Archive for the ‘U.S. empire’ Category

Modern Money

July 1, 2018

By the time of the U.S. presidential election in November 2020, historical experience and the condition of global money markets suggest that the current global economic boom will probably have run its course. While the latest government economic figures show the current boom continuing in the United States and Europe, serious crises have already hit the currencies of Argentina and Turkey.

The dollar after a period of weakness has begun rising against the euro and other currencies and against gold. This sudden dollar strength is not only the result of rising U.S. interest rates. Trump’s threat to impose high tariffs on a whole range of commodities starting on July 6 has set off a flight into the dollar due to its role as the international means of payment. We have seen many such flights into the dollar over the years whenever a crisis threatens, whether political, military or economic.

If no compromise is reached by July 6 and Trump’s tariffs – and the retaliatory tariffs of competing nations – go into effect, it is possible that some commodity sales will fall through, which could trigger an international credit crisis. If severe enough, such a crisis would quickly throw the global capitalist economy into recession. This is all the more likely given the very late stage in the current industrial cycle, which has made the global credit system increasingly fragile even in the absence of a trade war. Whatever happens in the short run, Trump’s economic nationalist “America First” policies are undermining the entire world order that has prevailed since 1945. But that is the subject for another post.

Because capitalist economic crises tend to manifest themselves first in the spheres of currency and then credit, many reformers have sought cures for crises through reforms to the currency and credit systems. This creates the illusion in the minds of middle-class reformers, who stand between the two main class camps of modern society, the capitalist class and the working class, that the contradictions of capitalist society can be overcome through reforming the credit/monetary system. The U.S., in particular, has produced numerous monetary reform movements.

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Three Books on Marxist Political Economy (Pt 17)

June 3, 2018

Apartheid planet and the new racism

John Smith in his “Imperialism in the 21st Century” sees imperialism as evolving towards a form of global apartheid. Under the rule of the U.S. world empire, the freedom of capital to move across national boundaries in its endless search for the highest rate of profit has expanded. However, workers do not have freedom to cross national borders in search of the highest wage.

Since World War II, the nation-state, the cradle of the capitalist mode of production, has been in decline. One example of this decline is the limited sovereignty of Germany and especially Japan since World War II. Even the sovereignty of countries that were allies of the U.S. in World War II, Britain and France, has been severely restricted within the NATO “alliance,” and in the case of Britain within the “special relationship.”

The U.S. and its imperialist satellite states of Western Europe and Japan have opposed every attempt to establish new strong independent nation-states – though with mixed results – since World War II. In the pre-war era, the then-politically divided imperialist countries sometimes gave limited support to nationalist movements in their rivals’ colonies and semi-colonies. Since World War II, the entire imperialist world has been united against national liberation movements in the oppressed world.

Taking the world economy as a whole, the productive forces have long outgrown the nation-state. This was already shown by the outbreak of World War I more than a hundred years ago. In recent years, the revolution in communications represented by the rise of the Internet and the smartphone is increasingly breaking down global, linguistic, and cultural boundaries.

But the nation-state has refused to peacefully fade away into the sunset as the productive forces have outgrown it. In the period between the two world wars, there emerged within the imperialist world a counter-tendency of resurgent economic nationalism, which found expression in increased tariff and other trade barriers. Economic nationalism was accompanied by growing political nationalism, racist anti-immigrant movements, and racism within the imperialist countries. These trends found their most extreme manifestation in Nazi Germany.

Today in the imperialist countries, we once again see a rise of economic and political nationalism accompanied by anti-immigrant movements and growing racism. This extremely dangerous tendency is currently represented by President Donald Trump and his supporters in the U.S., where it is now in power; the current government of Austria; the National Front in France; the Alternative for Germany in Germany, where it is the official opposition party; and their counterparts in other imperialist countries. Though they are not imperialist countries, similar movements dominate governments of many of the ex-socialist countries of eastern Europe such as Poland, Hungary and the Czech Republic

Trump’s recent decision to move the U.S. Embassy in Israel to Jerusalem and recognize Jerusalem as Israel’s “eternal” capital was accompanied by Israeli massacres that have left more than a hundred Palestinians dead and thousands wounded in Gaza. Trump’s move cannot be separated from the broader racist trend that Trump personifies.

