Tuesday, 26 October 2010

WikiLeaks, US Exceptionalism and the Media (Jon Kofas, Greece)

Posted on October 26th, 2010
In 2008, the Norwegian Nobel Committee chose Thorbjoern Jagland to chair the Committee. Jagland is a Labour Party politician, former prime minister, foreign minister, speaker of the parliament, and current secretary-general of the Council of Europe. On 21 October 2010, WAISer John Torok submitted a provocative but informative article by Japanese journalist Yoichi Shimatsu, who argued that under Jagland’s leadership the Nobel Peace Prize committee headed by “Jagland the warmonger” intends to send political messages regarding a new military world order with a strong NATO and a Cold War ideology. Shimatsu wrote that: “The goal of the West is not democracy and human rights; what its leaders really desire is domination and warfare.” John Torok rightly commented that the article reads a bit too conspiratorial, but it is posted on WAIS for all to read and reach their own conclusions. In light of WikiLeaks Iraq revelations, we have very clear evidence that the Obama administration ignored what could be termed as “war crimes.” Was Obama worthy of Jagland’s choice to receive the Nobel Peace Prize at a time that mass killings of Iraqi civilians were taking place? A few mainstream media organizations have called on the US to “investigate” the revelations brought to light by WikiLeaks docs–that is, the Pentagon would investigate itself to conclude that a few Iraqi and US “bad apples” were responsible for the massive “collateral damage” (civilian killings) in the field. I believe there will be an investigation, but it will be to determine how to better protect confidential sources in future and keep tighter control of non-mainstream media that poses a threat to “democracy” equated with national security, regardless of violations of the Geneva Convention as WikiLeaks claims.
Some mainstream media, including the New York Times, are downplaying the “war crimes” aspect and the elaborate cover up. Instead they are focusing on the flamboyant WikiLeaks Australian founder Julian Assange, as though this individual regardless of his style and tactics is the essence of the problem in US foreign and defense policies. There is a very interesting article in the Independent by Patrick Cockburn, “Echoes of El Salvador in Tales of US-Approved Death Squads.”
US mainstream media is more exercised about Juan Williams losing his NPR job as “Liberal” commentator after making a racist remark at the expense of Muslim (and immediately rewarded a lucrative Fox News contract) than they are about the serious issue of American Exceptionalism that has remained a cornerstone in US foreign policy from the Spanish-American War, when US Marines committed war crimes against civilians in the Philippines, to the current wars in Iraq and Afghanistan. After the WikiLeaks revelations in the wars in Iraq and Afghanistan, American democracy is on trial at home and around the world; yes, especially now with Obama who promised a more “democratic” America that respected human rights! In an election year that the majority seems to be leaning toward Republicans, with some Tea Party elements advocating a unilateral foreign policy, a hawkish defense policy, and tighter domestic security (anti-terrorist measures), the American voters have difficult choices. But how can they make informed choices in the absence of full disclosure of vital information by their government that conceals many issues under the “national security” label and feeds information to the media that has been reduced to an official mouthpiece. Unlike the Nixon era, when the White House tried to manipulate the press toward greater conformity, today’s mainstream media, with few exceptions, does a much better job of conforming to official policy and refraining from investigative reporting that could damage “national security,” as each administration defines it and equates with Democracy.
Given that the mainstream media for the most part is raising questions about WikiLeaks and leaks inside the Pentagon, instead of demanding government accountability, who will investigate whether Obama has indeed pursued Bush policies of imprisonments, torture and assassinations of civilians and whether these amount to war crimes? Where is the voice of international organizations, including UN and International Court of Justice, or are they too busy condemning and investigating minor Third World political criminals to bother with the major ones in the West? What if North Korea or Iran, neither of which is ruled by benevolent Boy Scouts and neither of which has the best human rights record in the world, had engaged in the same acts as we see evidence in summaries from WikiLeaks docs? If American Exceptionalism has no limits, does this necessarily entail that America has abandoned its Jeffersonian ideals in favor of imperial power and moved closer toward an authoritarian model as I argued in a previous essay about “Threats to US Democracy”? This is a point made in a number of books and essays, including Ted Gup, Nation of Secrets (2008). Gup argues that it has become part of the American mindset to be obsessed with secrecy, an issue that extends to the private sector, including the press. As the trend toward greater secrecy continues, it results in misleading and misinforming the public, thus making them less democratic and corrupting them. Beyond the significance of WikiLeaks docs on Iraq and Afghanistan that have revealed a great deal about Iran as well, the larger question is whether secrecy has become so ingrained in American culture that it has molded the political system and compromised basic freedoms. (For more on “Secrecy and Democracy” see:
http://www.outsidethebeltway.com/balancing-secrecy-and-democracy )

Religion, Secularism and Geopolitics: Turkey (Jon Kofas, Greece)

