Archive for the ‘Economics’ Category

The Crisis (Pt 6)

May 24, 2020

U.S. unemployment hits Depression levels

In April, the U.S. Labor Department U-3 measure of unemployment hit 14.7 percent. The U-3 rate had been used over the last year or so to claim that unemployment was the lowest since 1969. In fact, it is designed to greatly underestimate the real level of unemployment. Even some Federal Reserve Board officials admit that the real rate of unemployment is over 20 percent and fast approaching the all-time quasi-official estimate of 24.9 percent that occurred at the very bottom of the Depression in March 1933. Nobody denies that the number of unemployed in the U.S. is in the tens of millions — around 50 million if you believe AFL-CIO President Richard Trumka.

However, it is claimed by Trump and most economists that the current unemployment crisis is the result of the deliberate shutting down of the economy made necessary by the COVID-19 pandemic. What is occurring, according to this logic, is not the long-feared Depression II but the “Great Suppression.” Though unemployment generally declined after March 1933 — except for the sharp but short-lived Roosevelt recession of 1937-38 — “full employment” did not return until the U.S. had entered World War II in 1941. This time, it is claimed by Trump and many economists, in contrast to 1933 there is no underlying economic crisis. Therefore, “full employment” will return much more quickly. The pandemic will have run its course within months, as Trump claims, or at most within several years, as claimed by more cautious economists.

Therefore, the argument goes, while still a terrible situation it is not quite Depression II. Though unemployment may be as bad as during the Depression, it won’t last nearly as long. Anyway, Depression-level unemployment is the necessary price we have to pay to stave off the much greater evil of millions of deaths in the U.S. alone from COVID-19. Not surprisingly, Donald Trump, who had been planning on running on “prosperity and full employment” as shown by the Labor Department’s U-3 unemployment rate, is leading the charge to “open America for business.”

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The Crisis (Pt 5)

May 17, 2020

U.S. infection rates rise as states move to reopen

More and more U.S. states are moving to reopen non-essential businesses though there is no sign the COVID-19 epidemic is dying down. “Take the New York metropolitan area’s progress against the coronavirus out of the equation, Nicky Forster, Carla K. Johnson, and Mike Stobbe wrote May 4 in an Associated Press article, “and the numbers show the rest of the U.S. is moving in the wrong direction, with the known infection rate rising even as states move to lift their lockdowns. … ”

According to a leaked CDC document that appeared in The New York Times and Washington Post, the government projects that new COVID-19 cases will increase 225,000 a day by June, with deaths climbing to 3,000 per day. In early May, when this is being written, new cases are only 25,000 with deaths a mere 2,000. This despite all the social distancing and stay-at-home orders.

With President Trump leading the charge to reopen America for business, state and local governments are competing with one another for which one can lift the social distancing and stay-in-place orders the fastest. So far, these are the only policies that have slowed the pandemic in some areas.

In reality, the pandemic is still gaining momentum nationwide. Thanks to Trump and various state and local governments, the spread of COVID-19 in the U.S. could very well accelerate further in the coming months. A similar pattern is emerging in other capitalist countries. Of course, the growth of the pandemic in one country, particularly one as large as the U.S., is a threat to people of all other countries, since the virus does not respect national boundaries.

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The Crisis (Pt 4)

May 10, 2020

May Day strikes

On May 1, International Workers’ Day, a wave of worker and renter strikes swept the United States. Workers protested the dangerous conditions in which they are forced to work during the COVID-19 pandemic. Among the companies struck were Amazon, Walmart, FedEx, Target, Instacart, Shipt, and Whole Foods. The May Day strikes show the increasing influence the internationalist traditions of the world workers’ movement is having on the U.S. working class, especially among the lowest paid and most exploited workers. The current medical-biological-economic-employment crisis has only deepened this tendency.

