Keith's NO EMPIRE Blog
A radical dissident perspective on various topics. Comments welcome at firstname.lastname@example.org
- Name: Seattle Keith
Saturday, October 11, 2014
Monday, December 16, 2013
Capitalism and Co-optation
The essence of capitalism is the rule of money, that is, the rule of those individuals and organizations which direct the flow of significant quantities of money. This, in turn, determines what gets funded and what does not, what gets done and what is neglected. We live in a money driven society, individual and organizational actions geared to satisfying the requirements of various markets, activity responding to economic power, the private sector even more powerful than the powerful government modern capitalism requires to achieve business objectives. The US is a capitalist democracy which means that politicians are dependent upon the wealthy and corporations for campaign funding, hence, the capitalists are their real constituency, the voters merely consumers to be seduced through expensive marketing campaigns. Also, important appointed positions of authority usually go to members of the capitalist elite who are then able to ensure that government policy serves business needs.
A critically important feature of modern capitalism is its unique ability to monetize power. He who has the gold rules. This holds true primarily for the advanced economies of the Western democracies where the market and market power has been expanded to include almost all economic activity. The use of money to direct most significant social activity appears to be the most efficient way to run a highly complex society such as ours. The ability to empower activity through funding tends to reduce bureaucratic inertia while maintaining a degree of control at the macro level. A sort of downward delegation of authority with strings attached.
There are several social consequences to this fluidity of economic power, one of which is the capacity of the capitalist system to co-opt the competition. Individuals and organizations seeking to change or ameliorate some aspect of the system require money to fund their activities. Small all-volunteer organizations require little additional funding, however, they usually have limited effectiveness. Larger organizations with at least some paid staff must engage in fund-raising activities to support their staff and other expenses. The “Big Green” environmental groups, for example, although puny compared to big business, nonetheless are very dependent upon significant fund-raising to stay in business. Usually, this involves significant dependence upon major donors and/or grants from grant-making organizations.
Therein lies the rub. In order to maintain organizational staff, facilities and operational activities, the organization must appeal to those with at least somewhat significant financial resources, that is, those most likely to support business as usual in most cases, and oppose significant systemic changes. The choice becomes between financial marginalization versus well-funded accommodation to elite objectives. The professional staff rarely opts to de-fund itself and lose its livelihood, hence, co-optation is the normal course of events in our monetized society. Either that or sustained marginalization. In other words, to be effective, a system challenger or reformer must become a successful capitalist to acquire the funding to effectively challenge the system, the acquisition of which co-ops the individual/organization which then becomes part of the system needing changing. I am referring to the US now. In Third World countries which the empire wishes to destabilize, dissident groups which serve the imperial agenda have access to massive funding as long as they serve their purpose.
Since money is power in our highly monetized society, it should be at least somewhat obvious that the more wealth is concentrated, the more oligarchic society becomes. Conversely, democracy even remotely worthy of the name absolutely requires that the system redistribute income and wealth to achieve a more equitable and wholesome balance, to empower the 99% and limit the power of the 1% and major corporations. Unfortunately, that appears unlikely to occur. Money power controls the doctrinal system and the average person seems incapable of understanding, much less challenging, a system based upon monetary control whereby corporations and wealthy elite have effectively replaced hereditary nobility in ruling society.
Sunday, November 10, 2013
Americans have a love affair with the word “democracy.” They have been led to believe that elections are unambiguously good, and that the lack of Western style elections are unambiguously bad, particularly when referring to Third World countries. This judgment is applied even though large numbers of citizens feel that the US government represents big business not them, 50% of the electorate not bothering to vote at all. Since the myth that elections equals democracy is so useful to the elites, the question of what actually constitutes democracy versus elections as a means of capitalist social control is rarely, if ever, discussed. I am going to attempt to discuss elections as social control and why this is possible. The implications are not encouraging.
Putting aside historical anomalies, the use of elections to select government officials only became widespread at the beginning of the industrial revolution as the commercial power of the industrialists challenged the hereditary power of the nobility. The beginning of capitalism marked the beginning of the end of monarchism and the power of royalty. Money power, justified by economic theory, replaced hereditary power, justified by religious ideology. The industrial revolution was more than a “revolution” in technology, it was also a revolution in social relationships. Elections and elected government were a means of chipping away at the old order utilized by the ascendant but still relatively weak capitalists. The entire process would take several hundred years during which the market would be continually expanded to encompass most aspects of social activity, and financial control would become all pervasive.
Elections have changed considerably over time as the population has become generally literate and the franchise has been expanded to include those elements once considered dangerous to the existing hierarchical order. Initially, the landed aristocracy and business elites feared the consequences of majority rule and the possibility of popularly mandated income and land redistribution, and other challenges to elite rule, consequently voting rights were restricted. During the twentieth century, however, the rise of mass communications and public relations/advertising permitted those with the necessary resources (money) to strongly influence public opinion and shape the social mythology so as to achieve elite objectives through voluntary compliance. In order to win elections, candidates required elite support and funding to successfully promote their candidacy. Furthermore, the expansion of the market meant that much of the political economy came under the direct control of the capitalist corporations and financial system.
This is a critically important point. Nowadays, elections in a capitalist democracy are a means of manufacturing consent by selling the illusion of democratic governance, legitimizing corporate/financial control in the process. After all, the government does reflect the choice of the majority of voters, the popular will. But notice how capitalist democracy relies upon the power of money to sell itself through massive spending on marketing which is critical to public opinion and electoral victory. Furthermore, how the spread of capitalist democracy virtually assures corporate control of the political economy, elections primarily a marketing extravaganza. Incredibly, most Americans seem to believe that the spread of capitalist democracy to the Third World, that is transnational corporate control of Third World countries, would be a good thing! This, in spite of the fact that polls indicate that most Americans feel that the US government doesn’t represent them, that instead it pursues the interests of big business.
How to explain this? First of all, the political theory of a rational voter is pure mythology. The majority of people aren’t rational concerning their core beliefs. By “rational” I mean arriving at conclusions consistent with empirical reality. They are, however, quite logical. By “logical” I mean arriving at conclusions consistent with group ideology/mythology. Humans remain naturally tribal, membership in groups (tribes) seen as necessary for survival (as it once was). Within the group, most are faithful followers, accepting group mythology and hierarchy as essential to group effectiveness which, to a degree, it is. But this is not an informed commitment, rather, it is a psychological commitment to the group whereby their loyalty to the group and to the group mythology secures their membership. And their loyal membership requires that the group and its mythology be defended against threats to the group and its ideology, empirical reality notwithstanding. This is why rational argument is usually ineffective with those who strongly identify with irrational group ideology/mythology.
Initially, this meant that most voters would vote consistent with their local group ideology and current group objectives. This still occurs frequently in Third World countries where powerful sub-groups remain within the nation state and sectarian loyalties hold sway. In the First World, however, the population has been considerably atomized, most taking their cues from the main stream media instead of labor unions, churches, etc. The entertainment media has significantly shaped the social mythology against which the news is evaluated for believability and relevance. The key to the success of the news and entertainment media in manufacturing consent is the extent to which the majority of the faithful follower citizenry rely upon them to provide valuable clues as to what constitute acceptable behavior and beliefs. Most are relatively unconcerned with the empirical truthfulness of the news, rather, they are concerned with exhibiting the behavior and beliefs which will enable them to successfully fit in as loyal group members. This is the primary reason why the citizenry does not abandon the two major corporate parties en mass and vote Third Party or independent. Most are psychologically incapable of a revolt at the polls.
Some might disagree, pointing out that during the Great Depression there was a revolt at the polls resulting in radical labor supported Democrats winning big victories and forcing significant concessions from the elites. True enough, however, these victories were the consequence of radical, usually communist oriented, organizing campaigns unlikely to be replicated. In other words, the voting reflected loyalty to the radical group, not some sudden mass upsurge in individual rationality. In other words, it shouldn’t take a huge organizing campaign to get voters to vote out of office those officials who are demonstrably screwing them, and to vote for those who make empirical sense. Yet, that is the way it has always been. What is the mantra of the Left? Organize! Organize! Organize! Got to have an organizer telling the folks what to do. Some vanguard of the elite. And what does that tell you about the “rational political man” and the viability of democracy in any meaningful sense of the term?
