Some Observations on ‘Obamacare’ and the NSA Spying Scandal

Two events have dominated the news over the past few months. One has been the “Obamacare” reform in the United States. The Republican Party, which controls the U.S. House of Representatives, threatened to default on the debts of the federal government unless Obamacare was repealed.

The other big story has been the continuing revelations of Edward Snowden about the widespread spying by the U.S. National Security Agency. Snowden’s revelations have lifted a corner of the curtain that hides the extent of U.S. spying on its European NATO “allies”—both the governments and the peoples of Europe.

This spying included the NSA’s tapping of German Chancellor Angela Merkel’s personal cell phone. More important has been the revelation that hundreds of millions of phone calls of people in Europe have been monitored by the NSA. As a result, Washington’s recent campaign against spying by the Chinese government on users of the Internet in that country has fallen flat. The world’s biggest “computer cracker”—someone who breaks into computers or computer networks with malicious intent—turns out be Uncle Sam himself.

Snowden revelations bares the essence of the U.S. world empire

Since the end of World War II, the U.S. has pretended that the “alliance” between the U.S. and France and Britain is an alliance between equals. Since the 1950s, this claim has been extended to the two former chief Axis powers, Germany and Japan. (1)

The mask of an alliance of equals has been ripped away by Snowden’s latest revelations. It should be remembered that the NSA, an agency of the U.S. military, is only a part of the vast U.S. spy apparatus, both military and civilian. The chief U.S. international spy agency is not even the National Security Agency but the Central Intelligence Agency. In addition to the CIA, there is the Defense Intelligence Agency, or military intelligence, and the foreign espionage operations of the FBI (2), as well as the intelligence agency of the U.S. State Department. And this comes nowhere near exhausting the list.

Snowden’s disclosures have embarrassed the Obama administration and brought a wave of formal diplomatic protests from European capitals. What is worrying the European politicians is not so much the extent of the U.S. surveillance that they are under—they are well aware that being closely watched by Washington’s spy agencies is an integral part of their membership in the NATO “alliance.”

More importantly, the Snowden revelations have exposed the extent to which European governments function as imperialist satellites of the U.S. and do nothing to protect their own citizens and even businesses from massive U.S. political and economic espionage. Many believe that a future inter-imperialist war among the NATO “allies” is unthinkable. But if this is so, why does Washington go to so much trouble to spy on its so-called allies?

The new global financial crisis that wasn’t

The other big story has been the new great global financial crisis that wasn’t. The main subject of this blog is not the exposure of the U.S. spy apparatus, an area where I have no particular knowledge or qualifications, but rather examining the nature of the capitalist economic crises caused by the periodic general overproduction of commodities. However, capitalist crises of overproduction are not monthly events but instead tend to recur every decade, give or take a few years.

Therefore, the next major global cyclical economic crisis is due in about four or five years’ time. However, if we believed the October 2013 headlines, the U.S. Congress came close to producing a global economic disaster all on its own, without the assistance of a cyclical crisis, by forcing the U.S. government to default on its debt.

The Republican majority in the House of Representatives had threatened not to increase the amount of debt that the U.S. government could legally carry unless the Obamacare reform was defunded—which would have effectively repealed Obamacare. In order to force the repeal of Obamacare, the Republican majority in the House “shut down” the federal government for several weeks.

In most respects, however, the government continued to function. There was apparently no interruption of NSA spying, for example, nor were the ongoing military operations in Afghanistan and Pakistan affected.

But U.S. national parks were closed and 800,000 civilian federal workers were laid off for several weeks. It seems likely that the government “shutdown” played a role in the slight decline in U.S. industrial production that the Federal Reserve Board reported for October.

Of much greater concern to the world capitalist economy than a brief economic slowdown caused by the shutdown was the threat by the Republicans to force the government to suspend payments due its creditors by refusing to increase the U.S. government debt limit, now around $17 trillion, if Obamacare was not repealed or defunded.

