Earth is crossing multiple points of no return

The world is certainly at a point where action, rather than more studies telling us what we should already know, is necessary. But if you do need another warning of looming environmental collapse, a new research paper concludes that four of nine “planetary boundaries” have already been crossed.

Crossing any one of these nine boundaries risks driving the Earth “into a much less hospitable state,” according to the paper’s lead author, Will Steffen of the Australian National University in Canberra. Crossing four of these boundaries — specifically, climate change, loss of biosphere integrity, land-system change and altered biochemical cycles — is all the more alarming.

Eighteen scientists, representing universities in Australia, Canada, Denmark, Germany, India, Kenya, the Netherlands, South Africa, Sweden and the United States, prepared the report, “Planetary Boundaries: Guiding human development on a changing planet” under the auspices of the Stockholm Resilience Center in Sweden. The goal of the paper, and the center itself, is to signal that a tipping point is approaching so that humanity has some time to change course. These warning points are determined in this way:

“[T]he proposed planetary boundary is not placed at the position of the biophysical threshold but rather up-stream of it, i.e., well before reaching the threshold. This buffer between the boundary (the end of the safe operating space—the green zone in [the graphic below]) and the threshold accounts not only for uncertainty in the precise position of the threshold … but also allows society time to react to early warning signs that it may be approaching a threshold and consequent abrupt or risky change.”

The nine planetary boundaries (Stockholm Resilience Centre)

The nine planetary boundaries (Stockholm Resilience Centre)

Of the four boundaries that have already been crossed, two of them (climate change and biosphere integrity) have the potential on their own “to drive the Earth System into a new state should they be substantially and persistently transgressed.” The paper sets the “zone of uncertainty” for atmospheric carbon dioxide content at 350 to 450 parts per million (we are currently at the midpoint of that zone) and calculates that the “energy imbalance” — the “forcing” of atmospheric change through continued introduction of global-warming chemicals — is approximately double the safe limit. In other words, carbon dioxide is being pumped into the atmosphere much faster than it is removed.

To calculate “biosphere integrity,” the paper’s authors use the rate of species extinction and the populations of species, using pre-industrial rates as benchmarks. Although these are calculated imprecisely and with inadequate knowledge of what rate of extinctions can be tolerated, the current rate of extinctions is estimated to be at least 10 times higher than the proposed range of acceptability, although that proposed range in turn is far greater the authors’ “aspirational goal” of holding extinctions to the rate of “well-studied organisms over the past several million years.”

Thus this scientific paper is actually conservative in its benchmarks and nonetheless finds the Earth is in a whole lot of trouble.

Telling business titans to stop doing what benefits them

Many of you reading this may be thinking, “We already know we’re in trouble! We don’t need another paper telling us what we already know, and those in denial won’t be swayed by science and fact.” Quite so, but can there be a tipping point in research that finally sparks some real action? Perhaps the Stockholm Resilience Center believes there can be, releasing the paper just in time to present it to the World Economic Forum.

At least for public consumption, World Economic Forum attendees say they are taking the paper’s sober analysis seriously. Those attendees, the world’s titans of industry and finance, and the political office holders who are beholden to them, in their actual practice have shown little inclination to change course, to put it mildly.

One of the paper’s co-authors, Johan Rockström, posted an article on the Forum’s web site saying that, even if carbon dioxide concentration is held to the range of 350 to 450 parts per million, that is still an unacceptable risk. Drawing a vivid analogy, he wrote:

“But it is important to recognise that 450 ppm also holds a less likely, but significant 1.6% probability … of resulting in 6ºC warming, which is beyond any doubt a catastrophic outcome for humanity. … Is this an acceptable risk level? The answer is clearly no. It is the equivalent of accepting that 1,500 aircrafts crash, each day. … This is a risk level we simply would never accept for other sectors in society.”

The probability of runaway global warming at 450 parts per million would be set at much higher than 1.6 percent by many environmental scientists and activists, but Professor Rockström’s analogy is scary enough. Nonetheless, “business as usual” appears to be the outcome. A commentary in the Singaporean newspaper Straits Times lamented that “leaders are failing to lead but are giving in to populist pressures,” in the wake of continuing economic weakness. A rather ideological formulation, considering that the world’s governments continue to impose brutal austerity on their populations on behalf of their society’s wealthiest while ignoring popular discontent.

The same Straits Times commentary claimed that “Business leaders at the forum voiced a willingness to take steps to address this issue,” and quoted the head of a financial-services company as saying, “What I am taking from this meeting is a huge sense of urgency, especially from the business community.”

Moreover, the climate program director at World Resources Institute, Jennifer Morgan, wrote:

“First of all, there was no climate denial to be heard in Davos. … Second, there are a tremendous number of companies—whether bankers, soft drink manufacturers, sporting companies, or furniture makers—that are already taking action to make their businesses more climate-resilient and competitive in a low-carbon economy. These businesses and others are becoming leaders in climate action.”

Huh? Business leaders have profited enormously by moving production to all corners of the world, wherever the cheapest labor, harshest working conditions and fewest regulations are to be found, necessitating the shipping of components, raw materials and finished products around the world, adding significantly to global warming through all the transportation necessary to make that work. Making these long supply chains “more efficient,” as Ms. Morgan exalts, hardly is the road to climate stability.

That something so oblivious could be said becomes less of a mystery when we see that the World Resources Institute is a non-governmental organization with a board full of corporate executives. We have no more cause for optimism from the Planetary Boundaries paper itself, which offers no guidance on what to do. Critiquing the global economic system is outside the scope of such a paper, and reasonably so, but it is fair game to note the weak-tea ideas it does offer: A “stronger focus on green chemistry” and “learning from earlier mistakes.”

Infinite expansion on a finite planet

So here we are again: The chimera of “green capitalism.” The same world economic system that requires endless expansion on a finite planet, in which all incentives are for ever more frenzied extraction of natural resources and corporate externalization of the costs of pollution and global warming, which remorselessly and ceaselessly elevates private profit above all other human considerations, is magically going to save us.

The maximization of profit and environmentalism are broadly in conflict because the managers of corporations are answerable to private owners and shareholders, not to society. Moreover, putting an immediate halt to polluting industries would cause economic disruption and throw huge numbers of people out of work in a system that will not have new jobs waiting for them, a factor that is leveraged to buttress global-warming denialism.

Even reducing consumption is difficult because between 60 and 70 percent of the economies of the world’s advanced capitalist countries are accounted for by household buying; a capitalist economy that is not growing causes pain as capitalists scramble to maintain their profits by any means necessary.