So, elections are not an opportunity for a rational citizenry to make informed choices to shape the political economy democratically. Rather, it is the money-power of the elites defining the overarching mythology and framing the discourse to sell corporate candidates to a faithful follower electorate. As such, the elected government is beholden to and dependent upon the elites, and basically function to manage society in accordance with elite goals and objectives. That the government is not truly a government of the people representing the public welfare should be obvious. What may be less obvious is that elections do, to a degree, reflect the popular will. That is, the elites have been able to sell their candidates and elite friendly policies to an irrational citizenry. That the elites should be so successful in their efforts to control the political system reflects poorly on the capacity of the citizenry to engage rationally in political decision making.
If elections are marketing campaigns bereft of democratic content, can they serve any useful purpose? If they are reasonably honest and reflect the vote, elections are an excellent source of feed-back regarding citizen awareness and desire for change. In theory, if people want change they can vote for new people. As such, an elected government has a legitimate claim to popular support, even if that support was created by money driven marketing. There are, after all, alternatives to the two corporate party candidates. Saying that Third Party candidates, independent candidates, and write-in candidates are unlikely to win does not negate their value as a protest vote. A high protest vote would tend to delegitimize the government and signal a grassroots desire for change which, at a certain point, could achieve sufficient momentum to bring about significant improvement. Currently, however, the miniscule electoral support for alternatives to the corporate candidates indicates a citizenry generally supportive of our current political economy and unlikely to support meaningful change. It should be noted that protesting the current system is not the same as supporting specific alternatives to business as usual. This demonstrated lack of support for progressive change bodes poorly for efforts to organize resistance to the neoliberal attack against the 99%.
When all is said and done, what is the alternative? Revolution? Get serious. All of the factors which permit the capitalist elites to more or less control the electoral process also permit them to more or less control the political economy. If you can’t get people to vote for you, how are you going to get them to man your barricades? And while you may get people to join a protest against current conditions, how will they come to agree on a preferred alternative? Why would people too lazy, dispirited, or uninformed to vote, a relatively easy task, suddenly commit to real sacrifice and risk? Perhaps if elections were obviously rigged and invalid, then other means to implement change would be justified. However, as long as elections are not obviously rigged, any other means of implementing change would be undemocratic. The point being that elections and the electoral process can be a means of organizing opposition to business as usual. This, of course, would be in conjunction with other organizing outside the electoral process, both mutually reinforcing. Unfortunately, the prospects for meaningful progressive change seem sufficiently bleak as to argue against any significant commitment of resources to challenge the system at the ballot box. However, a low-keyed approach to increasing political awareness may bear fruit in the long run. This would emphasize organizing around specific social issues combined with putting forth Third Party candidates as alternatives to corporate candidates.
Capitalists gained control of the political system through money-power, which remains too strong to be confronted directly. What must be done is to create a broad awareness of our capitalist political economy based upon empirical reality, not ideological delusions, and to gain as much independence from monetary control as possible. Ultimately, the private financial system needs to brought under control of the political system and concentrated wealth broken-up, something not currently possible. To succeed, the citizenry must abandon their role as faithful followers and become rational voters. In the long run, efforts for progressive change must utilize the ballot box, I can see no other way.
Monday, August 05, 2013
The Left and Political Economy
Capitalism and Marxism are two sides of the same coin, both ideologies justify elite social control, however, they differ significantly in how this is accomplished. Capitalist social control is achieved through financial control and market mechanisms, capitalist ideology merely a rationalization of the process. Marxism, on the other hand, is more akin to a secular religion justifying rule by a centralized bureaucracy similar to the way religion justified monarchy. Like monarchy, Marxism requires the leadership to maintain a certain fealty to Marxist/Leninist dogma. An analogous situation does not exist in capitalism where capital (power) accumulation is the name of the game, and economic theory flexibly accommodates the activities of the more successful capitalists. Marxism requires a system-wide belief in Marxist orthodoxy in order to justify elite bureaucratic rule. Capitalism requires nothing more than systemic dependency on money and the market, a process now seen as normal. Capitalism is a much more effective means of social control than ideologically based monarchy or Marxism, one of the reasons both Russia and China have embraced a form of Capitalism.
Yet the American radical Left intelligentsia, encouraged by the financial near-collapse of 2008, buoyed by the prospect of their Marxist star rising, have continued to analyze events from a Marxist ideological perspective rather than focusing on empirical reality. One of the consequences is that they seem unaware of the extent to which the financial system controls and empowers the political economy, and the extent to which neoliberal globalization has created economic interdependencies which greatly enhance the power of the global financial system. At this stage of the game, it is difficult to imagine how Third World countries can extricate themselves from First World control and exploitation, everyone forced to play by the rules of a private, debt-based monetary system which siphons off an increasing share of the social product as interest payments. Those who control the global financial system are de facto global rulers, controlling the global political economy at the macro level. The planet has been turned into the rough equivalent of one big factory town, dependent upon “the boss” for food, clothing, shelter, etc.
The bottom line is that the American radical Left intelligentsia doesn’t appear to have a clue either about the seismic transformations underway or about what to do. Mostly made up of middle class college educated Marxist or Marxians, their understanding of political economy is overly influenced by archaic analyses and Marxist mythology. They dream of the masses rising up, leading, as if by magic, to a socialist revolution which they would somehow lead, even though they could not get even 1% of the vote in an honest election, yet claim to speak for a mythological proletariat. They are worse than useless, rather, they are a counter-productive distraction which has developed a symbiotic niche relationship with the system, creating the psychologically satisfying illusion of radical opposition to business as usual, while simultaneously discouraging actions to press for specific concrete changes in favor of revolutionary rhetoric and dreaming. Wisely, the Occupy movement has shunned them. Regrettably, there appears no comprehensive First World Left progressive analysis worthy of the name. Instead, we get warmed over Marxism. Perhaps this is why Third World resistance groups seem to grasp what is going on better than their self-indulgent Western counterparts.
The global political economy appears to be in crisis, with recessions, neoliberal austerity, social upheaval, and increased American foreign intervention. Ask a member of the Western radical Left intelligentsia what the problem is and odds are that he/she will respond that the problem is capitalism and that we are experiencing a terminal crisis of capitalism. What is meant by “capitalism” will never be described in meaningful terms, it is just a handy label. Capitalism, they say, needs to be replaced by “socialism,” another handy, ill-defined label. And since the radical Left has no chance at the polls it cannot be done democratically, but will require a revolution of the disenchanted masses who will rise up against the people they voted for. So that the same people who can’t get even 1% of the vote will claim that massive protests against structural adjustment and neoliberal austerity somehow bestows legitimacy on them, that they speak for the disaffected majority! What rubbish!
I am not sure what can be done to stave off disaster in any event. We appear to be in a de facto class war where the elites are intentionally crashing the economy to facilitate neoliberalism and global privatization leading to a neo-feudal rentier economy. I have no idea how to prevent this, however, any hope for the future must be based upon how the real-world political economy functions, how trade and financial interdependencies are the crucial factors of social control. How the private, debt-money financial system is driving us to ruin. How growth in the real monetary transaction economy based upon material production and consumption is no longer sustainable, hence, un-moderated compounding interest obligations are no longer viable and require systemic amelioration. Somewhere, somehow people need to understand that a public banking system utilizing sovereign money is the only alternative to neo-feudal debt servitude for the 99%. Also, that local autonomy and self-sufficiency are essential attributes of a sustainable society, and that trade interdependencies need to be reduced as much as possible.
Thursday, June 06, 2013
Neo-Feudalism and the New Dark Ages
It is my contention that the last 300 years or so are best understood as a period of transition from the old feudal/monarchal order to the new feudal/oligarchic order. The industrial revolution was much more than an explosion of technological progress, rather, it involved a complete remaking of the entire political economy to facilitate social control through the application of money power, the divine right of capital. Much social progress during this period was made possible by the relative freedom produced by these countervailing forces vying for power during this transition rather than some sort of linear phenomenon moving inexorably toward social betterment. The solidification of oligarchic control does not bode well for humankind.
This is a difficult topic to discuss without getting bogged down in excessive detail and my own ignorance. Fortunately, the overarching pattern appears recognizable. Where to start? My first observation is that prior to the industrial revolution technological change occurred slowly and had limited impact on the political economy and the structure of power. Power was based upon military force using primitive weaponry, justified by religious ideology. Societies were organized hierarchically, the larger and more complex the society the greater the hierarchy. Also, the greater the specialization. Democracy was sufficiently rare and narrowly defined as to be a relatively insignificant factor other than as a limited precedent.
