Thursday, 30 September 2010


On 29 September most of Europe from the Balkans to Portugal and Ireland is under the cloud of mass strikes and demonstrations owing to the fiscal tightening (otherwise austerity measures in varying degrees) that countries are undertaking to reduce budgetary deficits. Even France announced massive cuts in order to stimulate growth! But across Europe, all governments are slashing budgets, raising indirect taxes, cutting public sector jobs, slashing social security programs for the sole purpose of achieving financial equilibrium that would result in long-term growth! The middle class and workers want growth, but they want shared sacrifice that has yet to come. The most significant demonstration is in Brussels, where an estimated 100,000 people from 30 countries are protesting the anti-labor anti-middle class anti-social welfare-pro-corporate welfare measures that EU has adopted. In January 2010 I took the plunge trying to predict the year ahead when I posted a piece on WAIS forum, which included the following: “Rising unemployment, wage stagnation which entails cuts in social security and social benefits will mean lower living standards for labor and the middle classes that must work longer to secure the ‘retirement dream’ they seek. Labor (urban and rural) and student unrest will accelerate in 2010, as it becomes clear that governments will demand that the lower classes will pay for the banks’ bailout.” For the next several months we will see the intensification of social unrest across Europe where the workers and middle class feel that they are paying for the bank bailouts and for policies that are designed to prevent upward mobility not only for the generation protesting in the streets, but for their children as well–indeed the biggest issue is the lack of optimism on the part of the middle class for its college-educated children. Widespread fear about austerity measures designed to strengthen the state with the intention of buttressing corporate welfare at the expense of the middle class and workers may be contained only if there is a new policy direction that proves concretely and transparently that the state will not be the sole instrument for finance capital, but that it will represent fairly the interests of all social classes. And here is where we have the problem. First, there is the reality that creditor countries, especially Germany, does not see how its corporate interests are furthered unless it strongly advocates deep cuts in budgets for deficit countries throughout Europe. To prevent social unrest from translating into the polarization of the voters, the best Germany can do, for today at least, is to ask the EU for some “slow down in the cuts”–and that is indeed what it has done. However, anything short of reducing unemployment and strengthening the middle class will simply entail going from IMF-style shock therapy to prolonging the pain for the remainder of what will most certainly be a slow-growth decade because the stimulus is coming from Asia, not the West. Second, there is the strikingly symbiotic relationship between the political and financial elites that the majority of the people recognize especially in times when things are not going so well with their own finances because they lost their job, their retirement savings was trimmed because of market downturns, the children will have a difficult time finding jobs when they graduate college, retirement age will be higher for all, and above all, the lack of optimism that plagues bourgeois society today. It is no secret that some EU officials are double-dipping, others are going to work for corporations whose agenda they represent to their former political colleagues, a few enjoying the role of both financial baron and political boss and still others amassing considerable personal wealth as a result of their “public service”! Third, centrist politicians, journalists, intellectuals, and human rights activists, especially in Germany and Sweden, are concerned that across Europe the extreme right is slowly gaining popular support as a result of the current economic crisis. The political expression of Europe’s extreme right wingers finds an audience among ultra-nationalists and xenophobes, especially anti-Muslim elements that are active mostly in northwest Europe, which is also the area that Al-Qaeda and other militant groups are currently targeting. Ethnocentrism, xenophobia, and political extremism as expressed by political parties and right wing groups has been fueled by socioeconomic polarization and the fact that even mainstream conservative parties like that of France project the image that they are less than hospitable to the Roms (gypsies), and they adopt a hard cultural line toward Muslim nationals while criticizing of course the fanatical and cruel practices of fundamentalists in Muslim countries. One could argue that socioeconomic polarization in the US has also exacerbated the same problems Europe is facing. A distinct aspect of the US experience is that it is a single country with a very long historical tradition rooted in conformity to the law and institutions, whereas Europe is made up of sovereign nations with very different traditions linked together primarily by a common currency and commercial relations. The current crisis has crushed the euphoria that once existed about the EU on the part of creditor nations of northwest Europe as well as those of the south and East that chronically suffered deficits and only occasionally experienced surpluses–Portugal, for example.
Today, there is a clear divide within the EU between the strong economies of the northwest that threaten the national sovereignty of all the rest, and there is fear on the part of the northwest that the weak of the south and east may drag down the entire union. The social unrest centered in Brussels and taking place across Europe is significant not so much for the economic message it is sending to the political and financial elites, but for the political message. If Iceland’s special court finds former prime minister Geir Haarde guilty for failing to prevent the financial disaster of 2008, and if he indeed goes to prison, this could signal a very democratic solution to the perception that political elites are in collusion with the financial elites to benefit each other. If no one is punished from the political and financial elites responsible for the crisis, if there is a perception that social justice is not something government need bother with because only markets matter in today’s cut-throat world, if the deep cuts are imposed solely on workers and the middle class, then sociopolitical polarization will continue and the clashes in the streets may become more bloody in the future and political instability will follow as I wrote last January.

Tuesday, 28 September 2010

The IMF, the World Bank, and U.S. Foreign Policy in Ecuador, 1956-1966 by Jon V. Kofas

LATIN AMERICAN PERSPECTIVES, Issue 120, Vol. 28 No. 5, September 200150-83 © 2001

Ecuador is rich in natural resources, but since its independence it has remained one of the poorest countries in the Western Hemisphere. Historically dominated by a few wealthy landowning families, Ecuador's Indian peasants and mestizo workers were excluded from mainstream political, military, economic, and social institutions. Class divisions were paralleled by the regional schism between the agriculturally dependent indigenous people of the temperate highlands and the coastal population, whose livelihood emanated from plantation crops, light manufacturing, commerce, finance, and service industries. With almost 80 percent ownership of land, the oligarchy, which had investments in light industry, finance, and commerce and made up a tiny percentage of the 4.2 million people in 1960, dominated politics and determined the country's economic destiny. Because the state pursued policies that perpetuated the upper classes' privileged economic status, which is reflected in the grossly unequal income distribution of the second half of the twentieth century, workers have not experienced upward socioeconomic mobility comparable to that in Europe, Canada, or the United States. Foreign development and stabilization loans that the United States and the multilateral banks granted to Ecuador during the cold war perpetuated the uneven income distribution and dependency on foreign capital. During the export-oriented growth period of 1948-1960 while the banana boom lasted, Ecuador enjoyed relative political and monetary stability. In the mid-1950s, however, the prices of raw-material exports declined relative to prices of manufactured imports, forcing Ecuador to rely on foreign loans to finance imports and development programs. In response to declining export revenue in the second half of the 1950s, the state began moving slowly toward import substitution, which meant even greater reliance on foreign loans and direct foreign investment. As was the case in the rest of Latin America, import substitution did not result in greater self-sufficiency, especially since bananas, coffee, and cacao accounted for 80 percent of exports even in the early 1970sjust before the oil boom. Monocultural dependence and declining terms of trade favoring the industrialized countries crippled Ecuador's economy, leaving the civilian and military regimes to rely on foreign credits and thus perpetuating a pattern of financial dependence that Washington and the multilateral banks used as policy leverage. Because Ecuador did not have a diversified, labor-intensive economy with substantial reserves to withstand sharp drops in the volume and price of primary exports and the government was unwilling to undertake structural administrative, economic, and fiscal reforms, foreign borrowing was a method of keeping the finances afloat. And as long as governments in Quito followed policies that Washington and the multilateral lending agencies prescribed, foreign loans continued to finance chronic budgetary and balance-of-payments deficits.  Unlike other Latin American countries that encountered debt crises from independence to the Great Depression, Ecuador had an external public debt amounting to US$42 million from 1820 to 1950. By the end of the 1950sthe foreign debt was US$94 million, and it increased to US$241 million by 1970 and US$6.1billionontheeve of the Latin American debt crisis in 1982.1 Furthermore, while US$241 million in 1970 was not inordinate even for Ecuador's small economy, the raw amount of debt as a percentage of gross domestic    product (GDP) was 14.7, and the burden fell inordinately on salary and wage earners. Moreover, the pattern of financial dependence in the 1950sand the 1960sandthe reliance on foreign loans continued in far greater volume after the oil boom, making Ecuador the sixth-largest debtor in Latin America in terms of percentage of GDP by the early 1980s. As this study demonstrates, distribution of burden and relative indebtedness areas important as the aggregate amount of public debt. In contrast to Bolivia and Chile, which experienced high inflation and virtual economic stagnation, with a growth rate of just 1 percent annually during the 1950s, Ecuador enjoyed relative monetary stability during the export- oriented growth years. Yet, despite currency stability and impressive GDP increases in the 1950s, a 1961 World Bank report concluded that "Ecuador is one of the poorest countries in Latin America, falling in the same category as Bolivia, Haiti, Honduras, and Paraguay when ranked by such indices as per capita income, miles of road and railroad per 10,000 hectares of arable land, and installed power capacity".  