“Green” consumption is still consumption, and not environmentally healthy, either. All the more is that so for the capitalist system as a whole. Fred Magdoff and John Bellamy Foster, in their book What Every Environmentalist Needs to Know About Capitalism, puts this in sobering perspective:

“ ‘Green capitalism,’ even if products are produced using the utmost environmental care and designed for easy reuse, offers no way out of a system that must expand exponentially and thus continue to ratchet up its use of natural resources, its chemical pollution, its contaminated sewage sludge, its garbage, and its many other toxic substances. Some of these ‘fixes’ will probably slow down the rate of environmental destruction, but the magnitude of the needed changes dwarfs these approaches.” [page 120]

If we are to be serious about reversing global warming and repairing the environment, we have to create an economic system based on human need, that is stable as a steady-state system and under democratic control, rather than our present authoritarian system that is designed to maximize private profit. The scientists who prepared the Planetary Boundaries paper no doubt have the highest sincerity, but they have much company in being unable to imagine a world without capitalism. Until we do live in such a world, we will continue to hurtle toward catastrophe regardless of good intentions and well-designed research reports.

Bigger rewards for holding the economy hostage

They are bigger and badder than ever. The heightened offensive against regulations launched by the financial industry carried forward by the new Republican Party majority in the United States Congress is one demonstration, but just in case you wish more evidence, bank profits got bigger in 2014.

The multibillion-dollar fines U.S. government agencies have assessed banks has merely dented profits, and only in some cases. Four of the six biggest banks in the U.S. — which together hold about two-thirds of all assets in the U.S. financial system — reported higher profits for 2014 than in 2013, and in the cases of the other two, it appears that an increase in fines paid was responsible for their decline in profits.

Overall, these six banks — JPMorgan, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley — racked up a composite net income of US$75 billion on revenue of $413 billion.

The most comical comment during the banks’ announcements last week of their financial results was that of JPMorgan Chairman and Chief Executive Officer Jamie Dimon, who whined on a conference call with reporters that “Banks are under assault,” adding that “We have five or six regulators coming at us on every issue.”

Those regulators seemed to have taken it easy on JPMorgan last year. The company’s total legal costs for 2014 were $2.9 billion, compared to $11.1 billion in 2013, according to a report carried by financial news network CNBC. Nonetheless, JPMorgan’s $21 billion in profits for 2014 was considered a disappointment by Wall Street, because the fourth-quarter profit dipped slightly from the previous year’s fourth quarter. Thus, the company wasted no time in announcing that “Senior executives at JPMorgan Chase & Company are pressuring managers across the bank to cut costs,” according to Reuters.

Wall Street traders have already punished the company by sending its stock down in three of the first four trading days following its “disappointing” results. Not even Wall Street banks are immune from their own role as enforcers. Some low-level employees are about to pay for that with their jobs.

U.S. Treasury Department under new management (photo by takomabibelot)

U.S. Treasury Department under new management (photo by takomabibelot)

Never mind that the U.S. Treasury Department handed out $700 billion to Wall Street (among other measures), bailing out the very banks whose bottomless greed and reckless gambling brought on a global economic downturn now in its seventh year. A downturn paid for not by the banks, nor their executives, but through the endless austerity imposed on working people throughout the world. Not one Wall Street executive has been prosecuted.

JPMorgan has been assessed fines for a variety of crimes, among them mortgage fraud and currency-market manipulation. A compliance lawyer for JPMorgan tried to alert authorities to systematic irregularities in mortgage securities before the crash, but was ignored. Jamie Dimon, heroically holding up against the assault on his bank, earned $20 million for 2013. One suspects he will not be homeless once his 2014 compensation is totaled.

That his company will need to come up with billions of dollars by 2019 to meet Federal Reserve capital requirements, which will slow down its ability to speculate with money it doesn’t have in reserve, might just have something to do with his whining.

It pays to be a banker

The year 2014 was a very good one for banks. Here are the full-year results for the six largest banks, as reported by themselves.

• JPMorgan Chase & Company: net income of $21 billion on revenue of $97.9 billion. This was three billions dollars more than the year before, but still not good enough in the eyes of speculators.
• Bank of America Corporation: net income of $4.8 billion on revenue of $85.1 billion. The net income is down from 2013, but that appears to be due to “litigation expenses” of $16.4 billion, more than double the 2013 litigation expenses of $6.1 billion. Almost all of those extra expenses occurred in its consumer real estate division; the bank agreed in August to pay nearly $17 billion to settle charges that it sold toxic mortgages.
• Citigroup Incorporated: net income of $11.5 billion on revenue of $77.2 billion. Citigroup’s profits were lower than the year before, but the culprit is familiar — it reported legal costs of $4.8 billion in 2014, more than ten times the $430 million of 2013. Citigroup agreed in November to pay $1 billion for rigging foreign-exchange markets and agreed in July to pay $7 billion for selling bad mortgages.
• Wells Fargo & Company: net income of $23.1 billion on revenue of $84.3 billion. With profits up from 2013, Wells Fargo said it handed out $12.5 billion to shareholders through dividends and net share repurchases, five billion dollars more than a year earlier. This at the same time that many of its branch tellers can’t move out of their parents’ house because of low pay.
• The Goldman Sachs Group Inc.: net income of $8.5 billion on revenue of $34.5 billion. Those were higher than a year earlier. The average pay for Goldman Sachs employees for 2014 was $373,265, but as that includes secretaries and clerks, those involved in speculation make far more.
• Morgan Stanley: net income from continuing operations of $6.2 billion on revenue of $33.6 billion. This profit is more than double what the company made the year before, but nonetheless is not good enough. The company moved quickly to appease speculators, announcing it would cut the percentage of its revenue going to wages, pay higher dividends and buy back more stock.

What would they do if they weren’t under “assault”?

Subject to the same remorseless laws of capitalism as any other industry, the industry rapidly consolidated. The percentage of total industry assets owned by the five biggest U.S. commercial banks has increased more than four-fold since 1990. Nor is that something peculiar to U.S. banking — the five largest banks in the European Union hold 47 percent of their industry’s total assets.

The “assault on banks” must have been conducted with a wet noodle. Although by any ordinary human logic, these colossal sums of money should satiate the most asocial speculator, the remorseless logic of capitalism dictates that more is never enough, that profits have to increase steadily. Even the rate of the increase can be expected to increase.

While working at a financial news wire during the stock-market bubble years of the 1990s, I vividly recall one day when a major computer company reported a profit of more than $800 million for its latest three-month period, more than the year-earlier quarter, only for its stock price to be driven down. Curious, I discovered that “analysts” had forecast a profit even bigger, and the rate of the increase had been lower than the rate of the increase a year earlier. That was enough for speculators to lash out.

The financial industry acts as both a whip and a parasite in relation to productive capital (producers and merchants of tangible goods and services). The financial industry is a “parasite” because its ownership of stocks, bonds and other securities entitles it to skim off massive amounts of money as its share of the profits. It is also a “whip” because its institutions — stock, bond and currency-exchange markets and the firms that trade these and other securities on those markets — bid up or drive down prices, and do so strictly according to their own interests.

