Posts Tagged ‘economist John Maynard Keynes’

Three Books on Marxist Political Economy (Pt 7)

July 10, 2017

“The real net rate of profit,” Shaikh writes, “is the central driver of accumulation, the material foundation around which the ‘animal spirits’ of capitalists frisk, with injections of net new purchasing power taking on a major role in the era of fiat money.” This sentence sums both the strengths and the basic flaw in Shaikh’s theory of crises, and without too much exaggeration the whole of his “Capitalism.”

By “net rate of profit,” Shaikh means the difference between the total profit (surplus value minus rent) and the rate of interest, divided by total advanced capital. This is absolutely correct.

But now we come to the devastating weakness of Shaikh’s analysis. Shaikh refers not to the net rate of profit but the real net rate of profit. “Real” refers to the use value of commodities as opposed to their value—embodied abstract human labor—and the form this value must take—money value. While real wages—wages in terms of use values—are what interest workers, the capitalists are interested in profit, which must always consist of and be expressed in the form of exchange value—monetary value (a sum of money).

In modern capitalism, as a practical matter the money that makes up net profit or profit as a whole consists of bank credit money convertible into state-issued legal-tender paper money that represents gold bullion. The fact that legal-tender paper money must represent gold bullion in circulation is an economic law, not a legal law. (More on this in next month’s post.) When Shaikh refers to real net profit, he does not refer to profit at all but rather to the portion of the surplus product that is purchased with the money that makes up the net profit.

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Three Books on Marxist Political Economy (Pt 6)

May 21, 2017

Shaikh’s theory of money

Shaikh deals with money in two chapters—one near the beginning of “Capitalism” and one near the end. The first is Chapter 5, “Exchange, Money, and Price.” The other is Chapter 15, “Modern Money and Inflation.” In this post, I will concentrate on Shaikh’s presentation in Chapter 5. In Chapter 15, Shaikh deals with what he terms “modern money.” I will deal with his presentation in this chapter when I deal with Shaikh’s theory of inflation crises that is developed in the last part of “Capitalism.”

In Chapter 5, Shaikh lists three functions of money—considerably fewer than Marx does. The three functions, according to Shaikh, are (1) money as a medium of pricing (p. 183), (2) money as a medium of circulation, and (3) money as a medium of safety. Shaikh deals with money’s function as a means of payment under its role as a means of circulation. The problem with doing this is that money’s role as a means of payment is by no means identical to its role as a means of circulation and should have been dealt with separately.

Anybody who has studied seriously the first three chapters of “Capital” Volume I will be struck by how radically improvised Shaikh’s presentation here is compared to that of Marx. It is in the first three chapters of “Capital” that Marx develops his theory of value, exchange value as the necessary form of value, and money as the highest form of exchange value. He does this before he deals with capital. Indeed, Marx had to, since the commodity and its independent value form, money, is absolutely vital to Marx’s whole analysis of capital.

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Three Books on Marxist Political Economy (Pt 5)

April 23, 2017

Shaikh’s wrong theory of interest rates

“The interest rate is the price of finance,” Shaikh writes at the beginning of Chapter 10, “Competition, Finance, and Interest Rates.” Shaikh treats the rate of interest as fluctuating around the price of production of the “provision of finance.” Late in Chapter 10, Shaikh indicates he was confused on this subject in the 1970s and the early 1980s but brought to his current views by the Sraffrian-neo-Ricardian Italian economist Carlo Panico. Is this the correct approach to ascertaining what actually determines the rate(s) of interest? I believe it is not.

Do interest rates really fluctuate around a “price” of the provision of finance the way market prices fluctuate around prices of production? Strictly speaking, price is the value of one commodity measured in terms of the use value of the commodity that serves as the universal equivalent—money. According to this definition, interest rates are not prices at all.