Starting slowly, the industrial revolution began to alter the power dynamics. Technological advancement greatly enhanced military capabilities. The industrial application of gunpowder marked the beginning of the end for the old order as primitive weaponry proved no match for machine guns and tanks. Economic development became increasingly important to power projection and social control. Consequently, the economic elites became an increasingly important component of national and imperial power. So too, the acquisition of the raw materials of industrialism, frequently obtained by the force of arms made possible by the industrial process. The industrial revolution encouraged the militarism which it made possible in order to secure the resources it required.
The industrial process greatly accelerated the rate of technological development which, in turn, rapidly altered the means of communication and social control. The proliferation of the press and literacy along with the increased emphasis on scientific knowledge and scientific advancement tended to reduce the role of religion and the priesthood as a source of social mythology. The introduction of democratic forms along with the separation of church and state brought about a rapid decline in the power of the nobility, along with increased power for the economic elites and capitalist business organizations which continued to expand their power and social control.
An immensely significant aspect of this whole process is the degree to which more and more human activity occurred within the context of the market economy based upon monetary transactions, hence, subject to money power. Prior to this change, much of the social product was produced by individuals for themselves, their families and some larger cooperative social groupings, with somewhat limited market activities to obtain the balance. Societies were largely agrarian with limited capacity for supporting literate professionals, along with a ruling nobility, supported by taxes payable in kind. Isolated, sophisticated metropoles arose, usually supported by trade or imperial plunder, however, this trading and plunder did little to increase overall global productivity, mostly transferring wealth from a subjected periphery to the metropolitan center.
An essential part of the initial process of industrialization was the enclosure of the commons. This deprived large segments of the rural population of their traditional source of livelihood, essentially forcing them to perform factory work for wages in order to obtain their sustenance via the market. As industrialism preceded, the market continually expanded so that more social activity was monetized and more people worked for wages to acquire goods and services in a market economy upon which most became utterly dependent. Industrial productivity and mechanized agriculture freed up large groups of people seeking employment. This greatly expanded the types of goods and services available while simultaneously expanding the scope of the market economy and of the ability of money power to define and control social policy and actions.
As the market and market power expanded, the role of the nobility decreased. The introduction of nominal representative democracy further accelerated the process. No longer would the government be led by royal appointees, now the government would be led by professionals primarily representing the interests of businessmen in the name of the people, justified by economic ideology. The new priesthood. With the advent of modern corporations and the development of the mass media, the power to manufacture consent tilted social power even farther towards those who controlled concentrated economic power. Those who direct the financial flows essentially control society at the macro level, both directly and indirectly. The hereditary nobility is long gone, and our nominally democratic representatives effectively manage society in accordance with business goals and objectives. Even those opposed to business-as-usual are severely constrained by the reality of our money-driven society.
Capitalist global domination was briefly slowed by Soviet communism, an alternative system based upon centralized bureaucratic control of the political economy. A comparison of the two systems is beyond the scope of this paper, and would be difficult in any event in view of communism’s late start and capitalism’s ability to ruthlessly exploit the Third World for profit. Suffice it to say that the Soviet Union no longer exists and there is currently no countervailing power to resist capitalism’s global control.
As a result of capitalism’s overwhelming success in establishing monetary social control, society and the human species is facing a profound existential crisis. The success of capitalism depended crucially upon the expansion of the market which, in turn, required a corresponding growth in the money supply controlled via the financial system. Our financial system is essentially privately controlled and utilizes debt money (bank credit) which is loaned into existence, and must be repaid with interest. While there are debtors and creditors, overall the supply of money in circulation represents net debt owed to the banks and bond holders. No debt, no money, no monetary transaction economy. It doesn’t have to be this way, but this is the way it is, thanks primarily to the long and tireless efforts of the private bankers to impose this system on society.
The use of bank and bond credit to finance capital projects spurred growth well beyond what would otherwise occur. Money empowers action. Additionally, the need for systemic growth based upon new loans which provided the money for the repayment of old loans plus interest. Compound interest required a growing economy and expanding markets to avoid massive default. Of course, some defaults did occur, booms led to busts during which debts were written down so that the cycle could resume. The reason it could resume was that the real economy, if funded, was capable of additional real growth, and the market, if funded, was capable of responding to that growth and capable of further expansion, further monetizing the economy. Now we are talking about a global monetary transaction economy administered by the privately controlled global financial system.
In order to deal with the localized disruptions of the 19th century boom and bust cycles, governments were persuaded to create private central banks which combined governmental authority with private direction and control. Public central banks and a public banking system were options which were not pursued. A public banking system would not be in the best interests of the private bankers who create money and loan it out at interest. The creation of credit money by private banks also gives them considerable influence over the political economy insofar as these private institutions decide what gets funded and what does not. This is true on a global basis where projects are funded based upon profit and power objectives, frequently irrespective of the social consequences.
The creation of national, private central banks served to globalize national financial problems. The great depression resulted in the adoption of Keynesian use of counter-cyclical fiscal policy to offset financial cyclical tendencies. This morphed into Western military Keynesianism which utilized massive, ongoing military spending and corresponding government debt to provide a consistent, growing monetary base to grow the monetary transaction economy and prevent massive private debt default leading to depression. It also concentrated wealth and made some elites and corporations fabulously wealthy and powerful.
The situation we are currently facing is that the real economy, now mostly monetized, has reached the limits of growth. This means that that the real economy and market expansion can no longer underpin the creation of exponentially increasing amounts of credit money to satisfy the obligation to repay outstanding loans plus compounding interest payments. The private financiers have monetized the planet and are sucking it dry. With a financial system using sovereign money, public banking, and progressive taxation on income and assets, this problem wouldn’t exist. However, our private banking system and debt money were never intended to serve the public good, rather, it was a means to concentrate wealth and power into a relatively few private hands and the corporations they control. Now, it is virtually inconceivable that the capitalist financiers will voluntarily change the system in a socially constructive manner, having devoted their lives to immiserating most of the world’s population for profit and power.
What can we expect? In the short run, the elites appear to favor global structural adjustment. All or most government functions and assets will be privatized, and the bulk of the population will be forced into de facto debt servitude. Media propaganda will continue, however, popular resistance is anticipated and will be dealt with harshly, in an openly fascistic manner. Surveillance will be ubiquitous. At some point however, the elites will need to somehow deal with the problem of debt money and unsustainable compound interest or face global financial collapse. By that time global society will resemble a form of financial feudalism, one based not on territory but on functional and market dominance, with the corporations as the Lords of the Realm, the rest of us existing at their pleasure, serving them as people once served Kings and other noblemen.
Saturday, April 20, 2013
Elections and Democracy
The dictionary definition of democracy refers to the rule of the majority, a government of the people. It is commonly believed that elections are indicative of democratic governance. They are not. In fact, it is debatable whether or not democratic decision making is either possible or desirable, government having evolved into a rather complex, specialized function, involving issues too complex for the law makers much less the citizenry. And then there is the reality that in a capitalist society money rules, the government generally acting as the administrative arm of big business and finance. With this in mind, perhaps we should redefine democracy as citizen empowerment, the most important aspect of which is the control over our own lives, along with some influence over social policy.
The most important aspect of control over our own lives is the establishment of individual rights under the law. The U.S. Constitution’s Bill of Rights is an example of essential political safeguards which protect the individual from arbitrary political abuse. Unfortunately, our constitutional rights have increasingly been ignored by the government, including the courts. Legal rights without enforcement power are meaningless. A “parchment barrier.” Absent from the start was an economic bill of rights to safeguard the individual from economic abuse, without which political rights are almost meaningless. In the absence of economic rights, the near absence of political rights, and the failure of “representative democracy” to provide a government responsive to the popular will and common good, what benefit do elections and voting provide?
Many Americans have what appears to be a schizophrenic attitude towards elections and democracy. They pooh-pooh the U.S. electoral system as not reflecting the will of the people, while simultaneously expressing strong support for elections in foreign lands. Placing great importance on elections somewhere else, while recognizing their limitations here, some not bothering to vote. Too little thought has been given to the role U.S. elections play in the administration of society, both as a means of social control and as a vehicle for influencing social change.