Also, and this should be noted, the internationalist implications of the global May Day holiday stand in complete opposition to the traditional AFL-CIO union leaders, Bernie Sanders, and many progressives and newly minted “democratic socialists” going down the disastrous road of economic nationalism and China bashing. Trump and the other economic nationalists, both Democrats and Republicans, are trying to divert attention from the disastrous mishandling of the pandemic by the U.S. government — both federal and state — to China. More on this in the coming weeks.

‘Party of Order’ versus Sanders

As we saw last week, Bernie Sanders has for many years operated well within the limits of capitalist, or — to use traditional Marxist language — bourgeois, politics. He has done nothing to organize an independent workers’ party or an independent workers’ media, either print, radio-TV or Internet. Nor is he internationalist like the working-class leaders of the past, such as Sanders’ personal hero Eugene Debs. Rather, Sanders is an economic nationalist and an imperialist dove.

Why then is the Party of Order so hostile to Sanders? As its leaders know full well, capitalism has in many countries survived presidents and prime ministers far more radical than Bernie Sanders. No knowledgeable person believes that U.S. capitalism would be in danger of being abolished under a Sanders administration.

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The Crisis (Pt 3)

May 3, 2020

The king of commodities

On April 20 (2020), the May futures contract for the delivery of oil fell to a negative $37 per barrel. Since the 1970s, some have suggested that oil has replaced gold as the money commodity, reflected in the term petrodollars. We can now see that this idea is based on a misunderstanding. Oil as the commodity that stores energy as well as serving as a raw material is perhaps the king of commodities as far as its use value is concerned. However, this doesn’t mean that oil is the money commodity, which in terms of its use value measures the value of all other commodities.

What would happen if global production and circulation suddenly became paralyzed? We are now finding out. With production and transportation sharply curtailed around the globe, what is the use value of oil now? Marx explained in Chapter 3, Volume I of “Capital”: “Whenever there is a general and extensive disturbance of this mechanism [credit — SW], no matter what its cause, money becomes suddenly and immediately transformed, from its merely ideal shape of money of account, into hard cash. Profane commodities [such as oil — SW] can no longer replace it. The use-value of commodities becomes valueless, and their value vanishes in the presence of its own independent form. On the eve of the crisis, the bourgeois, with the self-sufficiency that springs from intoxicating prosperity, declares money to be a vain imagination. Commodities alone are money.”

Since oil has storage costs, the owners of May 2020 oil futures contracts were for a day willing to pay buyers to take it off their hands to free themselves of those costs. This shows that not oil but money is the king of commodities. In the words of Marx, the value of oil has vanished in the presence of its independent value form. Even Trump’s move to buy all the oil that the U.S. government can physically store has not prevented the oil price collapse.

When the value of a commodity as important as oil vanishes — though it isn’t only oil that is being affected — in the presence of its own value form, the credit system is thrown into crisis. Credit is based on the assumption of a given price structure. When commodities become unsalable or at least unsalable at the expected price, the credit system begins to break at a thousand and one places. For example, banks lend money to oil companies. If the oil companies can’t sell their oil at profitable prices, they will not be able to pay the banks. How will the banks pay their creditors, which include their depositors? And what about the pension funds loaded up with oil and bank stocks?

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The Crisis (Pt 2)

April 26, 2020

Trump bares his Bonapartist fangs

The conflict between Trump and some state governments grew as Trump claimed “total authority” to “reopen the economy” in any state whenever he wants. But he soon outdid himself when on April 15 he claimed, in complete contradiction to the U.S. Constitution and its “separation of powers” doctrine, that he had the right to “adjourn Congress.” No U.S. president has ever claimed that authority.

At a press conference, Trump bitterly attacked the Republican Senate as well as the Democratic House for remaining nominally in session, thereby blocking his authority to make “recess appointments.” The U.S. Constitution gives the president the right to appoint federal officials only with the consent of the Senate. If the Senate is not in session, the president can make a temporary recess appointment. The official who is appointed through such an appointment then has “acting” in front of his or her title. Trump prefers this because it removes the ability of the Senate to block his appointments.

