Archive for the ‘Economics’ Category

The Putsch of January 6, 2021

January 10, 2021

Normally, after my draft returns from the editors, I make a few last-minute changes, sometimes correct factual errors, and then send it back for final editing and posting. In this post, my deadline for the initial draft was Jan. 4. I considered updating the draft to cover the events of Jan. 6 but it was clear that would involve changes way beyond the usual last-minute updates I sometimes have to make. I therefore decided to leave the post as is, minus some minor editorial changes, but add this special section. The following post should be read as a description of the U.S. political situation on the eve of the attempted putsch of Jan. 6. There will be more on this subject in next month’s post.

After the the Electoral College elected Joseph Biden and Kamala Harris to the presidency and vice presidency of the United States on Dec. 14, Trump appeared to be out of legal options in his attempt to cling to office. But there was one more legal hurdle to clear before the presidential election was formally complete. This was the counting of the electoral vote and announcement of the results to a special joint session of the House of Representatives and Senate by the president of Senate, which was Trump’s vice president, Mike Pence.

At this point, if a member of the House mounts a challenge to the electors of a given state and is backed by a member of the Senate, both houses of Congress have to vote on the challenge. If the challenge is approved by both chambers, the electoral vote of that state is declared invalid. This year, a number of extreme right-wing Republican congressman and some senators announced that they would indeed mount such challenges in a series of swing states that were carried by electors pledged to the Harris-Biden ticket.

Such challenges, though they have occurred occasionally, have always been overwhelmingly voted down. This year, it was clear that the challenges would also be defeated. First, because as far as the Senate is concerned, they did not have support of Republican leader Mitch McConnell, and second, because the Democrats have a majority of the House of Representatives. Trump not only would have had to overcome McConnell’s resistance but split off some Democrats in the House to have any chance of prevailing.

But Trump hoped that the Electoral College vote could be nullified on Jan. 6, which would then move the election to the House of Representatives where Trump would be “elected” to a second four-year term. Or perhaps Trump hoped Vice President Mike Pence could simply announce that not Biden-Harris but Trump-Pence had carried the Electoral College.

When Pence tried to explain to him that the vice president has no such power under the U.S. Constitution, Trump was reportedly enraged and came to view Pence, who had hoped before the Nov. 3 election to become Trump’s anointed successor in four years, as a traitor just as Trump views so many other high officials who have come and gone over the last four years.

With time rapidly running out, Trump decided to play one final card. In the preceding weeks, thousands of MAGA supporters had arrived in Washington waiting to act on the president’s command. On Jan. 6, the command came. As the two houses of Congress were convening in the Capitol to carry out their ceremonial function of certifying the presidential election, Trump addressed a crowd of assembled fascists, some armed with guns, in front of the White House. He announced that they would march to the Capitol. Trump, however, instead of joining them retreated to the White House to watch the show on TV. The fascist mob not only marched to the Capitol, it stormed the Capitol.

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The End of the Trump Era

December 13, 2020

Just as he promised he would, Donald Trump has refused to concede the U.S. presidential election to Joseph Biden. However, on Nov. 23, Emily Murphy, the Trump-appointed head of the General Services Administration, or GSA, finally allowed the Biden transition team to begin preparations for Biden’s assumption of the U.S. presidency on Jan. 20, 2021.

Between Nov. 3 and 23, Murphy had stubbornly refused to grant access to the Biden transition team on grounds that, in Ms. Murphy’s judgment, it wasn’t clear that Biden had won the election. Her decision to begin cooperating with Biden’s transition team was seen as a de facto admission by at least some in the Trump administration that Biden had won the election.

Widespread relief was felt in financial circles that a contested election outcome leading to widespread unrest in the streets, if not outright civil war, had been adverted. The stock market celebrated by rising to new all-time highs and the U.S. dollar rose against gold. However, Trump himself along with many if not most Republican politicians still refused to concede the election. Trump continued to claim that he had in fact won and that Biden and the Democrats had stolen the election through massive fraud.