If this had actually happened, the U.S. Treasury would literary have run out of money—not for economic reasons but for purely legal reasons—and the U.S. national debt would bounce like a check written against insufficient funds. In reality, there was never any chance that this would happen. Indeed, global financial markets were remarkably calm during the “crisis” despite the dire threat that for several weeks seemed to hang over the world economy. And the reason this was true tells us a lot about the nature of the society we live in.

What is Obamacare?

I will make no attempt to describe Obamacare in full, since that would fill a book full of legal jargon. But it is useful to understand Obamacare’s essential features.

Obama’s health reform program, dubbed “Obamacare” in the media, is due to go into effect on January 1, 2014. (3) Instead of providing free medical care for all people, as is the case in many other capitalist countries, Obamacare is a complex scheme designed to make private medical insurance “affordable” to all legal residents of the U.S.—so-called “illegals” are excluded.

Under Obamacare, medical insurance companies can no longer deny insurance to people with pre-existing conditions, as was the case under the strictly profit-driven system that was in effect and remains in place until January 1. It is that wonderful system that the Republican Party, supported by much of the media, is trying so hard to retain.

Under Obamacare, the federal government will subsidize private insurance for high-risk or elderly people or people unable to afford insurance because of insufficient income while allowing the insurance companies to recoup any reduction in profits by charging higher premiums to low-risk healthy younger people. In this way, the profit interests of the insurance companies will be carefully safeguarded. Proposals for a public option—in effect, a federally owned insurance company—were defeated because providing such an option would have undercut the profits of the private insurance companies.

As a consequence of Obamacare’s safeguarding of these profits, some people are either losing the health insurance plans they had previously purchased from private insurance companies or are seeing their insurance premiums rise sharply. This is providing an opening for the Republican Party and its media allies to gain a hearing from those working people who are losing under Obamacare—mostly the young and healthy—rather than gaining from the program.

This enables the Republicans to appeal to the young, healthy and slightly better off working people who can afford insurance policies at “free market prices”—as against the old, sick or super-exploited workers. (4) The Republicans are therefore able to get away with what would be political suicide for the right-wing conservative parties of other capitalist countries if they dared attack the principle of universally available medical care.

Medical care and basic Marxist theory

The medical care for-profit system gradually developed with the rise of capitalist production from the 16th century to the dawn of the 20th century. After that, it began to be modified in various capitalist countries in various degrees due to the struggles of workers’ parties of the Second and Third Internationals. (5)

The classic capitalist medical care system consists of a complex of institutions built around the profit motive. First are the private for-profit medical schools that charge medical students high fees—more or less the price of production—for the privilege of studying medicine. Many who wish to be doctors in order to cure sick people are thus eliminated or forced to settle for careers as nurses or paramedics. In addition, unless the medical students come from rich families, they are expected to pay off their student loans by charging their patients “all the market can bear” fees.

Drug patents a global health hazard

Second, there is the role of the for-profit companies that produce medicines as commodities. These companies are granted patents for medicines they develop that enable them to charge prices far above the price of production that capitalist competition forces the makers of “generic” drugs to charge.

The rationale put forward in defense of these drug patents is that the drug companies need the super-profits to finance the development of new medicines. But the current patent system as practiced in the U.S., and imposed on much of the rest of the world through the U.S. world empire, is designed above all to protect the monopoly profits of the politically powerful drug monopolies. Indeed, the current U.S. system of medical patents can only be described as a major global health hazard.

Third are the for-profit insurances companies. In order to earn at least the average rate of profit for their owners, these companies sell insurance policies according to the contingent liabilities that they assume may actually have to be paid. The greater the chance that these contingent liabilities will have to be paid, the more the insurance companies charge for their policies.

As a result, the price of an insurance policy is low if you are young and healthy and much higher if you aren’t. The more you need medical insurance, the less likely you will be able to afford it. Therefore, unless you were at least quite well off before Obamacare, it was practically impossible to purchase medical insurance if you had a “pre-existing” medical condition. This all makes perfect sense if you are managing an insurance company trying to maximize profits for your shareholders.