A management that fails to maximize profits in the short term and deliver higher stock prices in the longer term is in danger of being pushed out, not because diffuse shareholders possess that leverage individually, but because the financial industry as a whole, through the markets it controls, can sell off enough stock to make the price nosedive, leaving the company vulnerable to an unfriendly takeover by a speculator seeking to profit from the reduced value of the company. Executives who do what the “market” dictates, on the other hand, are showered with riches.

Moreover, companies with stock traded on exchanges are legally required to maximize profits for shareholders, above all other considerations. A company that fails to make a deal, or decides against selling itself to another company, is subject to being sued in courts because angry speculators will sell their stock, causing the price to decline and then complain that the company’s management failed to maximize “shareholder value.”

Governments representing the world’s four largest economies — the U.S., the E.U., China and Japan — committed US$16.3 trillion in 2008 and 2009 alone on bailouts of the financiers who brought down the global economy and, to a far smaller extent, for economic stimulus. These are the governments that are “assaulting” banks. Such is the looking-glass logic of capitalism.

Will a Syriza victory be the first blow against austerity?

Is the first step toward the unraveling of European austerity about to begin, courtesy of Greek voters? The future direction of the European Union certainly won’t turn merely on the results of Greece’s January 25 parliamentary election, nor will the world slip off its axis if the expected Syriza victory materializes.

Nonetheless, the first blow has to be struck some time, by somebody. If Syriza does take office and if it can hold firm against the withering pressure that it will immediately be subjected to, an alternative to financial industry diktats could provide an example elsewhere in the E.U., particularly within the eurozone. That example can not be taken up too soon, given the many economic weapons likely to be deployed against a Syriza-led Greece. (Perhaps in Spain, where Podemos, the party organized a year ago by the Indignados movement, already is a near three-way dead heat with Spain’s biggest parties, Popular and Socialist, according to recent polling.) There is no Greek solution to Greece’s economic collapse, only a European solution.

View of Vikos Gorge, Greece (photo by Skamnelis)

View of Vikos Gorge, Greece (photo by Skamnelis)

As the Greek parliament was in the process of failing to elect a new president last month, thereby triggering automatic parliamentary elections, Syriza issued this statement about the New Democracy/Pasok coalition government that had continued to impose punishing austerity:

“The only option left to them is the policy of fear and terrorization of the society, the creation of false dilemmas and fake polarization. This option is triggered by the fact that the government as well as the dominant economic and media system and forces inside and outside the country are very well aware that they have a lot to lose.”

Such fear-mongering won’t only come from the Greek establishment. European governments have alternated between ordering Greek voters to vote for pro-austerity parties and to insisting that both a Greek exit from the eurozone and any changes to Greece’s debt obligations are unthinkable. These have not only come from German Finance Minister Wolfgang Schäuble, as would be expected, but from French President François Hollande, continuing his journey to becoming Paris’ Monsieur 1%.

Certainly the financiers who hold decisive power over the undemocratic institutions of the European Union, nor their representatives such as Finance Minister Schäuble, can be expected to welcome the basic self-description of Syriza’s intentions:

“Syriza insists strongly on its position that it will abolish the memoranda signed with the Troika of lenders when it assumes office and will re-negotiate the loans. At the same time it will promote a programme of social and economical reconstruction, aiming at development that promotes human needs and well-being and respects nature. … Syriza is fighting for the re-foundation of Europe away from artificial divisions and cold-war alliances such as NATO. As for the E.U., Syriza denounces the dominant extreme neoliberal and euro-atlantic policies and believes that they must and can be transformed radically in the direction of a democratic, social, peaceful, ecological and feminist Europe, open to a socialist and democratic future.”

Putting forth a program of reforms

Syriza — the Coalition of the Radical Left — re-constituted itself as a single party at its first congress in July 2013. Nearly 500 organizations were represented at the congress, which elected Alexis Tsipras as party president and a 201-member central committee. Close to 20 groups comprised Syriza prior to this congress (when it was formally a coalition), most of which remain as part of the party while a few became “allied groups.” The party includes Trotskyist, Maoist, Eurocommunist and other non-orthodox communist Leftist groups, but that does not mean it intends to implement a revolutionary program.

The “Thessaloniki Program,” announced last September by Mr. Tsipras in the Greek city of that name, promises that Syriza will:

  • Re-negotiate the national debt and a “haircut” on the foreign debt.
  • Impose higher taxation on the rich.
  • Raise salaries for some low-paid employees.
  • Abolish a recently enacted property tax.
  • Provide more money for the municipalities and the local authorities.
  • Create 300,000 new jobs.
  • Re-open public radio and television, which were summarily shut by the outgoing government.
  • Establish a new national development bank.
  • Restore Greece’s previous monthly minimum wage of €751.

Ilias Milonas, a member of the Left Platform grouping within Syriza writing on The Socialist Network web site, in pointing out that the Thessaloniki Program consists of reforms that fall short of effecting a necessary structural change, said:

“In the Syriza leadership’s programme also absent is the most crucial matter of the nationalisation of the banks, a policy that was decided on at the last congress of Syriza – almost all the banks in Greece have been privatised in recent years. We believe that there is not one programme that can be implemented without the nationalisation of the banking system along with and the rest of the economic system. In contrast, the leadership’s proposal for the establishment of a New Development Bank with a budget of one billion Euros is like planting a tree in the Sahara in the hope of greening the desert. Indeed, all they propose for the banks is a vague form of “social control.”

Even within Germany, the Left Party advocates a nationalization of banks, so Syriza doing so would not be outlandish (especially as public control of banking and the elimination of speculation are prerequisites for a democratic economy). And a restoration of the previous Greek minimum wage of €751 a month is not living in luxury — at current exchange rates, that’s US$893 or £589. Nobody is living well on that.

The program, Mr. Tsipras said, is to cost about €13.5 billion. The Greek newspaper To Vima reports that, of that total, about €2 billion would go toward addressing the humanitarian crisis, €6.5 billion would be used in measures to help restore the economy (with an estimated €3 billion toward benefits), and €5 billion would be invested in restoring employment. This cost is six percent of the total of the loans by the troika (the European Commission, European Central Bank and International Monetary Fund).

Debt relief for Germany

These reforms — which would do nothing to challenge the prevailing power relations and amount to a program of Keynesian initiatives — are nonetheless presented as the crazy schemes of dreamers. “Every new government needs to fulfil the contractual agreements of its predecessors. … But if Greece goes in another direction then that’s going to be a difficult situation,” Finance Minister Schäuble said, as reported by Reuters. Well, no need for any more elections, then.

Most of all, it would be some sort of moral outrage, scream European leaders and echoed by the corporate media on both sides of the Atlantic. Conveniently overlooked is the huge debt forgiveness given to Germany after World War II, which surely helped the Federal Republic recover. Germany’s pre-war debt amounted to 22.6 billion marks, including interest, and its postwar debt was estimated at 16.2 billion marks, according to the Committee for the Abolition of Third World Debt. Yet the U.S., the U.K. and France agreed in 1953 to forgive nearly two-thirds of that total, and allowed Germany to negotiate payment schedules in cases of financial difficulty. On top of that, the allies voluntarily reduced the amount of goods they would export into the Federal Republic so that it could reduce its trade deficit and give a boost to its internal manufacturers.