It is true that we often use price in a looser sense. For example, we talk about the prices of securities that are in reality legal documents that entitle their owners to flows of income. Another example is the price of unimproved land whose owners hold titles to flows of ground rent. It would be absurd to talk about the price of production of unimproved land if only because unimproved land is a form of wealth produced by nature and not by human labor.

Some other ‘non-price’ prices

Another example of a price that is not a real price is the dollar “price” of gold. This very important economic variable is not really a price at all but instead measures the amount of gold that a dollar represents at any moment. Other examples of “non-price” prices are the “price” of one currency in terms of another—exchange rates—and the price of politicians.

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Three Books on Marxist Political Economy (Pt 3)

February 26, 2017

The election of Donald Trump as the 45th president of the United States, combined with the rise of similar right-wing demagogues in Europe, has prompted a discussion about the cause of the decline in the number of relatively high-wage, “middle-class,” unionized industrial jobs in the imperialist core countries. One view blames globalization and bad trade deals. The European Union, successor to the (West) European Common Market of the 1960s; the North American Free Trade Area; and the now aborted Trans Pacific Partnership have gotten much of the blame for the long-term jobs crisis.

This position gets support not only from President Trump and his right-hand man Steve Bannon and their European counterparts on the far right but also much of the trade-union leadership and the “progressive” and even socialist left. The solution to the problems caused by disappearing high-paid jobs in industry, according to economic nationalists of both right and left, is to retreat from the global market back into the safe cocoon of the nation-state. Economic nationalists insist that to the extent that world trade cannot be entirely abandoned, trade deals must be renegotiated to safeguard the jobs of “our workers.”

Most professional economists have a completely different explanation for the jobs crisis. They argue that changes in technology, especially the rapid growth of artificial intelligence in general and machine-learning in particular, is making human labor increasingly unnecessary in both industrial production and the service sector. Last year—though it now seems like centuries ago—when I was talking with one of this blog’s editors about possible new topics for future blogs, a suggestion was made that I take up a warning by the famous British physicist Stephan Hawking that recent gains in artificial intelligence will create a massive jobs crisis. This is a good place to examine some of the subject matter that might have been in that blog post if Brexit and Donald Trump had been defeated as expected and the first months of the Hillary Clinton administration had turned out to be a slow news period.

It is a fact that over the last 40 years computers and computer-controlled machines—robots—have increasingly ousted workers from factories and mines. The growth of artificial intelligence and machine learning is giving the “workers of the brain” a run for their money as well. This has already happened big time on Wall Street, where specially programmed computers have largely replaced humans on the trading floors of the big Wall Street banks. No human trader can possibly keep up with computers that can run a complex algorithm and execute trades based on the results of the computation in a fraction of a second.

Wall Street traders are not the only workers of the brain whose jobs are endangered by the further development of AI. Among these workers are the computer programmers themselves. According to an article by Matt Reynolds that appeared in the February 22, 2017, edition of the New Scientist, Microsoft and Cambridge University in the UK have developed a program that can write simple computer programs.

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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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Three Books on Marxist Political Economy

October 9, 2016

The year 2016 will be remembered for an exceptionally toxic U.S. election cycle. More positively, it will also be remembered for a series of new books on Marxist political economy. Among these, two stand out. Oxford University Press published “Capitalism, Competition and Crises” by Professor Anwar Shaikh of the New School. Monthly Review Press published John Smith’s “Imperialism in the Twenty-First Century.” Smith, unlike Shaikh, has spent most of his adult life as a political activist and trade unionist in Britain.

This year also marks the 50th anniversary of the publication of Paul Baran and Paul Sweezy’s “Monopoly Capital.” Monthly Review writers, led by editor John Bellamy Foster, treat this book as a modern-day classic playing the role for monopoly capitalism that Karl Marx’s “Capital” played for classical competitive capitalism. Monthly Review magazine devoted its special two-month summer edition to marking the anniversary.