Let us begin by asking what is the alternative to elections and voting? What other mechanism is there for the citizenry to participate in the selection of government officials, and to express approval or disapproval of the actions and policies of current officials, and the proposed actions and policies of challengers? While there are ways to influence governmental decision making outside the electoral process, particularly for those with significant economic power, nonetheless, in the absence of obviously fraudulent elections, an elected government has a legitimate claim to more-or-less represent the citizenry. Elections tend to bestow legitimacy and to provide an important avenue for citizen input, at least in theory.
For elections to have value, they must be honest, that is, that they accurately reflect the vote. Elections in which there is significant vote fraud should be rejected and boycotted if possible. The use of voting machines which have no paper trail for audit/recount purposes is unacceptable. It should never be acceptable to take the official tally ‘on faith’ with no recourse to confirmation. Equally unacceptable is the suppression of voting rights either by the fraudulent manipulation of voter registration lists or inadequate voting accessibility. Restrictions on the franchise itself should be minimized and justified.
Honest elections provide valuable feedback in regards to the mood of the citizenry. And while power, particularly monetary power, can and do heavily influence the electoral outcome, these same factors affect all other aspects of social interaction, communication and change. So that while elections may not be ‘fair’ in the full sense of the term, honest ones do reflect prevailing social reality, and do provide an indirect measure of elite ability to manufacture consent for elite policies and overall social control. Additionally, elections do represent a minimally disruptive avenue for change if and when the citizenry chooses to challenge elite rule at least somewhat. If you can’t get people to vote for you, they are even less inclined to join in your revolution. Also, honest elections bestow legitimacy, a factor which advocates of “lesser of two evils” voting forget.
A common critique of elections in a representative democracy is that money and power so restrict the available choices that elections cannot possibly provide candidates which either reflect the will of the people or the best interests of the citizenry. This is partly true insofar as significant campaign funding gives significant advantage to the well-funded Democratic and Republican candidates versus poorly funded third party and independent candidates. Yet, the fact remains there is frequently a choice of alternative candidates, particularly for President, which the voters could select should they choose to do so. The fact that voters can be so effectively manipulated by expensive propaganda and media bias is indicative of a society that willingly allows itself to be controlled. In other words, the electoral results reflect social reality. The majority of the citizenry are faithful followers who willingly acquiesce to elite rule, and are unwilling to challenge the system in any meaningful sense.
One aspect of social reality is the phenomenon of people voting/campaigning for a candidate whose policies they mostly oppose, then protesting the policies of the person they voted for. Not that pressure shouldn’t be brought to bear here and there on elected officials the electorate mostly supports, but it is irrational to support a candidate whose policies you mostly oppose in the hope of obtaining significant change through street pressure, a tactic more suited to the absence of democratic elections. Why vote for someone whose policies you mostly oppose? The usual excuse is that the alternative is/would be even worse. The alternative usually defined as the other major party candidate, third party candidates dismissed out of hand as unelectable, hence, a wasted vote. While there may be a certain logic to a one time vote for the “lesser evil,” in the long run this philosophy represents de facto approval of elite rule and deteriorating conditions.
The denigration of the electoral process by some social critics is a misguided belittlement of one of the few avenues for popular organization and peaceful change. A big part of the problem is excessively focusing on the particular corporate candidates vying for public office, and voting for the lesser of two evils. The end result is to democratically legitimize corporate rule, having voted for the representative of the corporate oligarchy, and ignoring third party candidates of meaningful social change. The effect is to marginalize attempts at social change through electoral rejection. As long as the citizenry continues to go along with business as usual, offering no meaningful resistance whatever, why should the corporate oligarchs temper their plans much less yield social power? This is a losing strategy and a sign of weakness.
Many who justify lesser evil voting also actively support the “lesser evil” corporate candidate through campaign contributions and volunteering. In other words, they contribute time and money in support of corporate control and business as usual. On the left, the Democratic Party is the graveyard of progressive change, particularly at the national level. At the local level, however, there may be some justification for supporting major party progressives, to the degree they exist. If they do, they most likely will be Democrats, the Republican Party increasingly the home of right-wing fundamentalists. Supporting those few progressive Democrats at the local level does not mean supporting the Democratic Party which is essentially corporate controlled and the enemy of progressive change. All candidates must be held accountable for their votes and other actions. Democrats calling themselves “progressive” who loyally support the national party’s regressive policies are not progressive, nor worthy of support. Talk is cheap, and lying commonplace. Accountability is essential.
It is one thing to vote for progressive Democrats at the local level, quite another to work for the Democratic Party at any level. However, there may be some benefit to joining some alternative progressive social and political organizations. This may provide an organizational setting within which to share ideas and engage in meaningful activities. Therefore, joining progressive third party organizations may have merit, particularly if they are linked with a progressive social movement. These types of organizations will likely be more successful at the local level and in the social sphere. Most would be well advised to practice radical decentralization, trying to accommodate and smooth over fundamental differences is ultimately self-defeating. Trying to ‘unite the left’ is nonsense. The ‘left’ is nothing but a label attached to people, many of which have little in common. It is better to work with people who share your vision, networking with others where appropriate.
To summarize, elections are not synonymous with democracy, and in fact, may have little effect on governmental decision making which, in turn, is but one factor in shaping the political economy. However, honest elections do provide valuable feedback on the opinions and inclinations of the citizenry, and have the potential to significantly influence the political system and the political economy as a whole. This potential has rarely manifested itself and currently appears dormant, largely because of the elite ability to manufacture consent which, in turn, is greatly facilitated by the tendency of most to acquiesce to hierarchical organizational control and elite rule. As things now stand, elite rule seems firmly entrenched, and the conditions of life for the majority will likely get worse.
Thursday, September 06, 2012
The Political Economy of Capitalism
We live in a world of global capitalism. The nature of capitalism seems not to be well understood except, perhaps, by the capitalists themselves, and then only intuitively. There is a fundamental misconception about the nature of the political economy whereby the political system and the economic system are treated as distinct and separate from each other. The reality is that both are but different aspects of the same system of social organization which relies primarily upon money as the primary instrument of social control, the other aspects largely commodified and in the service of capital. Capital refers to money-power and is the driving force behind individual and group power-seeking based upon capital accumulation. Insofar as power is relative, the emphasis is upon differential capital accumulation. It is a big topic requiring me to greatly simplify.
The essence of capitalism is the rule of capital, that is the rule of money, more precisely the rule of those who posses, control and/or direct the flow of money. Private individuals and organizations (the rich, the corporations, the financial institutions) effectively manage society seeking to expand organizational power through capital accumulation. Government functions as the essential bureaucratic component of capitalist control, providing infrastructure and order, and seeing to the availability of raw materials and markets. At the national level, government provides massive subsidies to corporate profit-seeking, currently under the umbrella of the Pentagon system of military Keynesianism whereby the government is the corporate sector’s biggest customer. Without this or some other massive government spending, the system, as currently configured, would collapse due to lack of effective demand.
At the international level, the U.S. functions as a global hegemon, organizing and protecting global capitalism, insuring raw materials and markets, and attacking challenges to the system. This involves an expanding matrix of global financial control. Global finance, led by Wall Street, is the central nervous system of global capitalism. Central to global finance is the U.S. Treasury bond market, the largest, deepest and most liquid financial market, and the U.S. Federal Reserve which functions as a de facto global central bank. Insofar as the various high-level managers of capitalism share similar perspectives harmonized through various organizational linkages and interactions, the system as a whole has a certain organic tendency to adapt and grow. Currently, the global economy is experiencing a period of financialization whereby the financial instruments themselves are a primary source of speculation and profit unrelated to real economy goods and services. It is a process whereby the guardians of money-power increase their power through predictable financial gamesmanship.
The use of money as an instrument of power and control is achieved through the use of extensive market dependency. Indeed, increasing the breadth and depth of the market has been a primary objective of capitalism throughout, globalization the latest and ultimate example of monetary conquest. The modification of behavior to obtain money (working for wages) to acquire the essentials of life, luxuries and social power is seen as natural, its coercive nature camouflaged. In addition, the use of nominally democratic forms gives the illusion of democracy and citizen control.
The effectiveness of capitalism as a system of social organization and control derives in large part from its unique ability to monetize power. In capitalism, money is power, economic power in fluid form, the primary instrument of social control. Other means of social control can be readily obtained by those with financial resources, but not by those without. Also, unlike monarchy where nobility is determined by birth and is relatively static, money-power provides the potential for acquiring significant social power by working within the system, mostly a myth but an effective one.