Syriza argues, not unreasonably, that what was done for Germany in 1953 should be done for Greece today. And, although debt writedowns and aid programs such as the Marshall Plan went toward raising living standards of Germans, the €227 billion of loans that have gone to Greece benefits large financial institutions elsewhere, none more so than German and French banks. By one estimate, only €15 billion has gone to state operations; none after 2012. The Greek government has been a pass-through, taking the loans given it and promptly sending it the financiers who own the debt. At the end of 2008, more than 50 percent of the debt was owed to banks in Germany, France and Italy alone.

The troika has not been propping up the Greek government, it has been propping up Europe’s banks and financial houses.

That derives from the neoliberal concept is that people exist to serve markets rather than markets existing to serve people. Entire countries have been harnessed to the dictates of “markets.” This has long been the pattern imposed by the global North on the South through institutions like the IMF; now the stronger countries of the North are imposing it on their weaker neighbors. Taxpayers in those stronger countries are on the hook, also, as some of their taxes go toward the bailout funds, for which bailed-out countries are merely a conduit to pass the money to financiers, often from their own country.

If it looks like a depression, talks like a depression …

What has Greece received from the troika’s loans? Greek gross domestic product has contracted by 25 percent, unemployment is above 25 percent, real wages have fallen by 30 percent and industrial output has declined by 35 percent. The country’s foreign debt has actually risen, to 175 percent of GDP from approximately 130 percent in 2009. This is what the International Monetary Fund hailed as “progress” two years ago!

Just as “the market” dictates a race to the bottom for labor, the harshest terms that can be imposed are mandated for debtors, always wrapped in a hypocritical, sanctimonious “morality.” German Chancellor Angela Merkel is not stubborn nor obsessed with Weimar-era inflation, as she is sometimes portrayed; she is simply reminding other national political leaders that economic harmonization will conform to the tightest policy among them and Germany so happens to have that tightest policy. This is the will of the “market” to which they chained themselves.

None of the eurozone’s national leaders are reducible to “puppets,” but their perceived national interests are distorted by whatever consensus their industrialist and financiers arrive at. Big industrialists and financiers dominate their societies through control of the mass media and a range of other institutions to the point that their preferred policies become, through repetition, the dominant ideas across society and the ideas adopted by the political leaders who become dependent on them. Their aggregate interests constitute the “market.”

Greece can not be a socialist island in a capitalist Europe, nor can any other country; that understanding is reflected in Syriza’s program. What might a different Europe look like? Various non-orthodox economists have proposed programs, some envisioning Greece remaining in the eurozone and some envisioning Greece dropping the euro and returning to the drachma. What these programs have in common is a vision of a European-wide economic restructuring.

To summarize some of these ideas: The E.U. should be leveraged to internationalize the resistance of working people; full employment demanded as an explicit goal; banks should become publicly owned and democratically controlled so that capital is directed toward socially useful investment instead of speculation; a highly progressive taxation system should be coordinated at the E.U. level; wages raised to account for improved productivity that has, for three decades, gone to capitalists; governments should default at least some of their debts to banks; bank deposits should be guaranteed; and there should be more investment in education to enhance future productivity.

Impossible? In a capitalist Europe, yes. But in a better world, these kinds of ideas would simply be common sense. Why shouldn’t they be?

Our world is awful, yes, but it isn’t fascism — yet

The term “fascism” gets tossed around much too casually. I am not speaking here of right-wing political illiterates who call a centrist like Barack Obama a “socialist” one day and a “fascist” the next. I am referring to people on the Left who ought to know better.

If we call anybody on the Right a “fascist” or use the word as an all-purpose pejorative, we fail to understand the real thing, and that is to our collective peril. Yes, economic conditions in the present era of global neoliberalism, of the corporate race to the bottom abetted at every turn by the world’s governments, of wars actual and threatened necessary to maintain the global capitalist system, are harsh. But a sham “formal democracy” and an outright fascist state are two very different things.

At its most basic level, fascism is a dictatorship established through and maintained with terror on behalf of big business. It has a social base, which provides the support and the terror squads, but which is badly misled since the fascist dictatorship operates decisively against the interest of its social base. Militarism, extreme nationalism, the creation of enemies and scapegoats, and, perhaps the most critical component, a rabid propaganda that intentionally raises panic and hate while disguising its true nature and intentions under the cover of a phony populism, are among the necessary elements.

Despite national differences that result in major differences in the appearances of fascism, the class nature is consistent. Big business is invariably the supporter of fascism, no matter what a fascist movement’s rhetoric contains, and is invariably the beneficiary.

Mural paintings in honor of  Jecar Neghme of Chile's MIR in the place where he was killed by the Pinochet government. (Credit: Ciberprofe)

Mural paintings in honor of Jecar Neghme of Chile’s MIR in the place where he was killed by the Pinochet government. (Credit: Ciberprofe)

Instituting a fascist dictatorship is no easy decision even for the biggest industrialists, bankers and landowners who might salivate over the potential profits. For even if it is intended to benefit them, these big businessmen are giving up some of their own freedom since they will not directly control the dictatorship; it is a dictatorship for them, not by them. A few of this class will oppose the institution of a fascist dictatorship, some will be ambivalent and perhaps a few were squeamish about the Nazis’ virulent anti-Semitism.

It is only under certain conditions that business elites resort to fascism — some form of democratic government, under which citizens “consent” to the ruling structure, is the preferred form and much easier to maintain. Working people beginning to withdraw their consent — beginning to seriously challenge the economic status quo — is one “crisis” that can bring on fascism. An inability to maintain or expand profits, as can occur during a steep decline in the “business cycle,” or a structural crisis, is another such “crisis.”

Massive corporate subsidies and the funding of gigantic projects, such as military buildups and monumental buildings, are used to combat stagnating or declining profits. If the crisis is severe enough, the level of subsidies and projects required can be achieved only against the will of working people, for it is from them that the necessary money will come, in the form of reduced wages and benefits, increased working hours and the speeding-up and intensification of their work. Fascism overcomes resistance through force.

Exploiting middle class anxieties

But, no matter how powerful they are, numerically these big capitalists are a minuscule portion of the population. How to create popular support for a movement that would ban unions, turn working people into helpless cattle, regiment all spheres of life, destroy all freedom, mercilessly destroy several groups of society, reduce the standard of living of those who still had jobs and inevitably lead to war? This is not an appealing program.