Posted on June 15th, 2010

Taking the long view on Anatolia’s intermediary role between East and West, it is indeed true that there has been much written on the issue. The Erdogan regime is interested in having Turkey play an essential diplomatic role between West (NATO, especially US) and Middle East. It is no secret that Turkey wants to recapture some of its Ottoman glory through diplomacy; it wants a greater geopolitical role that would give it leverage to have a voice in determining the regional balance of power. This makes sense because there is no longer a Communist bloc, the US failed in Iraq and Afghanistan, both EU and US appear helpless in bringing about a solution to the Israel-Palestine conflict, and it seems that such a course would solidify Erdogan’s domestic political base threatened by secularists inside the military as well as outside. Until the archives of a number of countries become available to the public, we will not know why Turkey and Israel chose to clash in such a dramatic fashion. From published reports so far we have a nebulous picture. Some dynamics behind the clash include: 1. Turkey’s desire to bring out into the open US foreign policy on whether Ankara will play the catalytic role that the Obama administration desired when it took office; a time when Bush’s foreign policy appeared it was not achieving anything desirable for broader US interests.
2. Challenging Israel is a great way to unify reluctant generals behind the regime and to recapture public support at home and in the Muslim world where there are no great leaders speaking out.
3. Turkey’s obvious ties with Iran and Hamas are justified if we consider the intermediary role Erdogan wants to play in the Middle East and the absence of an alternative from the Arab side.
4. Turkey’s increasing economic ties with its neighbors and especially Russia, that has signed a number of agreements on energy. Turkey has a sense that it needs to pursue a multi-dimensional foreign policy, and the place to do it starts with neighbors.
5. Turkey has to play the geopolitical card more so today than ever because it sees that EU membership will be delayed amid a protracted economic recession and European reluctance for political, financial, and cultural/religious reasons to allow Turkish membership into the Eurozone.
6. Given Turkey’s vote at the UN Security Council not to continue with the US-led ‘’sanctions diplomacy,” it now seems likely that Israel launched the attack with US approval. Given what the US said officially and also what it did in the aftermath, I am guessing that Washington gave the green light and may have informed other governments (NATO) regarding IDF operations.
7. The US most likely has reconsidered its position about using Turkey, a long-standing NATO ally, as an intermediary in the Middle East as originally planned, probably because not just Israel, but also some Arab states do not want Ankara to have such a preeminent role.
8. Israel launched the attack and in a calculating manner to create a diplomatic crisis, partly to deflect attention from having its nuclear program undergo the kind of scrutiny others are enduring at a time that US and EU hypocritically demand Iran stop dead in its tracks with nuclear research.
9. Israel knew ahead of time that no European country would do anything detrimental to alter its military, economic, or diplomatic ties with Israel just to support Turkey. Naturally, the rhetoric on the part of most regarding the “poor Palestinians” seemed hypocritical against the reality that this is an ongoing problem from which most countries have washed their hands. In fact, some EU countries also did not want the US to use Turkey as the new regional power at a time that a power vacuum exists. EU benefits from a “tamed” Turkey, not one playing intermediary between Muslims and US.
10. Israel went out of its way to punish Turkey because it wanted to send the message that the Erdogan regime had drifted from the historic role of bilateral relations and it was becoming too close to Iran and Hamas. Erdogan received the message and threatened to board a ship and head for Gaza, prompting Obama to speak with him privately about undertaking such a highly provocative venture. Erdogan now has no illusions about the limitations of his ambitious foreign policy; he knows that Turkish foreign policy is not determined by Turkey’s national interests as the regime defines it, but by the US which sets the limits and with Israel helping behind the scenes to make certain a regional power gap is not filled by any country that Tel Aviv does not approve. The question of course is where do the US and Israel go from here? There is an obvious regional power gap in the region, currently filled only by Iran, and there is a need to solve chronic conflict between Israel and Palestinians as the entire world demands. The Clinton-Obama decision to re-think their original strategy about Turkey’s role takes us back to the Bush era, when the only prospect was perpetual conflict that some right wingers in the US and of course in Israel want. The dead-end Bush Middle East foreign policy is back!

Monday, 25 October 2010

Economics: Military Strength and Political Power (Jon Kofas, Greece)

Posted on November 29th, 2008
We do not live in the worlds of Alexander the Great, Attila the Hun, or Charlemagne when military expansion entailed economic prosperity through military conquest and direct looting and thus political might for the duration of military supremacy. There is a school of thought among Roman historians, whose thesis is that the decline and fall of Rome was caused primarily by internal decay, especially economic in the consuming Latin-speaking West, while the commercial Eastern half of the empire (Byzantium) survived. Similarly, the path to military and political power contributed to the downfall of the mighty European empires whose existence rested on war and occupation, as there is a direct correlation between long-term defense spending and economic decline. After WWII Japan and Germany, with very low defense expenditures, quickly became the strongest economies in their respective continents and trailed the US that helped re-industrialize them and subsidized their defense. By contrast, the USSR, which was a political and military power, spent itself out of existence as it sacrificed its civilian economy for an outward-looking defense sector. Who knows how the history of the USSR would have evolved if it focused on inward-oriented economic growth and development, instead of extraordinarily costly military and political power beyond its borders? And what affords today’s Russia more leverage domestically and internationally, the gas and oil pipelines or its nuclear weapons?
After the Nixon visit, China, transitioning to global capitalist integration and currently spending 10 times less on defense than the US, is a serious contender for the preeminent economic and political position at some point later in this century. After the demise of their empires, Great Britain and France continued to devote considerable resources on defense as members of the nuclear club and continued their ambitions for continental and overseas preponderate influence. But the political and military influence of either France or UK on a world scale is minor in the absence of the US behind them. And is India a rising power because it has nuclear weapons and presumably deterrence, or because its economy has been strengthened in the past two decades? Also part of the nuclear club, Israel, which has a military-based if not a war economy, enjoys regional power status at the expense of its own population, but it status is largely owed to the US as a devoted ally in every respect. The US became a great power with global military and political influence because it first established the foundations for global economic preeminence in the 19th century and took advantage of its preeminent role in the 1940s when it established an international system that would serve American interests for the coming decades. More than ever a country’s political and military power today rests on its economic strength, assuming of course that economic resources are prudently managed with ongoing investments in education, health, science, technology, and creative endeavors that enrich society as a whole instead of enriching a small class of the privileged few absorbing most capital. Power comes in many forms from intellectual and aesthetic to raw animal strength that is very direct and invariably appreciated by the masses as popular culture of most societies throughout history have shown. But perhaps the question should not be about the nature of power as Niccolo Machiavelli and Thomas Hobbes assumed without questioning the benefits/harm of power on their subjects and on people beyond the borders of the country exerting power. If we compare a country whose government has wielded inordinate power domestically or internationally, against a country where government is more focused on best serving the welfare of its subjects and less interested in power for the sake of glory, etc., the latter would be a more harmonious and constructive society than the former. Yet, human nature is such, perhaps conditioned by the aphrodisiac-power-based culture, that most people would probably rather live in the society where government exercises power in all forms at the expense of the majority.