Finally, the classic capitalist medical system depended on what I will call businessmen-doctors. (6) Under this system, doctors are encouraged to engage in private practice—that is, function as businessmen—with the aim of making as much money as possible. Though these businessmen-doctors are not necessarily industrial capitalists—they have to perform the work of doctors—they are expected to hire and exploit workers to help them out. These include nurses and other “medical assistants,” bookkeepers, and other clerks. The larger their private practice becomes, the more of these workers the businessmen-doctors hire and exploit.

Some of these businessmen-doctors do evolve into full-scale industrial capitalists, becoming the owners of private for-profit hospitals and nursing homes. The latter, in particular, are often hellholes where very sick or aged people spend their final days in nightmarish conditions.

There are many idealistic doctors who are interested in helping sick people, fighting against disease, and extending the human life span rather than getting rich. But the classic capitalist medical system discourages such idealistic motives at every step, just like it discourages idealistic young lawyers who want to help those who are victimized by the capitalist criminal justice system. Just as is the case with lawyers, the professional associations of doctors are dominated by businessmen-doctors who hold that the classic capitalist medical system dominated by “market principles” is the best possible medical system. Therefore, idealistic doctors are obliged to fight the reactionary doctors’ organizations such the U.S. American Medical Association.

The interests of the businessmen-doctors—those doctors who are interested in making as much money as possible as opposed to doctors who are interested in curing sick people, fighting disease, or extending the human lifespan—are best served by keeping the number of doctors as few as possible. After all, according to the laws of competition, the fewer doctors there are the less competition there is between them and the higher the fees they can charge. Therefore, any moves to open up medical education for all those who want to become doctors and can show that they are able to master the subject are strongly opposed by the businessmen-doctors and their organizations.

The businessman-doctor as a social type is the opposite of the doctors that are encouraged in revolutionary Cuba. There, any young person who can demonstrate that they are capable of becoming a doctor can indeed become one. Many of the doctors are women, and Cuban medicine, despite its extremely limited resources due to the U.S. blockade, has become the wonder of the world. The example of Cuban medicine, including the scientific discoveries and medicines that are being developed with such few material resources, is hated by the U.S. medical establishment.

The U.S. government is working night and day to destroy the Cuban medical system. (7) What progress could be achieved in health care and medical science if the resources of the entire world economy were combined with a Cuba-like medical system? To achieve this, however, we would have to completely overcome the resistance of the capitalist medical establishment and the rest of the capitalist class through a global workers’ revolution.

The supporters of the U.S. medical system like to boast that the U.S. has the best medical system in the world. Why tamper with it, these people argue, by implementing the Obama medical reforms. Is this simply empty boasting? Not really. It is a matter of class. If you are very rich, the U.S. medical system is indeed the best in the world. But if you are a worker it is a different matter.

For example, if I am a poor worker and am in urgent need of open heart surgery, under the pre-Obamacare medical system that the Republicans are trying so hard to preserve I would not be able to afford to purchase medical insurance—I have a pre-existing medical condition, after all. And I certainly will not be able to meet the doctor’s bill without insurance.

But assume I am rich and healthy but want a nose job. Since I can afford costly medical insurance and will be able to pay any doctor’s bills out of my pocket in any event, I will be able to get this unnecessary surgery much faster than in the countries with socialized or quasi-socialized medicine. The market sees to it that I as a customer who has the means to pay am quickly provided the best of care. To me as a very wealthy person, the U.S. medical system is the best in the world.

But for the vast majority of people, especially if you are a worker, and even if you belong to the “middle class,” the U.S. medical system is the worst system in the world once you factor in the vast wealth of a country that exploits the entire world. And since even in the U.S. wealthy capitalists represent a small part of the total population, the figures that measure the overall performance of the U.S. medical system relative to those of other countries are devastating.

Let’s take a brief look at some health statistics. Two main measures of the health of a national population are life expectancy and the level of infant mortality per 1,000 births.

According to the World Health Organization, the U.S. ranked 33rd in terms of life expectancy in the five-year period ending in 2010. This puts the U.S. well below all other imperialist countries as well as some non-imperialist capitalist countries. For example, South Korea, a neo-colony of the U.S., is listed as number 17, well above the U.S.’s own ranking.