The Nazis, for example, skillfully appealed to German middle class fears of economic dislocation, the increasing numbers of unemployed blue-collar workers, the threat of being swallowed by big business and political instability (although the Nazis were the most responsible for the last of those four), creating the social base needed by the economic elite to bring its movement to power. A movement that was as anathema to the middle class as it was to the lower economic ranks, although its middle class supporters were blind to that reality as the Nazis simultaneously appealed to its grudges against societal elites.

Leon Trotsky, the sharpest observer and analyst of fascism of his time, exposed at the time the false facade of the Nazis. The party’s full name was the National Socialist German Worker’s Party, a name intentionally chosen to fool the middle and lower classes. Capitalism was discredited in Germany, so the Nazi leadership let a populist socialist-sounding program be put forth, and Hitler himself thundered against bankers, albeit generally as part of his anti-Semitic rants.

Many storm troopers believed the party’s rhetoric, even as Hitler was saying very different things to his corporate benefactors and the storm troopers were being used to burn union offices and beat and kill the workers who presumably were the victims of the bankers the storm troopers’ leaders were fulminating against. In a vivid 1932 essay, Trotsky wrote:

“In National Socialism, everything is as contradictory and as chaotic as in a nightmare. Hitler’s party calls itself socialist, yet it leads a terroristic struggle against all socialist organizations. It calls itself a worker’s party, yet its ranks include all classes except the proletariat. It hurls lightning bolts at the heads of capitalists, yet is supported by them. … The whole world has collapsed inside the heads of the petit bourgeoisie, which has completely lost its equilibrium. This class is screaming so clamorously out of despair, fear and bitterness that it is itself deafened and loses sense of its words and gestures.”

A fascist régime can not take root without a social base. Although we are accustomed to seeing storm troopers or their equivalent as coming from the depths of society, the middle class largely supplies that base, as was the case in countries as different as 1930s Germany and 1970s Chile. The historian Isaac Deutscher, in the third volume of his Trotsky biography, The Prophet Outcast, captured the mood of German shopkeepers and other middle class people who came to ruin during the Weimar Republic:

“The Kleinbürger normally resented his social position: he looked up with envy and hatred at big business, to which he so often hopelessly succumbed in competition; and he looked down upon the workers, jealous of their capacity for political and trade union organization and for collective self-defense. … At big business the small man shook his fists as if he were a socialist; against the worker he shrilled his bourgeois respectability, his horror of class struggle, his rabid nationalist pride, and his detestation of Marxist internationalism. This political neurosis of impoverished millions gave [Nazism] its force and impetus.”

Great for profits, awful for workers

It is important to remember, however, that fascist dictators like Hitler and Mussolini were appointed to power, not elected. It is true that the Nazis came in first place in Germany’s July 1931 vote, although with just 37 percent of the vote. The Nazis’ showing in another vote three months later declined to 33 percent and totaled two million less than the combined vote for the Social Democrats and Communists. The traditional nationalist conservative parties decided to “use” Hitler in the belief that they could control him; that the Nazis were in such a position was due to the massive money they received from Germany’s bankers, industrialists and large landowners. A representative of those landowners, Marshal Paul von Hindenburg, was president and appointed Hitler chancellor. It took Hitler only three months to consolidate his power.

Mussolini, too, was appointed prime minister by King Vittorio Emmanuel and received heavy support from Italy’s capitalists. What did they — and capitalists in Spain, Chile and Argentina — receive for their investment in fascist movements?

  • In Germany, corporate profits more than doubled in five years, while from Hitler’s ascension to power on January 30, 1933, to the summer of 1935, wages dropped 25 to 40 percent. In 1935, a “labor passport” was instituted in which the employer wrote reports on the holder. The employer could confiscate the passport at will, without which employment could not be taken, effectively making it impossible to change jobs. In 1938, it was formally made illegal for a worker to change jobs.
  • In Italy, from 1926 to 1934, industrial wages were reduced at least 40 to 50 percent, while agricultural wages were reduced 50 to 70 percent. Unemployment meant the specter of starvation, and as a further whip to keep wages down, children were regularly used in agricultural and factory work as substitutes for fired adults. From 1935, many factory employees were placed under direct military discipline; missing more than five days of work was a penalty subject to nine years’ imprisonment. All workers had to carry a “labor passport.”
  • In Francisco Franco’s Spain, real wages in 1949 were 50 percent of those in 1936. Rationing lasted until 1952; the rations alone were insufficient to maintain human existence. The historian Paul Preston, author of two books that closely examine Franco and his regime, quoted Hitler aide Heinrich Himmler as calling the Franco regime “more brutal in its treatment of the Spanish working class than was the Third Reich in its dealings with German workers.”
  • In Augusto Pinochet’s Chile, the majority of workers earned less in 1989 than in 1973 (after adjusting for inflation). Labor’s share of the national income declined from 52 percent in 1970 to 31 percent in 1989. The minimum wage dropped almost by half during the 1980s, and by the end of that decade, Chile’s poverty rate reached 41 percent and the percentage of Chileans without adequate housing was 40 percent, up from 27 percent in 1972. One-third of the country’s workforce was unemployed by 1983.
  • In Argentina, the main union federation was abolished, strikes outlawed, prices raised, wages tightly controlled and social programs cut. As a result, real wages fell by 50 percent within a year. Tariffs were reduced deeply, leaving the country wide open to imports and foreign speculation, causing considerable local industry to shut. For the period 1978 to 1983, Argentina’s foreign debt increased to $43 billion from $8 billion, while the share of wages in national income fell to 22 percent from 43 percent.

It was not inevitable then, it is not inevitable today

Although there were differences among these régimes due to national characteristics, and the ratio of armed street gangs and storm troopers versus direct repression by the military varied considerably, organized extreme violence, up to and including massacres, is the common thread. This mass violence is what the world’s capitalists are prepared to do if their rule is threatened, or even if their profits are in serious jeopardy.

Violence is certainly not absent from the conduct of formally democratic capitalist governments but there is a large difference between that and what is meted out by fascist régimes, at least internally. We lose our understanding of what fascism would mean in everyday life, and erode our ability to combat the tendencies from which it derives, if we obliterate these differences.

The German Communist Party pretended not to know the difference in the early 1930s, preferring to concentrate its attacks on the Social Democrats rather than the Nazis under the inane idea that the Social Democratic-run Weimar Republic was already “objectively fascist” and that the Nazis would not make much difference. The Communists very swiftly found out otherwise, becoming the first to be rounded up. In the years after World War I, the Social Democrats helped the German military and traditional right-wing parties suppress not only Communists but workers’ revolts in general — not excepting their own social base — thereby paving the road for Hitler.

On top of those blunders, the Communists and Social Democrats had their own militias, which could have countered the Nazi storm troopers, but were never put into action. It was not ordained that Hitler would come to power, or that other fascist régimes would do so. Chile’s Left was highly organized, for example.