Shaikh’s “Capitalism,” published 50 years after “Monopoly Capital,” can be viewed, at least in part, as the “anti-Monopoly Capital.” In sharp contrast to the Monthly Review school, Shaikh has held throughout his career that the basic laws of motion governing today’s capitalist economy are the same as those that governed the capitalism of Adam Smith, David Ricardo and Marx. This is what Shaikh attempts to prove in his “Capitalism” and what Baran and Sweezy denied. We can expect that Shaikh’s “Capitalism” and Baran and Sweezy’s “Monopoly Capital” will be dueling it out in the years to come.

Monopoly stage of capitalism, reality or myth?

Shaikh rejects the idea that there is a monopoly stage of capitalism that succeeded an earlier stage of competitive capitalism. He rejects Lenin’s theory of imperialism, which Lenin summed up as the monopoly stage of capitalism. According to Shaikh, the basic mistake advocates of this view make is to confuse real competition with “perfect competition.”

Real competition, according to Shaikh, is what exists in real-world capitalism. This was the competition Adam Smith, Malthus, Ricardo and Marx meant when they wrote about capitalist “free competition.” The concept of perfect competition that according to Shaikh is taught in university microeconomic courses is a fiction created by post-classical bourgeois marginalist economists. Nothing, according to him, even approximating perfect competition ever existed or could have existed during any stage in the development of capitalist production.

In this month’s post, I will take another look at Baran and Sweezy’s “Monopoly Capital” and contrast it with Shaikh’s “Capitalism.” I will hold off on reviewing John Smith’s book, since his book is in the tradition of Lenin’s “Imperialism” published exactly 100 years ago, which Shaikh considers severely flawed. There are other important books on Marxist economics that have recently been published, and I hope to get to them next year, which marks the 100th anniversary of the Russian Revolution.

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The Early Cold War and the Two-Party System

July 17, 2016

The Brexit vote and new wave of racist police murder in the U.S.

During the week leading up to the June 23 Brexit referendum, media representing the largest capitalists that benefit from the U.S.-dominated world empire pulled all the tricks out their bag to ensure that the proposal for Britain to leave the European Union was defeated. They claimed that Brexit would bring financial panic and a deep new world recession that would otherwise be avoided.

The leaders of all the major parties in Britain, including the Conservative leader and prime minister David Cameron, Labor leader Jeremy Corbyn, who was lukewarm in his opposition to Brexit, and the leadership of the liberal Social-Democratic Party, were united on their opposition to Brexit. Only the far-right racist United Kingdom Independence Party and a few small leftist groups supported it.

What was the Brexit vote about?

The Brexit movement was dominated by the racist anti-immigrant right with neo-fascist components, much like the Trump campaign is in the United States. There was a much smaller left-wing movement that also favored Brexit. The problem was there was no way to distinguish between votes for anti-immigrant, racist Brexit and the leftish “lexit” movement.

Unfortunately, there are many on the left who echo Brexit by explaining that there has to be some limit on immigration, since otherwise wages in Britain and other “white” European countries will plummet. Such people are not thinking like working-class revolutionaries but like bourgeois trade unionists who want to assure high wages for “our British Workers” at the expense of “foreign workers” who are not “white” or are from Poland. (Polish workers in Britain these days do not qualify as “white.”)

Voters were given two choices. One was to vote for the British nationalist “Trumpist” movement’s position based on nostalgia for the days when “Britannia ruled” and everybody in Britain was English, Welsh, Scottish, or “at worst” Irish, and there were many relatively good paying jobs in industry and mining. In bygone days in industrial Britain, the high demand for the commodity labor power made it possible to organize powerful trade unions that limited the competition among the sellers of that commodity, resulting in relatively high wages for British workers.

The other choice was to vote for the order that has “given the world 70 years of peace”—among the imperialist robber countries, that is—but has also led to the progressive decay of the industrial economies of the imperialist core countries—especially Britain. In U.S. terms, it was comparable to voting for Hillary Clinton—the status-quo presidential candidate—or the anti-immigrant, racist, fascist-infested Donald Trump candidacy.