How does the U.S. medical care system stand up against the medical system of blockaded Cuba? Remember, Cuba in addition to facing the U.S. blockade for more than 50 years has faced a double blockade for more than 20 years due to the destruction of the Soviet Union under the Gorbachev and Yeltsin governments. Despite this, for the years 2005-2010, according to the estimates of the United Nations Department of Economic and Social Affairs, U.S. life expectancy is below that of double-blockaded Cuba.

The other main way public health is measured in a country is the ratio of infant deaths to every 1,000 live births. Here, too, the U.S. ranking is dismal. According to the CIA World Factbook—the Central Intelligence Agency is among other things an official agency of the U.S. government, after all—the U.S. in 2013 had 5.9 deaths per 1,000 live births. This compares to double-blockaded Cuba with only 4.76 deaths per 1,000 live births.

According to the United Nations World Population Prospects report for the years 2005-2010, the U.S. ranks 34th on this index below all other imperialist countries, some non-imperialist capitalist countries—as well as Cuba.

What the official statistics hide

These numbers must not be looked at uncritically. The figures compiled by various capitalist agencies take no account of class. If we examined the number of deaths per 1,000 live births or the life expectancy of only the working class, the U.S. would rank far lower than it does in the official figures.

Why Obamacare?

Since there is no sign that a mass workers’ party is rapidly developing in the U.S. at this time, why is the Obama administration and the purely capitalist U.S. Democratic Party reforming the U.S. medical system at all? The reason is that there is one fly in the ointment of the otherwise wonderful U.S. pre-Obamacare health care system from the viewpoint of one group of the rich—namely, the industrial capitalists.

Industrial capitalists—and these include the industrial capitalist corporations—have to purchase a peculiar commodity called labor power that alone produces surplus value. Part of the value of the commodity labor power is the cost of medical care—equivalent to the cost of repairing machinery from the viewpoint of the industrial capitalist. Therefore, the industrial capitalists have an interest in keeping the value and price of labor power as low as possible. This is how the rate of surplus value and the rate of profit is maximized. Unless they happen to be engaged in the medical care business, the industrial capitalists have an interest in keeping the cost of medical care down.

Fortunately, due to the struggle of the workers’ movement during the 19th and 20th centuries, most capitalist countries have either abandoned or considerably modified the classic capitalist medical system in favor of socialized or quasi-socialized medical schemes. As a result, in these countries the cost of medical care is much cheaper, and to that extent the value of labor power is lower, putting the U.S. industrial capitalists at a major competitive disadvantage.

The current U.S. medical care system, dearly beloved by the rich and the Republican Party, therefore happens to stand in the way of the “re-industrialization,” or at least the halting of the “de-industrialization,” of the U.S. If this de-industrialization were to continue at the pace it has been going since 1979, the inevitable fall of the U.S. global empire would be considerably accelerated. Hence, Obamacare.

Obamacare was actually designed by “moderate elements” of the Republican Party—the faction that seeks to represent the interests of U.S. capitalism as a whole—as a “market-based alternative” to socialized medicine. But there are still many capitalists, such as the infamous Koch brothers, and their allies, such as businessmen-doctors, who think even the market-driven Obamacare system is opening the door to socialized medicine in the future. Obamacare does, after all, claim to be based on the idea that medical care is a basic human right—whether Obamacare delivers it or not is another question—and not simply a commodity like any other whose price reflects the cost of production as determined on the free market.

This promise of Obamacare does cut across the grain of capitalism. In addition to these general “ideological principles,” businessmen-doctors may fear that insurance companies will put pressure on them to hold down their fees compared to the situation before Obamacare, since Obamacare prevents the insurance companies from charging “economically rational prices” according to long-established actuarial principles. Also, Obamacare is partially financed by a tax on medical equipment, a highly unpopular tax if you happen to be an owner or producer of medical equipment.