A key component of capitalism as a system of social control is the fluidity of money-power, the ability to rapidly and effectively empower that which works, and to dis-empower that which doesn’t. This, in turn, rewards those who are able to anticipate the needs and wants of their funders, and to modify their behavior accordingly on their own volition. Corporate managers, for example, are expected to tend to business and to accumulate capital on their own initiative; those that do are rewarded, those that don’t are replaced.
In order to appreciate the effectiveness of capitalism as a system of social control, it is necessary to understand two things. First, and critically important, is the degree to which our modern and complex society is organized around monetary control and is utterly dependent upon the monetary delegation of authority (funding) to allow economic transactions to occur. A lot of money can buy a lot of goods, services and influence, a lack of money a sign of weakness. As such, most are inclined to naturally behave in such a way as to acquire systemic power, to obtain money or credit (debt money). Money is the basis for most socio-economic activity, hence, our society is dependent upon the financial system to function, and would collapse without it. In the long run money overwhelms most opposition. Money endures.
The second critically important thing to keep in mind is that to change our society from the way it is to the way it ought to be, we need to change the financial system and redirect the flow of money. Money powers and guides the workings of our highly monetized society. He who has the gold rules. The increased concentration of wealth of the elites effectively translates into increased elite power and reduced power for the majority. Vast concentrations of wealth are inherently oligarchic. We have entered a period of vastly increased elite power. Progressive social change absolutely requires public control of the financial system along with a massive downward redistribution of wealth. This would also benefit the real economy which is starved for funds due to wildly excessive concentrations of wealth leading to systemic imbalance and financial gamesmanship.
Capitalism has entered a new phase with globalization. Thanks to computers, telecommunications and ‘trade’/financial agreements and organizations, capital (money power) roams the planet imposing its will. Nations and communities dependent upon the global market and global finance are subject to the whims of keystroke tyrants located far away. The bond traders who inflate Third World economies with rapid, unregulated capital inflows, then instigate capital flight causing insolvencies and bankruptcies, sound businesses destroyed financially then acquired for pennies on the dollar. This crumbling of national barriers to economic/financial penetration is extremely significant, countries locked into a matrix of economic and financial control, national and local independence a fading memory, the possibilities for successful revolt increasingly remote.
One aspect of all of this inadequately noticed is the degree to which the economically powerful can foment dissent in target nations simply by funding dissenters. Prior to globalization, back when there were significant national barriers to financial penetration, nation-states, particularly powerful ones, had a certain degree of independence from financial control, their political system potentially responsive to democratic input. Nowadays, the nation-states, particularly the weaker ones, are in danger of being taken over by the global financial elites through privatization, and/or being destabilized by well-funded opposition groups, present in any society, but frequently weak without outside support. The economically powerful nations are relatively immune to externally induced revolts insofar as a much greater level of financial penetration would be required to seriously threaten internal cohesion supported by vast wealth. Even the most powerful nations, however, are vulnerable to financial pressure exerted through the private global financial system.
What this means and where this is heading is that nowadays the global financial system, run by the financial elites of the most powerful nation-states, particularly the U.S., establishes the overarching framework of order and general guidelines within which the corporations and lesser elites pursue their power-seeking objectives. It is an integrated system of capitalist logic where money-power (capital) imposes its will via market mechanisms backed by military force. It is a system which absorbs (co-opts) dissent, and which maintains power and privilege in dynamic power-seeking (differential capital accumulation), rather than ideologically justified bureaucracy (Marxism). It is a highly resilient system with built-in defense mechanisms insofar as opposition is dependent upon obtaining funding within the system itself. Its weakness is its propensity to over-concentrate capital which results in market dynamism being replaced by oligarchic rigidity, economic inefficiency and mass misery. Furthermore, the reliance on debt-money along with unsustainable compound interest is driving the system toward financial collapse, a problem that is not being acknowledged much less dealt with. Finally, monetary power-seeking ignores environmental limits and constraints, and is inducing a likely environmental collapse of catastrophic proportions, or perhaps nuclear warfare.
Sunday, March 25, 2012
Evolution and Organizational Hierarchy
I have come to the conclusion that human beings have evolved in such a way that most are born with the capacity and desire to form groups. Just as chimpanzees naturally form troops with an acknowledged hierarchy, so too humans naturally formed tribes with an acknowledged hierarchy. That is, social organization at the primitive level is not the result of a rational recognition of mutual benefit, a much too tenuous situation, but rather a natural inclination to band together and bond, resulting in the natural formation of tribes essential for human survival. Intrinsic to this tribal predisposition is an inclination for hierarchy which facilitates group unity and effectiveness.
In order to facilitate group formation and cohesion, humans accommodate themselves to fit in the group. This involves both an acceptance of group ideology and finding a suitable role to fill within the group consistent with perceived reality which, in turn, is strongly influenced by group ideology. That is, all members of the tribe tend to accept the legitimacy of the chief, but circumstances dictate whether one could aspire to be chief or perform some other role. As society developed beyond the tribe, the number of roles and functions expanded and the social organization became more formal and elaborate, however, the underlying logic remained unchanged. Personal survival and welfare is intimately related to group membership and group success which, in turn, is strongly influenced by group solidarity. Most accept and defend group hierarchy.
The importance of the group for individual survival and well-being is such that individual actions which act to diminish group solidarity are considered disloyal and sometimes treasonous, and are dealt with harshly. Challenges to group hierarchy are tolerated only to the degree that they are considered legitimate, that is viable with reference to ideology and hierarchical status. While powerful individuals and coalitions may vie for supremacy, most willingly follow the lead of powerful leaders as circumstances warrant. The majority almost never challenge the organizational hierarchy per se. As societies grew larger and more complex, this tribal predisposition remained unchanged so that while people might shift their loyalty among various pretenders to the throne, the legitimacy of monarchy itself remained unchallenged, supported by an increasingly elaborate religious ideology.
Having survived for millennia, hereditary monarchy was finally overthrown by capitalist controlled industrialism which effectively shifted power from a religion justified hereditary hierarchy to a money-power hierarchy justified by nominally democratic forms and ideology. The whole process took several centuries and involved the development and use of elected government to wrest control from the monarchy. There always was less to democracy than met the eye. People continued to align with power, now formally by voting for competing representatives of the new elites. Government, in turn, shifted from implementing the commands of the nobility to managing society consistent with the business objectives of the capitalist elites. And just as the old rule of nobility was considered legitimate, likewise the new capitalist hierarchy and rule of money is seen as legitimate by most. Nowadays, while the citizenry may vote for the major party candidate of their choice, or not vote at all, voting for a non-elite third party candidate or independent is rarely done, apparently considered tantamount to a revolt at the polls against elite rule, and is not considered a serious option by most. The notion that voting third party or independent is a waste of time is both a recognition of elite domination of the political system and a flimsy excuse for not democratically resisting elite control. Exactly how much time is saved by acquiescing to the rule of money?
The implications of all of this are quite significant. Barring a sudden and inexplicable transformation of human psychology, significant change originating at the “grass roots’ is unlikely, democratic mythology notwithstanding. Society is now more-or-less run by the capitalist nobility who oversee the private economy where most of the significant decision making occurs. The political system has been totally corrupted by capitalist money-power, and serves primarily to administer society for the benefit of the elites. Elections and other democratic forms serve to legitimize what essentially is the rule of money. The potential for democratic reform remains dormant due to citizen acquiescence to the current hierarchy of power. The acceptance of group ideology and hierarchy seems at least somewhat hardwired into us, the notion of self-organization outside the group an alien concept.
Of course, there are those who cling to the Marxian illusion that the key to majority rule is through organization. Unionization the perfect example of people banding together to wrest some degree of power from the economic elites. Alas, while organizing the “grass roots” may provide some temporary relief at the local level, as the union grows, a new top down bureaucratic hierarchy asserts itself. While some local unions may be responsive to their members, the international unions are run primarily for the benefit of the officers, and the AFL-CIO is an intrinsic part of the capitalist system of social control, albeit one of decreasing importance in the face of the neo-liberal onslaught. The same holds true for other attempts to harness “people power” to effect social change. The majority feel a certain inherent loyalty to the prevailing system of social organization and hierarchy which transcends rationality. Having accepted the role of the faithful follower, the majority behaves accordingly.