The World Court's ruling in 2004 against Israel in pursuing the building of the WALL mainly to cut off the West Bank from Israel cannot be dismissed as anti-Semitism, but there are people who use that decision and UN decisions condemning specific policies of the government in Tel Aviv for anti-Semitic propaganda. Well-intentioned analysts view the Wall as having both positive and negative consequences for Israel, to say nothing of its detrimental impact on the Palestinians. 1. There is no doubt that the Wall has made it more difficult, but not impossible for Palestinians interested in carrying out attacks against Israel. 2. There is no doubt that the Wall as something tangible offers psychological protection to Israel and it plays to the conservatives who favor a hard line without making any concessions on statehood and settlement evacuations to the Palestinians. 3. The Wall is a political-military line of demarcation that can be negotiated in the future and used as leverage for U.S. and EU aid as part of a final settlement on a Palestinian state to which Israel will agree. These are positive elements from Israel's perspective. On the down side, the wall and continued Israeli settlements in Palestinian territories confirm to the entire world that Israel and its U.S. patron have no intention of compromising. Second, the policy of separation and occupation demonstrates that Israel intends to be a Zionist garrison state that unapologetically punishes Palestinians collectively, an issue (collective punishment) that the UN has condemned along with almost every nation in the world. Third, the  places the U.S. in an even more defensive position than it has been regarding its lack of balance in the region, especially given Iran's protestations to the UN about Israel's nuclear weapons. Finally, the continued settlements and the APARTHEID WALL will not stop attacks on Israelis, the Arab states will be compelled to provide more aid for Palestinians, and Islamists will find creative ways to increase their activities against Israel and U.S. interests around the world. In short, there is no military solution for this problem, any more than for Iraq, or Afghanistan. Only collective (U.S. must be included) pressure on both sides to compromise will result in a constructive solution. Israel and the Palestinians can only find a way to coexist provided the US adopts a very tough carrot and stick approach with Tel Aviv, an approach not likely given the enormous influence of the Israeli lobby in the US. Obama, like his predecessors in the last six decades will fail in his Middle East foreign policy to deliver a viable state to the Palestinians and secure co-existence to the Israelis.

Tuesday, 21 September 2010

AFGHANISTAN TODAY (Jon Kofas - Greece)

Posted on September 21st, 2010

The occasion for last weekend’s elections in Afghanistan is a good opportunity to reflect on what the US and NATO are really accomplishing in that country. What has Obama accomplished? For about two years, I have argued in several WAIS postings that the US has lost the war in Afghanistan and that any resources that the US and NATO throw to that lost conflict are wasted in the sense that their goals will never be realized for the duration. It has been a remarkable journey to observe how that doomed war has gradually strengthened Iran, India and China, while weakening Pakistan and of course leaving Afghanistan in an increasingly chaotic mess from which it will require many decades to recover. The most recent public opinion poll CBS/NYT of 16 September 2010, indicates that only 38% support US involvement while 54% are opposed. Given that one in seven Americans is living below poverty (mostly minorities, women and children) and given that official unemployment is around 10%, given that 45 to 50 million (depending on the source) have no health coverage, given that prospects for a “jobs-growth economy” is not on the horizon even if Obama gets a number of bills through Congress, the Obama administration is continuing the lost war in Afghanistan to placate right-wing ideologues who have a mass following primarily in the South and rural areas throughout the states, and to appease disparate conservative groups that exercise immense influence through the media and campaign contributions. While the US and NATO are wasting precious resources on a lost war with the Taliban and Al-Qaeda, the real power struggle is heating up between China and India, both of which have ambitions to become economic, military, and political powerhouses of the 21st century. This is where the US should have been focused, not on mountain rebels whose religious fanaticism only complicates matters for US and EU security with Muslims everywhere seeking the excuse to randomly hit Western interests around the world. Because so many US and NATO officials as well as independent analysts are immersed in Cold War dichotomous thinking and because that is where their career and pocketbook interests rest, there is lack of realistic assessment in foreign affairs. The ubiquitous theme that “America is going soft” is very old and very Cold War, and yet it carries as big a punch today as it did during the early Cold War. In terms of geopolitical/strategic, economic, and political influence, is Afghanistan the belly of the beast for the US and NATO, or is it the new chosen Vietnam after Iraq because there must always be a Vietnam to validate American power (and its limits)?

Afghanistan: Ideology and Symbolism vs. Pragmatism (Jon Kofas, Greece)

Posted on December 3rd, 2009 
It is hardly a surprise to anyone who keeps up with US foreign policy that President Obama will send an additional 10,000 US troops to Afghanistan in 2010 and then consider withdrawal just in time for the 2012 presidential campaign. After all, in 2008 Obama campaigned on the “bad war in Iraq” vs. the “good war” in Afghanistan, a campaign that afforded him political “legitimacy” with right wingers and with domestic and foreign lobbies that profit economically and/or politically from perpetual conflict in the Middle East. Before the 2008 election, I wrote a piece on the futility of US involvement in Afghanistan, part of which asks questions about US goals:
* If the goal is to maintain a Karzai-type regime that controls only a part of the country while peasants grow heroin whose production has skyrocketed since the US invasion, then that goal has been achieved. Once again Afghanistan is the largest poppy producer in the world.
* If the goal is to allay the fears of the American people that the US “will continue to take the war to Al-Qaeda,” the question is whether this has yielded results other than psychological. After all, is Homeland Security taking care of this problem at an immense cost to taxpayers?
* If the goal is to appease the substantially vociferous right-wing elements entrenched throughout American society from media and business to politics, intelligence services to military, then the money and cost in every other respect is well worth it.

Only one-third of the US population supports the war in Afghanistan, and at least 55% are against. And the only reason NATO members have agreed to send an additional 5,000 troops in 2010 is because of Obama’s personal appeal and the realization that this too will come to an end soon along with the mass catastrophe in Iraq. The fact is that the US has already lost the war in Afghanistan and only blind ideologues, certain corporate interests profiting from war (charging $10 per bottle of water for the troops is just the least of such examples), and the Israeli lobby along with an assortment of right-wing think tanks refuse to see it. The war is taking place presumably to save face and to show that indeed a real effort has been made before withdrawal. Remnants of die-hard Cold War mindset, ideology and symbolism in foreign policy transcend pragmatism, and Afghanistan is proof. Even if Obama orders an additional 100,000 troops to Afghanistan in 2010 to the existing 50,000 troops on the ground today, the US will not keep Afghanistan in its sphere of influence once the troops withdraw two years later when Obama must once again face the voters and explain his failed foreign policy. Knowing that people are making comparisons with Vietnam and knowing that he could become captive to a disaster he inherited, Obama will in fact have to announce a political solution right before he goes on the campaign trail. Otherwise, as the economy improves, he will soften his multilateral foreign policy, and his administration will become much more hawkish, especially as pressures build for the US to “punish” Iran, and Israel continues its hard-line policy toward the Palestinians. Meanwhile, the persistence of ideology and symbolism combined with strong domestic and foreign lobbies that finance political campaigns always win over the pragmatic course that best serves broader US national interests as the majority of the American people see it. Even Jeffersonian democrats recognize the limits of pragmatism in a democracy and the long arm of ideology and symbolism that invariably represent minority domestic and foreign interests.