International Political Economy and Realignment of Elites

Posted on February 19th, 2009

Part I:
Among other symptoms, the current global financial crisis will result in realignment of the political and financial elites, the latter of which are seeing their role diminished symbolically so far, while the former are managing pressures from disparate social groups demanding immediate and effective solutions to the crisis. The need for realignment is not only that the state has become the economy’s only safety net and main engine of growth, but the private sector having squandered the state’s trust and peoples’ money has no choice but to seek state patronage as the price that must be paid for using bailout funds. Of course, throughout the history of capitalism in the past 500 years, the state redistributes income from the lower classes to the upper. Bailouts are only another layer of redistribution the state appropriates from the masses to strengthen financial elites. During the transition from the manorial economy to mercantile capitalism (1450-1650), when both aristocracy and bourgeoisie accepted absolute monarchy first in England under the Tudor monarchy and eventually on the continent, statism was a way to engender stability and order. Capitalists realize today as they did 100 years ago that it isn’t only the emperor who has no clothes but the banker and the corporate CEO standing completely naked with millions in salary compensation and bonuses thanks to a political regime that works for them. All that concentrated wealth in the hands of the financial elites with the state’s intervention the instrument of income redistribution, and what do they have to show for it but a global crisis and social and geographic inequality that increases with each crisis cycle? The state desperately tries to protect capitalists’ nakedness of rapacious greed that exacerbates social injustice. Operating under the assumption that the existing social order can be stabilized without changes in the system, the political elites are essentially serving the best interests of the financial elites, which in some cases (for example, Silvio Berlusconi) are one and the same thing. Empirical evidence contradicts the assumptions of the state during the current mini-depression that Allen Greenspan now believes may be more serious in some respects than the Great Depression. Should the millions unemployed thank Mr. Greenspan for this warning, or ask about his part in acquiescently serving the financial elites while he was FED chair? Not that Europe is doing much better. Moody’s has just sounded the alarm for Eastern Europe, where banks of seven west European countries are heavily exposed. The cost to bail out Eastern Europe may be between $600 billion to $800 billion, subject to revisions. What countries should pay for Eastern Europe, and what do consortium creditors receive in return for their credit in these hard times when some politicians and trade unionists are thinking protectionism? The same question applies to underdeveloped and semi-developed countries in need of credit. Some banks have extended loans that amount between 200 and 500 percent above deposits in Eastern Europe, and the same holds true for banks in Third World countries–all following the US lending model. The EU and IMF are advising debtor countries to embrace modified “austerity programs” in order to secure currency stabilization loans (IMF or EU Central Bank), development loans (World Bank & European Investment Bank), commercial consortium loans from the G-7, and direct foreign capital investment. Many countries will need IFI certification for creditworthiness and that means “austerity” at the time that inflation is not an issue and the advanced capitalist countries are pursuing deficit financing and statism. The IFIs insist that debtor nations (six within the Eurozone alone) can only secure creditworthiness if they follow a prescription of IMF-austerity-style measures that include everything from higher indirect taxes to lower wages, lower benefits, raising retirement age, and curtailing of social programs in every area from education to mental institutions. If debtor nations comply, then there is the promise of external equilibrium and economic growth. In reality, the bulk of credit goes to legitimate businessmen who use local credit machinery to generate profits invariably invested in the markets of the advanced countries, but also to speculators, luxury importers, contraband traders. Austerity entails lower living standard for the middle class and workers, higher indirect taxes along with higher cost in essential goods and services, but above all, lower value of domestic assets that become available for foreign investors to own at a substantial discounted price mostly with local financing thanks to the IFI programs. Consolidation in most sectors from banking to retail in the entire world, combined with greater capital concentration mostly in multinationals, will mean the inevitability of another recessionary cycle. While corporate management will have to go on a “no-caviar and no-champagne diet” in order to save the system until the next cyclical crisis, the middle class and workers will have to fluctuate between financial anorexia and bulimia. That the financial elites will have to do with greater state interference in exchange for their own protection is inevitable and already taking place. But there is the added insult of billions in money laundering operations that the financial elites appropriated with the acquiescence if not approval of the political elites, given that most heads of state are inexorably linked to financial oligarchs; and yes, this includes US presidents, vice presidents, senators, congressmen, and the occasional Pentagon official. Various media outlets have reported that at least $50 billion and perhaps more than $100 billion were stolen in Iraq alone as part of the reconstruction program. While it is no secret that Iraq has absorbed several hundred billion dollars, the aggregate cost may come to one trillion. Wall Street’s, banking, and insurance scandals ran parallel to those of the Defense Department contractor money laundering operations. But it is all in the name of spreading freedom far and wide, preaching democracy to the non-believers, instilling patriotism to the cynical youth, and above all protecting the American people from terrorism for the sake preserving of free enterprise. There is no doubt that the political elites will use the bottomless corruption pit of the financial elites to exert preponderate influence over the latter’s objections. Given that economic and social stability are more significant than ever in a climate of a deep recession, and given that the state is the agent of credit engineering and growth, the financial elites will acquiesce to a preponderate role of the state as guarantor of private capital with accountability mechanisms. Therefore, the neo-liberal deregulation-denationalization-privatization-corporate incentives trend established when Reagan-Thatcher used the state to further empower financial elites will be modified as needed. This is not because of ideological considerations, but out of current economic, political and social realities–the necessity to engender that elusive stability most people want. Economic recessions or depressions have never caused social revolution and the current crisis is no exception. On the contrary, economic contracting cycles are more likely to bring about right-wing movements, regimes, and military conflicts. In some cases as in France in 1789, however, economic crises have triggered social revolutions whose causes ran deep in the social fabric. Rationalizing the economic system as the political elites are trying to do by setting stricter accountability mechanisms for the financial elites will buy time until the next inevitable cyclical crisis.
Regarding the ” realignment of elites” issue, in the past three decades we have had numerous academic publications, newspapers and magazine articles, and endless radio, TV, and web analysis that hailed the ” triumph of markets over the state.” In fact, many euphoric analysts in many countries around the world went as far as to argue that markets, and by implication the financial elites, are making the state and by implication the political elites increasingly less relevant in society.
Part II:
The markets-over-state (financial elites over political) theme was reinforced and emboldened by the end of the Communist bloc and concurrently the enormous rise of stock markets (irrational exuberance, Greenspan called it) around the world in the 1990s. The end of history was upon civilization, so proclaimed true believers in the market economy, ideologues celebrating the death of their nemesis, presumably serious academics ready to sound the trumpet on behalf of a social order that once seemed unshakable. The markets-over-state theme was so prevalent that it filtered down to the middle classes throughout the world, and people (from retirees to millionaires) placed their faith and savings in that institutionalized theme driving stock markets.
As I noted when I wrote about Davos-2009 conference and in the piece on realignment of elites, the new reality today is that the financial elites have recognized the market-over-state culture has been obviated by the global economic crisis, far more serious than most people thought even two months ago . As the last resort and presumed arbiter in society, political elites are far more significant in times of any type of crisis to guide the course of the economy than the financial elites. Political elites are under mechanisms (at least some depending on the country) of accountability and have a responsibility for all societal institutions, while the financial elites’ accountability does not extend beyond the investors, if that as we know. Because the state as the largest entity in the economy and as the main engine of economic stimulus determines the fate of the economy, institutions, and social order, with markets and the larger society clearly asking for such intervention, political elites are currently more hegemonic than they have been in 30 years. Such realignment of financial and political elites of course takes place depending on whether society is undergoing economic crisis, war, revolution, or some other destabilizing episode. My contention is that the current crisis will result in permanent (long-term rather than temporary) realignment of elites because it will be a very long time before the political climate is such that it permits the revival of the unfettered market-over-state culture of the last three decades. While this does not mean that the political elites will not continue to protect and preserve the existing social order and within it the financial elites, the gradual ascendancy of the cyber-eco-bourgeoisie, as I have argued in previous WAIS postings, will necessarily contribute to the permanent realignment of elites as society itself is undergoing extremely rapid changes.