Israel itself is the product of an earlier wave of racism that accompanied the economic and political nationalism of the period between World War I and World II that ended with Nazi Germany’s attempt to physically exterminate the entire European Jewish population. Zionist Israel, therefore, links the “old racism” with the new.

Is a kind of global apartheid system emerging, as Smith suggests, that is replacing the increasingly outmoded bourgeois nation-state? Today’s political and economic trends suggest the answer could be yes if the coming period does not result in a victory of the global working class.

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The Current U.S. Economic Boom in Historical Perspective (Pt 2)

May 6, 2018

Trump’s attempts to reverse the decline of U.S. capitalism

In April 2018, the U.S. political world was shaken by the news that Paul Ryan, the Ayn Rand/Austrian school-inspired Republican speaker of the U.S. House of Representatives, would not be running for re-election in this year’s mid-term race. Ryan claimed he was retiring at the age of 48 from politics “to spend more time with my family.”

It is widely believed, however, that Ryan is retiring from Congress because he fears a humiliating defeat at the hands of his Democratic Party opponent, the construction worker, trade unionist, and “Berniecrat” Randy Bryce. Over the last year, many of Ryan’s constituents were no doubt shocked to learn that their handsome, genial congressperson wanted to take away their health insurance.

It seems likely that Ryan, who is believed to harbor presidential ambitions, plans to lie low, make lots of money in the private sector, and count on the public forgetting (with the assistance of the mass media) about his attempt to throw tens of millions of people off their health insurance. At a later day, Ryan will be poised to reenter electoral politics and ride a new Republican wave, perhaps all the way to the White House.

But how could there be another Republican wave in the aftermath of the ever-growing debacle of the Trump presidency and the self-exposure of the Republican Party on the health insurance issue? To assume that a Republican comeback is impossible, would be to ignore the lessons of the last great “progressive” victory in U.S. politics—the election in November 2008 that brought into the White House the first African-American president, combined with solid Democratic majorities in both houses of Congress. However, at the end of Obama’s triumph lurked the racist Donald Trump, backed by Republican majorities in both the Senate and the House.

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The Current U.S. Economic Boom in Historical Perspective (Pt 1)

April 1, 2018

U.S capitalism has been in decline for decades. Within that long-term trend, U.S. capitalism continues to experience cyclical booms. During its dramatic rise between 1865 and 1929, the U.S. economy experienced three major financial panics—1873, 1893 and 1907—along with numerous lesser recessions. However, the increase of the number of workers employed in manufacturing—which represents the core of capitalist production and the core of the working class—that occurred during the industrial booms of that era was greater than the declines that occurred during recessions. In the years 1945-1979, though the number of workers in manufacturing began to decline relative to overall employment—a symptom of capitalist decay—that number continued to grow in absolute terms.

However, since the recession 1979-82, known as “the Volcker shock,” the pattern has reversed. The U.S. economy has continued to experience cyclical booms—defined as periods of above-average business activity in terms of industrial production, manufacturing, and overall employment and trade—as well as recessions. But the rise in manufacturing employment during booms—if any—has been far less than the declines during recessions. Therefore, the year 1979, which marks the beginning of the Volcker shock recession, represents the most important turning point—not excepting 1929—in the history of U.S. capitalism.

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Three Books on Marxist Political Economy (Pt 13)

December 3, 2017

The value of labor power

The value of labor power is determined by the value of the means of subsistence workers must consume to reproduce their labor power. This includes the developing labor powers of their children, who in time will replace them on the labor market. At the minimum, the means of subsistence must enable the workers to live and raise their children in the biological sense.

