Archive for the ‘U.S. empire’ Category

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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Prospects for the Economy Under Trump

January 1, 2017

This article will come in two parts. This month, I examine policies of the Federal Reserve and Trump’s domestic policies. Next month, I will end this series with an examination of Trump’s global economic policies.

The Federal Reserve and Donald Trump

On December 14, 2016, the Federal Reserve Open Market Committee announced that it had finally decided to raise the federal funds rate—the rate that commercial banks, not the Fed itself, charge each other for overnight loans—by a quarter of one percent. Instead of targeting a rate of 0.25 to 0.50 percent like it did between December 2015 and December 2016, its new target is 0.50 to 0.75 percent.

Since Trump’s victory on November 8, long-term interest rates have risen sharply. This combined with the decision of the Fed to finally nudge up the fed funds rate indicates that the money market has tightened since Trump’s election. In the course of the industrial cycle, once the money market starts to tighten it is only a matter of time before recession arrives. The recession marks the end of one industrial cycle and the beginning of the next.

As it became increasingly likely that Trump could actually win the Republican nomination, the Fed put on hold its earlier plans to raise the fed funds rate multiple times in the course of 2016. The normal practice is for the Federal Reserve System to raise the fed funds rate repeatedly in the later stages of the industrial cycle. Indeed, this is central banking 101. These policies are designed to hold in check credit-fueled “over-trading” (overproduction), as well as stock market, land and primary-commodity speculation that can end in a crash with nasty consequences.

If the central bank resists raising interest rates too long by flooding the banking system with newly created currency, this leads sooner or later to a run on the currency, which is what happened in the 1970s. The result back then was stagflation and deep recessions with interest rates eventually rising into the double digits, which effectively wiped out the profit of enterprise—defined as the difference between the total profit and the rate of interest. At the end of the stagflation in the early 1980s came the explosion of credit, sometimes called “financialization,” the aftereffects of which are still with us today.

Under the present dollar-centered international monetary system, the repeated failure of the Federal Reserve System to push up interest rates would lead to the collapse of the U.S. dollar and the dollar system. The inevitable result would be a financial crash and thus the military and political crash of the U.S. world empire, which has held the capitalist world together since 1945.

In this cycle, however, the Federal Reserve waited more than eight years after the outbreak of the crisis in August 2007 before it began to push up the federal funds rate. The reason for the prolonged delay is that the current U.S. economic expansion, which began in 2009—representing the rising phase of the current industrial cycle—has been the slowest on record.

During this extraordinarily feeble expansion, the U.S. GDP has grown, with some fluctuations, at a rate of only about 2 percent a year. This performance contrasts sharply with the double-digit U.S. GDP rates of growth that occurred during the expansion of 1933-1937 and again after the severe but brief recession of 1937-1938 during the Great Depression. Far more than in the 1930s, the current era has been marked by “secular stagnation” in the U.S. as well as Europe and Japan.

Beginning with the panic that broke out with the failure of the giant Lehman Brothers investment bank in September 2008, the Federal Reserve engineered an explosion in the dollar-denominated monetary base designed to stave off a new super-crisis that could have been much worse than the one in 1929-1933. This effort succeeded in preventing the crisis from reaching the extremes the earlier super-crisis did in most countries—but not all. For example, the crisis/depression that began in the U.S. in 2007 has been far worse in Greece than the crisis of the 1930s was in that country. But even in countries where a full-scale repeat of the 1930s Depression was avoided, the post-crisis stagnation has been far more stubborn than anything seen in the 1930s.

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Donald Trump, the New Political Chief of Capitalist Society

December 4, 2016

Donald J. Trump, the 70-year-old New York billionaire, real-estate magnate, owner of casinos and golf courses, and former clownish reality star, is the new political chief of the United States and leader of the “free world” (as the U.S. world empire likes to call itself).

Trump was actually defeated by a margin of 2.3 million votes in the election by Hillary Clinton. However, he won an overwhelming victory in the electoral college. The electoral college is itself an undemocratic hangover from when the plantation economy dependent on the slave labor of kidnapped Africans and their descendants dominated the southern U.S. This would be as though the Labour Party in Britain won a small but definite majority in the House of Commons but the House of Lords and the Crown—both survivors of the time when a feudal economy dominated what is now Great Britain—combined to install a prime minister from the Tory Party.

Hail to the Chief!

The big capitalists know full well that, whether or not they like a particular “leader of the free world,” they have only one such leader at a time. Immediately after the proclamation of Trump as “president-elect,” outgoing President Barack Obama wished Trump success. He explained that, whatever differences there might be between the first African American to be elected to the presidency and his right-wing racist successor, “we”—the ruling capitalist class—are “playing on the same team.”

Obama is correct. Hillary Clinton after a lag of a few hours—reports said that she had not even considered the possibility that she would lose and had not prepared a concession speech—delivered a meek statement along the same lines.

Ironically, Trump had declared in the weeks leading up to the election that “the system is rigged” and he might not accept the results. This indicated that Trump himself did not actually expect to win. Whether Trump would have recognized a Clinton victory as legitimate and indicated his support of a President Hillary Clinton will never be known.

The selection of Senator Jeff Sessions of Alabama for U.S. attorney-general indicates that the Trump administration will be the most racist administration since at least the days of Woodrow Wilson. Ronald Reagan nominated Sessions for a federal judgeship, but his racism was too obvious and he was rejected by the Senate. Sessions called African American employees of the Justice Department “boy”—the term of address used by white slaveholders when addressing their African male slaves. Later, in the Jim Crow era, white bosses, officialdom and racist whites would address African American men as “boy.”