In a normal U.S. presidential election, the losing candidate concedes the election and congratulates the winner within hours after the polls close on election day. If the election leads to a new president, the outgoing and incoming presidents and their aides work closely with one another until the transition is officially completed. Since the 1896 presidential election, when the losing “silver” Democrat William Jennings Bryan conceded to the victorious “gold” Republican William McKinley, the concession statement from the losing candidate has become an unwritten part of the U.S. Constitution.

This election year had unusual complications because of COVID-19, which made voting at traditional polling stations extremely dangerous. As a result, many voters voted by mail. This had the paradoxical effect of making voting easier for many voters. Perhaps of even greater importance, the racist and bigoted reelection campaign of far-right incumbent Donald Trump led to an extreme polarization of the U.S. electorate. Usually, the differences between the Democratic and Republican presidential candidates are obviously not very deep, if not virtually nonexistent. As a result, most voters, though they generally prefer one candidate to another, do not care that much whether their preferred candidate wins or loses.

But not this time. While Joseph Biden created even less excitement than the usual Democratic candidate, Donald Trump in contrast was either hated — the clear majority view in the U.S. and even more so in the world — or loved by his bigoted white racist supporters. The result was the largest turnout of voters for a U.S. presidential election in decades. As a consequence, the large number of mail-in ballots, combined with COVID-19, messed up the computer algorithms that since 1952 have enabled the networks to accurately call the election with only a minority of the votes counted.

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Trump Loses, Party of Order Wins

November 15, 2020

On Saturday, November 7, at about 11:30 a.m. eastern standard time, the Associated Press finally declared Joseph Biden and his running mate, Kamala Harris, the victors in the 2020 U.S. presidential election. Biden is now the unofficial president-elect. However, he will not officially be the president-elect until January 6, when the newly elected Congress certifies the results of the vote in the Electoral College, which meets on December 14. Then, at noon EST on January 20, Biden and Harris will be sworn in.

Joseph Biden will be at 78 the oldest person by far to assume the presidency, breaking the record set by Donald Trump who was 70. Kamala Harris, 56, will be the first woman and first person of color to serve as vice-president of the United States.

Once the AP declared a winner in the presidential election, the losing candidate — this time the incumbent Donald J. Trump — was expected to offer within a few hours a concession speech. The speech Trump would have been expected to give if he were a normal president would have gone something like this: “The American people have spoken and made their choice. I have just telephoned president-elect Biden and sent him my heartfelt congratulations. Once again, American democracy has demonstrated its strength. Let no foreign foe be mistaken. We are one people and we will rally around President Biden, who is president of not only the those who voted for him but of the entire American people. God bless America and God bless the American people.”

However, in the hours following the AP’s unofficial anointment of Joseph Biden as president-elect, duly seconded by virtually every major capitalist media organization from the strongly anti-Trump New York Times to the staunchly Republican Fox News, Trump indicated that he would continue to pursue legal actions, which virtually all observers agree are hopeless, in a last-ditch attempt to reverse the outcome.

The importance of the concession speech

There is no written constitutional provision that the losing presidential candidate must concede. But it has become an unofficial part of the Constitution since Democrat William Jennings Bryan conceded the 1896 presidential election to Republican William McKinley.

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The U.S. Election and People’s Front Politics

October 25, 2020

A note on the stimulus

I will start with the “stimulus” proposal and how it will affect the evolution of the industrial cycle now beginning. In recent weeks, Trump has been all over the map on the stimulus proposal. In a tweet, he announced that he was ordering the Republicans to end the negotiations with the Democrats. Hours later, after a sharply negative reaction on the stock market, he announced that since the stimulus is desperately needed he is for an even bigger measure than the Democrats have offered.

Trump’s motivation here is obvious. The president, who is sharply down in the polls, sees the mailing out of government checks — with his name on them — as a way to use the vast financial resources of the federal government to buy votes. However, Majority Leader Mitch McConnell and his fellow Senate Republicans have emerged as the main opposition for the stimulus. McConnell is opposed to any aid to ordinary Americans, only to business.