LIFE EXPECTANCY: Might we live 1000 years?

The Picture of Dorian Gray may not be just a figment of Oscar Wilde’s creative imagination, if Cambridge University gerontology researcher A. de Grey has his way. Grey claims that within the next few decades it will be possible to prolong life to 1000 years while keeping people relatively youthful and vibrant. It is remarkable that life expectancy today is roughly twice on average as it was during the Medieval era in parts of Europe.
Nutrition, hygiene, medical science, and less labor-intensive labor have raised lifestyle expectancy. When asked, however, most people replied that they would not wish to live more than a century, especially if their friends and relatives are not alive, thus proving Epicurus correct after all. “Of all the things which wisdom provides for the happiness of the whole life, by far the most important is the acquisition of friendship.” Life of quality, not quantity, mattered to the pagans 2000 years ago, and it seems the same is true of Christians
today. Assuming Biotechnology and medical science can make it possible for people to live more than 100 years, what kind of planet would need to meet a population of 100 billion or more, what techno-institutions,
what robo-lifestyles, what recycled products would we use and become? Life is sweet because it is short, because we wonder at its beauty and race to give it meaning before it ends. Immersed in common endeavors,
struggles, endless antagonisms over which we fight and die so we can derive purpose, life’s absurdities are as sweet and bitter as are choices. If indeed medical science makes it possible for people to live 1000 years, would government establish “Soylent Green” plants (a 1970s motion picture in which the great actor Edward G. Robinson chooses death in exchange for a few minutes of enjoying nature on the big screen). People recycled for the consumption of other people may not be such a bad idea if we live 1000 years. Are we as irrational about what we expect from biotech companies as we are of what we expect of each other, of ourselves? Would this mean that 700-year old people would be arguing about Jerusalem as the exclusive domain of Jews, Muslims, and Christians; that 800-year old people would be debating the merits of using space for dumping garbage only after securing official UN paperwork, that 900-year olds would be arguing
same-sex marriages and legal adoption of 600-year-old children? The limits of Kafkaesque techno-absurdity are only surpassed by those of human imagination. Science and technology can be applied toward
constructive resolution of conflicts for those of us under 1000 years old, just as they can make it possible some day for us to live 1000 years of blissful agony. Will the US State Department abandon four-year plans and design foreign policy for the century like Japanese companies plan their future? Would the Marshall Islands and Mongolia be EU members over the vehement objections of western Europeans? Would 1000-year old academics be debating the merits of including Middle Eastern countries in NATO and EU, would they be contesting the limits of democracy as a facade for anarchy or dictatorship and arguing about terrorism as a euphemism for aggressive diplomacy or merely another form of protest? And what of those
crypto-Chiliastic elements among us who believe the world will end in 1000 years, only to have Microsoft reassure investors that it has already taken Divine Providence into account despite anti-trust

The State and Wealth Redistribution (Jon Kofas, Greece)

Originally Posted on February 26th, 2009

The state’s role as an agent of redistributing income from the bottom up using the fiscal structure is one that has occupied many writers, politicians, trade unionists, activists, etc. since the 18th century when bourgeois propagandists of the Third Estate raised the issue. In short, there is an abundance of literature on this topic from disparate ideological perspectives, some rooted in classical economists’ works (Adam Smith to Karl Marx), others, on Joseph Schumpeter, John M. Keynes, Milton Friedman, and the whole list of more recent Nobel Prize winners. The fundamental question is who produces wealth, who owns it, and who redistributes it? If we accept, as everyone from Adam Smith to Milton Friedman has accepted, that capital alone produces wealth, and that the state imposing taxes on capital is a form of appropriation of private property, then of course we must accept that the state is an agent of labor whose contribution to the economy is determined by capital. Given such assumptions, laborers are a burden not only on social security but on all social programs, because capital produces wealth taxed by the state that redistributes it downward to labor. In response to Thomas Malthus’s theory about the root causes of poverty, Robert Owen, nineteenth-century manufacturer and analyst of industrial capitalism, rejected the assumptions of Malthus regarding Smith’s contention about wealth creation. Owen took into account the “appropriation process” involved in capital-labor relationship that neither Smith nor Malthus had considered. As much in the 19th century as today in many countries and for unskilled labor, the owner of capital determines worker’s compensation not on the basis of value created, but on “subsistence wage theory”–what we call minimum wage but justify it as “market conditions.” The appropriation theory is at the heart of the debate about what social group(s) creates wealth, what group(s) accumulates it, and how the state redistributes it through the fiscal system. If labor is the catalyst to capital creation, as I believe it is, then labor creates state revenue, but the political elites redistribute it to benefit the upper class. The issue of income distribution and the state’s role had arisen even as early as the German Peasant’s War in the 1520s. Inspired by Martin Luther’s teachings, Thomas Munzer led a rebellion amid inflation and hard economic times against the Germanic states controlled by the aristocracy and upper clergy that produced nothing but owned most of the wealth and benefited from taxes on the masses. In the 18th century the French intelligentsia complained that the aristocracy was parasitic because it lived off the labor and taxes from the middle and lower classes (Third Estate), while enjoying political, legal, and social privileges–occupying the lucrative positions in government when in reality educated middle class civil servants and workers carried out the work. In the 19th century, the British Parliament often debated the issue that also concerned Continental European governments coming under social pressures, especially after the revolutions of 1830 and 1848. Did Otto von Bismarck, a Prussian Junker who detested the German Social Democrats, adopt a social security program because he believed in returning some of the wealth appropriated by capitalists from workers; or did he do it because it was the only means to deprive the leftist party of an issue, de-radicalize German workers, and proceed with his blood & iron policy of making Germany the strongest land-based power on the continent–all an integral part of Realpolitik? And why did FDR adopt a social security program? Was it because he saw the issue as the unions and many professionals from doctors to academics, or because it was politically, socially, and economically the prudent thing to do, especially when the country was suffering economic dislocation and radicalization of the masses that his policies contained by co-opting the left? Whose money was it anyway that the government returned in the form of very modest social security benefits at the time when retirement age was the same as average life expectancy?
Ultimately, to arrive at a better understanding of this issue we must examine the issue of who decides the value of labor in New York or Lagos, Nigeria. Why is it that the labor value of an AIG insurance worker worth just a small fraction of the value of corporate management responsible for the company’s mismanagement that so far has resulted in $150 billion bailout of taxpayer money? Milton Friedman always answered that the market decides. But who decides about the market, God or those who control the market? This is an issue that European and US governments are addressing as they are handing out trillions–wealth expected to be produced by the middle class and workers–to corporations to save the system that the financial elites (the not-so invisible hand of the market) have bankrupted with the state’s considerable acquiescence.
Every generation believes that it lives in unique times, and we are no different in this epoch of anxieties as Paul Tillich and Carl Jung so brilliantly observed about 20th-century man. There are very serious structural problems in the market economy and appearances to the contrary, government responses to this crisis will not and cannot simply be limited to bailouts of banks and other industries only to revive them so we find ourselves right back where we are now with the same institutional and social problems. To lessen the length and breadth of inevitable cyclical recessions in the market economy, systemic readjustments will be needed that include every sector from defense and security, to health, education, and environment. Above all, of course there will be, as it must to avoid serious problems in the future, a reexamination of the fiscal structure currently designed to redistribute wealth from the bottom 90% to the top 10 percent of the population. Such concentration is the source of the problem today as it was in previous economic dislocations.