George F. Kennan, the great American diplomat and foreign policy scholar, died in March 2005 at the age of 101. In the early 1980s when I was conducting research in Washington and the Truman Library for a book on the Truman Doctrine and the Marshall Plan, I came across some of his correspondence with various officials. To his credit, Kennan understood the significance of pursuing a policy of containment of Stalin's USSR by emphasizing the economic and political options rather than the military option which many Cold Warriors seeking to build their careers advocated. Kennan expressed reservations about military and counter-insurgency operations in Greece during the Civil War (1946-1949), while he was an enthusiastic supporter and one of the architects of the Marshall Plan, which he believed is the best way to combat the spread of Communism and at the same time strengthen the U.S. politically and economically. By the end of the Vietnam War, Kennan had changed some of his earlier views regarding U.S.-USSR relations, stressing a policy of engagement to prevent not just a possible superpower conflict, but to resolve conflicts between the satellites of the U.S. and USSR.  Unlike many who viewed the Soviet invasion of Afghanistan as an offensive move coinciding with the Iranian and Nicaraguan revolutions, Kennan saw it from a defensive perspective, arguing that the Soviets often acted out of fear and anxienty, rather than a desire to acquire more spheres of influence so that they could antagonize the West. Nor was he encouraged that the U.S. resorted to counter-insurgency operations in Central America, especially when the revelations came out in 1986 about the illegal deals to funds the contras in Nicaragua by selling weapons to Iran, among other such short-sighted and reckless foreign policy adventures. Like McNamara, whose views also evolved since he was defense secretary, Kennan dropped the ideological rhetoric of the early Cold War, and became more pragmatic about U.S. foreign policy, earning respect among centrists and even leftists.  An advocate of constructive co-existence with the Communist bloc, Kennan was a reflective man with astute instincts about U.S. foreign policy which he viewed as an expression of the country's history, institutions, domestic and global interests, and always from a pragmatic perspective that earned him respect around the world. Kennan leaves a rich legacy with his many books, articles, interviews, having influenced countless scholars, journalists, and politicians since the 1930s. It is unfortunate that people of his towering intellect and sense of realism are absent from leadership positions in the State Department today. A new Kennan or perhaps several like are needed to deal with greater pragmatism and less ideological baggage.  Regional conflicts and balance of power issues like Israel-Palestine, Iraq, Iran, Afghanistan, and Pakistan have remained a dead weight on US foreign policy. US bilateral and multilateral relations with the Great Powers also require a new direction toward greater global cooperation to deal effectively with vital issues from debt insolvency for the Third World to degradation to ecosystem and energy needs for the 21st century.

Monday, 20 September 2010

Economics: Debt Restructuring in EU (Jon Kofas, Greece)

Posted on September 20th, 2010 

In the last 10 months or so, there has been a great deal of analysis and commentary from different ideological perspectives devoted to the structural weakness of the EU. This is not only because of how the EU handled the 2008-2010 financial crisis and the bailout of Greece with IMF assistance, but largely because the global economic dislocation exposed flaws in the monetary union’s integration model. Last week, more reports surfaced that Portugal may be facing a financial crisis, and immediately that sparked the fear that Spain and Italy are becoming nervous after the austerity experiences of Ireland and Greece in 2010. Despite Germany’s very strong GDP growth and its prospects, the EU is in trouble unless it undertakes a new course of action that goes beyond bailing out banks. I have pointed out on numerous postings that the EU integration model was founded on “inter-dependency,” namely, the stronger northwestern EU countries would help with subsidies lift the weaker southern and Eastern members. Because of Maastricht Treaty’s (1992) rigid rules on members to keep annual fiscal deficits below 3%, the EU never had in place mechanisms to effectively deal with countries that experienced default-like conditions in case of global recession, any more than it had mechanisms for countries that simply lied about exceeding the treaty’s terms. It is now public knowledge that EU officials were allowing the weaker countries in the union to spend at much higher levels than Maastricht permitted and to illegally strike swaps deals with Goldman Sachs. Banks and multinational corporations like Siemens, MANN, Deutsche Bank, Hypo Real Estate, etc., in the stronger countries decapitalize the weaker EU members through direct and portfolio investment; a situation made worse by the much higher level of official corruption in EU’s debtor countries concentrated in the south and east.
In essence this means that the EU is creating a two-tiered economy with the strong and thus hegemonic economies on the northwest tier and the weaker and “dependent” economies in the south and east. Especially amid this crisis, creditor countries demand from weaker EU members lower taxes for direct foreign investment, fewer restrictions on capital movement, liberalization of all vital sectors of the economy, including privatization of public enterprises so that foreign investment penetrates and eventually dominates such sectors. In return, they extend loans with interest rates higher than most home mortgages, and they saddle the debtor countries with cumulative foreign debt that will keep them perpetually dependent in every respect, from finance and trade to technology and essential pharmaceuticals. Many analysts in the West, as well as die-hard advocates of what is euphemistically called “free” enterprise (instead of state-supported corporate welfare system) insist that debtor countries are solely responsible for their own problems and financial demise. Therefore, “they must get their own house in order,” as though it was ever their own house and not a rental from northwest EU’s powerful banking houses. And in this campaign to impose austerity on the weaker members, creditor countries have the IMF to provide legitimacy and to insist that “austerity”–under formalized agreements or simply as piecemeal policies–is the only solution. Unless creditor countries agree to loan restructuring that entails debt forgiveness for a percentage of the debt, EU member and associate members which are currently debtor countries and under some formal or informal austerity program will be reduced to “Third World” status and they will suffer cyclical debt crises like Latin America and Africa.

Die Truman-Doktrin und der griechische Bürgerkrieg 1946-1949 - JON KOFAS

Heiße Kriege im Kalten Krieg
Die Truman-Doktrin und der griechische Bürgerkrieg 1946-1949 - JON KOFAS 
 (chapter abstract)
Considering that there are hundreds of books and articles published on the Truman Doctrine and the Greek Civil War, my article analyzes the domestic dynamics of Greece, as well as U.S. regional and global foreign policy considerations in making the decision to use Greece as a prototype for the containment policy of the USSR. The article further demonstrates that besides multiple U.S. concerns regarding the USSR's regional role, the Truman administration was interested in redefining U.S. national security interests on a global scale as a prelude to integrating under its aegis as much of the non-Communist world as possible.

Titel:Heiße Kriege im Kalten Krieg
Herausgeber:Greiner, Bernd; Müller, Christian Th.; Walter, Dierk
Verlag:Hamburger Edition, HIS Verlag