A curious correlation has recently emerged in the financial markets. Whenever the passage of the “stimulus” seems more likely, the stock market rises but so does the dollar price of gold, which measures how much real money — gold — the U.S. dollar actually represents. The higher the dollar price of gold the lower the gold value of the dollar. When passage of a stimulus bill appears less likely, we see the converse. Both stocks and the dollar price of gold fall. That is, U.S. stocks lose dollar value and the dollar gains gold value.

It may seem at first glance that the capitalist class favors the stimulus since the stock market rises whenever passage appears more likely. So isn’t there a common interest between the capitalists — or at least the corporations listed on the main stock exchanges — and the workers, who can certainly use whatever money the government puts in their hands? Due to an accelerating turnover of capital and higher selling prices (to the extent the stimulus checks represent newly printed money that is then borrowed and spent by the U.S. Treasury), as well as higher profits and dividends, stock prices will also rise. Many progressives reason in this way. Only reactionary Republicans, according to them, drunk on their “conservative” or “neo-liberal” ideology are opposed to the stimulus.

Why then does Mitch McConnell, who directly represents the interest of capital as much as is humanly possible, oppose the proposal to put extra money into the hands of the workers if it is so good for profits, dividends, and stock market prices? Is McConnell turning against the interests of business? Hardly. Or is it that he and his donors are blinded by their reactionary conservative, or if you prefer neo-liberal, ideology? Again, the answer is no.

From the standpoint of capital, mass unemployment created by the COVID-19 pandemic provides a unique opportunity for employers to lower wages and increase the rate of surplus value. To the extent that the government feels obliged to put money into the hands of workers if only to damp down unrest caused by the U.S. government’s incredible mishandling of the pandemic, the opportunity to raise the rate of surplus value — the ratio of unpaid to paid labor — is “spoiled” because the workers then feel less desperate and therefore better able to resist the wage cuts.

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The Current Industrial Cycle (Pt 3)

October 25, 2020

A deepening political crisis

On Aug. 23, African-American Jacob Blake was shot in the back by police seven times in Kenosha, Wisconsin. Blake is expected to survive but is paralyzed from the waist down. This latest police outrage triggered a wave of demonstrations by the Black Lives Matter movement in Kenosha and elsewhere. Two days later, a Trump supporter and police wannabe named Kyle Rittenhouse shot to death two Black Lives Matter protesters with a rifle he was carrying. Rittenhouse, who lives in Illinois, is a member of a fascist militia group that came to Kenosha for the announced purpose of defending the property of business owners from Black Lives Matter protesters.

The cops were seen thanking the fascists and offering them water. After Rittenhouse killed the two protesters, he walked up to the cops with his hands up. However, the guardians of “law and order” refused to arrest him. He was finally arrested and charged with murder only after he returned to Illinois. U.S. President Donald Trump then weighed in. Trump defended the young fascist killer claiming that Rittenhouse faced certain death if he had not acted to defend himself. Trump also attacked the alleged violence of “left-wing” — Black Lives Matter — protesters but defended the violence of Rittenhouse and other murderous right-wing counter-protesters.

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The Current Industrial Cycle (Pt 2)

August 30, 2020

After Congress deadlocks, Trump issues decrees

On August 8, Donald Trump at a meeting of wealthy members of a New Jersey country club he owns announced a series of Executive Orders. These decrees supposedly dealt with the problems of unemployment insurance and mass evictions. Trump claimed they would protect the expanded unemployment insurance unemployed workers have received under the emergency CARES Act passed last March and extend the moratorium on evictions that was part of the Act. Trump also claimed he is giving workers earning less than $100,000 a year — essentially all people who can reasonably be considered “workers” — tax relief through a payroll tax cut. The tax cut is only a moratorium on the collection of the employee contribution — collected by the boss — to finance the Medicare and Social Security trust funds. Trump, however, indicated that if he is re-elected to a second term he will make the abolition of the payroll tax permanent.

The background to Trump’s announcement was the July 31 expiration of the expanded unemployment benefits of $600 a week and the moratorium on evictions. Under the CARES Act, the government handed out trillions of dollars to the capitalists under the pretext of counteracting the effects of the economic collapse associated with the COVID-19 pandemic. But the CARES Act also included a few “sweeteners” for the working class. These included expanded eligibility for unemployment insurance and an increase in unemployment payments by an extra $400 a week plus a federally mandated moratorium on home foreclosures and evictions.

