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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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 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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After police murder of George Floyd, demonstrations and uprisings sweep U.S.
On June 1, a combined force of military police, park police, and Secret Service brutally cleared an area around the White House of peaceful demonstrators who had been protesting the May 25 murder by Minneapolis police officers of African-American George Floyd. To clear the crowd, these military-police forces used a low-flying helicopter, tear gas, and stun grenades. This was so that President Donald Trump could appear in front of a nearby church Bible in hand.
Trump, who had earlier been sheltering in a special bunker beneath the White House, threatened to invoke the Insurrection Act of 1807, which would permit him to order the military to suppress the massive wave of demonstrations and uprisings that have been sweeping the U.S. since the police murder of Floyd. Trump’s threat to use the military, if carried out, would be a major step towards a military-Bonapartist dictatorship.
Trump’s threats led to a wave of complaints by mostly Democratic politicians and warnings of some retired generals, including Trump’s former Secretary of “Defense” General James “Maddog” Mattis, not to use the military against peaceful demonstrators. Republican leaders, with a few exceptions, either supported Trump or maintained an icy silence.
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U.S. unemployment hits Depression levels
In April, the U.S. Labor Department U-3 measure of unemployment hit 14.7 percent. The U-3 rate had been used over the last year or so to claim that unemployment was the lowest since 1969. In fact, it is designed to greatly underestimate the real level of unemployment. Even some Federal Reserve Board officials admit that the real rate of unemployment is over 20 percent and fast approaching the all-time quasi-official estimate of 24.9 percent that occurred at the very bottom of the Depression in March 1933. Nobody denies that the number of unemployed in the U.S. is in the tens of millions — around 50 million if you believe AFL-CIO President Richard Trumka.
However, it is claimed by Trump and most economists that the current unemployment crisis is the result of the deliberate shutting down of the economy made necessary by the COVID-19 pandemic. What is occurring, according to this logic, is not the long-feared Depression II but the “Great Suppression.” Though unemployment generally declined after March 1933 — except for the sharp but short-lived Roosevelt recession of 1937-38 — “full employment” did not return until the U.S. had entered World War II in 1941. This time, it is claimed by Trump and many economists, in contrast to 1933 there is no underlying economic crisis. Therefore, “full employment” will return much more quickly. The pandemic will have run its course within months, as Trump claims, or at most within several years, as claimed by more cautious economists.
Therefore, the argument goes, while still a terrible situation it is not quite Depression II. Though unemployment may be as bad as during the Depression, it won’t last nearly as long. Anyway, Depression-level unemployment is the necessary price we have to pay to stave off the much greater evil of millions of deaths in the U.S. alone from COVID-19. Not surprisingly, Donald Trump, who had been planning on running on “prosperity and full employment” as shown by the Labor Department’s U-3 unemployment rate, is leading the charge to “open America for business.”
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U.S. infection rates rise as states move to reopen
More and more U.S. states are moving to reopen non-essential businesses though there is no sign the COVID-19 epidemic is dying down. “Take the New York metropolitan area’s progress against the coronavirus out of the equation, Nicky Forster, Carla K. Johnson, and Mike Stobbe wrote May 4 in an Associated Press article, “and the numbers show the rest of the U.S. is moving in the wrong direction, with the known infection rate rising even as states move to lift their lockdowns. … ”
According to a leaked CDC document that appeared in The New York Times and Washington Post, the government projects that new COVID-19 cases will increase 225,000 a day by June, with deaths climbing to 3,000 per day. In early May, when this is being written, new cases are only 25,000 with deaths a mere 2,000. This despite all the social distancing and stay-at-home orders.
With President Trump leading the charge to reopen America for business, state and local governments are competing with one another for which one can lift the social distancing and stay-in-place orders the fastest. So far, these are the only policies that have slowed the pandemic in some areas.
In reality, the pandemic is still gaining momentum nationwide. Thanks to Trump and various state and local governments, the spread of COVID-19 in the U.S. could very well accelerate further in the coming months. A similar pattern is emerging in other capitalist countries. Of course, the growth of the pandemic in one country, particularly one as large as the U.S., is a threat to people of all other countries, since the virus does not respect national boundaries.
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May Day strikes
On May 1, International Workers’ Day, a wave of worker and renter strikes swept the United States. Workers protested the dangerous conditions in which they are forced to work during the COVID-19 pandemic. Among the companies struck were Amazon, Walmart, FedEx, Target, Instacart, Shipt, and Whole Foods. The May Day strikes show the increasing influence the internationalist traditions of the world workers’ movement is having on the U.S. working class, especially among the lowest paid and most exploited workers. The current medical-biological-economic-employment crisis has only deepened this tendency.