 Ähnlich wie bei der Erforschung des Kolonialismus, wo sich schon vor einiger Zeit zunächst der Blick von den Zentren auf die Peripherie verlagerte, bis schließlich, in Umkehrung der Perspektive, gewissermaßen „das Imperium zurückschlug“, so hat sich auch die Geschichtsschreibung des Ost-West-Konflikts zwischen 1945 und 1989 neuerdings vom direkten Verhältnis der Supermächte und Europa als zentralem Schauplatz des Kalten Kriegs ab- und verstärkt anderen Regionen zugewandt – mit dem Ziel, ein genaueres Bild der gut 40 Jahre währenden „Teilung der Welt“ zu erhalten.[1]
Dies ist nicht allein dem Aufkommen des Schlagworts „Globalisierung“ seit Mitte der 1990er-Jahre geschuldet, sondern wohl auch der internationalen Entwicklung seit dem Ende des Ost-West-Konflikts, die bislang weit weniger friedlich verlief als nach Mauerfall und Untergang der Sowjetunion häufig erwartet. Die Betrachtung des Kalten Kriegs über die hochgerüstete, unter der Drohung atomarer Vernichtung stehende, aber ohne größeren militärischen Konflikt lebende nördliche Hemisphäre hinaus zeigt dann schnell, dass von einer Epoche des „langen Friedens“[2] kaum die Rede sein kann.
Mit einer Reihe der in der so genannten Dritten Welt geführten „heißen“ Kriege und ihrer Bedeutung im Kontext des Ost-West-Konflikts beschäftigt sich der von Bernd Greiner, Christian Th. Müller und Dierk Walter herausgegebene Sammelband, der auf eine Tagung des Hamburger Instituts für Sozialforschung (HIS) vom Mai 2004 zurückgeht.[3] In 13 Fallbeispielen soll „in erster Linie die Qualität und Struktur der Konfliktlogik im Einzelfall“ (S. 11) hinterfragt, also untersucht werden, welche Rolle die „Faktoren des Kalten Kriegs“ im Verhältnis zu anderen Determinanten in den jeweiligen militärischen Auseinandersetzungen gespielt haben.
Als Auswahlkriterium galt ein begründeter „Anfangsverdacht“, dass es sich tatsächlich um „Stellvertreterkriege“ handelte, wie es zeitgenössisch und auch historiografisch bis heute noch oft pauschal heißt, oder doch zumindest eine „Bedingtheit durch die globale Blockkonfrontation“ anzunehmen war. Näher untersucht werden in dem Band der griechische Bürgerkrieg 1946-1949 (Jon V. Kofas), die von der Kolonialmacht Großbritannien bekämpften „Emergencies“ in Malaya und Kenia 1948-1960 (Dierk Walter), der Koreakrieg 1950-1953 (Bruce E. Bechtol, Jr.), der „Abnutzungskrieg“ in Vietnam 1965-1973 (Bernd Greiner), der Wettbewerb der Supermächte in Südasien sowie die von Indien, Pakistan und China geführten Regionalkriege 1954-1972 (Amit Das Gupta), der Kalte Krieg in Südafrika (Elaine Windrich), die Hintergründe der sowjetischen Invasion in Afghanistan 1979 (David N. Gibbs), der Bürgerkrieg in El Salvador 1980-1992 (James S. Corum), der indonesische Kolonialkrieg in Osttimor 1975–1999 (Brad Simpson), der irakisch-iranische Krieg 1980-1988 (Henner Fürtig), Ägypten im Kalten Krieg (Thomas Scheben), die Nahostkriege zwischen Israel und seinen Nachbarn (Bruce Kuniholm) sowie die Interventionen Kubas in Afrika 1975-1991 (Piero Gleijeses).
Den einzelnen Untersuchungen gehen drei übergreifende Beiträge voran. Robert J. McMahon ordnet die „heißen Kriege“ allgemein in den Kalten Krieg ein und streicht heraus, dass sowohl aus amerikanischer als auch aus sowjetischer Sicht die Dritte Welt ab den 1950er-Jahren zum „wichtigsten“ oder gar „entscheidenden“ Schauplatz der Ost-West-Konfrontation wurde. McMahon betont dabei die Bedeutung von Faktoren wie politischer Glaubwürdigkeit und atomarem Gleichgewicht oder die Spielräume für die im Rückzug befindlichen europäischen Kolonialmächte einerseits und die Unabhängigkeitsbewegungen andererseits, die das „System des Kalten Kriegs“ geschickt für eigene Zwecke ausnutzten. Seine Feststellung allerdings, der Kalte Krieg habe „Verlauf, Richtung und Dauer fast jeder dieser Auseinandersetzungen machtvoll beeinflusst“ (S. 33), wird von den Einzeluntersuchungen des Bandes gelegentlich in Frage gestellt.
Der gedankenreiche und konzeptionell hervorstechende Beitrag von Marc Frey über „Muster von Interaktionen“ zwischen den USA und der Dritten Welt weist unter anderem auf den dort – im Gegensatz zum bipolar organisierten Europa – vorherrschenden Polyzentrismus hin, insbesondere bei Dekolonisierungskonflikten. Dieser war innerhalb der „freien Welt“ anzutreffen, wo die Vereinigten Staaten und ihre europäischen Verbündeten häufig überkreuz lagen, und auch im „kommunistischen Lager“, wo der Sowjetunion in der Volksrepublik China schnell ein Konkurrent erwuchs. Frey verweist auch auf die Bedeutung ideologischer Grundvorstellungen und kultureller Vorprägungen bei Washingtoner Entscheidungsträgern, auf die Rolle von Geheimdiensten und bilateralen Polizeiausbildungsprogrammen.
Etwas unbefriedigend ist dagegen der spiegelbildliche Beitrag von Roger E. Kanet über „sowjetische Militärhilfe für nationale Befreiungskriege“. Abgesehen von seltsamen Begriffen wie „israelischer Imperialismus“ (S. 61), womit Kanet möglicherweise dem Duktus seiner Quellen folgt, ist sein Verständnis sowjetischer Außenpolitik vergleichsweise eindimensional und nicht immer leicht nachzuvollziehen. Nach Kanets Einschätzung war die Sowjetunion um 1979 aufgrund ihrer internationalen Interventionen auf dem Höhepunkt ihrer Macht, die dann aber doch recht abrupt zerfiel, ohne dass der von US-Präsident Ronald Reagan Anfang der 1980er-Jahre vollzogene „Rollentausch“ (nun unterstützten die USA, und nicht mehr die Sowjetunion, weltweit Guerillas gegen instabile und unpopuläre Regime) dabei ein „Hauptfaktor“ gewesen wäre (S. 78).
Unterschiedliche Qualität haben auch die Einzelstudien. Herausragend ist der brillante, quellenreiche, panoramaartige Essay Bernd Greiners über den Vietnamkrieg („Die Blutpumpe“). Greiner betont einerseits den exzeptionellen Charakter dieses Kriegs; andererseits nimmt er ihn als Ausgangspunkt für vergleichende Überlegungen. So verweist er auf den Zusammenhang zwischen asymmetrischem Krieg und entgrenzter Gewaltanwendung bzw. die Verwendung „symmetrischer Mittel“ höchst unterschiedlicher Kriegsgegner.
In anderen Untersuchungen wird dagegen auf eine eingehendere Betrachtung der Natur der jeweiligen „heißen Kriege“ oft verzichtet. Bemerkenswert sind viele Beiträge dennoch. Sie zeigen unter anderem, dass den Einflussmöglichkeiten der Supermächte, beispielsweise in den Fällen Nahost oder Indien/Pakistan, gelegentlich enge Grenzen gesetzt waren. Zu bedauern ist, dass mit der Ausnahme Großbritanniens, für das Dierk Walter globalpolitisches Denken und die Dauerhaftigkeit strategischer Elemente womöglich etwas überbetont, andere Mächte wie Frankreich oder China nicht als eigenständige Akteure beleuchtet werden. Generell hätte eine größere Einheitlichkeit der Aufsätze möglicherweise ein größeres Maß an vergleichenden Erkenntnissen erbracht.
Die in der „Wahrnehmung des Kalten Krieges [...] dominante Logik eines bilateralen globalen Konfliktes zweier nahezu monolithischer Blöcke aufzubrechen“ (S. 11) ist das Hauptanliegen der Herausgeber. Diesem Anspruch wird der insgesamt anregende Band ohne Zweifel gerecht. Er steckt ein faszinierendes, für künftige Forschungen noch sehr umfangreiches Feld der internationalen Geschichte ab.

Thursday, 16 September 2010

Economics: IMF and EU/US Unemployment (Jon Kofas, Greece)