These measures have indeed been a lifeline for the tens of millions of people who have become unemployed since March. However, there was a catch. Under the CARES Act, the moratorium on evictions and the extra $600 in unemployment insurance were to expire in only four months. The Democrats and Republicans, and above all Trump, “assumed” that the pandemic would be over by July 31 and that the millions of people who lost their jobs in March and April would be back at work by then.

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My rant in place of the regularly scheduled post

August 23, 2020

The next post will have to be delayed a week and I owe my readers an explanation. I realized after a little thought that this “explanation” is an opportunity to examine some of the economic laws we have been exploring throughout this blog.

In the early hours of Sunday, Aug. 16, a rare summertime cluster of thunderstorms, spun off one of the many tropical storms popping up like mushrooms this year due to global warming, swept the Bay Area in California where I live. Awakened by the storm, I noticed my clock radio was out indicating the power had failed. Normally, when the power fails it comes back on in a few hours at worst. I assumed that the power would be back on by the time the sun came up in the morning, or in the worst case shortly thereafter. The longest power outage I have experienced here was in December 1995 when a violent winter storm with near-hurricane-force winds caused the power to fail early in the evening. But even then the power came back on around dawn. Surely, I assumed, this power outage wouldn’t last longer than the one associated with the 1995 storm. I was wrong.

The block where I live seems to be prone to power outages. The power frequently fails for a few hours during winter storms, and sometimes it will go out when there is no storm or earthquake or for any other obvious reason while it stays on in surrounding blocks. Clearly, there is some weakness in the power delivery system for my block that has persisted over many years and Pacific Gas and Electric has done nothing to repair. Without power, I lose access to the Internet and thus normal fact-checking. With my laptop, I can still type, of course, but only at the cost of running down the battery. If the battery runs out of juice, I have no computer at all until the power comes back on.

The power finally came back on Monday morning but my schedule was in ruins. I have little reason to complain about what was personally a minor inconvenience and nothing more. In areas of the U.S. hit by major hurricanes and floods, power outages can last for weeks. And in many countries oppressed by U.S. imperialism, power might be on for only a few hours a day even under normal circumstances. However, there is a broader story here, far more important than some minor personal inconvenience that in and of itself would not be worth writing about.

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The Current Industrial Cycle (Pt 1)

July 26, 2020

COVID-19 devastates the U.S.

It has now become clear that the COVID-19 pandemic has hit the U.S. harder than any other large nation — and most smaller ones. The U.S. ruling class and Trump administration have been particularly enraged by China’s ability to largely check the pandemic. China has had far fewer cases, hospitalizations, and deaths despite its far larger population. Though the U.S. has only about 4 percent of the population it has 25 percent of the world’s COVID-19 cases.

Both Trump and the U.S. ruling class as a whole, including Democratic presumptive nominee Joseph Biden, have stepped up their anti-China propaganda — often combined with old-fashioned red-baiting — on numerous fronts. In Trump’s case, the anti-China attacks have an openly racist character. He regularly refers to COVID-19 as the “Chinese flu” or the even more racist “Kung flu.” This is typical Trump.

Less commented on is the record of Vietnam. Vietnam acted early and effectively in controlling the pandemic, first reported in its northern neighbor late last year. According to the website Exemplars of Global Health, “Although Vietnam reported its first case of COVID-19 on January 23, 2020, it reported only a little more than 300 cases and zero deaths over the following four months.”

Exemplars reports that Vietnam’s “early success has been attributed to several key factors, including a well-developed public health system, a strong central government, and a proactive containment strategy based on comprehensive testing, tracing, and quarantining.” Not mentioned is the fact that none of the factors that have enabled Vietnam to deal so successfully with the COVID pandemic would have been possible without Vietnam’s successful struggle half a century ago against the attempt by U.S. imperialism to destroy it in the name of “fighting communist aggression.” The Southeast Asian country is still struggling with the effects of the infamous “Agent Orange” defoliation program and other effects of the brutal “American war,” as it is called in Vietnam.