In addition, owners of private for-profit hospitals and nursing homes may fear increased regulation or, even worse, pressure to create municipal- or state-owned hospitals and nursing homes. Therefore, to a certain extent at this particular time, the U.S. medical complex finds itself at odds with the broader interests of the capitalist ruling class.

U.S. Constitution protects the rights of property owners whose interests conflict with the property-owning majority

It is a peculiarity of the U.S. Constitution—and I don’t mean only the written constitution but the unwritten constitution as well—that the rights of any group of property holders whose interests conflict with the majority of property owners are carefully safeguarded. The origins of this peculiarity in the U.S. Constitution, as so much else that is backward and reactionary in U.S. society compared to other capitalist countries, lies in African slavery.

In the wake of the U.S. War of Independence, the U.S. slave owners demanded and won elaborate safeguards for their “peculiar” type of private property—African slaves, often in the name of “states rights”—before they would agree to enter into a union that they feared would sooner or later be dominated by other large property owners—industrial capitalists—who based themselves on “free labor”—that is, the wage-labor system.

The base of the modern Republican Party—the Republican Party that emerged after the realignment of the Democratic and Republican parties that occurred due to the Civil Rights movement and ending of legal Jim Crow—is composed of various arch-reactionary interests, including ironically those who glorify the traditions of the southern “Confederacy.” The Republican Party has come a long way since the days of President Abraham Lincoln.

Prominent among the base of the modern Republican Party is the medical establishment, which is quite happy with the traditional capitalist medical care system that has served them so well. The opponents of any medical reform form an important part of the so-called “Tea Party” faction of the Republican Party. The Tea Party is also picking up support from those who would have everything to gain from a genuine system of socialized medicine but are losers under Obamacare, which so carefully safeguards the interests of the private insurance companies.

Playing to this base, the Republicans in the House of Representatives threatened to refuse to raise the the amount of debt that the federal government could assume unless Obamacare was basically repealed.

It was this that put the House Republicans on a collision course with Wall Street. This is not because Wall Street is necessarily all that enthusiastic about Obamacare. From the point of view of those on “the Street,” a case can always be made that the cost of medical care should not be part of the value of labor power at all. That would in their view be part of an ideal “market-based solution” to the high cost of medical care.

True, this would mean a less healthy and shorter-lived workforce and would run the risk of a workforce less productive of surplus value as well. On the other hand, this approach would have the advantage of more quickly eliminating from the ranks of the living people who are past working age and are therefore useless to the capitalist class. This would help among other things to reduce the cost of financing Social Security. And of course, it would be well in accord with market principles.

However, even in the U.S. there would be a lot of resistance to going back to the standards of the 18th and 19th century when workers pretty much did without medical care, and medical science was in any event far less capable of fighting disease and saving lives than is the case today.

Be that as it may, this does not in the view of Wall Street affect the principle that the obligations owed them by the U.S. federal government must be paid on time and in full, come what may. Therefore, through the media, Wall Street even threatened to run candidates in Republican primaries against Tea Party Republicans who failed to grasp the necessity for the prompt and full payment on the national debt to come before all else.

To understand why Wall Street read the riot act to the Tea Party, it is necessary to look at the structure of the present-day international monetary system that forms the foundation of the U.S. world empire. Let’s review the essence of the U.S. global empire.

First, military and political power is centered in Washington. Germany and Japan never fully recovered the sovereignty they enjoyed before the war, while Britain and France found their own sovereignty rapidly eroding towards that enjoyed by Germany and Japan.

However, the U.S. did not use its overwhelming power to destroy the economies of Germany and Japan, though it was tempted to do so immediately after World War II. If Washington had followed such a policy, it would have run into the resistance of the workers, who would have faced massive and permanent pauperization. And if that resistance had been crushed, Washington would have faced nationalist movements that the German and Japanese ruling classes would have supported in a last-ditch attempt to save their capital. Instead, unlike the case after World War I, the U.S. opened up its vast domestic market to them in exchange for their lost sovereignty.