Sessions once joked that he had no arguments with the Ku Klux Klan until he found out that Klan members used marijuana. The point of this joke is that Sessions, though he disapproves of weed, has no disagreements with the Klan on the question of race. This joke is beyond offensive and in a decent society would disqualify him for any public office, let alone the position as chief law-enforcement officer. The Sessions nomination gives the lie to any claim that the president-elect is not a racist.

Trump appointed Steve Bannon as White House chief advisor and strategist. Bannon, the former chief executive officer of Breitbart “News,” a far-right website that has provided a platform for the neo-Nazi-ridden alt-right movement, has sent chills down the spines of all American who do not fit the white-nationalist definition of European Americans. As defined by neo-Nazis—or white nationalists, as they like to call themselves today—non-European Americans include the African American community; Latinos, especially but not only the Mexican community; Native Americans; the entire Muslim community and, yes, that other group not considered to be European American, the Jewish community.

Not so long ago, the complacent mainstream leaders of the U.S. Jewish community, who are all Zionists, claimed that anti-Semitism today came from the left. According to these misleaders, anti-Semitism showed itself in the form of the Boycott and Divestment and Black Lives Matter movements because the leaders of these movements expressed solidarity with the struggle of the Palestinian people against Israeli apartheid.

But then a funny thing happened. The old anti-Semitism of “the right”—that is, the real thing—is now raising its ugly head not only in far-off Poland, Hungary and Hitler’s homeland of Austria but right here in the U.S. Recently, the Anti-Defamation League denounced the attacks on Muslims. This is a welcome development though it would be nice if they extended their defense of Muslims to Arab Muslims who are native to Palestine. This illustrates the fact that the state of Israel and the entire Zionist movement are actually barriers in the struggle against fascism and the real anti-Semitism that inevitably accompanies it.

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The U.S. Two-Party System After Trump

September 11, 2016

For reasons I explained in an earlier post, the bipartisan Democratic-Republican leadership of the U.S. ruling class finds the prospect of Donald Trump as U.S. president unacceptable. When the conventions were held in July, polls showed a Trump victory was not out of the question. Indeed, for a brief time in July, after the Republican convention but before the Democratic convention, Trump had a modest lead in the polls against Hillary Clinton.

The media, including media that normally support the Republican Party, then launched a campaign of ridicule against Trump. Trump has even been pictured as an agent of Russian President Vladimir Putin. In the wake of this media campaign, Trump plunged in the polls. Most recent polls show Trump rebounding but still trailing Clinton and some show Trump closing the gap.

In the course of his campaign, Trump has managed to insult or otherwise alienate huge sections of the U.S. voting population. These include African-Americans; Latinos; Muslims of all nationalities, or people who “look” Muslim; Native Americans; anybody else who doesn’t look “white”; and Jews. Trump is also extremely unpopular among many female voters, who represent around half the vote. Polls show that among African-Americans Trump has the support of maybe 1 percent, at most 2 percent, of the African-American population. This is an all-time low for any Democratic or Republican presidential candidate. There was a time when the “Party of Lincoln” got the majority of the African-American vote. In recent years, however, only 4 to 6 percent of African-Americans have voted Republican. Trump has managed to whittle this down further.

Trump is extremely unpopular among younger voters, or “millennials” as they have been dubbed. Never since modern polling began has a candidate of either the Democratic or Republican party polled so poorly among young people of all “races” and genders—who represent the future. This is in contrast to Adolf Hitler during his rise to power, who was particularly popular among the non-working class German youth. The Nazis captured the campuses even before they captured the streets and then the government.

If Hitler had alienated as much of the German population as Trump has managed to do, nobody would recognize his name today. Due to the U.S. empire’s advanced and growing state of decay, fascism remains a growing long-term threat. The Trump campaign has given a boost to those in the U.S. who are trying to build a genuine fascist movement. This development should not be taken lightly. However, the victory of fascism in the world’s dominant imperialist country is not imminent. If fascism some day comes to power in the U.S., it is hardly likely that now 70-year-old Trump will be its leader.

Though a Trump victory in November cannot be excluded at this time, it is likely that the world will have to deal with an extremely hawkish Hillary Clinton, who by all indications favors a more aggressive Bush-like foreign policy than that associated with President Obama.

Not that Obama’s foreign policy has been exactly “peaceful.” However, Obama has tried to avoid large-scale combat on the ground, limiting himself to using “special forces” numbered in the dozens or hundreds. Instead, he has made heavy use of drones combined with conventional bombers in Libya, Iraq, Syria, Yemen and other war theaters. The administration, fearing revived anti-war demonstrations in the streets, has done everything it can to fight its wars with minimal casualties
among U.S. forces.

It should be noted, however, that Obama did not keep his promise to end the war in Afghanistan. After a hundred thousand troops deployed to this war front failed to crush the Afghan resistance forces, Obama agreed to keep a U.S. ground force of around 10,000, combined with bombing using both drones and conventional bombers. This campaign is now set to continue indefinitely.

While Obama rejected the bombing of Syrian government forces, he later opened a bombing campaign in Syria against the Islamic State. The administration has now sent special forces into northern Syria to help Kurdish rebels trying to establish a Kurdish state in opposition to the Syrian government of President Assad—bringing the U.S. closer to open warfare with that government.

Under the more hawkish Hillary Clinton, chances of the commitment of large-scale ground combat forces in the Middle East, Africa or even Ukraine or other areas near Russia will, all else remaining equal, increase. And the increased warfare that Hillary Clinton is indicating she will bring can only, in the long run, strengthen the fascist forces that have been rallying around the Trump campaign in this electoral cycle. A Hillary Clinton victory in November will therefore in no way be a victory in the struggle against the growing danger of U.S. fascism.\

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