Posted on September 16th, 2010 
On 13 September 2010, at a meeting that the International Labor Organization (ILO) co-sponsored, IMF managing director Dominique Strauss-Khan warned that the global recession since 2008 has created “a wasteland of unemployment that is likely to leave scars on society for years to come, unless action is taken to address the jobs crisis.” Spanish Premier Zapatero added that “The crisis of unemployment is the worst one facing the world right now.” Given that the US and EU are facing “official unemployment” of 10%, the heads of state gathered in Oslo agreed with IMF and ILO leaders about the problem.
Absent from the Olso meeting was self-criticism. For its part, the IMF failed to mention that the monetarist policy recommendations the Fund has been making to all its members, whether they are receiving stabilization loans like Greece and other Eastern European countries or not, have exacerbated unemployment, shrunk the middle class, and made upward mobility a dream for the new generation of college graduates. Nor was there shortage of hypocritical rhetoric by heads of state like Greece’s Papandreou, who said: “We need to humanize this global economy”–this comment from a politician who has done everything the IMF, EU central bank and finance capital demanded to accommodate and strengthen finance capital that caused the crisis while dehumanizing the economy and creating much higher unemployment as a result.
On 11 January 2010, I wrote a piece for WAIS predicting that the world economy will actually perform much better than the IMF was claiming in December 2009. I added, such growth will be limited to corporate profits amid a jobless-growth economy that will not recover until 2011. I further noted that rising unemployment, wage stagnation, cuts in social benefits and social security will undermine the middle class and workers. The consequences will indeed be intense labor (urban and rural) and student unrest in 2010, as it becomes clear that governments will demand that the lower classes will pay for the banks’ bailout.
In January 2010 when I was making these predictions, I never imagined that the IMF, whose policies are designed to strengthen finance capital and the core within the capitalist world system, would participate in a conference where it is sounding the alarm about a lost generation of unemployed folks, a generation that includes not just unskilled workers but highly educated people with several degrees and no job prospects. Guardian of capital, the IMF realizes that the strength of a pluralistic society on which capitalism rests for the Western World must have a strong middle class. On several occasions I have written that the global recession will seriously undermine the middle class and consequently the liberal bourgeois social order. The Oslo meeting took place to send a message both to governments and private sector about that specter hanging over the capitalist Western World today. “If you lose your job,” Strauss-Kahn added, “you are more likely to suffer from health problems, or even die younger. If you lose your job, your children are likely to do worse in school. If you lose your job, you are less likely to have faith in public institutions and democracy.”
Considering that the IMF, central banks, private banks, and multinational corporations have demanded that governments force workers and the middle class to pay for the crisis of 2008-2010, and considering that more squeezing of labor the middle class is coming this fall and winter in most advanced capitalist countries and especially in less developed, the IMF is doing the right thing both from a PR and symbolic perspectives to warn markets and states that something must be done. But what is this panacea? The ILO and IMF will work together, and with them member governments, to promote “employment-creating growth,” no matter how wonderful yet nebulous that sounds.
The reality is that the financial and political elites are in panic mode because of what is coming ahead not just in “basket-case” countries like Greece (leader of the PIGS and remaining on the list of most corrupt countries on the planet), but in the UK, France, and US. Of course, there is always the possibility that “employment-creating growth” could come out of more defense spending that has not suffered cuts amid major trimming of the welfare state and downward pressures on wages and salaries. The US hopes to sell $60 billion worth of arms to the Saudis. I have no clue why the Saudis need to make such a monumental weapons purchase, unless it is to help the US economy for it will mean jobs for US arms manufacturers. After all, Kissinger made such deals with the Shah of Iran, arguing that Iran had made billions selling oil and it was time to pay something back!
France and Germany are no different from the US, and Russia and China of course are on the same road. A member of the EU parliament recently exposed the hypocrisy of EU politicians, who on the one hand insisted that Greece adopt austerity measures last winter, but this past August, the negotiations for major weapons sales by France and Germany to Greece went ahead. Those of us who have researched stabilization and development loans know that such loans are linked to contracts from creditor countries, and that includes weapons purchases.
The sad reality about all of this is that intelligent people who should know better shrug their shoulders and ask: what choice does government have but to make cuts in the bloated social welfare state and get rid of surplus public employees; what choice but to strengthen finance capital and weaken the bloated public sector; what choice but to agree to IMF-style austerity measures–whether it is receiving stabilization loans or not–and agree to link major contracts for arms purchases? What choice indeed but to remain apathetic in the face of adversity that even the IMF acknowledges undermines the bourgeois social order?

Economics: China, US and the Currency Debate (Jon Kofas, Greece)

Posted on September 15th, 2010 
Just a few thoughts on one of the many complex and significant issues that Tor Guimaraes raised on his posting of 14 September. There have been repeated calls in the mass media, the latest one by popular economist Paul Krugman in a NYT article entitled “China, Japan, America,” to pressure the Chinese government to stop manipulating its currency, thereby undercutting the economies and balance of power of the developed countries with which it does business. China is currently holding a reported $2.5 trillion in foreign reserves, of which as Tor Guimaraes notes about $1 trillion is US. Krugman and others like-minded commentators who have called for China to stop manipulating its currency leave the impression that the US, EU, Japan and other countries are not playing politics with their currencies like China, but permit the “invisible hand” to do its magic! This “populist” game that certain academics, journalists and politicians are playing very opportunistically is designed to apportion blame to external forces for the domestic economic problems in advanced capitalist countries, especially the US. Krugman is an intelligent economist and he knows that governments for centuries since the Roman Empire have manipulated currencies, just as he knows the US has engaged in this practice. Chinese currency manipulation is a complex political issue with serious multifaceted consequences if Washington upsets the delicate inter-dependency it has with Beijing. Krugman and like-minded individuals have further complained about Chinese subsidies. Again populist critics know that the US, EU, Japan, Korea, Taiwan also provide subsidies in varying forms to strengthen certain domestic sectors or specific industries for the “good of the national economy.” All of this noise about China has been around for many years. It assumed momentum after a January 2007 report to Congress warned that “China’s Trade with the US and the World” posed threats to US, EU & Japan national industries and employment.
The US, EU and Japan have been concerned for many years about intellectual property rights violations and dumping by China. Beijing has deliberately kept its currency low and it is guilty of intellectual property rights violations and dumping; all issues that the World Trade Organization can help resolve with China as a member. However, it seems that journalists, consultants, and even academics are falling into the politicians’ perfidious mold of writing/saying what people want to hear, just so that they can be accepted by the public that responds to cryptic or overt nationalist rhetoric. The key question for the US economy is whether the solution rests a tariff war of some sort limited or extended. Reducing this issue into populist protectionist rhetoric to appease the public, only helps the few companies crying out for government help and does nothing to address structural problems in the US. The “economic nationalists”–at least those like Krugman currently playing the card for popular consumption–know that the US has an inter-dependent relationship with China, that the currency issue has many facets beyond economic, and that abrupt and direct pressure would hurt the US much more than China.
Besides, the US has imposed “select tariffs” on those Chinese products, including steel, copper, tires, and automotive parts, that the Commerce Department deems part of a “dumping campaign.” Moreover, the US and EU have intervened to prevent China from buying bonds from EU members and associate members beyond a certain amount. In short, the US and EU do not want China to create a “dependency” relationship with countries traditionally under the Western sphere of influence. The solution for the US and EU is to get their own public finances and economy in order, starting with a progressive fiscal policy and restructuring the economy on a jobs-growth basis as the IMF and ILO recommended during Olso meeting a few days ago. China is hardly responsible for the fact that the US and EU are over-consuming and under-producing to the detriment of their own socio-economic and political harmony.
Like the Latin-speaking half of the Roman Empire after the death of Marcus Aurelius, the US, the EU is right behind it, has chosen the road to wealth concentration in the hands of a small percentage, a runway culture of wasteful spending and over-consumption, and refusal to undertake systemic changes to alter the current course that will yield cyclical crises down the road. By contrast, China with a Communist regime–such as it is practicing capitalist economics–has opted for productivity oriented route and very slowly it is allowing consumption to filter down to the masses.
History will judge in a few decades if the Chinese or the US-EU models of development will best serve their respective populations. The Chinese model–detrimental as it is to hundreds of millions of cheap laborers working under unsafe and unhealthy conditions–is focused on exported-oriented growth strategy with low domestic consumption. The US-EU model rests on perpetual debt-by-growth strategy, using the reserve currencies and political power to maintain global market advantages, weakening the welfare state and focusing on strengthening finance capital while hoping that will somehow filter down to benefit the middle class needed to maintain the existing social order.

Monday, 13 September 2010

Laws of History: Economic Determinism

Economic Determinism is an undisputed law of history, though by no means the only one as many Marxists would argue. Societal institutions, the state, the economy, social classes, religion, the family, values systems and norms are to a large extent economically determined. The question is to what degree do other forces play a role in determining history and society? For Christians who hold to the doctrine of Divine Providence, history is guided by the hand of God, while for Hegel history is the unfolding of the mind of God. Are the laws of history more rooted in the spiritual as St. Augustine argued, the intellectual as Hegel and to some degree Kant contended, or in the material as Marx and Engels maintained? After the ceremony of president Ronald Reagan's funeral, former president Mikhail Gorbachev was asked if Reagan's high defense spending was the principal reason for the fall of the Communist bloc. Garbachev replied that there were multiple causes for the fall of Communism. Reflecting prevailing thinking among conservatives, Colin Powell insisted that defense spending was at the core. Since the early 1990s, Marxist scholars scrambled to explain why the fall took place and what this means for the future of Marxism as an ideology. If we assume that the laws of history are a reflection of the laws of nature, economic determinism is a very important law. Marx and Engels, among many others, deserve credit for their work in refining economic determinism into a coherent doctrine that helps all scholars explain history and political economy. Gorbachev was indeed correct that many forces precipitated Communism's downfall, among them economic. Semi-integrated into the world capitalist-system while pursuing its own regional integration, the Communist bloc was neither Communist nor capitalist, but a mixture of an anachronistic enclave that operated very inefficiently without meeting the material needs of its people and without offering much hope for the future. Ironically, the doctrine of "Economic Determinism" explains the fall of Communism. That should give hope to those who believe in Socialism as a viable system, and it should be a source of concern for those advocating globalization. The same forces that brought down Communism are at work in any political economy that fails to serve society and fails to keep pace with change".