History does not repeat itself neatly, but the wide differences among the five examples cited underscore that the threat of fascism exists in any and all capitalist countries. That does not mean that fascism is inevitable, although if capitalist economies continue in a generally downward spiral, some capitalists will undoubtedly begin thinking of it as a last-ditch effort to maintain profits despite the bad ending such régimes invariably meet. It can’t be denied that some of the pieces of fascism are in existence — including militarized police forces and ubiquitous spying agencies.

A better world, one designed to fulfill human need rather than private profits, not only is necessary for human salvation, it is the only way to put an end to the risk of turns to the authoritarian Right, in nationalist, fascist or other forms. That can only arise from organized social movements, confident in themselves and linking hands across borders. May the new year accelerate the process.

Goodbye privacy, hello censorship if secret TISA pact is approved

Internet privacy and net neutrality would become things of the past if the secret Trade In Services Agreement comes to fruition. And on this one, the secrecy exceeds even that shrouding the two better-known corporate giveaways, the Trans-Pacific and Transatlantic partnerships.

Yet another tentacle in the octopus of multi-national corporations’ attempt to achieve dictatorial control, the Trade In Services Agreement (TISA) is intended to eliminate government regulations in the “professional services” such as accounting and engineering but goes well beyond that, proposing sweeping de-regulation of the Internet and the financial industry.

Geneva Fountain (photo by Lional Rajappa

Geneva Fountain (photo by Lional Rajappa

Another snippet of TISA’s text has been leaked, this time by the freedom-of-information organization Associated Whistleblowing Press. Without this leak, and an earlier leak published by WikiLeaks in June 2014, we would know absolutely nothing about TISA and its various annexes. No matter what a negotiating government might claim about it, should one actually deign to discuss it, TISA is not about your right to hire your accountant of choice. Here is Article X.4 on “movement of information”:

“No Party may prevent a service supplier of another Party from transferring, accessing, processing or storing information, including personal information, within or outside the Party’s territory, where such activity is carried out in connection with the conduct of the service supplier’s business.”

What that proposal means is that any regulation safeguarding online privacy would be deemed illegal. (“Party” in the quoted text refers to national governments.) European rules on privacy, much stronger than those found in the United States, for example, would be eliminated. Further, any rule that in any way mandates local content (Article X.2) or provides any advantage to a local technology (Article X.3) would also be illegal. Thus the domination of U.S.-based Internet companies, such as Google or Facebook, would be locked in, along with their vacuuming of your personal data. A French anti-dumping law intended to help bookstores withstand predatory practices by Amazon.com is the type of law likely to come under attack.

What this has to do with the provision of “professional services” is not clear. TISA seems intended to be a catch-all to eliminate regulation and allow multi-national corporations to muscle their way into as many areas as possible unimpeded, and the benign-sounding surface purpose of liberalizing access to foreign engineers may be intended as a wedge to force open all barriers to corporate profiteering.

Taking aim at net neutrality

The text is written in sufficiently ambiguous language that net neutrality seems strongly at risk. A reference to “open networks” contains the caveat that Internet usage is “subject to reasonable network management.” An analysis prepared by Professor Jane Kelsey of the University of Auckland and Burcu Kilic of Public Citizen in Washington says:

“ ‘Reasonable network management’ is code for an exception to ‘net neutrality,’ whereby everything on the Internet is treated the same. There is no guidance on the meaning of ‘reasonable network management.’ The concept has been highly controversial when the US Federal Communications Commission (FCC) proposed it in the US. The FCC says it ‘consists of practices which are reasonable,’ which is a vague and circular meaning that could be a rubber stamp for anything the network operator wants to do.” [page 22]

U.S. telecommunications corporations bitterly oppose net neutrality because, under this principle, they can’t speed up or slow down online content according to who pays them, or doesn’t, for special treatment. And any dilution of net neutrality opens the floodgates to censorship of the Internet, whether government or corporate.

The analysis by Professor Kelsey and Dr. Kilic discerns three broad goals of TISA on the part of the U.S. government, which is pushing hardest for it, as it does with other “free trade” agreements:

  • To advance the commercial interests of its services industry that supplies services across the border. There would be particular gains to the information telecommunications and technology sector, but would protect U.S. competitive advantage and monopoly rights over intellectual property and technology.
  • To serve “a range of ‘national security’ and commercial purposes” by consolidating data repositories to the benefit of the U.S. government, transnational companies and third-party commercial interests.
  • To prevent or restrict government regulation that impedes the activities and profits of the major global services industries, and guarantees unrestricted cross-border movement of data.

A letter sent to TISA negotiators by 342 civil society groups based in Europe and elsewhere in 2013 asking that the negotiations be immediately halted, states:

“The proposed TISA is an assault on the public interest as it fails to ensure that foreign investments in service sectors actually promote public goals and sustainable economies. We are particularly wary of further undermining of essential services such as health care and insurance, water and energy provision, postal distribution, education, public transportation, sanitation, and others if they are handed over to private and foreign corporations motivated only by profits and available only to those who can pay market rates.”

Restrictions on the financial industry would be illegal

TISA, as revealed by WikiLeaks in June, also would require signatory governments to allow any corporation that offers a “financial service” — that includes insurance as well as all forms of trading and speculation — to expand operations at will and would prohibit new financial regulations. These offensives are incorporated in TISA’s Financial Services Annex, which would:

  • Require countries to change their laws to conform to the annex’s text (Annex Article 3).
  • Require countries to “eliminate … or reduce [the] scope” of state enterprises (Article 5).
  • Prohibit any “buy local” rules for government agencies (Article 6).
  • Prohibit any limitations on foreign financial firms’ activity (articles 7 and 10).
  • Prohibit restrictions on the transfer of any data collected, including across borders (articles 8 and 11).
  • Prohibit any restrictions on the size or expansion of financial companies and a ban on new regulations (Article 15).
  • Require any government that offers financial products through its postal service to lessen the quality of its products so that those are no better than what private corporations offer (Article 22).

The ninth, and most recent, round of TISA negotiations took place on December 1 to 5 in Australia. In a typically bland statement providing no actual information, the Australian government said:

“Good progress was made in advancing the enhanced disciplines (trade rules) for e-commerce and telecommunications, domestic regulation and transparency, financial services, temporary entry of business persons, professional services, maritime and air transport services and delivery services. There was also further discussion of proposals on government procurement, environmental and energy services, and the facilitation of patient mobility. Parties reported on progress in bilateral market access discussions held since the September Round and committed to advance these further in 2015.”

Canberra’s likely overstating of “progress” is nonetheless more than is offered by other governments. The office of the United States Trade Representative, for example, last issued a public update about TISA negotiations in November 2013, and then merely said that the then-latest round of talks “was positive and productive.”

Tightening secrecy of “free trade” agreements

The next round of TISA negotiations are scheduled for Geneva February 9 to 13, 2015. Fifty countries are negotiating TISA, including the 28 countries of the European Union, which are collectively represented by the unelected and unaccountable European Commission. Among other countries are Canada, the United States, Australia, New Zealand, Japan, Norway and Switzerland. The negotiating countries, with perhaps more transparency than intended, refer to themselves as the “Really Good Friends of Services.” Good friends of working people they are not.