As the day of the vote approached, the “establishment” prepared to celebrate. Polls under the weight of the media campaign were shifting toward the “anti-Brexit” position. The assassination of Jo Cox, a strong Brexit opponent and Labor MP, by a neo-Nazi a short time before the referendum seemed to put wind in the sails of the anti-Brexit camp. In anticipation of another great victory for the “pro-European Union position”—which really means pro-U.S. world empire—world stock markets climbed relentlessly while U.S. government bonds and the dollar price of gold slumped.

Or, as the financial press likes to say, with Brexit headed for defeat the appetite for risk was increasing. The defeat of Brexit in Britain would then signal the coming victory of the pro-status quo, conservative Hillary Clinton in the November U.S. presidential election over her anti-immigrant, nationalist-racist challenger Donald Trump.

Just before the polls closed, the media reported that a last-minute poll showed a further swing toward the anti-Brexit position. It was, it seemed, a done deal, and the anti-Brexit supporters prepared to celebrate their great victory! But that was before the votes began to be counted. As the returns came in, the mood of victory among the conservative supporters of the status quo turned to horror. Against all expectations, Brexit was victorious at the polls.

What happened? It seems that many young people—comparable to Bernie Sanders supporters in the U.S., though they most certainly didn’t support the racist Brexit campaign—couldn’t get themselves to vote for the status quo by voting against Brexit. Many of these young people disgusted with what was being offered to them by both the pro- and anti-Brexit positions simply stayed home. Could something like that happen in November in the U.S. causing the election of Donald Trump to the U.S. presidency?

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The U.S. Two-Party System and Proto-Fascist Trends in the 1930s

June 19, 2016

Much to the relief of the U.S. ruling class, Wall Street favorite Hillary Clinton defeated Senator Bernie Sanders in the June 7 California primary. In the wake of Clinton’s victory, President Obama formally endorsed Clinton for the office of president of the United States, as did the “progressive” Massachusetts Senator Elizabeth Warren, considered a major leader on the left wing of the Democratic Party.

This makes it all but official that the Democratic nominee will be the pro-corporate, pro-Wall Street, and very hawkish former Secretary of State Hillary Clinton, wife of former President Bill Clinton. Clinton will be the first female to be nominated by one of the two ruling parties to the presidency and if elected will be the first female president of the U.S.

The media made it appear that Clinton won by an unexpectedly large margin, though Sanders got more than 40 percent of the vote. Before the election, most polls had shown Clinton well ahead of Sanders. But that was before Sanders staged a series of rallies that drew thousands of enthusiastic young people, in sharp contrast to the tepid support for Clinton. Clinton’s lead in the polls began to evaporate and it looked as though Sanders might have the momentum to pull off an upset in California like he had done earlier in Michigan and some other states.

In the end, Clinton prevailed frustrating the hopes of Sanders’ newly politicized young supporters. One factor was that on the eve of the California primary, the Associated Press, quickly echoed by other media, announced that Clinton had clinched the Democratic nomination. In reality, Clinton lacked, and still lacks despite her victory in the California primary, enough elected delegates to win the Democratic nomination. However, she is assured of the great majority of the unelected “super-delegates.” Indeed, weeks before the AP announcement it had become clear that Clinton would almost certainly be the Democratic nominee thanks to the un-elected super-delegates.

Sanders had kept alive the hope among his young supporters that he would be able to convince the super-delegates to shift their support to him, but this never seemed likely. However, it would have been far more costly politically for the Democratic establishment if Clinton had been nominated after losing the primary in the U.S.’s biggest state. The timing of the AP announcement just before the election had all the markings of a corporate move to save Clinton from an embarrassing loss.

There were other factors in Clinton’s victory. Under the bizarre electoral rules of California’s so-called open primary system, persons can vote in the primaries regardless of their stated political party preference. However, this rule does not apply to the office of U.S. president. Who exactly can vote in the presidential primary is different for the Democratic Party than for the Republican Party.