Saturday, 23 October 2010

WikiLeaks and US Politics (Jon Kofas, Greece)

On 22 October 2010, WikiLeaks made available a very large number (400,000 pages) of classified docs that reflect US government coverup during the Iraq war in several areas. There are some tragic revelations, among them that the Obama administration continued some of the secret war operations that Bush started, the same operations he had criticized before taking office. The US systematically and deliberately denied it was keeping a record of Iraqi casualties, especially civilians that according to the war logs could be 66,000 of the total 109,000 (another source has the total at 150,000, of which 80% were civilians), or 31 civilians dying each day of US occupation with the intention to “deliver freedom and democracy to Iraq.” The graphic description of detainee abuse and torture in Iraq is nothing new. However, killing journalists by US forces cannot be good news for the Pentagon’s image; not that killing innocent Iraqi women and children is any better for the military’s image or for the US. WikiLeaks adds another empirical dimension to what was already known, a dimension that disproves the massive US-NATO propaganda that torture and prisoner abuse were isolated incidents and that they were not policy but the acts of “individual servicemen” simply going too far. US-trained Iraqi military under the watchful eye of US military officials, carried out systematic torture and prisoner abuse; this despite US government and media propaganda campaign that such acts were isolated and not policy, and the individuals responsible would of course pay. But what about the fact that at one time the US had over 200,000 private contractors in Iraq and they operated with trigger-happy enthusiasm at the expense of civilians? The numbers of dead, tortured, and of course running for their lives inside and outside Iraq may never be known with certainty, but the certainty is that the casualties of war were mostly civilians. Surprisingly, perhaps not, we have the following revelation that: “US soldiers sent 1300 reports to headquarters with graphic accounts, including some beaten to death. The other issue: Why Bush and Obama okayed turning over detainees to torturing Iraqis.”
WikiLeaks shows that Iran was engaged in low-level warfare against the US along its border with Iraq. Iran’s aim was to train hit squads operating inside Iraq, while the US aim was to thwart any Iranian strategic advantage in the region as a result of Iraq’s occupied status. Based on the WikiLeaks information, the question of “war crimes” both in the case of Iraq and Afghanistan is an obvious one that many people around the world will raise. I have no doubt that the US will “strongly condemn” the illegal tortures and deaths by Iraqi security forces and that if there is anyone to go to trial for war crimes, it will be the Iraqi military and political leaders implicated in war crimes! All wars are carried out mostly at the expense of civilians, mostly at the expense of women and children, and Iraq is no different. Just before the US midterm elections, the question is whether the WikiLeaks docs reveal that operations and practices on the ground did not change simply because America put on a “kinder gentler face” attached to Barack Obama and the Democrats.
What do WikiLeaks mean for US foreign policy? First, WikiLeaks has edited out sensitive information that could cause harm to individuals. We now know that the docs about Afghanistan did not cause as much damage to US interests as US officials claimed initially. “In a letter to Senate Armed Services Committee chairman Carl Levin (D-Mich.) dated Aug. 16 and obtained by CNN, Gates asserts that while the online whistleblower’s publication of the documents did pose a risk to national security, it did not compromise any key sources of intel. Gates said most of the information published related to “tactical military operations.”

Second, it is too early to determine if the Iraq WikiLeaks will compromise US intel sources or even national security. But there are serious questions why WikiLeaks is the place for top-secret government docs and not the NY Times, Washington Post, or any mainstream media outlet. Given the reports that such a flood of classified docs on Iraq was coming, what does that say about Pentagon security? Is there a group of people inside the Pentagon and perhaps State Dept. that wants to a) end the US war in Iraq and Afghanistan and pull out completely; b) increase defense spending and force the Obama administration to become more hawkish; c) focus all efforts on a future conflict with Iran, given that Iraq and Afghanistan did not go so well, and given that Iran has emerged as the regional power; d) an effort by Democrats to embarrass Republicans and keep losses to a minimum in the upcoming election; e) an effort by Republicans trying to prove that there is not much difference between Bush and Obama in the manner they handled the issue of torture in Iraq?
Although the Nov. 2010 mid-term election will be decided on the economy, unemployment, and fiscal issues, the release of the WikiLeaks docs may help the Tea Party Republicans make even greater gains in November by focusing more on Iran and militant Muslims as a threat to US interests, something Israel has been pushing as well. American citizens now have proof that the Democratic administration allowed some of the same type of operations that Obama criticized while running for President. Documents prove Obama’s response was not very different than Bush’s when it came to detainees and having Robert Gates as Defense Secretary may tell much of the story. Not that WikiLeaks will decide the election, but it may have some impact in further polarizing the already polarized electorate. Tea Party Republicans will definitely gain ground trying to show that US foreign and defense policies must remain hawkish against the background of international (Islamic terrorist threat, especially Iran trying to join the “Nuclear Club”), and against liberal and leftist conspiracies like the one that appears behind WikiLeaks and undermines American security. Obama, now exposed by WikiLeaks, will have no choice after the mid-term elections but to move to the right of center–left and center have nowhere to go–in preparation for the 2012 presidential race.