Wednesday, November 16, 2011
It's the Money
We have entered a period of rapid change as the corporate/financial elite pursue global economic and financial domination. Spearheaded by a rogue financial system, wealth is rapidly flowing upwards as the rich get richer and the rest are forced into a future of debt servitude. The problem is systemic, intrinsically tied to our debt-based, privately controlled monetary system. Modern capitalism is based upon financial control not ownership. This appears poorly understood by the intellectual forces of resistance whose analyses are often hobbled by the influence of Marxist ideology. As such, realistic assessments of current problems and real world solutions give way to talk about ownership of the means of production and other diversions. It is long past time to cast aside Marxian ideological misrepresentations which continue to influence and hobble progressive thought, stymieing any hope for change in this critically important time of neoliberal globalization.
Let us begin by noting that 19th century political economy was radically different from our current reality. At the beginning of the 19th century, many people only worked for wages on a temporary basis. They were primarily somewhat self-sufficient farmers who produced for themselves, requiring only temporary wages to acquire those few things which they did not produce for themselves. Or perhaps they were independent craftsmen or small merchants who operated their own businesses, earning a living in the market rather than work for wages. Most made a modest living which, nonetheless, was preferable to factory work as it existed back then. As a consequence, laws were passed enclosing the commons thereby eliminating the traditional means of livelihood for many. The result was to effectively force large numbers of people to work long hours for subsistence wages merely to survive. In effect, wage slavery in the literal sense of the term. From about the mid-19th century on, more and more people were sucked into the market economy and impoverished as a consequence. This wasn’t the consequence of industrialization per se, rather it was the consequence of exploitation of the workers by the industrialists, and by the system they created. It is this system Marx wrote about, a system which has undergone massive change in the last 150 years.
Nowadays, very few are able to supply their needs outside the market which has expanded enormously. The vast majority of people in First World countries obtain their needs and wants by purchasing them, hence, the need to acquire money to survive. Additionally, technological innovation and increases in productivity have dramatically reduced the number of First World people engaged in either farming or manufacturing. Most now earn their livelihood from employment in larger, more complex organizations, in a more diverse economy with a dramatic increase in specialization and the number of different jobs. Two points are critically important. The first is that to a significant degree the very concept of ownership of the means of production has been rendered anachronistic. What is a teacher’s means of production? A salesman’s? A clerk’s? A postal worker’s? A waiter’s? A scientist’s? Etc? The concept of ownership of the means of production was developed to organize factory workers to seize control of the political economy, which would then be run by Marxist elites. Out with the oligarchs, in with the commissars.
The second critically important point is that the proliferation of specialization and different job types isn’t necessarily bad. There currently exists a large and diverse number of job choices not available in Marx’ time. The point being that nowadays those of us in the First World need money to survive which means that most need to obtain employment in some organization, or become a small businessman, or self-employed craftsman, or artist, etc. As to worker control over the work environment, this is an important consideration which is sidetracked by discussions of ownership. The very notion that employees need to own the business to not be “wage slaves” is nuts. Perhaps that is why so few employees have aggressively acquired their organization’s stock. Furthermore, the number of organizations where this is even remotely feasible isn’t very great. Own the post office? The police force? NASA? MIT? What can’t be emphasized enough is the extent to which real world solutions to real world problems are ignored in favor of unrealistic and unworkable goals. Ownership of the means of production is an elite formulated myth, a revolutionary slogan, an ideological justification for the Marxists to seize power, nothing more.
Once one puts aside Marxist ideological blinders and focuses instead on what was the intended consequence of “ownership,” what do we have? Better pay? Better working conditions? Job security? Input into workplace decisions? Input into business strategizing and decision making? Input into the US political economy? Input into US geo-strategy and political decision making? If I was to speculate, I would guess that most workers, regardless of occupation, are concerned over their pay and benefits, working conditions, and job security. Fewer would be interested in direct involvement in running the business. It is difficult to even guess how many would be concerned about impacting the political economy or foreign affairs, except insofar as these areas negatively impact them. In any event, both areas are beyond the scope of business ownership, falling instead within the political system. Now my guess is that many people have become aware of the negative aspects of US wars of aggression and militarism, neoliberal globalization and structural adjustment, and of potential environmental catastrophes, and they would dearly love to have some political empowerment. Empowerment, I might add, that would not come by virtue of collective ownership of the means of production.
Let us begin by noting that to make changes, we need to deal with the world as it is, not how we imagine it to be based upon wishful thinking. In this regard, it would be helpful to eliminate most Marxist phraseology from our vocabulary. For example, what is the proletariat? It is a fictitious entity created by Marx to advance his agenda. Using the term proletariat to describe workers, primarily factory workers, creates the illusion of some sort of organizational affinity between individuals who may have nothing in common except socioeconomic grouping. I assume that it was Marxism’s goal to create some sense of class solidarity across organizational boundaries, thereby facilitating the organization of factory workers into the equivalent of one huge international union, which would seize power in the name of militant laborers. And when power is seized, then what? Why the elites consolidate their control. Happens every time. It happened in Russia, in China, in Korea, and in Viet Nam. It also happened in the US labor movement, popularly elected officials eventually yielding to a highly bureaucratized international federation where labor elites pursue their personal agendas at the expense of the membership. This is what happens in the real world. The “proletariat” inevitably turned into cadres for the benefit of elites who purport to speak for them.
Once we rid ourselves of ideological blinders, we can begin to analyze the situation intelligently. Using clear language, we can discuss hierarchy and power, and what can realistically be done to maximize life, liberty and the pursuit of happiness for the population as a whole. Let us begin by noting that while hierarchy and power are correlated, they are not the same thing. Virtually all successful groups/organizations have a hierarchy. Hierarchy appears to be a natural phenomenon occurring where animals band together for survival. Wolf packs, chimpanzee troops, and human tribes, for example. Hierarchy is the difference between a mob and an army, the army surviving at the expense of the mob. Hierarchy facilitates group goal attainment, and permits specialization of functions. Hierarchy, in and of itself, is not a problem. The problem is that without organizational constraints, hierarchy tends to lead to concentrated power and to arbitrary power. Also, there is a tendency to limit mobility within the power structure, and to overemphasize top down decision making.
The essence of our capitalist system is the rule of capital, that is to say the rule of money. In other words, the rule of those who control and direct the flow of significant amounts of money. Currently, our financial system is in private hands for private profit. The ramifications of this are enormous, including the effective control of the political system by concentrated money power, so that while the government is the single largest spender of money, its priorities are so attuned to the wants of business and finance that it effectively supports business goals and objectives. If the political system were to gain control of the financial system, and if taxation were to break up concentrated wealth, capitalism as defined would no longer exist. I differentiate between the government and the larger political system. The Bill of Rights, for example, is part of the political system designed to restrain government abuse of the citizenry. That the Bill of Rights has been continually abused, and recently contemptuously so, indicates that excessive government power is as bad as excessive private power. There is little point in exchanging private tyranny for public tyranny, and vice versa.
I think that most progressives would agree that our current system isn’t working well. Part of the problem, however, is that there doesn’t seem to be a clear understanding of what our system is, how it functions, and how to realistically change it. Too often people fall back on ideological suppositions which don’t make sense in our modern world, and which are unlikely to be implemented in any event. The first thing which needs to be understood is that the financial system more or less controls society at the macro level, and that concentrated wealth is concentrated social power, and that meaningful change is not possible without breaking up concentrated wealth and gaining control of the financial system.
Let’s get fundamental. We have a debt-based money system. That is, banks create money by loaning it into the system as bank credit. Virtually all of the money in the system exists as a consequence of bank loans which must be repaid with interest. If all of the loans were repaid, there would be no money left in the system. In fact, there would be no money to pay the interest due on the loans. Where does the money come from to pay the interest? It is borrowed. In the system as a whole, total debt needs to grow at a sufficient rate to keep money in the system and to pay the interest now due on past loans. This means that the economy needs to grow at a rate sufficient to service the debt required to provide the money needed to run the system. In other words, compounding growth of debt is built in to our dysfunctional financial system. This means that a steady-state sustainable economy is not possible with our current system, and that lack of economic growth leads to economic collapse, unless forestalled by inflation or recessions/depressions accompanied by debt write down. A debt-based money system is a disaster and needs to be replaced by sovereign money, that is, money created by the government rather than money created by the private banking system.