What the U.S. did not dare do to its defeated imperialist enemies it could hardly do to its “allies” Britain and France. As a result, inter-imperialist economic competition reemerged, but political and military competition has been held in check for almost 70 years by the U.S. world empire.

This is not a historically stable state of affairs. Sooner or later, growing competition among the imperialist countries, combined with uneven development, will tear it to shreds. A future inter-imperialist war is by no means impossible and indeed in the long run is inevitable if the world socialist revolution does not come in good time. But Washington wants to maintain the current relationships as long as it can. To do this, it must among other things maintain the current dollar-centered international monetary system.

Under the dollar system, all primary commodities including oil are quoted in U.S. dollars. As a result, the great bulk of world debts are also quoted in U.S. dollars. Gold, the money commodity, is also quoted in U.S. dollars. This system obliges banks and corporations, as well as countries, to hold the bulk of their reserves in U.S. dollars.

The dollar itself is backed, first, by the gold hoarded in Fort Knox and in other depositories around the U.S. This gold is tightly guarded and the physical locations of it are to some extent kept secret. Second, much of the gold nominally held by U.S. allies is deposited in a huge vault under the U.S. Federal Reserve Bank of New York or in other U.S depositories. Since possession is nine-tenths, if not ten-tenths of the law, the gold held there also effectively backs the U.S. dollar. Why is this so?

If a run should develop against the U.S. dollar, which would take the form of a sudden and dramatic rise in the dollar price of gold on the open market and possibly a dramatic fall in the dollar exchange rate with other currencies such as the euro and yen, the U.S. could sell large amounts of gold in a bid to break the run. Even if it failed to break the run, it would at least buy time to take other measures to halt a run on the dollar such as raising interest rates.

All other countries maintain only small gold reserves—or their gold is locked up in a vault under the Federal Reserve Bank of New York. Instead of gold, they back their currencies by dollar-denominated U.S. Treasury bills, notes and bonds—for example, bills that run for one month, which unlike Federal Reserve Notes—green dollars—yield a certain interest, even if these days a very small rate of interest.

Like gold backs the U.S. dollar, U.S. Treasury bills, notes and bonds back the value of all other currencies, including the euro, yen and Chinese yuan. If a run develops on any of these currencies, the governments and central banks of these countries would sell these Treasury securities in order to halt the run at least momentarily, just like the U.S. would sell gold in the event of a massive run against the U.S. dollar.

Why do countries hold dollar-denominated treasuries?

Even though the threat of a dramatic collapse of the gold value of the U.S. dollar hangs over the global capitalist system, the chance of this actually happening in a given month is slight. And even if the dollar does take a sudden plunge against gold—the dollar price of gold dramatically spikes—it will take considerably more than a month before this is reflected in commodity prices and even longer before it is reflected in dollar-denominated debts. As long as the U.S. dollar remains the global standard of price, and consequently international debts are denominated in dollars, even holding the money commodity gold is speculative and risky. (8)

Even if the long-term trend of the U.S. dollar is downward against gold, the U.S. dollar does occasionally spike against gold, as “gold bugs” learned to their sorrow this year. Indeed, the dollar system could not survive without these occasional significant drops in the dollar price of gold.

In addition to the periodic rises of the dollar’s value against gold, which interrupt its long-term decline against gold, the dollar system is built on the promise that the U.S. Treasury will never default on its dollar-denominated debt. After all, isn’t the ultimate medium of payment under the dollar system Federal Reserve Notes printed by the U.S. Treasury itself, though as we have seen elsewhere in this blog they are issued as money by the U.S. Federal Reserve banks that are themselves closely linked to the U.S. Treasury.

What would have happened if the U.S. had defaulted? Why it didn’t happen

In general, financial markets did not take the threatened default seriously. However, there was a slight fear that there might be a “theatrical” default to match the “theatrical” shutdown of the U.S. government for a few days. As the deadline neared, there was a definite rise in the rate of interest on one-month treasuries. In effect, the market was telling the U.S. Congress that no delay whatsoever in the payment of interest would be tolerated.