However, if the president can “adjourn” the Senate and House of Representatives at will, the legislative branch of the government would be rendered powerless versus an all-powerful executive. Imagine if Richard Nixon in 1974, when told by Republican congressional leaders that he faced certain impeachment in the House of Representatives and conviction in the U.S. Senate, had simply adjourned the U.S. Congress instead of resigning!

There is a term for the system of government where the parliament is powerless and the executive is all-powerful. It is called the Bonapartist system. If Trump’s doctrine of total presidential authority and the right of the president to adjourn Congress was to be implemented and accepted as part of the system of government, the U.S. would no longer be an imperialist democracy — no matter how eroded — but a Bonapartist autocracy run by an all-powerful dictator-president.

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The Crisis (Pt 1)

April 19, 2020

A personal note

In February, I was hit by a staph infection that had spread to the blood. This was the first serious illness of my adult life. Before this infection, I had been free of any illness more serious than the occasional cold or seasonal flu. I was really knocked off my feet and had to be hospitalized.

This was no fun. But no evil is without positive features. I got to see the medical system for the first time in my adult life from the inside. At least here on the West Coast, the medical system is staffed by a mix of many nationalities with a bias toward the Far East — the very group that President Trump with his racist attacks on the “Chinese virus” has made a target of his demagoguery. I was served by medical workers from France, the People’s Republic of China, Vietnam, the Philippines, and other nations.

Then as fate would have it in one those bizarre coincidences that life occasionally brings, the whole world was swept by the ghastly COVID-19 pandemic. Financial markets crashed and then much of the global economy was shut down including industrial production and world trade. Most importantly, employment entered a downward spiral. More than 10 million people in the U.S. have been forced to apply for unemployment insurance within two weeks, implying double-digit Depression levels of unemployment.

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Announcement on schedule

March 8, 2020

The post originally planned for this month will be postponed to next month owing to Sam Williams contracting a nasty staph infection, combined with internal bleeding, requiring hospitalization. He is now well on the road to recovery and expects to be “back to work” within a week or two.

Political and Economic Crises (Pt 16)

February 9, 2020

Trump is acquitted

The beginning of February finally saw the end of the impeachment saga with the acquittal of Trump in a partisan-line vote with one exception in the Republican-dominated U.S. Senate. That was Senator Mitt Romney, Republican of Utah, who voted to convict on the Article of abusing power. Romney’s vote reflects a growing friction between the conservative Utah-based Mormon religious sect of which Romney is a member and the pro-Trump “Christian right.”

The Christian right does not consider Mormons to be genuine Christians. Mormons indeed have a history of being persecuted in the U.S. They fear that despite their long-time alliance with the right wing of the Republican Party, Trump with his dependence on the Christian right is potentially dangerous to them. This is similar to the fears of even highly conservative parts of the U.S. Jewish community who fear the influence of anti-Semitism within the Trump “movement.”.

The fate of the impeachment trial was sealed when on Jan. 30 the Senate voted to refuse to allow witnesses to testify, making it impossible for the Democrats to advance their charges against Trump any further.

In mid-January, Nancy Pelosi finally sent two Articles of Impeachment, passed by the House of Representatives against President Trump in December, to the U.S. Senate. Essentially, the Democratic House charged that President Donald Trump held up military aid to the pro-imperialist Ukrainian government of President Volodymyr Zelensky to force Zelensky to open a corruption investigation of former-Vice President Joe Biden and his son Hunter. The Democrats charged that Trump intended to use this against Joe Biden if he were to become the Democratic presidential nominee.