Only registered Republicans can vote in the Republican presidential primary. However, in the Democratic primary it is possible for persons registered as neither Democrats nor Republicans to request a special ballot that enables them to vote in the Democratic presidential primary. Of course, many young people—and indeed even older people—were awakened to politics for the first time by the Sanders campaign and were not registered Democrat. They simply didn’t know that they could actually vote in the Democratic primary for the office of president. Or even if they did know this, they might not have known where or how they could obtain the special ballot. This undoubtedly cost Sanders many votes.

In addition, many poor people have felony convictions. Convicted felons who have passed their probation are “out of the system” and under California law can vote in elections. But many such people believe that once you are convicted of a felony you can never vote again—which is indeed the case in some U.S. states.

Yet another factor that tends to depress the votes of anybody who has to work for a living is that U.S. elections are held on a working day. In virtually every other country, elections are held on holidays or weekends giving voters several days to vote. To be sure, in the California primary people did have the possibility of voting by mail, but to do this you had to be signed up beforehand. It is also possible to vote at a polling place, but you have to know where to go to vote if you follow this route, and there are often long lines.

All these factors work strongly in favor of corporate-backed machine candidates such as Hillary Clinton. These machine voters know their polling places or are signed up to vote by mail.

Perhaps most important was the alliance between the leaders of trade unions, including unions made up mostly of immigrant low-wage workers, and the Democratic Party machine. This close alliance between trade-union leaders and the corporate-backed Democrats, now led by Hillary Clinton, dates back to New Deal days. If the union leaders had backed Sanders (1), the result would have been quite different. This illustrates the truth, if in this case negatively, that in present-day capitalist society no major progressive social and political change can happen without the support of the organized working class.

Clinton’s victory, however, does not change the fact that about 40 percent of those who voted in the Democratic Party, and far more than half of the younger voters, preferred the avowed “democratic socialist” to the pro-corporate, pro-war Hillary Clinton.

While Sanders and Clinton were campaigning in California, Donald Trump actively campaigned up and down the state as though he, too, was in a tight race. In reality, Trump faced no opposition in the California Republican primary. Indeed, Trump’s last standing opponents, Ohio Governor John Kasick and Texas Senator Ted Cruz, had withdrawn from the race weeks before. Nor is the racist Trump given a realistic chance of winning the state in the general election where white people are a minority and Latinos are now the largest single ethnic group.

Therefore, unlike the case with Clinton and Sanders, Trump should have had no real interest in the California primary if we judge by normal electoral criteria. What then was Trump up to in California?

 

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U.S. Two-Party System After Defeat of the Slaveholders’ Rebellion

May 22, 2016

The attempt of the Republican and U.S. political establishments to deny Donald Trump the Republican presidential nomination collapsed on May 3, when Trump won a decisive victory over his two remaining rivals in the Indiana Republican primary. Trump routed Tea Party darling Senator Ted Cruz of Texas and Ohio Governor John Kasick, probably Wall Street’s favorite among the remaining candidates to succeed termed-out President Barack Obama next year. Kasick’s share of the vote ended up in single digits.

In the weeks leading up to the Indiana primary, Cruz and Kasick had announced a bloc to deny Trump a majority of the delegates needed for nomination on the first ballot at the Republican convention in July. If this bloc had succeeded on the second or, if necessary, later ballots, delegates pledged to Trump on the first ballot would have been free to vote for somebody “acceptable” to the large capitalists—somebody like John Kasick.

In the weeks leading up to the Indiana, New York and New England Republican primaries, the media had pictured the Trump campaign as at long last in deep trouble. Headlines like “Trump’s Worse Week” were splashed across the major newspapers and associated websites. The corporate press made much of the success Cruz had in picking up a few delegates here and there delivered to him on a silver plate by state Republican machines in service to Wall Street interests.

But these maneuvers came to nothing after Trump swept first the New York primary and then the New England primaries, with majorities as opposed to the mere pluralities he had won in primaries held earlier.