Friday, 22 October 2010

Corporate Welfare & European Social Unrest & (Jon Kofas, Greece)

Posted on October 22nd, 2010

If only the upheaval unfolding in the streets of Paris, London, and other European and non-European capitals were about the fragile egos of academics and the professional class determined to defend the validity of its position to the point of invariably excluding mitigating factors and nuances in each instance that may be important in understanding the other side and/or total picture. The reality of what is taking place in the streets in Paris, London and elsewhere has nothing to do with WAISers who have the right to defend their particular position from a coherent ideological/political perspective without having to apologize for it. The reality is much harsher and more tragic than the intellectual positions of WAISers; it is about lingering pain and frustration of those engaged in a struggle to sustain their jobs, wages and benefits, as well as those of their children; it is about consumers and small shopkeepers enduring ephemeral hardships owing to lack of goods and services; it is about fear of millions concerned about a bleak future if the current course in the political economy continues; it is about the view inculcated into our minds ever since we are children reading fiction where all ends well and everyone lives happily ever after, a view that now clashes with the ugly reality that neither life nor history (civilization) is a steady line of progress and development as Hegel wanted us to believe.
Perhaps there is some merit to Martin Heidegger arguing that the transition from one epoch to the next does not entail a rational process because epochs may be irreconcilable and gaps are inevitable; perhaps our actions are the manifestations of our irrational minds. The reality for many in the streets is that the social fabric is disrupted more abruptly than it would if there were greater socioeconomic harmony; that harsh reality translates to higher divorce rates, higher suicide rates, higher crime associated with the socioeconomic polarization–crime then feeds the cycle of greater fear, and the need for police protection and fear that our need for more safety and security may translate into fewer freedoms. If I do not experience the pain of the other suffering not just socially and economically but psychologically through unemployment, debt, divorce, and contemplating suicide, and if at the very least I am not prepared to offer a word of empathy–a word that reveals community over atomistic proclivities, what moral right do I the distant academic spectator have to speak at all using beguiling rationalizations to defend the “correctness” of my ideological perspective?
From the Balkans to Ireland, there is a climate of fear that has taken control of the middle class and workers who once believed the EU was the next Paradise, but now seems like Paradise Lost for this and the next generation. Maybe all of this will be a distant memory conveniently forgotten one year from today, at least I hope so, assuming Germany’s GDP growth can pull the rest of EU out of recession. The 2008-2010 recession, however, was very deep and it will have to cut very deep into the social welfare state across Europe in order to sustain finance capitalism. Let us not forget that the world did not recover quickly from the Great Depression, and that tragically a global war took place to set a new course for the international economy and social order. Let us not forget that the funds governments handed out to financial institutions have to come from some source other than the continued printing of money that causes monetary inflation, something that Germany at least adamantly opposes. The price of gold and precious metals is proof that there is too much money printed and finance capitalism must return to a monetarist course as the IMF advocates for the world economy to have steady growth under low inflation. This means that if money cannot come out of defense or corporate profits, as it clearly cannot and will not, it must be squeezed from the middle class and labor.

Thursday, 21 October 2010

Social Unrest and Historicism (Jon Kofas, Greece)

Posted on October 21st, 2010 
Social unrest has now spread from the Continent to the UK, which is making the deepest cuts affecting labor and the middle class in the past half century. Good old England, the country of Edmund Burke, the man many consider the first counter-revolutionary propagandist of the modern Western World, the man whose work became popular in the US during the McCarthy era in the 1950s among extreme right-wingers, Burke, the man who was either naive enough or deliberately “clever” enough to argue that evolutionary process not revolution is how political and social progress takes place (conveniently forgetting the revolutions of the 17th century); good old England indeed does not appear immune from social unrest these days, and things may become much worse in the next few months as the UK is indeed in a much worse fiscal state than some of the periphery countries of the EU. Even so, are we witnessing precursor conditions of social revolution, are we witnessing mere protests by disparate social elements otherwise unworthy to call themselves responsible citizens, or is the whole thing nothing more than a mere social cloud in an otherwise bright sky of a solid political economy that is undermined by social misfits protesting in the streets of European capitals?
Just a point or two of clarification given that both Nigel Jones and John Heelan made some observations about my previous posting (20 October) on street protests in Paris. In my posting, I stated: “If the process of weakening labor and the middle class continues and socioeconomic polarization becomes more pronounced, eventually it could lead to the mobilization of the masses and an uprising.” Now that I have a second chance to examine that statement, it seems rather timid. Perhaps I would have made it stronger if I were writing under English foggy sky watching TV coverage of deep budgetary cuts that will weaken labor and the middle class, instead of this bright sunny sky here in Greece operating under the IMF-EU austerity “safety net” for finance capital. As I have written on numerous occasions, the middle class and labor have weakened considerably as a result of fiscal, economic, and social policies that governments have been adopting since Reagan-Thatcher, and especially since 2008, and they will suffer further erosion in this decade. If anyone disputes this statement, please prove it with statistics, and please no references to the rise of the middle class in China, India and Russia as exceptions to the rule in an otherwise contracting economy. On the points I made regarding social revolution, I explained that under current social, economic, and political conditions the masses are unlikely to mobilize and rise up to overthrow any government now, but they very well could in the future. I never stated, simply because I have no idea, the form that mobilization and/or uprising would take, so why does the reader make the assumption that it would another Revolution of 1848, or something like it? Is that the only model of revolution that can possibly exist? Did I not rhetorically ask what does it mean to be a Marxist these days, a comment I made recalling one of my Jesuit professors describing himself as “Marxist” and arguing that the roots of that ideology rest in Christianity. I use the terms “eventually,” “mobilization,” and “uprising,” obviously leaving open to interpretation all kinds of possibilities. Because most people have a monolithic view of Marxism and of revolution, they cannot envision social mobilization and uprising in any form other than what has taken place in the past–in short, falling into the Hegelian historicist trap without realizing it. But understanding social discontinuity is very complex–whether we examine the transition from the ancient Roman era to the Medieval, or from feudalism/manorialism to the modern market economy. As someone far more interested in trying to understand and analyze the dynamics of social discontinuity and less interested in Hegelian historicism that Karl Popper has very skillfully criticized, where exactly is it that I am predicting a Marxist revolution in my posting about the Paris street riots, and what do those riots or demonstrations in Spain, and other countries, now in UK, have to do with the larger issue of social discontinuity and its evolutionary course? I have written a few hundred WAIS postings in the last several years, and the consistent prediction I have made is that social discontinuity of the kind the West experienced during the transition from the ancient to Medieval world and from the Medieval to the modern is unlikely in our lifetime owing to systemic forces that appear to uphold the existing social order–and this indeed at the risk of committing (see Karl Popper, The Poverty of Historicism) the grave fallacy of historicism. The most I have ventured at offending Popper’s fans is a four-part essay I wrote some years ago on the Cyber-Eco-Bourgeoisie, where I make it clear where I believe the social order is headed during this century.