Although any sections detailing enforcement have yet to be leaked, TISA would likely depend on the “investor-state dispute mechanism” generally mandated in “free trade” agreements. Deceptively bland sounding, the mechanism is a secret tribunal to which a “dispute” is sent when a corporation wants a safety or environmental regulation or law changed so as to increase its profits. One of the most frequently used of these tribunals is an arm of the World Bank.

Many of the judges who sit on these tribunals are corporate lawyers who otherwise represent corporations in similar disputes with governments, and there is no appeal to their decisions. These rulings become a benchmark for subsequent disputes, thereby pushing the interpretations further in favor of multi-national capital.

That the Trade In Services Agreement, or the Trans-Pacific Partnership, or the Transatlantic Trade and Investment Partnership, or the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), have to be negotiated in total secrecy, with only corporate lobbyists having access to texts or meaningful input, speaks for itself. The empty shell of formal democracy under capitalism gets ever emptier.

Shopping ’til we all drop at Wal-Mart

Wal-Mart is concentrated neoliberalism. From working to weaken government at the same time it gorges on government subsidies, to exploitation of its workforce, to moving production to the places with the lowest wages and weakest laws, to underpaying taxes, the workers who walked out on Black Friday have no shortage of targets.

Some of the latest findings in a just released report reveal that Wal-Mart dodges $1 billion a year in taxes and is the recipient of an estimated $6.2 billion a year in indirect subsidies through social-welfare programs such as food stamps. A separate report also just published documents the poverty of Wal-Mart workers, many of whom regularly skip meals because their pay is so low.

Four members of the Walton family, recipients of the capital amassed by Wal-Mart Stores Inc., are collectively worth $144 billion — each is one of the nine richest people in the United States. At the same time, Wal-Mart workers are organizing food drives so they can eat. Wal-Mart officials shamelessly praise the food drives as examples of its employees caring about their co-workers.

Too bad Wal-Mart executives care much less about their employees.

It’s not as if the company can’t afford to pay its workers — it earned $78.4 billion in profits for its last five fiscal years. In 2013 alone, Wal-Mart paid nearly $6.2 billion in dividends to its shareholders.* And who were the major recipients of this largesse, extracted from the backs of its employees? None other than the Walton family, who own about 50 percent of the company’s stock, according to The Wall Street Journal. Then there are the buybacks of its stock — a buyback is when a company pays a premium above the price to buy its stock from willing sellers, giving a windfall to the sellers and spreading the profits among fewer shareholders. In 2011, for example, Wal-Mart spent $11.3 billion on dividends and stock buybacks.

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

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

Who pays for this massive transfer of wealth? Let’s look at the other side of the equation. A report prepared by public-interest group Eat Drink Politics, “Walmart’s Hunger Games: How America’s Largest Employer and Richest Family Worsen the Hunger Crisis,” offers several stories of Wal-Mart employees who make too little money to eat properly. One employee, La’Randa Jackson of Cincinnati, Ohio, says:

“I skip a lot of meals. The most important thing is food for the babies, then my younger brothers. Then, if there’s enough, my mom and I eat.”

Full time work but under the poverty line

The Hunger Games report notes that Wal-Mart’s immense size drives down pay not only in retail but in other industries. The company’s wages are much less than it claims:

“Estimates of hourly Walmart wages vary, but one study by the National Bureau of Economic Research found that Walmart cashiers average just $8.48/hour, while another industry report found the average pay to be $8.81 per hour. At this rate, an employee who works 34 hours per week, which is Walmart’s definition of full-time, is paid $15,500 per year, which is about $8,000 below the federal poverty line for a family of four.”

Not that all Wal-Mart employees are able to work even those 34 hours per week. The Hunger Games report said:

“As many as 600,000 Walmart workers currently work part-time, although many want to work full-time and are pushing for additional hours. The company intensified its hiring of temporary workers last year, while continuing to deny full-time hours to many employees who want them.”

The report on Wal-Mart’s tax evasion, “How Walmart is Dodging Billions in Taxes,” produced by the coalition Americans For Tax Fairness, found that the company exploits tax loopholes to pay about $1 billion per year less in taxes than it would otherwise — a total of $5.1 billion in the past five years.

Meanwhile, the company retains a fleet of 74 lobbyists, mostly former members of Congress both Republican and Democratic, spending $33 million on lobbying in the past five years. Among the goodies on Wal-Mart executives’ wish list are more tax breaks, including a drop in the statutory corporate tax rate to 25 percent from 35 percent (although it, like almost all corporations, pay much less than 35% already) and the elimination of taxes on revenue it claims to have earned outside the U.S. Americans For Tax Fairness estimates that the company would avoid another $720 million per year in taxes should its wishes be granted.

This report also finds that taxpayers already spend at estimated $6.2 billion per year subsidizing Wal-Mart’s low pay and paltry benefits. This was calculated by projecting the cost to Wisconsin of Wal-Mart as reported in a study prepared by the Democratic Party staff of the U.S. House of Representatives Committee on Education and the Workforce to the company’s 1.4 million employees across the country. Programs included in the report’s estimate include school breakfast and lunch programs, Section 8 housing subsidies, the Earned Income Tax Credit, Medicaid, the Low Income Home Energy Assistance Program and food stamps (the Supplemental Nutrition Assistance Program).

It’s the system, not one company

Wal-Mart is not unique in the viciousness in how it deals with, and exploits, its employees. The internal logic of capitalist development is driving the manic drive to move production to the locations with the most exploitable labor, not any single company, industry or country. One company will inevitably become the most ruthless in implementing what companies in a variety of industries are forced to do under the rigor of capitalist competition. Wal-Mart so happens to be it.

Multi-national corporations that transfer production to low-wage countries  — and their suppliers who are forced to move production to them under compulsion, such as apparel manufacturers who knuckle under to the demands of Wal-Mart — profit from systems of global supply chains, and are the fiercest advocates of “free trade” agreements that make it easier for them to transfer and subcontract production.

If a supplier doesn’t transfer production to a low-wage company, it can’t meet Wal-Mart’s demand for lower prices and goes out of business because Wal-Mart is a dominant customer. Other suppliers, even those who service other chains, then have to do the same to match the competition.

Although an increasing amount of outsourced production is being shifted to Bangladesh and Vietnam, and the Chinese government is seeking to manufacture higher-end and more sophisticated products, the low wages and vast numbers of exploitable workers, often displaced from the countryside, that China offers represented an opportunity for Western and Japanese corporations.

“Market forces” are at work here. If markets can’t be expanded, cutting costs is the route to maintaining profit rates, no matter the human cost. The Wal-Mart workers and their allies who demonstrated, walked out and, in Los Angeles, staged a hunger strike on Black Friday are therefore not only going up against the company most responsible for the lowering of wages and movement of production overseas — one virulently opposed to any form of employee organizing and relentless in eliminating local competition — they are going up against the market forces of capitalism and the logic of neoliberalism.