Earlier, there had been a lot more Republicans in the presidential race. They included Wall Street’s original favorite Jeb Bush, former governor of Florida and son of former President George H. W. Bush and brother of the hated George W. Bush. Unlike his brother, Jeb was considered to be an “intelligent conservative.”

But Jeb Bush got very few votes and was forced out of the race after the South Carolina primary. As more Republicans were forced to drop out, the race to defeat Trump came down to the extreme neoliberal Senator Ted Cruz and the “moderate”—but still very neoliberal—John Kasick.

Cruz would be more in the mold of Ronald Reagan, while Kasick would be more like George W. Bush. Certainly, the conventional wisdom went, the “anti-Trump” majority among Republican voters would rally around these two candidates whose support of traditional Republican neoliberal economic policies would make either one more acceptable than Trump to Wall Street.

Eventually, the conventional wisdom went, either Kasick or Cruz would emerge as the nominee to face off against pro-Wall Street Democrat Hillary Clinton in November. But just the opposite happened when Trump won first in New York and then the New England states with outright majorities, and then won in Indiana, also with an outright majority, where Cruz had been expected to do well. Cruz and Kasick were then forced to withdraw from the race leaving only Trump.

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Germany and the U.S. Empire (Pt. 5)

January 31, 2016

On January 30, 1933, German President Paul von Hindenburg appointed Adolf Hitler Reich chancellor, the most powerful office in the government. But there were only two other Nazis in the cabinet. In terms of cabinet members, traditional reactionaries such as Franz Von Papen (1879-1969)—the vice-chancellor—and the arch reactionary media baron and Nationalist Party leader Alfred Hugenburg (1865-1951) dominated the government.

Hugenburg was the Rupert Murdock of Germany. Leaving aside the Nazis, Alfred Hugenburg’s Nationalist Party was considered Germany’s most right wing, representing the large landowners. Hugenburg held the Ministry of Economics and Food, a ministry of considerable interest to Germany’s large landowners.

The Communist movement at first believed Hugenburg, not Hitler, was the dominant member of the new government. Not only were Nazis a small minority in the cabinet but the Prussian landowner and militarist Paul von Hindenburg (1847-1934) still occupied the presidency and had the power to appoint and dismiss the chancellor.

The view that Hitler was not the real power in the cabinet, however, ignored several crucial facts. One was that the two Nazi ministers besides Hitler gave the Nazis control over the bulk of Germany’s police forces. The Ministry of the Interior was awarded to Nazi Wilhelm Frick (1877-1946), a lawyer and policeman by profession. The other Nazi, Herman Goering (1893-1946), held the post of minister without portfolio and, more importantly, served as acting minister of the interior for the State of Prussia. This gave Goering effective control of Germany’s police force, including its political branch—the “red squad” in U.S. terminology. The Prussian red squad was soon given a new name—State Secret Police, or Gestapo for short.

Even more importantly, the Nazis were not just another bourgeois political party, only further to the right. They were a combat organization with a huge SA militia, whose membership numbered in the millions—compared to only 100,000 for the official German military, the maximum allowed under the Treaty of Versailles. Members were recruited mostly from Germany’s desperate middle-class youth, who had few prospects in Depression-bound Germany. The SA was organized to wage civil war against all wings of the workers’ movement—especially the Communists but also the Social Democratic Party, the trade unions, cooperatives, youth groups, and so on, in the streets of Germany.

Imagine if Donald Trump today commanded a private army of tens of millions of mostly middle-class youths, dwarfing in size both the regular army and all police forces of the U.S. Imagine further that this militia was fanatically loyal to Trump’s person. Further imagine that this private army was waging violent war in the streets against the trade unions, all African American organizations, Mexican-American organizations, immigrant rights groups, and Muslim and Arab organizations. This is what a full-fledged, Nazi-like mass fascist movement would look like in the early 21st-century U.S.

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