As a result, the Republicans had no alternative but to capitulate, though they have continued to do all they can—encouraged by much of the capitalist media—to undermine the Obamacare reform, short of postponing payment on the national debt. That is allowed. It is even encouraged by finance capital. What is simply not allowed is to even briefly delay payment on any obligations that the U.S. government owes to its creditors.

If there was a real delay in the debt payments by the U.S. Treasury, the one-month treasuries would begin to lose their equivalence to cash—Federal Reserve Notes. If such a situation actually arose, it would trigger sooner rather than later a panicky demand for payment in Federal Reserve Notes. The entire chain of credit would break at a thousand points. Credit would contract, the demand for commodities would dry up, factories would shut down and world trade would grind to a halt.

Just as importantly, the entire dollar system would start to fall apart—countries would decide that it would be better to back their currencies with gold rather than U.S. treasuries—and the continued existence of the U.S. empire would be threatened.

A similar situation arose at the height of the last crisis, in September-October 2008. If the banks had not been bailed out, credit would have all but completely ceased with similar results.

This threat is based not on the personalities of the leaders of finance capital but is built into the foundations of the system itself. Finance capital, which commands the great mass of money capital, therefore has become the most powerful sector—though not the only sector—of the capitalist class.

This is hidden to some extent in “normal” circumstances but comes to the fore in crises—during crises of overproduction but not only crises of overproduction—that threaten the credit system in any way. We saw this during the crisis in 2008, and we saw it again in the recent struggle over Obamacare.

How to repudiate the national debt

Socialist parties often include in their programs a repudiation of the huge debt owed to the capitalist money lenders. Is this demand wrong? No. But it can only be accomplished by a government that has broken the resistance of the capitalist class—what Marx called a dictatorship of the proletariat. Such a government would be able to replace the power of money capital in a crisis with a far greater power, the power of the working class—the associated producers—to plan the economy to meet human needs.

But any other type of government—whether a popular front, or a liberal labor government—will always be obliged to do the bidding of finance capital as soon as things “get really serious.” (9)

A changing of the guard at the Federal Reserve

There is one other recent event that deserves examination.

It has been announced that Ben Bernanke, who steered the Federal Reserve System through the last crisis, will not be seeking an additional term as the Fed chair, though he would be eligible. Instead, he is scheduled to be replaced by Janet Yellen, a noted economist in her own right. Janet Yellen will be the first woman to head the U.S. central banking system. This provides us an opportunity to look at the current condition of the world economy and the stage of the global industrial cycle we are now passing through. Barring unexpected developments of great importance, that will be the subject of next month’s post.


1 The third Axis power, Italy, is something of a special case. In 1943, Mussolini’s fascist government was ousted in a coup. The new government then changed sides, aligning itself with the “Allied” powers—the U.S., Britain and the Soviet Union—and declared war on Germany. Before the 1943 anti-Mussolini coup, Italy had been effectively functioning as an imperialist satellite of Germany. Though Italy was definitely an imperialist country in its own right, viciously oppressing its colonies such as Libya and Ethiopia, it was at the same time subordinated to a far more powerful imperialist country, Nazi Germany. Japan, in contrast, though allied with Nazi Germany, was a far more independent imperialist power. (back)

2 The Federal Bureau of Investigation, or FBI, is formally the investigative branch of the U.S. Department of Justice. In reality, it combines both police and intelligence functions. It is the leading internal intelligence agency—political police—of the U.S. while also carrying out certain criminal police functions at the federal level.

Before World War II, the FBI functioned as an international intelligence organization. It then lost a lot of these functions when first the Office of Strategic Services—OSS—and later the CIA were created. But it has held onto certain foreign intelligence functions and is thus a rival of the CIA. In recent years, the FBI has expanded its role as an international police agency working beyond U.S. borders, while the CIA has developed into a paramilitary organization going far beyond its role as a spy agency. This has included holding people the CIA calls “terrorists” without any legal charges in secret prisons around the world. (back)