In addition to being a debt-based monetary system, our financial system is privately owned and operated for profit. The consequence of this is that our financial system primarily serves the profit seeking goals of the financiers at the expense of the real economy, and is unaccountable to the democratic will of the people. Attempts have been made to control the avarice of the financiers with financial rules and regulations. These seem to work for a while, but are eventually circumvented resulting in negative consequences for the real economy and the citizenry. This is the situation we are now in as unstable exotic financial instruments combine with financial speculation to cause the financial system to implode. Our private financial system is a social disaster which needs to be replaced with a public banking system which serves the real economy.
Our financial system is a disjointed system in which monetary policy is separate from fiscal policy. This is the equivalent of treating the two sides of the same coin as separate entities. Public control of the financial system, however, would favor the joining of fiscal policy with monetary policy to achieve social objectives. Money creation and taxes need to work together to control and direct the flow of money. Progressive taxation of income and wealth for both individuals and organizations, along with income redistribution, is absolutely essential to correct the current dysfunctional concentration of money power.
Several things are critically important. The first is that public control of the financial system is a precondition for meaningful change. As long as the financiers control our money, the financiers will set policy. The second is that the majority are under attack by the financial oligarchs. Neoliberal globalization inevitably leads to structural adjustment, which is basically the impoverishment of the majority leading to a form of debt servitude. Modern society runs on money, and the people who currently control money are using their money power as a weapon. There is a real possibility of a collapse of the global financial system, hence, a pressing need for alternatives to global finance. Local money, local banks, local script, even barter may be required if “official” money disappears.
Thursday, September 29, 2011
Ritual Voting and the Illusion of Democracy
“It is axiomatic that political power aligns with economic power” (David C. Korten)
One of the great myths of our time is that elections and voting constitute the essence of democracy. To the degree that democracy constitutes self-rule, even in the limited sense of citizen control of the political system, democracy is an oxymoron in a capitalist political economy. The very essence of capitalism is the rule of capital, that is the rule of money, that is the rule of those who control and direct the flow of money. To anyone not blinded by mythology, it is obvious that we live in a capitalist oligarchy, not a democracy.
Elections are rituals, pure and simple. As such they serve multiple functions. The simplest function is that of a political circus, full of color and noise, diverting attention away from the underlying systems of power and control. The next is the distraction of organized ritualistic behavior - phone banking, sign building, rallies, etc. - which keep activists busy while imparting the illusion of meaningful participation in the political process. Next is the symbolic legitimatization of government and its actions by associating voting with citizen approval of subsequent policy and actions. Finally, the whole process tends to misrepresent the role of government in our political economy while simultaneously bringing the market to bear on the political system. That is, to hide the fact that our government is subservient to business interests and elite pressure.
Currently, our economic system has totally overwhelmed our political system and is the decisive locus of power in our political economy. It is businessmen in large corporations and financial institutions who make the decisions which most effect our lives. They are the ones who decide whether to invest in solar power or oil exploration, whether to build a factory in the US or overseas, whether to build affordable housing or luxury homes, whether to support fuel efficiency and mass transit or to develop tar sands oil, whether to support living wages or to slash benefits, whether to invest in the real economy or engage in financial speculation. These are the things which fall under the domain of business decision making. Additionally, the economic elites exert strong influence on governmental decision making and infrastructure development.
The American economic elites exercise de facto control of the political system through several means. The first is the most obvious: those who control significant wealth fund political candidates who demonstrate a commitment to elite objectives and have the ability to get results. This is particularly important at the start of a campaign when candidates need to obtain significant initial funding to be viable. Thereafter, the ongoing need for future campaign financing biases elected officials in favor of “business friendly” legislation and executive actions. In this way, the market is brought to bear on elected officials. Another aspect of elite control is through the doctrinal system whereby the funding of think tanks and the control of commercial media, the elites construct the ideological framework within which political decision making occurs. It is important to note that the average person has negligible impact upon the creation of social mythology which informs our perceptions and guides our decisions, and which has been created by the elites to facilitate the attainment of elite objectives. Finally, our privately controlled financial system is debt based which creates a systemic need for growth. Additionally, the private banks, bondholders and Federal Reserve have the power to stimulate or depress the economy through monetary means to achieve their objectives.
The point is that the US and other Western “democracies” present themselves as democratic, and are viewed by their citizenry as essentially democratic when, in fact, they are not. In this regard, voting and elections constitute an elaborate charade to create the illusion of democracy. The best one can say is that the US has democratic forms which are totally ineffective in achieving the stated goal. Money is the big corruptor of representative democracy, however, to simply state that concentrated money power corrupts the system and leave it at that is inadequate. The implications of why expensive political advertising is as effective as it is has profound implications for the very concept of democracy.
I have come to several conclusions about human nature and political economy which are at odds with just about everything I have ever heard or read. The core concept undergirding these conclusions concerns what I refer to as the logic of irrationality. I define reasoning as logical if it is consistent with relevant assumptions, whereas, thinking is rational if consistent with empirical reality. They are not the same thing. For most people, the logic of ideology and bias tend to overwhelm rational thought. That is, when individual/group bias and ideology conflict with rational interpretation, rationality is usually ignored in favor of an ideologically consistent interpretation. This is true for most people and is probably an inevitable consequence of human evolution. For all or most of human history, being a member of a supportive group/tribe was an essential component of survival, hence, the majority of people willingly adapted their individual biases and simplifying paradigms to be consistent with the group ideology/mythology so as to fit in and promote harmony and solidarity.
The tendency for individuals in a group to evaluate situations from the perspective of a shared ideology creates a de facto internalized behavioral guidance system consistent with group objectives. The subordination of individual bias to group ideology is essential for group cohesion and direction, and a key to group success. It should be noted that group ideology and group objectives do not reflect the input of the various members of the group, rather, they reflect the biases and objectives of the group elites who basically control the overall thrust of group activity. Most groups of any significant size tend to form a hierarchy, with the majority following the direction of the group leaders. Most subconsciously align with power. Those who don’t tend to suffer consequences. Dissent which threatens to undermine group solidarity and effectiveness is considered treasonous.
The implications of all of this is that the elites basically control the actions of the majority through the control of information and social mythology. This appears to be changing somewhat as elite implementation of structural adjustment produces the inevitable (and anticipated) civil disobedience which, in turn, is dealt with by a return to the more traditional modes of coercive force to augment the psychological manipulation of the population.
Be that as it may, social control in the US still relies primarily upon information manipulation. While in theory there is nothing to prevent the electorate from voting for Third Party candidates and throwing the Republicans and Democrats out of office, this is not likely to happen. The electorate is not rational, the notion of a “rational” political man (or “rational” economic man) is a myth. The vast majority of the people are faithful followers who can’t seem to help being seduced by the logic of elite propaganda. Reality is misrepresented in such a way as to produce an anticipated response in the polity. As a consequence, people will satisfy themselves with the illusion of choice within the framework of established power, or opt out completely, rather than stage a rebellion at the polls.
Taking all of this a step further, the notion of the US spreading democracy or opposing tyranny or being concerned by dictators is ludicrous. We live in what has been described as the dictatorship of capital, the tyranny of money. This reality is camouflaged by elections and voting which give the illusion of popular participation in political decision making. A sham which tends to ameliorate popular discontent without significantly impacting elite goal seeking. Also, nowadays, how many nations don’t have elections? Most do, with the outcomes frequently manipulated. The elections of allies will be lauded as free and fair, those of regimes we wish to destabilize will be presented as illegitimate. In almost all case, voting is symbolic only, a means of manufacturing consent.
What does the future hold? I am not going to even attempt to discuss democracy in the broadest sense of the term. Rather, what, if anything, could be done to create a situation whereby elections and voting are more than a money driven charade? I am pessimistic about the extent to which the majority of citizens can become rational voters, at least in the short run. The human need for most to subsume themselves to group mythology and to align with power appears resistant to change. Realistically, the best hope would appear to be to seek to reduce the concentration of economic power as much as possible. While people would still be susceptible to the logic of propaganda, hopefully, having many more potential message senders would result in some ideological competition rather than our current consistent bias and propaganda.
Monday, September 26, 2011
“Those who can make you believe absurdities can make you commit atrocities.” (Voltaire)
There is no more absurd or destructive mythology than the notion of a giant struggle between the forces of good versus the forces of evil. In reality, the subjective labels of “good” and “bad” are moral and situational judgments properly attached to actions. Actions are subjectively evaluated as “good” or “bad.” People, in turn, should be evaluated based upon their behavior, their actions. A “good” person is someone whose behavior is generally “good.” A “bad” person is someone whose behavior is generally “bad.” A “good” person is nonetheless capable of committing “bad” acts. A “bad” person is nonetheless capable of “good” behavior. It is the subjective evaluation of behavior which determines whether or not a person is, on the balance, “good” or “bad.” There is no such thing as an intrinsically “good” or intrinsically “bad” person. The term “evil” is used to denote something monstrously bad.