Friday, 10 September 2010

Burn the Koran Day (Jon Kofas, Greece)

Posted on September 9th, 2010

From disparate perspectives that may perhaps contribute to the edification of all interested parties, in the last ten days WAIS has been entertaining the eternal issue of God’s existence and the equally controversial issue of institutionalized religion’s role in society. Amid such WAIS discussion, sparked by Professor Stephen Hawking and his new publication, just by coincidence comes a tiny religious fundamentalist group ready to promote hate and precipitate violence on a wide scale–all in the name of Jesus!
During the current crisis of socioeconomic dislocation for millions of Americans (and billions throughout the world), the religious right in America has been gaining strength a few weeks before the congressional elections in November. There are close to one million web sites devoted to Burn the Koran Day and the Florida group and its affiliates is running slogans like the following:
“Christianity - the religion of redemption and forgiveness v. Islam - the religion of terrorism!
“The Dove World Outreach Center, a non-denominational church in Gainesville, Florida, will celebrate “Burn the Koran” day on September 11. Terry Jones, pastor of the church, says the burnings will be held on church grounds “in remembrance of the fallen victims of 9/11 and to stand against the evil of Islam. Islam is of the devil! On its website, The Dove World Outreach Center sells ‘Islam is of the Devil’ T-shirts.”
Naturally, religious leaders from Islam, Judaism and Christianity have tried to publicly distance themselves from “extreme fundamentalists down south” calling Islam a religion of the Devil and doing so under First Amendment protection–no matter that their “religious” words and actions promote hate crime against another monotheistic religion and its followers. Along with Secretary of State Clinton and NATO secretary-general Anders Fogh Rasmusen, world leaders have pleaded with the Florida group and the undetermined number of people in the US and the world that agree with burning of the Koran on 9/11 not to go through with such high-profile symbolically hateful act that could precipitate violence. The question of course is not that this particular religious group led by Terry Jones is carrying out a symbolic crusade against Islam on a very symbolic day, but what are the political, economic, social, and cultural conditions that gave rise to such a movement? Islam and Christianity have a long history of antagonism that dates back to the Crusades, followed by European Imperialism in Muslim lands for the primary purpose of commercial and geopolitical exploitation. With the division of the World between East and West, the antagonism continued with Muslims detesting atheistic Communist East and cooperating with the capitalist West more out of expediency and “lesser of two evils proposition.” The Cold War ended. Islam took another look at the West immersed in a materialistic culture whose hedonistic value system it was spreading along with its products and services–and always under a patron-client integration model that favored the Christian West. Then there is the that unavoidable issue not just of religion, but of race that has so stigmatized the history not just of the US, but the entire Western Judeo-Christian World. Does Western Civilization have room for Muslims as they are, or must they conform to Western Civilization’s value system in order to be accepted? Given Western policies toward Muslim countries and given how the Western media and entertainment industry–motion pictures and TV–have portrayed Muslims, how is anyone surprised at Burn the Koran Day?
Religious hate crime in the US has risen sharply in the last decade. Hate is a moral issue, if the authorities choose to define it as such–as in the case of a previously unknown Christian pastor in Florida calling for the Koran’s burning. Laws defined politically as in this case, are not enforceable. Politicians who laid the foundations for the atmosphere of hate crimes in direct and subtle forms through foreign and domestic policies that are detrimental to a particular religious group are now asking for religious tolerance for a very specific case. If a Muslim group in Cleveland called for Burn the Bible Day, I wonder if the authorities would not define the term hate crime legally instead of morally. Within 24 hours the FBI would have arrested and every single individual connected with the announcement and their distant relatives and friends and interrogated them without due process–all under the US Patriot Act.
Watching on TV extremist Muslim leaders warn America that if the Koran is burned on 9/11, there will be retaliation is predictable, and I would have expected nothing less from the other side of the three-sided coin of monotheism! In the endless “cycle of eye for an eye, tooth for a tooth” practice of an ancient dogma that sinister leaders and faithful followers of the three monotheistic religions pursue, reason and compassion cannot and will not prevail because tangible interests and historical culture clashes are far stronger!

Thursday, 9 September 2010

Economics: The Future of the Middle Class (Jon Kofas, Greece)

Posted on August 30th, 2010

The Obama administration remains concerned that the American Dream is fading because the middle class is weakening, especially right before the 2010 congressional elections that the prospect of a double-dip recession may be more real than it was six months ago. Arguing that the “middle class dream” (synonymous with the American Dream) is fading fast, the Obama administration has a task force operating on the assumption that “everyone wants to and can be in the middle class.” Clearly not the same definition as in 18th century France or England, a definition that underwent change since then in Europe that operates in America’s shadow since the 1940s, US government (media and mainstream institutions as well) defines middle class on the basis of a) owning a home, b) car, c) college for the kids, d) retirement fund, e) health care, and f) family vacations. If you have these six things, you too are in the shrinking “middle class” as US government (and mainstream institutions) defines it. Therefore you are happily conformed and the social order will continue to exist for a very long time. But what if you lack one or more of the six criteria? High-paying jobs in the secondary sector of production (manufacturing) have been going to Asia and Latin America and with it the drop in salaries and benefits for Americans, followed by white-collar jobs in sectors from computer science to medical engineering. The situation is not very different for many other advanced capitalist countries that have experienced downward social mobility under globalization. Although Americans and their European counterparts became two-income families, some taking second jobs, the cost of living rose sharply in the last two decades, while wages, salaries, benefits, and social security income could not keep pace. “For most of the 20-year period following 1990, the Commerce Department reports that real median income grew at a rate of about 20%, while the cost of a college education grew between 43% and 60%, the cost of housing rose 56% and health care costs jumped by 155%.” Joe Biden’s web site describing the task force notes that “A strong middle class equals a strong America.” But was it not government policies regardless of political parties whether in the US or any of the advanced capitalist countries that led to the shrinking middle class since 1970? Is the solution to a strong middle class a more even income distribution where the majority of the population does not live on less because the pyramid is becoming increasingly narrower at the top and wider at the bottom? Who knows what Joe Biden will do to get Democrats elected this year against the background of a Republican assaults (Glenn Beck calling Obama racist)? It seems any solution that proposes social and economic justice would be unacceptable for mainstream America. A more acceptable solution for US government and mainstream institutions is: a) find another job to supplement your income, b) work harder, c) plan and invest better, d) return to school for more education or re-training; and e) wait for “lady luck” to ring your doorbell because you have conformed to the Calvinist work ethic! If indeed the assumptions of the US government (and the entire mainstream institutional structure) that “securing a middle class” is the key the American Dream, how do we explain US public opinion polls indicating that the “happiness” level (granted the obvious difficult of quantifying it), has been under 50% and steadily declining since 1970? And how do we explain that in a global public opinion poll, the top four “happiest” countries in the world are Denmark, Finland, Norway, Sweden, while the US ranks 14th, despite the largest GDP on the planet?
Even if we accept the US (political and financial elites backed by media and academia) ubiquitous PR campaign, to project the image that upward mobility is the dream, scholarly studies by individual academics and think tanks for the last three decades indicate that there has been downward mobility in America, spreading to the rest of the world with some exceptions. Global outsourcing under neo-liberal policies has resulted in a shrinking middle class likely to shrink more in this decade in the US and EU.
(Earl Wysong, 2007, Levy and Murnane, 1992; Karoly, 1993; Duncan, Rodgers, Smeeding, 1991 and 1992;
In March 2009, I issued a posting on WAIS entitled “Twilight of the Middle Class,” where I argued that the middle class in most of the world has been created on paper owing to the credit economy. When I presented the same point last spring as a guest speaker at a Greek university conference dealing with issues of international political economy, no one in the audience was surprised that indeed the middle class was built on a mound of debt under an unsustainable global (public and private) credit economic structure designed to keep wealth concentrated. People know where they stand versus the image they project, a dream that the political and financial are projecting while constantly working to make the social pyramid even narrower.
The larger question today is should the six-point criteria developed by individuals who want to perpetuate consumerism be the basis of the American Dream, or should there be an re-examination of peoples’ values in the wake of this prolonged global recession–and I mean all people, not just the middle class that constitutes the popular base of bourgeois political parties? Are these the values America wants to continue exporting to the rest of the world so it can strengthen finance capitalism at the expense socioeconomic chasm and social polarization from which arise extreme right wing elements? Is the essence of humanity predicated on the six points mentioned above? In the US government report, there was no mention of creativity, no mention of empathy in thought and deed for one’s fellow man, no mention of protection of nature, no mention of philosophical/spiritual self-reflection, no mention of greater social equality or collectivist action that alleviates suffering of the vast majority, no mention for lessening societal and institutional violence. America is becoming more polarized, and Europe is following in its footsteps as indicated by race riots in England, anti-gypsy sentiment in France, xenophobia in Italy, and of course America’s Beck and Palin backed by the extreme Christian right promising a slice of Heaven to “Real Americans.” The Obama administration needs to appoint a task force to reexamine what values it should be peddling to the American people and the world. At 4% of the world population, the US consumes roughly one-quarter of the world’s resources, but a mere 1% of the population owns 35% of the wealth. Is there a future for a growing middle class (the realization of the American Dream and the avoidance of sociopolitical polarization) under such wealth concentration?