3 Obamacare sets up an online market—called “exchanges”—where all legal residents of the U.S. can purchase private insurance. The law requires that all legal residents have medical insurance by March 31, 2014. If they don’t, they will be hit with a tax penalty. The software that runs the federal version of the system functioned very poorly, giving those opposed to Obamacare an opportunity to use these technical glitches to push their opposition to universal health care. (back)

4 The Republicans have been encouraging young healthy people not to purchase health insurance as required by Obamacare. Instead, they are telling the young and healthy that the fines they will pay will be less than the cost of Obamacare private insurance. In this way, they hope that Obamacare will be so underfunded it will collapse and the U.S. will then return to a purer form of the classic for-profit health care system. (back)

5 One of the roles of reformist trade unions and workers’ parties in capitalist society is to safeguard the capitalist class from its own excesses. In the U.S., the Socialist Party, which represented the Second International phase of development of the workers’ movement, was much weaker for historical reasons—largely African slavery and its aftermath—than its European counterparts.

Similarly, the U.S. Communist Party, which represented the Third International and post-Third International era of the the workers’ movement, was far weaker—especially after World War II—than its European counterparts. The result was that U.S. trade unions ended up with leaders who oriented to and were members of the Democratic Party, a capitalist party that originally represented the interest of the U.S. slave owners.

The trade unions bought various private medical insurance schemes—and in the case of the old AFL craft unions often functioned as insurance companies for their members—but failed to win universal medical insurance for all. As a result, the U.S. medical system, especially before Obamacare, was a barely modified version of the classic capitalist for-profit health care system. Even with Obamacare, this system will remain closer to the classic capitalist model than is the case in any major capitalist country in the world.

Ironically, the U.S. capitalist class is now paying for these “uncorrected excesses” in the form of the highest medical costs in the world, which is undermining its competitive position. Obamacare is a very belated and weak attempt to deal with some of these uncorrected “excesses.” (back)

6 Perhaps I am being unfair to the male sex by calling doctors primarily interested in making money businessmen-doctors. There are also businesswomen doctors. But it is a fact that medicine is largely male dominated in the U.S., while in socialist countries like the Soviet Union and today in Cuba doctors have been largely of the female sex. (back)

7 The U.S. has a special program that rewards Cuban doctors with money who are sent on international missions and defect to U.S. imperialism. The remarkable fact is not the few Cuban doctors who take advantage of this program but the much greater number who do not.

The U.S. is also doing all it can to encourage the deepening of the concessions to private businesses the hard-pressed Cuban leadership has been forced to make in the absence of economically powerful socialist allies. As part of this campaign, we can be sure the U.S. will be encouraging Cuban doctors who desire to make extra money to engage in a little private practice on the side.

Just like there are many doctors in the U.S. who are motivated by the desire to help the sick and fight disease rather than to make money, there are doubtless doctors in Cuba who are looking forward to becoming wealthy businessmen—doctors in what they hope will be a future capitalist Cuba. The fight to defend the socialist Cuban health-care system is therefore an important part of the fight to defend the Cuban socialist revolution under the current extremely difficult circumstances. (back)

8 This fact is undoubtedly one of the chief causes of the illusion that gold is no longer money and that the dollar can function as money independently of gold. I will take a closer look at this next month when I deal with the changing of the guard at the Federal Reserve System. (back)

9 This is true of the U.S. federal government. Countries like Argentina yesterday and perhaps Greece tomorrow, whose bonds are far from the center of the global monetary and credit system, can sometimes repudiate their debts even under the present system because such debt repudiations will not in and of themselves bring down the entire capitalist monetary and credit system. In the case of Argentina, its debt repudiation proved highly beneficial. (back)


2 thoughts on “Some Observations on ‘Obamacare’ and the NSA Spying Scandal

  1. Hey Rick, the current decline in the price of gold, I believe, is still not sufficient to disprove the Marxist theory of money. Also the decline in gold has not been universal. India for instance has recently undergone a currency crisis where extrodinary measures were used to prevent wealthy Indians moving their capital into gold.
    Plus gold is still 50% above where it was in 2006. It will be longer term trends over the industrial cycle which will in retrospect weaken or strengthen this theory.



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