Wednesday, 20 October 2010

France: Street Protests in Paris (Jon Kofas, Greece)

Posted on October 20th, 2010 

Very good comments by Robert McCabe (20 October) on social unrest in France, but I would not be so quick to pronounce the end of social unrest in Paris until we see everything that Sarkozy has in store for labor and the middle class. My reading from various sources is that indeed the Confederation Generale du Travail (CGT) is the main force behind the strikes. Just to clear the record, in 1995 the CGT broke from the Communist-oriented World Federation of Trade Unions (WFTU) and eventually joined the European Trade Union Confederation, officially sanctioned by the EU and European Free Trade Association. In short, the CGT is not some Stalinist entity determined to bring down the bourgeois state through strikes and revolution. And what exactly does it mean to be a French Communist in 2010 when the Communist bloc is no more, when the EU enjoys such immense power as a pillar of finance capitalism, when trade unions are so weak, when the middle class lacks organization either in a political movement or political party? Are there not varieties of Communists, many with much in common as far as their aims as many Socialists and centrists?
Now I understand that it seems difficult to understand why the French are protesting raising the retirement age from 60 to 62, given that people today live longer than they did half a century ago, given that EU has a problem with low birth rates and that means young workers are paying more for the current generation of retirees, and other countries are increasing retirement age and trimming benefits; so why should France be any different. But is French social unrest limited to the small Communist party and the syndicalist working class? And is social unrest in Paris isolated from the rest of European and global social and economic developments?
First, European countries have had social unrest linked directly to the fact that the state is weakening the welfare state in order to strengthen corporate welfare, and keep a strong defense sector. Second, French social unrest from what I have seen involves the middle class as it does the working class. Indeed, it is the middle class that is more vocal and adamant about protecting its social status and that of its children than workers who know their limits because the establishment has beaten them down so hard for so long they only dare reach so far and no more. Third, for a year the French have been watching with a great deal of apprehension developments in Portugal, Ireland, Spain, and Greece, and they fear of falling into the same fate of IMF-austerity style measures that would erode their incomes and benefits. Fourth, it is correct that the capitalist state has enormous power, it marginalizes and criminalizes protesters, whether in Paris or any other European capital, and it presents specific strikers and demonstrators as “narrow interest groups” disrupting the rest of the country and the general welfare–truckers vs. the nation or railroad workers vs. passengers, etc. This corporatist approach that is propagated through the mainstream media works to persuade many in the general public to agree with the government. Le Figaro’s perspective of what is taking place reflects the government’s policies that it presents as what the economy needs, while the welfare state is archaic that prevents healthy competition and is an obstacle to growth. In one article, the paper states that 75% of the French went to work and 64% do not feel that strikes and demonstrations impact their work. Of course if 50% or more of the workforce hits the streets, that would be an ominous development and a signal of something more significant than a demonstration against pro-business anti-labor policies; a signal of systemic change in the social order. I will not refer to what l’Humanite is publishing these days about social unrest and the government’s liberalization measures designed to debilitate labor and the middle class, but there are many centrist sources for the Liberal (Le Monde) among others. Finally, I agree with Robert that what is happening in Paris this week is not the start of an uprising. It is not a sign that majority wishes to start a revolution, it is not even a precursor to a labor-middle class movement with the potential of a future uprising. However, it is still early and much depends on how far the state rolls back the welfare state to strengthen corporate welfare, whether in France, UK, or anywhere else in Europe. If the process of weakening labor and the middle class continues and socioeconomic polarization becomes more pronounced, eventually it could lead to the mobilization of the masses and an uprising.

Tuesday, 19 October 2010

Greece: ‘Baksheesh Capitalism’ (Jon Kofas, Greece)

The economic miracle of Greece in the past 25 years will most likely continue, in spite of pending world economic slowdown and the current austerity measures. Large-scale foreign investment and the natural gas deal with Russia and the Black Sea Consortium represent considerable impetus, as do multi-billion dollar investments from China and the Arab world. Greek-owned firms have been taking advantage of low-cost labor and government subsidies to expand into the Balkans and the Near East, and Greece has benefited from cheap immigrant labor that continues to fuel its economy. Despite the Greek economy’s impressive growth rate, the socioeconomic gap will be widening once again after it had been closing in the past three decades, as it did in Spain, Portugal, and Ireland. IMF-EU privatization recommendations that have been implemented, or they are on the way, tightening social security benefits, along with rapid price inflation and the lowest average wages in the EU entail that Greece is hardly the economic miracle of the early 21st century that some EU observers were praising before the global recession of 2008-2010. Unrelenting rampant official corruption, chronic and widespread tax evasion not much different than in a Third World country, a thriving subterranean economy that include but not limited to pervasive narcotics, sex traffic, and money laundering activities amounting to as much as 2% of GDP, and a corrupt health care and educational system, especially higher education, are some of the problems facing the country. During the wildfires of last summer, EU officials were eager to help, but some pointed out that Greece along with southern Europe has serious problems with unbridled corruption, something that World Bank studies confirm. While southern Europe does not have monopoly on capitalism’s inherent contradictions, such traits manifest themselves more poignantly in the periphery in the form of ‘baksheesh capitalism’ in contrast with Scandinavian-style ‘enlightened capitalism.’ Amid a cesspool of rampant corruption and deteriorating social conditions for more than two-thirds of the population, economic growth in Greece benefits the ‘chosen’ minority. At 22.6% for those under 25 years old, Greece has the highest unemployment in the EU. While the EU integration model yields benefits for its periphery members, it has not fostered ‘enlightened capitalism,’ thus raising questions about the extent to which ‘baksheesh capitalism’ will impact the broader social classes of the rest of the Balkans and Turkey once they become full EU members. While Greece is not a microcosm of EU’s northwest members, it is a reflection of the periphery and future members. In the era of globalization and privatization, the inherent
characteristics of baksheesh capitalism are evident in other countries and contribute to the radicalization of the masses just as in the case of Greece where the leftist parties currently enjoy the highest percentage among voters since the late 1950s.