Thursday, 2 September 2010

Policy Formation and Consent Theory after the Crisis (Jon Kofas, Greece)

Posted on March 19th, 2009
Classical Liberal (Lockean) political theory maintains that individual consent ought to determine politics and policies. “Wherever, therefore, any number of men so unite into one society as to quit every one his executive power of the law of Nature, and to resign it to the public, there and there only is a political or civil society.” John Locke, Second Treatise on Civil Government. However, the reality is that T. Hobbes’s Leviathan that Locke rejected lives inside competing interest groups among the elites (including the 17th century, when Locke represented mercantile interests) that have played a catalytic role in shaping policy in modern pluralistic societies governed by varieties of Liberal-type constitutions. Though policy-formation is the presumed domain of competing interest groups whether politically organized like the Whig faction in Locke’s time, or modern-day corporate lobbies, consent-theory is more easily justified and implemented during times of national emergencies or crises than during “normal times.”
Having built a national consensus during the Great Depression for economic reasons, the US continued to expand the consensus to include the entire Western Hemisphere under bilateral and multilateral agreements. These culminated in redefining the Pan-American system during the war, and then globalized during the Cold War when besides NATO, OAS and SEATO, IFIs were also established to complete the triumph of Pax Americana. The dynamics of the Cold War necessarily resulted in domestic national consensus not only in pluralistic societies like the US at the helm of the world-capitalist system, but also in Communist nations and in the non-aligned bloc. Therefore, the Cold War as the point of origin for policy-formation and consent-theory entailed that the state forged consensus among competing interest groups under a neo-corporatist model that would presumably serve not only the political and financial elites, but the military establishment, intelligentsia, farmers, and labor unions whose cooperation was crucial for policy-formation against the “common external enemy.”
Nor is this to be confused with the military-industrial complex that was only one byproduct of conformist policy-formation. After the Communist bloc collapsed and China became thoroughly integrated into the world capitalist system, the institutionalized co-optation of the disparate interest groups needed to remain intact. This is not because there was a “common external enemy”–of course one had to be created as catalyst to interest-group co-optation–but because consent-theory assumptions were obviated by the changing structure of the political economies around the world and the neo-liberal globalization trend. The interdependent world economic structure as the basis of consent-theory and as a reality cannot change systemically as Russia, China, Brazil, India, and even some EU leaders wish. However, economic nationalism–from the political left and to the ideological right–and varieties of Socialism will challenge and try to replace classical Liberalism and the American-centered world system as the ideological foundation on which political economy and international security rest. This means new international division of labor, redefinition of the terms of trade and investment that do not disadvantage the Third World and new “North-South” hemisphere relationship that allows for a more equitable redistribution of wealth–all of it used as leverage by those wishing to further dilute Pax Americana.
Depending on its severity, the current economic dislocation will force political and financial elites along with the intelligentsia to re-examine the “consent-theory” paradigm with the US as the leader. They must seek alternatives that would ensure policy-formation does not drift toward the lower classes or to the Third World whose conformity and co-optation must be guaranteed to prevent any change either in the social order or the international order. The unfolding civil disobedience combined with labor and middle class protests throughout the world will continue to challenge consent-theory that the political and financial elites are interested in preserving. Assuming that the forthcoming G-20 meeting (April 2009) will result in consensus and assuming the Chinese prediction about national recovery by June 2009 is correct, it may be possible that by early-to-mid-2010 the US will be coming out of recession as the FED is now predicting. The EU will realize real growth much later than previously expected (the latest IMF report is very pessimistic about Europe) and gradually Japan and the rest of the world will follow the EU. Such scenario depends largely on what policies the G-20 will adopt to better-regulate the crippled economy for the duration. The middle class and workers will lag far behind in the recovery process, as will the Third World–regrettably, there are no AIG-type bonuses for the middle class and workers whose consent must be manipulated back toward support of the elites.
In short, the lower the social strata the slower the recovery; similarly the less the country is developed the slower and more painfully it will emerge from this crisis. The crisis will exacerbate societal polarization that manifests itself in increased social protests, xenophobia, ethnocentrism, racism, chauvinism, etc. Whether it is to the extreme right or left, going to the roots of society in times of crisis will be a normal response on the part of the masses; that is where a large segment of the population feels a sense of belonging and safety, not in institutions that failed them. The current crisis will intensify the “revolutionary” impulse to alter the social and political structure as well as a minority counter-revolutionary impulse to retain the social structure by an authoritarian movement, regime, or authoritarian policies adopted by otherwise liberal-bourgeois regimes. The dialectic between the two impulses will entail the biggest challenge to the political elites in pluralistic societies since the Great Depression. If as Jean-Jacques Rousseau has argued the repressive conditions imposed by a minority over the majority necessitate force morally and socially justified, then we can expect in the upcoming months and years more voices of leftist dissent and reactionary outcries to maintain the status quo by force.
The current crisis has diluted if not obviated policy-formation and consent-theory, as we knew it under Pax Americana throughout the Cold War and in the post-Cold era of the global anti-terrorism campaign on which foreign policy of many states are based; with all its intended and incidental domestic policy-formation consequences. To counter the inevitable challenge that pluralistic societies will be facing, the political and financial elites will have to deliver on the promise that after the crisis there will continue to be “ever-rising living standards” within the existing stratified social and international order. Such promises of what Kenneth Boulding, Beyond Economics (1968) called “cowboy economics” rooted in arrogance of financial power buttressed and protected by the political elites will not be sufficient to convince people who lost homes and businesses, jobs and careers, savings and retirement nest eggs, and their lifestyle turned upside down. Given that the political and financial elites have always manufactured consent, consent-theory is their domain to define and implement to preserve and advance their privileged position. Crises, however, bring out in otherwise docile-conformist citizens tendencies that range from reactionary to revolutionary, from cynicism to “apocalyptic nihilism,” which is what most people act on and understand by the term (as opposed to anarchist or existential). Besides resorting to more austere laws to “contain” dissidence as it arises with greater socioeconomic problems, the state along with the media, think tanks, and anyone with access and influence to public opinion will have to argue that any alternative to systemic transformation of the social and political order nationally and internationally will entail the demise of civilization as we know it.

Greece, EU and Goldman Sachs: Economic Crisis and Crisis of Confidence (Jon Kofas, Greece)