The fight of Wal-Mart’s workers is our fight. Consider this passage from a Businessweek article:

“Walmart has been opposed to unions since Sam Walton opened his first store in Rogers, Ark., in 1962. These days, ‘we have human resources teams all over the country who are available to talk to associates, and we will get questions about joining a union,’ says David Tovar, a spokesman for the company. ‘We would say: Let us remind you of all that Walmart offers, and of what might go away. Quarterly bonuses might go away, vacation time might go away.’ ”

The Wal-Mart spokesman is merely saying out loud what many other corporate executives say in private. U.S. labor law, weak as it is, renders illegal intimidation tactics in regards to union organizing. Yet the company believes it can talk and act with impunity. So far, that is true.

Everyone who shops at Wal-Mart contributes to this problem. Those who do believe they are saving money by buying at low prices, but those low prices actually come at a high cost. The cost will become higher until we become willing to stop believing that begging for crumbs is the only way the world can be organized.

* My own calculation: Four quarterly dividend payments of 47 cents a share, multiplied by 3.28 billion outstanding shares.

You can have democracy as long as you vote for the boss

The idea that democracy and capitalism go together is a relatively recent phenomenon. The pairing don’t really go together: How much control do you have at your job? Over the development of your city? Over a political process responsive only to the greed of the one percent?

Early capitalists and their publicists believed political democracy was an outright impediment. Adam Smith and another influential classical economist, David Ricardo, among many others, opposed universal suffrage. Ricardo was prepared to extend suffrage only “to that part of them [the people] which cannot be supposed to have an interest in overturning the right to property.” Smith’s reluctance seemed to be rooted in his honest assessment of how few are able to enjoy that right to property: “For one very rich man, there must be at least five hundred poor, who are often driven by want, and prompted by envy, to invade his possessions.”

Not long afterward, the influential British politician and writer Thomas Babington Macaulay said universal suffrage would be “the end of property and thus of all civilization.”  (“Property” refers to the means of production, not personal possessions.)

Along U.S. Highway 20/26/93, west of Arco, Idaho (Photo by Pete Dolack)

Along U.S. Highway 20/26/93, west of Arco, Idaho (Photo by Pete Dolack)

Because capitalism is an impersonal system, it does not require that members of the dominant capitalist class actually hold political posts, although frequently they do. It is enough that the political structure that is a byproduct of the ideologies of capitalists’ institutions, corporations, remain in place, and that capitalists exert decisive influence over a society’s other institutions.

The modern state itself is a creation of the rise of capitalism and the need of industrialists and financiers for a structure to provide protection for investments and to settle disputes among themselves. These features are wrapped tightly in nationalism, with continual references to a given nation’s mythologies, to bind working people tighter to the system. Capitalism also requires a literate, educated population, in contrast to earlier systems, and a literate, educated populace is more inclined and more able to agitate for its interests.

Self-interest in expanding the vote

There is more communication — this, too, is a necessity for the increased commerce of capitalism — and if the people of one nation wrest a gain from their rulers, people in other nations will know about it, and will struggle to get it for themselves as well. Further, in the early days of capitalism, its development was seldom in a straight line; sometimes there could be an incremental expansion of the voting franchise because one bloc of capitalists believed the new voters would vote for their party.

Once the vote is made available to more citizens, pressure builds from below to further extend the vote; moreover, the creation of a modern working class brings together masses of people, enabling the creation of mass movements that can organize struggles for more democratic rights. Social media has proven to be a powerful tool for democracy activists, although by itself it can’t substitute for real-world organizing and a physical presence at key locations.

Capitalists intended to establish democracy only for themselves, but the spaces and contradictions contained within the political systems created to stabilize the functioning of capitalism (including institutions to adjudicate conflicts among the capitalists and mechanisms for selecting political leadership in the absence of an absolute monarchy or the continued ascendency of a static landed aristocracy) enabled their workers to wrest some of that democracy for themselves. None of that came easy — untold lives were snuffed out and untold blood was shed, and even in cases when a struggle has been bloodless, many advances required decades of dedicated activism to accomplish. The process is called “struggle” for a reason.

Summing up an essay in New Left Review on the development of voting rights across the world, Göran Therborn wrote:

“Democracy developed neither out of the positive tendencies of capitalism, nor as a historical accident, but out of the contradictions of capitalism. Bourgeois democracy has been viable at all only because of the elasticity and expansive capacity of capitalism, which were grossly underestimated by classical liberals and Marxists alike.”

Not endlessly expansive, however. Hard-won political rights are not only circumscribed by the immense power concentrated in the hands of corporate institutions and the class that controls those institutions, but those rights end at the entrance to the place of work.

A democratic lack of control?

If one class of people has the ability to bend the political process to benefit itself; arrogates to itself an unlimited right to accumulate at the expense of everybody else and at the expense of future generations; has the right to dictate in the workplaces, controlling employees’ lives; and can call on the state to enforce all these privileges with force, if necessary, then how much freedom do the rest of us really have? If one developer has the right to chop down a forest to build a shopping center that the community does not need or the right to build high-rise luxury towers that force out others who already lived there because one individual can earn a profit, and the community has no recourse, is this state of affairs truly democratic?

If a capitalist decides it would be profitable to move the factory to a low-wage country and thousands are put out of work as a result, is it not capital that actually possesses freedom? If enterprises were collectively run and/or under community control, would people vote to send their jobs to a low-wage haven thousands of miles away?

If the political system is so dominated by corporate power — the concentrated power of industrialists and financiers — that a politician at the national level who might genuinely wish to give working people a better break can’t because that corporate power is decisive, or that a politician at the local level might want to make the local factory owner do a little more for the community or simply pay a fair amount of taxes can’t because to push the idea would lead to the factory owner closing the factory and sending many townspeople to the unemployment office, then can this system said to be democratic?

Men and women have the vote, and have constitutionally guaranteed rights — lives were sacrificed to gain these rights. But if there is such a concentration of power that most elementary decisions are taken by a small number of people — either big capitalists or politicians acting on their behalf or under their influence — then the rights enshrined in a constitution are mere shells. Democracy is formal, and cannot be more than formal without democracy extending to all spheres of life. That is impossible under capitalism because concentrated economic power is leveraged into power over the political, cultural, social and educational life of a nation, and that power, as wielded by capital, will be tightened at home and expanded abroad due to the impetus to expand.

Capitalism is an impersonal system, and the competition that drives it inevitably leads to this dynamic, regardless of which personality is where. The world has not reached its present state by accident, and although it does not guarantee any particular capitalist a permanent place at the top, it does guarantee extreme inequality and the immiseration of the many (working people) for the benefit of the few (industrialists and financiers). No reform can wish that away.