Like all commodities, means of subsistence have three values. One is their use values necessary for the reproduction of human labor power. Among these are food, shelter and clothing. Second is the amount of (abstract) labor, measured in some unit of time, necessary under the prevailing conditions of production to produce the means of subsistence. Finally, the commodities that go into the value of labor power have a value form or money price, called the wage.

Regardless of the epoch, there is always a quantity of the means of subsistence below which human life cannot be sustained. As we saw last month, industrial capitalists operating in southern India can pay a wage so low that their workers will be unable to buy warm clothing and winter heating while still expecting them to survive biologically. However, industrial capitalists operating in Siberia, Russia, must pay a wage sufficient to allow their workers to purchase a winter coat and pay for heating. Otherwise, the workers will perish.

Even if workers are barely able to survive biologically, they might still not be able to produce children and raise the next generation of workers. So the biologically determined minimum wage must in addition cover the costs of bearing and raising children. These factors establish a level of wages below which the real wage cannot fall for any extended period of time.

If wages were to fall below the level necessary to buy food, the working class would be extinct within a few weeks, and so would the capitalist mode of production. Without workers, surplus value cannot be produced, and without the production of surplus value, there can be no profit, and without profit there can be no capitalism.

If bosses paid the workers just enough to maintain the workers’ lives but not enough to raise the next generation of workers, the number of available workers would progressively decline, which would also lead to the extinction of the capitalist mode of production. This biologically determined minimum wage is the level to which capital always attempts to depress the actual wage. In the absence of counter-pressure from the side of the workers, the biologically minimum wage will constitute the actual wage.

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Three Books on Marxist Political Economy (Pt 12)

November 5, 2017

John Smith’s ‘Imperialism in the Twenty-First Century’ (Pt 2)

John Smith’s “Imperialism” is aimed against what Smith calls the “Euro-Marxist” or “orthodox Marxist” tendency. This tendency holds that workers in the U.S., Western Europe, and Japan are often more exploited than workers of the “global South”—previously called the colonial and semi-colonial countries and later the Third World—despite the far higher level of real and money wages in the countries of the “global North.”

Marxists who hold this view rest their case, at least in part, on the following quote from Marx that appears in Chapter 17 of Volume I of “Capital”:

” … it will be found, frequently, that the daily or weekly, &tc., wage in the first [more advanced—SW] nation is higher than in the second, whilst the relative price of labour, i.e., the price of labour as compared both with surplus-value and with the value of the product, stands higher in the second [less advanced—SW] than in the first.”

Marx writing in the sixties of the 19th century is saying that English workers could be more exploited than the wage workers of poorly developed capitalist countries. To fully understand the debate around this question, including John Smith’s stand, it is necessary to delve into value theory in general and the theory of surplus value in particular. In doing this, we will explore many questions in regard to both the nature of contemporary imperialism and value theory.

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Three Books on Marxist Political Economy (Pt 11)

October 8, 2017

John Smith’s ‘Imperialism in the Twenty-First Century’

The year 2016 marks the centenary of V.I. Lenin’s famous pamphlet “Imperialism, the Highest Stage of Capitalism,” subtitled “A Popular Outline.” The pamphlet has immensely influenced politics of the last century. This is largely but not only because the author the following year became the leader of the first socialist revolution as well as chief inspirer and de facto leader of the Third (Communist) International—also known as the Comintern. If Lenin had not led the first socialist revolution and/or had not lived to found the Third International, the pamphlet would still have had considerable influence but of course not the influence it has had.

A century after Lenin’s “Imperialism” appeared, Monthly Review Press published “Imperialism in the Twenty-First Century,” by the British Marxist John Smith. As the title indicates, this book aims to do for the Marxist analysis of imperialism in our new century what Lenin’s “Imperialism” did for the last. Smith holds against innumerable critics that Lenin’s basic thesis was not only correct for its own time but also for our own, at least in broad outline.