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Political and Economic Crises (Pt 15)

January 12, 2020

Trump orders assassination of top Iranian general

On Jan. 2, 2020, Donald Trump ordered a drone strike that the next day assassinated among others General Qassem Soleimani, considered Iran’s leading general and one of the most powerful and popular leaders of the Islamic Republic. Soleimani was killed at the Baghdad airport while on a diplomatic mission aimed at improving relations among Iran on one side and Saudi Arabia and the United States on the other. The murder of such an important military and political leader while on a peaceful diplomatic mission has few if any precedents in the history of diplomatic relations stretching back over thousands of years. Rather, Trump’s action is straight out of the history of the 20th-century New York mob.

This has brought the U.S. to the brink of full-scale military war with Iran, and frankly, as I write these lines it is hard to see how this war can be avoided. The U.S. is already at war with Iran in the economic and political sense. Iraq’s Parliament has now demanded that the U.S. withdraw its 5,000 troops in the country, which are supposedly there to fight ISIS, though the U.S. has announced it has now “suspended” its war with ISIS.

Trump responded by saying he will refuse this demand unless Iraq repays the U.S. for the “aid” it has given Iraq and threatened Iraq with vicious sanctions if it does not withdraw the demand. For its part, Iran has announced it is finally pulling out of the nuclear accord it signed under Obama that exchanged intrusive inspections for promises by the U.S. and its imperialist satellites to relax economic sanctions — dial back economic warfare. These events have raised the chilling possibility that the year 2020 could be for this century what 1914 was to the last.

Trump’s action should remove the illusions shared apparently by the government of Russia and even a few progressives that, however racist and reactionary he is, in other ways Trump is part of some right-wing “isolationist” anti-war tradition that opposes the “Wilsonian” imperialism that has long dominated the Democratic Party, and since at least 1940 the Republican Party as well. In reality, Trump’s economic and political nationalism has always pointed in the direction of war, not peace, whether Trump personally wants war or not. History shows that the beginning of a major war brings with it a “rallying around the commander in chief.” Such an effect could considerably increase Trump’s chances of reelection. True, as the experience of many countries shows, as wars drag on public support for the war and the government turns into its opposite. But by then, Trump may be thinking, the election of 2020 will be far behind him.

In general, there seems to be an unofficial rule that U.S. presidents don’t start major military campaigns in election years. Otherwise, every president facing dubious reelection prospects would be tempted to start a war. But Trump’s Bonapartist and autocratic tendencies mean that he does not feel bound by such a rule, any more than he feels bound by the rule that the president should not criticize the Federal Reserve System.

However, while Trump’s unstable personality and autocratic tendencies are extremely dangerous factors in the current crisis, it is not the main factor behind the current war danger. The roots of the current war crisis can be traced back to George W. Bush’s decision to invade Iraq — supported by Democratic Senators Hillary Clinton and Joseph Biden — on March 19, 2003. The Bush administration intended to create a new Iraqi puppet government that would provide a thin veneer over what would amount to U.S. colonial control of Iraq.

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Political and Economic Crises (Pt 14)

December 8, 2019

The Democrats’ impeachment of Donald Trump

The public impeachment inquiry hearings held in November by the Democratic majority in the U.S. House of Representatives brought into the open the increasingly bitter rift between Donald Trump on one side and the professional apparatus of U.S. imperialism on the other. Left in the lurch was the Republican faction of the “Party of Order.”

Witnesses called by the Democrats were members of the imperialist apparatus — called the “deep state” by some. These include diplomats such as former U.S. Ambassador to Ukraine Marie Yovanovitch, Russian “expert” Fiona Hill, military officer and White House National Security advisor lieutenant-colonel Alexander Vindman, among others. These people have all made careers advancing the interest of U.S. imperialism and its world empire.

The impeachment inquiry finally allowed these men and women in the “trenches” of the U.S. world empire to unveil their bitterness and even hatred of Trump and his aides such as his personal attorney and former Republican Mayor of New York Rudy Guiliani. For these “professionals,” Trump, Guiliani and the others are corrupt blundering amateurs who are in well over their depth when it comes to defending the interests of U.S. imperialism.

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