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The Crisis (Pt 11)

June 28, 2020

Is capitalism approaching its limits?

In the first years of the 20th century, Rosa Luxemburg expressed great alarm when she discovered that Marx’s formulas of expanded reproduction in Volume II of “Capital” suggested that capitalism can in principle go on forever. These formulas appeared to contradict Marx’s famous Preface in “A Contribution to a Critique of Political Economy.” There Marx wrote: “No social order ever perishes before all the productive forces for which there is room in it have developed [my emphasis — SW] and new, higher relations of production never appear before the material conditions of their existence have matured in the womb of the old society itself.”

If, however, capitalism can engage in expanded reproduction without limit, how can capitalism ever develop all the productive forces “for which it has room”? Didn’t Marx himself mathematically demonstrate that capitalism can develop the productive forces without limit? However, a closer look reveals this apparent contradiction to be an illusion.

In the Volume II formula, the productive forces expanded only quantitatively but not qualitatively. There is no growth in labor productivity or what Marx called the organic composition of capital — the ratio of constant capital, which does not produce surplus value but merely transfers its value to the commodities it helps produce, and variable capital, the sold labor power of the workers, which replaces its value and produces additional surplus value.

It is also assumed that the correct proportions of production, including the correct proportions between Department I, which produces the means of production, and Department II, which produces the means of consumption, are maintained without explaining how they are maintained. And — almost always overlooked — among the correct proportions between the various branches of production that must be maintained is that between the production of money material and all other branches of commodity production.

In reality, the concrete history of capitalism has been marked by growth in labor productivity. The rate at which productivity grows is largely regulated by the competition between the industrial capitalists and the workers. To maximize their profits, the industrial capitalists as the buyers of labor power try to pay the workers the lowest possible wage. The workers as the sellers of labor attempt to get the highest possible wage right up to the mathematical limit where surplus value — and therefore its monetary form, profit — disappears altogether.

If Marx’s formulas show expanded capitalist reproduction running forever, it must be assumed that the quantity of auxiliary materials and the ores out of which money material is produced, and the supply of labor power that produces the means of subsistence for the workers, must be available in infinite quantities. If this is true — which it obviously is not — then the population, including the fraction of the population that consists of workers, can grow to the mathematical limit of infinity and capitalism can indeed go on forever. Otherwise, it can’t.

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The Crisis (Pt 10)

June 21, 2020

The police and the state

On Sunday, June 7, the Minneapolis City Council, by a veto-proof majority, voted to disband its police department over the opposition of the Democratic mayor. This doesn’t mean that Minneapolis police are about to be abolished. To believe this would be naive. For one thing, the abolition of the police would violate the Minneapolis City Character — the equivalent of a city constitution, which mandates the existence of a police department. And even if the Minneapolis Police Department were to be formally abolished, there are many other police agencies such as the Sheriff’s Department and the Minnesota State Patrol that could step into its role.

The significance of the City Council vote lies elsewhere. It represents an attempt by Democratic Party politicians to halt the growing movement in the streets demanding the abolition — not the reform — of the police. Once this is done, the Democrats figure that they can count on the courts to render their vote to “disband the police” harmless. It will then be back to business as usual.

But the real significance of the demand to abolish the police is that, even at this early stage, the incipient U.S. revolution cannot but begin to realize that the state consists of a body of armed men, and now some women, plus material extensions such as prisons. The state exists to defend capitalist private property in the means of production. It cannot be reformed. It must be smashed and replaced by an entirely new system of “public safety.” All this is in line with the writings of Marx, Engels and Lenin on the state.

The demand to abolish or “de-fund” the police is being raised not because the demonstrators have read the Marxist classics — very few have — but because their practical experience in what is, in essence, a class struggle points in the direction of getting rid of — not reforming — the police. Since the May 25 murder of George Floyd by Minneapolis police officers, which was duly recorded on cell phone video, anti-racist demonstrators have put the demand to abolish the police into the mainstream of political discussion in the U.S. for the first time.

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