But Smith’s book is more ambitious than that, and this is what attracted the interest of this blog. Smith is not entirely satisfied with Lenin’s work, which in the Third International, and the more loosely organized international Communist movement that continued after the Third International was dissolved in 1943, was often treated as virtually on a par with Marx’s “Capital.” Smith is dissatisfied with Lenin’s classic pamphlet because, unlike Marx in “Capital,” Lenin does not directly apply value theory. Value analysis is implicit rather than explicit as it is in “Capital.”

Smith in his “Imperialism” attempts to accomplish two tasks. One, he attempts to update Lenin’s “Imperialism.” More ambitiously, he attempts to “complete” Lenin’s work, bringing it into line with Marx’s “Capital,” first published 150 years ago this year. Smith explicitly puts value analysis at the center of his analysis of modern imperialism.

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Three Books on Marxist Political Economy (Pt 10)

September 10, 2017

History of interest rates

A chart showing the history of interest rates over the last few centuries shows an interesting pattern — low hills and valleys with a generally downward tendency. During and immediately after World War I, interest rates form what looks like a low mountain range. Then with the arrival of the Great Depression of the 1930s, rates sink into a deep valley. Unlike during World War I, interest rates remain near Depression lows during World War II but start to rise slowly with some wiggles through the end of the 1960s.

But during the 1970s, interest rates suddenly spike upward, without precedent in the history of capitalist production. It is as though after riding through gently rolling country for several hundred years of capitalist history, you suddenly run into the Himalaya mountain range. Then, beginning in the early 1980s, interest rates start to fall into a deep valley, reaching all-time lows in the wake of the 2007-09 Great Recession. Clearly something dramatic occurred in the last half of the 20th century.

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Three Books on Marxist Political Economy (Pt 9)

August 14, 2017

Last month, we saw that Shaikh’s view of “modern money” as “pure fiat money” is essentially the same as the “MELT” theory of money. MELT stands for the monetary expression of labor time.

The MELT theory of value, money and price recognizes that embodied labor is the essence of value. To that extent, MELT is in agreement with both Ricardian and Marxist theories of value. However, advocates of MELT do not understand that value must have a value form where the value of a commodity is measured by the use value of another commodity.

Supporters of MELT claim that since the end of the gold standard capitalism has operated without a money commodity. Accordingly, prices of individual commodities can be above or below their values relative to the mass of commodities as a whole. However, by definition the prices of commodities taken as a whole can never be above or below their value.

Instead of the autocracy of gold, MELT value theory sees a democratic republic of commodities where, as far as the functions of money are concerned, one commodity is just as good as another. Under MELT’s democracy of commodities, all commodities are money and therefore no individual commodity is money.

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Trump and the Resurgence of Imperialist Economic Nationalism

January 30, 2017

As the inauguration of Donald Trump as U.S. president approached, a political uproar unfolded in Washington that was more fury than substance. A little more than a week before Trump took the oath of office, the on-line site BuzzFeed published an unverified 35-page document by a “former” member of MI6, Britain’s counterpart of the CIA, on Trump’s alleged relationship with the Russian government and its intelligence agencies. Reportedly, the document was originally created on behalf of anti-Trump—Republicans eager to find some dirt that could be used to stop the billionaire political adventurer in the Republican primaries.

The text’s most sensational part was the claim that Russian intelligence obtained documentation of Trump’s perverted sexual tastes while he was staying at the Ritz-Carleton hotel during a visit to the Russian capital in 2013. It is well documented by many other sources that Trump has abused women throughout his adult life. So even if the claims of the document are taken at face value—they would, to tell the truth, be rather tame stuff. For the record, President Trump has strongly denied the allegations, as has the Russian government.

Far more importantly, the document claims that, in exchange for the help of Russian intelligence obtaining and distributing through Wikileaks damning evidence about the Hillary Clinton presidential campaign, Trump’s business organizations passed information about the activities of “Russian oligarchs” in the West back to Russian intelligence. If true, that would mean that Trump engaged in activities that could leave him open to charges of spying for a foreign power, namely Russia, an impeachable offence. Could this form the basis of bi-partisan—”Party of Order“-sponsored—articles of impeachment against Donald Trump in the not too distant future? Stay tuned on that one.

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