Also, and this should be noted, the internationalist implications of the global May Day holiday stand in complete opposition to the traditional AFL-CIO union leaders, Bernie Sanders, and many progressives and newly minted “democratic socialists” going down the disastrous road of economic nationalism and China bashing. Trump and the other economic nationalists, both Democrats and Republicans, are trying to divert attention from the disastrous mishandling of the pandemic by the U.S. government — both federal and state — to China. More on this in the coming weeks.
‘Party of Order’ versus Sanders
As we saw last week, Bernie Sanders has for many years operated well within the limits of capitalist, or — to use traditional Marxist language — bourgeois, politics. He has done nothing to organize an independent workers’ party or an independent workers’ media, either print, radio-TV or Internet. Nor is he internationalist like the working-class leaders of the past, such as Sanders’ personal hero Eugene Debs. Rather, Sanders is an economic nationalist and an imperialist dove.
Why then is the Party of Order so hostile to Sanders? As its leaders know full well, capitalism has in many countries survived presidents and prime ministers far more radical than Bernie Sanders. No knowledgeable person believes that U.S. capitalism would be in danger of being abolished under a Sanders administration.
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The king of commodities
On April 20 (2020), the May futures contract for the delivery of oil fell to a negative $37 per barrel. Since the 1970s, some have suggested that oil has replaced gold as the money commodity, reflected in the term petrodollars. We can now see that this idea is based on a misunderstanding. Oil as the commodity that stores energy as well as serving as a raw material is perhaps the king of commodities as far as its use value is concerned. However, this doesn’t mean that oil is the money commodity, which in terms of its use value measures the value of all other commodities.
What would happen if global production and circulation suddenly became paralyzed? We are now finding out. With production and transportation sharply curtailed around the globe, what is the use value of oil now? Marx explained in Chapter 3, Volume I of “Capital”: “Whenever there is a general and extensive disturbance of this mechanism [credit — SW], no matter what its cause, money becomes suddenly and immediately transformed, from its merely ideal shape of money of account, into hard cash. Profane commodities [such as oil — SW] can no longer replace it. The use-value of commodities becomes valueless, and their value vanishes in the presence of its own independent form. On the eve of the crisis, the bourgeois, with the self-sufficiency that springs from intoxicating prosperity, declares money to be a vain imagination. Commodities alone are money.”
Since oil has storage costs, the owners of May 2020 oil futures contracts were for a day willing to pay buyers to take it off their hands to free themselves of those costs. This shows that not oil but money is the king of commodities. In the words of Marx, the value of oil has vanished in the presence of its independent value form. Even Trump’s move to buy all the oil that the U.S. government can physically store has not prevented the oil price collapse.
When the value of a commodity as important as oil vanishes — though it isn’t only oil that is being affected — in the presence of its own value form, the credit system is thrown into crisis. Credit is based on the assumption of a given price structure. When commodities become unsalable or at least unsalable at the expected price, the credit system begins to break at a thousand and one places. For example, banks lend money to oil companies. If the oil companies can’t sell their oil at profitable prices, they will not be able to pay the banks. How will the banks pay their creditors, which include their depositors? And what about the pension funds loaded up with oil and bank stocks?
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A personal note
In February, I was hit by a staph infection that had spread to the blood. This was the first serious illness of my adult life. Before this infection, I had been free of any illness more serious than the occasional cold or seasonal flu. I was really knocked off my feet and had to be hospitalized.
This was no fun. But no evil is without positive features. I got to see the medical system for the first time in my adult life from the inside. At least here on the West Coast, the medical system is staffed by a mix of many nationalities with a bias toward the Far East — the very group that President Trump with his racist attacks on the “Chinese virus” has made a target of his demagoguery. I was served by medical workers from France, the People’s Republic of China, Vietnam, the Philippines, and other nations.
Then as fate would have it in one those bizarre coincidences that life occasionally brings, the whole world was swept by the ghastly COVID-19 pandemic. Financial markets crashed and then much of the global economy was shut down including industrial production and world trade. Most importantly, employment entered a downward spiral. More than 10 million people in the U.S. have been forced to apply for unemployment insurance within two weeks, implying double-digit Depression levels of unemployment.
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