Posted on February 16th, 2010 

The stability of a society and its institutions is tested not in times of relative growth and domestic and foreign harmony, but during domestic and international turmoil. Last week, the New York Times exposed a global scandal involving Goldman Sachs and a number of governments, including Greece and Italy. Apparently, in the past two decades, Goldman Sachs has been striking elaborate deals not only with businesses to conceal their actual earnings, but with governments to conceal their actual debt, so that they qualify for more loans at lower interest rates. In a number of pieces I wrote a few weeks ago, I noted “investment scams” were behind EU government bonds and the falling euro. I specifically mentioned in one of those pieces that Goldman Sachs, reputedly behind the massive AIG collapse and a number of Hedge Funds that were at the heart of the global financial crisis, had announced that it would reward its executive with $100 million in bonuses. This took place at a time that the Obama administration is trying to have the banks and investment firms set the example of restraint amid 10% official (15% real) unemployment. Naturally, I have no idea as to the NYT sources for the Goldman Sachs story, though I suspect one of the US Treasury, or one of the agencies, and all in retaliation for Goldman’s defiance of the Obama administration’s attempts to control some of the excesses in investment banking. The EU knew about Goldman Sachs deals with governments, but in 2001, it issued a directive to all governments to stop making deals with Goldman that resulted in “fraudulent debt figures,” a practice that burdened the fiscally stronger EU countries which subsidized the weaker ones. Presumably, all governments officially agreed to comply. However, the EU agreed to allow the false statistics Goldman was “cooking up” on behalf of governments in exchange for “liberalization” reforms, especially sales of public enterprises to the private sector. In short, Goldman operated with the EU’s indirect, “back-door” condoning because larger interests were served. In November 2009, Goldman approached the newly elected Socialist Government of George Papandreou in Greece and proposed purchasing the Greek debt, at least a portion of it, presenting it to the EU lower than it actually is, and in exchange take control of the airport tolls and other frozen income sources. In October 2009, Greece’s official debt presented to the EU was 6% of GDP as opposed to 12.83% that was the real debt. Having run a campaign to clean up rampant corruption involving both domestic and foreign firms, Papandreou rejected the Goldman proposal. What followed was a campaign by Goldman Sachs to expose Greece along with all of Southern Europe as EU weak links, whose bonds should command much higher bond yields than what Germany pays. Before the NYT published the Goldman-Sachs story, Papandreou went public with implicit accusations that the EU was complicit in covering up fraudulent statistics that Greece was submitting for a number of years in exchange for policy measures that it (EU) wanted Greece to adopt. The German government acknowledged that the EU had not done its job properly. Greece is by far the most corrupt country in Europe, where “baksheesh capitalism,” as I have baptized it, permeates every sector from government and business to the Orthodox Church and universities. According to the NYT article, Greece is just the tip of the iceberg, as other countries in the EU have also imbibed of the banking industry elixir. These arrangements are conceptually similar to the SIVs (Special Investment Vehicles) that banks have used to place assets off the books so that their capital requirements are less demanding. In other words, like a magician, wave the left hand to distract the audience while the right hand moves the pea under a different shell. Among the common sleights of hand are loans disguised as currency trades and selling future revenue streams from lotteries, tolls and fees. Greece is not alone in cooking the books, as we now know as a result of the Goldman Sachs scandal. Hedge Fund and other speculators in Europe and other countries took advantage of the inordinately high budgetary deficits (presumably much higher than official statistics indicate for a number of countries) in the EU to drive bond yields up, and the euro down along with declining security values. That Goldman was engaged in the type of “financial control” that is somewhat similar to what the “Great Powers” imposed on the Ottoman Empire and China more than a century ago is not surprising. That the investment firm did so with the cooperation of governments at a time that central banks knew of the fraudulent operations in the private and public sector is indicative of how finance capitalism really works. Scandals of such magnitude are not free of cost. On the contrary, the cost of fraudulent statistics in times of crisis entails austerity measures–higher unemployment and lower living standards. But it is all worth it knowing that the “free” enterprise system works! At the heart of finance capitalism is a predatory monster feeding ferociously on expanding and contracting economic cycles, a monster that would not exist or operate in such fraudulent fashion if the state did not constantly feed it and render it protection. With each contracting economic cycle, “free” enterprise weakens and regains its strength solely by the state’s vigorous intervention. Despite all that has transpired, the majority of the people–more in the developed countries and less so in the developing–believe in capitalism. What most people see is a “few bad apples” responsible for manipulating an otherwise “good system,” but one must have faith in the apple cart because it is the only temple of worship in town. Even the trade unions, most of which have been co-opted by the mainstream political parties, worship in the same temple just as they are declaring labor strikes. Faith by the masses in the political economy is what keeps it going even in crisis mode.

US: Neo-Corporatism under Obama

Every presidential candidate who challenges an incumbent or incumbent system necessarily campaigns on the promise of “change”; otherwise there is no reason to seek office. And the more vaguely optimistic the promise of “change” that pledges to “improve society,” the more the candidate is likely to succeed in securing votes. Such success is predicated on the candidate appearing as a quintessential “outsider” and “the people’s candidate” while essentially enjoying the establishment’s backing. US presidents have always been symbolic figureheads serving the entrenched establishment, or at least a segment of the establishment.

Obama has not taken office and he must be given a fair chance–the usual first 100 days–before his administration can be assessed. However he has made top cabinet appointments that point to more of the same amid an ongoing costly war and mini-depression, both of which require bold policy changes to the match campaign rhetoric that swept Obama to office. When the President-Elect recently met with Defense Secretary Gates, it was decided that US troops will stay in Iraq until 2011–a year before Obama goes on the campaign trail in 2012. The troops will not be withdrawn in 16 months as the candidate promised voters–not even the two-thirds reduction he claimed must return home. Moreover, the war against “Muslim terrorism”–the ultimate specter and trap haunting US foreign policy–will be expanded in Afghanistan, especially now that India was hit and will be more receptive to cooperation with the US.

 Putting aside Obama’s Clintonite administration that is bound to be an improvement over the Bush-Cheney team in many areas from stem cell research and a more rational environmental policy to shutting down Guantanamo and improving US image in the world, it is worth asking in what domains we are unlikely to see policy changes as promised. Will there be change in:

*Privatization of public services at all levels?
*Government decentralization that has been ongoing since the early 1980s?
*Fiscal policy to reflect the public sector’s dominant role in the private sector?
*Strengthening trade unions or continuing the same course of weakening them?
*Practical or ideological foreign policy?
*A multilateral foreign policy and stronger UN?
*Palestinian state at long last and rapprochement between Israel and its Arab neighbors?
*Rapprochement between US and Iran and Latin American countries with populist left-leaning regimes, especially Venezuela and Bolivia?

Change means different things to disparate supporters backing Obama; after all he was elected on the Democratic ticket with all that entails. Does “change” mean the same thing to an autoworker as it does to wealthy Obama campaign donors? Will there ever be a change from the neo-corporatist model rooted in the American folkish philosophical assumption that “we are all in the same boat but capital is the captain, so why shouldn’t workers, small farmers, and middle classes get behind the captain” to make the boat go in the right direction? Like religious followers, millions of people in the US and billions around the world wanted to believe that Obama meant hope beyond the average Democratic politician, a real change from the Bush-Cheney era of incompetence, deception and destruction, from an administration running the country with the naive ideological confidence of an intoxicated ship captain whose ship is about to capsize but he remains oblivious to the ocean waves.

Based on cabinet appointments, and on what Obama has said regarding policy direction, the evidence so far is overwhelming that we can only expect some substantive changes from his administration, but mostly staying the course. Regrettably the neo-corporatist model that keeps America steadfastly and institutionally unchanged seems alive and well under the future president. As much as progressives must always and without hesitation come to Obama’s defense especially when he is a target of an assortment of racists and right-wing fanatics domestically and around the world, progressive critics would be remiss not to point out that behind the mask of stylistic changes remains the permanence of American neo-corporatism.

Wednesday, 1 September 2010

Portugal: Christ and *Playboy* Magazine (Jon Kofas, Greece)

Posted on July 9th, 2010 
In the 20th century of mass wars and revolutions, mass anxiety and hysteria that drives people to pop pills for everything including shyness, in the century of triumphant materialism when the value of people is lower than that of commodities, some artists, sculptors, and novelists justifiably depict revered religious figures like Christ as a whore-tempted atheist. There is a fundamental difference, however, between genuine artistic expression intended to provoke aesthetic and reflective response, and Playboy depicting Christ with naked women on its cover for profit. Playboy represents the commercialization of people and uses the “artistic” argument as a thin veil to justify its exploitation. The same picture that appears on the cover of Playboy would have been very appropriate if it was a painting by an artist creatively representing a dissenting viewpoint. Playboy’s only goal is profit for the duration, whereas the goal of the artist is creative expression that could lead to possible edification of the interested audience. Curbing free speech by not issuing the Playboy edition with Jesus and the naked models in a predominantly Catholic country makes business and political sense. The same Playboy issue, however, could become a collector’s edition among an urban US/West European audience skeptical about religion and disgusted by its commercialization. The same issue could also be used by anti-Christian groups that feel exploited by the West, and justfiably so in my view. If Western media periodically promote anti-Muhammad material in the name of “free speech,” the same standard must apply to Jesus, if for no other reason so we can claim ownership of “pluralism and free speech ideals.” Anti-clerical humor of course is centuries old, often by people within the same faith, often clerics of the faith. The artistic purpose of such material as distinguished from the political is also centuries old and only natural that it exists. We have become used to the Western establishment–political parties, businesses, media–promoting its own God while demonizing the other’s, and that too is a form of warfare as old as civilization. The Last Temptation of Christ may be creative expression, or part of an anti-Christian, anti-Western propaganda machine. And that too is part of the nature of warfare.