In spite of the absurdity of the Manichean concept of the forces of light (good) in constant struggle with the forces of darkness (evil), this ideological duality is part of Western mythology, and is constantly reinforced by the media, particularly the entertainment media. For example, Luke Skywalker and Harry Potter are depicted as “good guys,” their intentions and actions noble by definition. Darth Vader and Lord Voldemort are depicted as intrinsically evil in nature, their intentions and actions wicked by definition. The duality is sharply drawn. It is difficult to imagine Harry Potter doing something “bad,” and Voldemort’s evil nature is absolute. It is a one dimensional caricature whereby the label defines reality. Good guys do good, bad guys do bad. Actions are assumed to correspond to the label.
All of this is no accident. In a militaristic empire such as ours, there is a constant need to pre-condition the public mind to accept the righteousness and need for the inevitable wars of aggression and other despicable acts that empire inevitably engages in. As such, it is advantageous for the elites to have the populace believe that we are intrinsically good, and future enemies intrinsically evil. People and nations are judged based upon the Manichean label which has been attached to them. Propaganda is used to provide the details to support this mythological depiction. Information is evaluated based upon this ideological pre-conditioning. When we bomb and destroy, kill and maim, this is depicted as necessary, even desirable, to enable the “good guys” (us) to defeat the forces of evil. On such absurdities do empires and wars and atrocities flourish.
Thursday, September 01, 2011
Private Financial Control, Debt Money and Compound Interest: Inevitable System Collapse
“The study of money, above all other fields . . .is one in which complexity is used to disguise truth or to evade truth, not to reveal it . . .The process by which banks create money is so simple that the mind is repelled.” (John Kenneth Galbraith)
“(Money is) the fundamental principle of social organization in capitalism.” (Doug Henwood)
I have been reading a lot of radical critiques of our political economy lately and I am struck by the extent to which even radical critiques rely upon a certain conceptual orthodoxy which inhibits understanding. What is occurring is really rather simple, so much so that simply stating the facts sounds simplistic, particularly to those accustomed to technical economic jargon intended more to obfuscate than illuminate.
The three key features of our current system which are absolutely crucial to understand are that the financial system is privately controlled for private profit, it is a debt based money system in which new money is loaned into the system at interest, and there is no formal means for dealing with the long term unsustainability of compound interest accumulation.
The fact that our financial system is privately controlled for private profit means that the financial system will inevitably be gamed to serve the profit seeking motives of the financiers at the expense of the real economy. We live in a highly complex, highly monetized society absolutely dependent upon money and the financial system to function. Controlling the creation and distribution of money/credit-- who/what gets funded and who/what doesn’t -- provides the financiers with immense social power, currently close to de facto control of the global political economy. Much of the system consists of rules, regulations and procedures designed to impose a uniformity of behavior upon the various private individuals and organizations which make up the financial system, thereby promoting confidence in system soundness by constraining the financiers from blatantly pursuing private profit seeking by abusing their power to create money. However, these rules, regulations and procedures have been circumvented by the creation and use of exotic financial instruments and other machinations justified by economic sophistry to the detriment of the real economy and financial stability. Private control of the financial system is inherently dysfunctional and needs to be ended. Unfortunately, this seems unlikely to occur, at least in the short run.
Few people seem aware that our financial system creates new money by loaning it into existence at interest. Two important consequences of debt money are that it creates a de facto lean on future earnings since it must be paid back with interest, and that the paying back with interest requires that new money be loaned into the system to enable the interest to be paid. This, in effect, is an internal compounding dynamic which requires compounding growth of the financial system to avoid default and system collapse. In other words, the real economy runs on debt owed to the private financial institutions which created the money. Without this debt, there would be no money in our current system. This debt based money works to the advantage of the financiers and to the disadvantage of the political economy as a whole, and needs to be replaced by debt-free government created sovereign money. This would not eliminate either interest payments on borrowed money, nor interest income on saved money, rather, it would eliminate systemic indebtedness to private finance.
The final critically important point to understand is the consequence of having a financial system in which the driving force of private accumulation is unsustainable compound interest. In the real world, nothing increases geometrically for very long. Consequently, the geometric increase in debt obligations has historically been resolved in one of several ways. First, the economy needs to continually grow to provide a real physical base to support the growing financial system. This entails both a growth in population and growth in the formal monetary transaction economy at the expense of the informal economy, that is, social interactions need to be increasingly monetized. Secondly, price inflation has tended to ameliorate the interest burden by effectively lowering the real rate of interest. The final way of dealing with unsustainable compound interest in our private system is through debt default and the writing down of bad debts. This write down is usually accompanied by a seizure of real assets (foreclosure) which are usually liquidated. This has been the historical consequence of recessions and depressions, in which the breakdown in the financial system causes a crash in the cash starved real economy which, in turn, forces a bad debt write down to repair the financial system. Massive foreclosures during recessions/depressions represent a cannibalization of the real economy by the financial system. While it should be possible to deal with compound interest at the systemic level through progressive income and wealth taxation to interrupt the accumulation process and redistribute the money, this has not been done because our capitalist political economy is designed to facilitate the accumulation and concentration of wealth, and any procedures which interfere with this are resisted regardless of the systemic implications.
Our current situation is both dire and unprecedented. For starters, our population and real economy have more or less reached the physical limits of growth. Consequently, the real physical base which has historically supported the growth of the financial system needed to meet interest payments on the debt are no longer able to do so. One consequence is the de-linking of the financial system from the real economy in what is usually referred to as financialization. Secondly, the current financial policy is to restrict inflation as much as possible thereby eliminating the de facto lowering of the nominal interest rate. The consequences of this are currently being masked by very low nominal interest rates, a consequence of Federal Reserve policy. One consequence of this is to cause investors to make riskier investments and engage in financial gamesmanship to obtain higher yields. A truly unprecedented situation is the massive bailout of the financial sector by transferring bad debts from the financiers onto the public. As a consequence, bad debts are not eliminated from the system, only from the financiers’ books. In other words, the financiers profit from good investments and profit even more from bad investments insofar as they create the money to loan the government to purchase their bad debts from them. The consequence of all of this is to starve the real economy while providing the financial sector with vast money power, hence, social control. The final result may be a massive privatization of public wealth as the financial system devours the real economy and the polity as a whole.
Taken as a whole, our private financial system has miserably failed the real economy and the polity while simultaneously increasing its control over both. Financial warfare seems an appropriate description. It is difficult to predict the final outcome or even the game plan of the financial elites. It appears to be a sort of slash and burn philosophy whereby capital will milk an area for all it is worth, then move on to greener pastures in a globalized world. A world of interdependencies linked by the global financial system where the areas will compete against each other to obtain financing. Apparently, the accounting rules will be modified to accommodate world-wide debt servitude. It is difficult to imagine this scenario actually working, total system-wide financial collapse seems more likely. It is also difficult to imagine the consequences of a system-wide financial collapse, however, it appears that is precisely where we are headed.
A critically important point is that our current private financial system is inherently unstable. It is held together by self-serving rules, regulations and procedures, some designed to reassure the financiers that they won’t be cheated by their fellow financiers, others designed to ensure that the fruits of the real economy flow into the financial system. These rules, regulations and procedures (and their organizational manifestations) can, of course, be changed. The extent to which they can be changed is contingent upon the extent to which the more powerful global financial centers can agree upon new rules, regulations and procedures which serve to inhibit individual and organizational profit seeking in order to achieve systemic equilibrium and stability. Implementing rules, regulations and procedures to deal with the systemic implications of unsustainable compound interest has never been attempted, much less implemented. While progressive taxation on income and wealth could achieve the desired outcome, it is practically inconceivable that the rich and powerful capitalists would go along with this, much less initiate it. It is difficult to imagine private capital solving this problem in such a way as to maintain the current hierarchy of power and equally difficult to imagine private capital agreeing to any significant alteration of the current hierarchy in our capitalist society, therefore, systemic collapse seems likely. In other words, the inherent bias and self-interest of private financiers will likely preclude solving our current financial problems as long as the financial system is run by private capital for private profit.