Turkey: EU Membership (Jon Kofas, Greece)

Posted on February 19th, 2008
From the promulgation of the Truman Doctrine in 1947 that created the ‘Northern Tier’ (Greece, Turkey and Iran) security zone protecting Middle East oil fields and establishing a defense network against the
USSR until today, Turkey has been of enormous geopolitical importance to the US and its European allies.
The new regional balance of power arising out the war in Iraq has made Turkey even more valuable, partly because of the Kurdish question, but also because the US needs Turkey as counterweight to Syria and Iran.
Nevertheless, Turkey’s future is with the EU, not with the US that will continue to decline as multiple poles of power continue to evolve in this century. While urban and mainly western Turkey is almost ready for EU integration, rural, mainly Eastern Turkey is clearly not, at least from my studies and from what I saw when I visited. Besides the Armenian and Kurdish issue that have Europeans worried, the military’s overbearing role in society as a guarantor of the Kemalist state, as well as Islam may be additional problems leading to EU integration. The country’s judicial system and rampant corruption are also overriding issues. Having visited beautiful Turkey a few times, it struck me that it will need a few hundred billion euros to raise its economy to a level that integration will make sense and we will not have a flood of labor exodus. The larger Turkish businesses, European banks and export firms, and a segment of the Turkish middle class are interested in EU membership. But the IMF, World Bank and European IFIs have concerns about Turkey’s membership because the country has chronic inflation, baksheesh capitalism worse than Greece, a judicial
system that needs reform and systemic corruption that needs to be addressed as well. In the past half century the IMF has tried to engender stabilization programs that have not worked any better than they have for Bolivia, while the World Bank has poured billions for development programs like water-powered electric projects that have been controversial owing to the damage that the environment has sustained. The concerns of the multilateral agencies, EU-based and US-based, are real and not pretexts to exclude Turkey from the EU. However, the most compelling reasons for Turkey to join the EU are precisely the ones that French president has provided for excluding it. For symbolic, economic, and geopolitical reasons, having a Muslim
country and for that matter Israel as EU members will entail greater stability and harmony in the region. Breaking the historical dependence on the US and becoming inexorably linked to the EU will change the
dynamic in the entire region. The alternative is to pursue existing policies that simply perpetuate instability.

Thursday, 14 October 2010


A few days ago, Soraya Sepahpour-Ulrich emailed me a Chris Hedges essay entitled: “How Democracy Dies: A Lesson from the Master,” which relies on Aristophanes’s works as an example of how society decays from within by corruption, greed, arrogance, distortion of ideals designed to promote the welfare of all people, and of course perpetual militarism that debilitates society and ultimately contributes to its demise. After reading the article, I surfed the Web for stories with the titles “who threatens US democracy” and “threats to US democracy,” and discovered that many essays (more than 20 million hits) include the following ten categories:
1. military establishment, conventional war, and war (PR, covert, etc.) on terror;
2. government bailout of banks and corporations;
3. the Supreme Court that is out of touch with the American people;
4. economic weakness and economic inequality;
5. the World Trade Organization and the UN;
6. Corporate power, corporate media, corporate campaign contributions;
7. Religious extremism of all types, Islamophobia, and Terrorism;
8. political (voter) ignorance, and interest groups;
9. the Internet;
10. narcotics trade and crime.
One very interesting article argues that the most basic threat to democracy is the human brain that “is predisposed to use information to confirm their existing beliefs, which makes democratic governance impossible.” If we accept that human nature as inherently atomistic and irrational without regard to others, assumptions that English philosopher Thomas Hobbes articulated in the Leviathan, then the human brain with its predisposition to the irrational and atomistic is indeed the obstacle to democracy. If we also accept the assumption that competition and private accumulation of wealth power, prestige, etc. in the social, economic and political spheres promotes self-interest at the expense of the greater good, then we have another obstacle to democracy functioning harmoniously for the welfare of all its citizens. But all of this is predicated on the definition of “democracy,” a concept that many people equate with free enterprise and individual pursuit of wealth (Adam Smith and his Liberal followers), others with social welfare and the pursuit of the greater good for the greatest number (utilitarian democracy), others with human rights and social welfare (social democracy), others with basic freedoms such as press, assembly, etc.(Libertarian), others equating democracy with voting. Of the ten categories listed above as “threats to US democracy,” clearly all of them and many more are real, depending on the individual’s definition of democracy, and on value systems that spell out not only what democracy is but what it is not. On the broader question of endogenous or exogenous factors that cause the demise of a democratic society, here we can look at historical experiences of countries that were “to some degree open societies,” countries that enjoyed aspects of democracy but lapsed toward some model of authoritarianism. In the cases of interwar Italy, Germany, and Japan the causes of abandoning pluralism for an extreme form of militaristic ultra-authoritarianism rooted in ultra right-wing ideology were internal, although external causes served as a pretext to convince the public of the need for a militaristic/authoritarian regime. If indeed people care more about safety and security, or at least if the media and their political, business, and social leaders convince them that nothing matters more than safety and security, people will voluntarily surrender any commitment to democracy for the perceived guarantee of safety and security. If the US moves increasingly toward a more authoritarian model under the political shell of “democracy,” as it could if in the future it faces more and deeper economic contractions that result in an increasingly smaller and weaker middle class, the cause will not be the UN, the WTO, Islamic “terrorism,” rogue nations like North Korea, etc. The dynamics of human society are similar today as in the 17th century when Hobbes wrote the Leviathan, therefore if a modern American Leviathan emerges it will be an expression of contemporary society confronting a social and economic structure that is unraveling. The segment of society that has the power to mold public opinion and convince them that Leviathan means “salvation” from self-destructive proclivities of an otherwise irrational public, will move society away from the Jeffersonian model that some equate as the ideal toward one that projects an image of narrowly-defined democracy and equates it with “the freedom to shop, to enjoy safety and security, and vote for politicians who represent the same institutions”" a model behind which rests an authoritarian/police/military state.

Wednesday, 13 October 2010

Economics: Cyclical Crises and Capital Accumulation

If the G-7 are unable to accumulate capital by extending credit to debtor nations for civilian and military products and services during a contracting economic cycle at the level that they could during the expansionary cycle, how does the process of capital accumulation work during contracting economic cycles? In short, if accumulation does not take place primarily by selling products and services rather than interest payments owing to limited private and public demand amid rising global unemployment and downward wage and salary cycle, what is the source for capital accumulation required to strengthen finance capital in the metropolis?
Classical economists from Adam Smith, David Ricardo, John Stuart Mill to Karl Marx and F. Engels developed well-known Liberal and Marxist theories of capital accumulation–concentration and centralization at the national and international levels. Liberal pre-Keynesian theory links capital accumulation to economic growth often equated with labor force productive growth and innovation forever. While accumulation is the engine behind growth according to the Liberal theory, capital concentration and centralization is the root cause of contracting cycles–inevitable recessions (at times severe), after periods of growth. Fernand Braudel to Immanuel Wallerstein and the theory of the evolution of the capitalist world-system provided another important dimension of capital accumulation theory and the division between core (advanced capitalist countries) where capital is concentrated and periphery (underdeveloped) areas from which capital flows out to the core. The question of unequal economic relationships on a global scale is now more complicated largely because of institutions such as the International Monetary Fund, World Bank, OECD, European Investment Bank, Paris Club, regional development banks, World Trade Organization, and of course the US Federal Reserve, Japan’s Central Bank and European Central Bank that coordinate their policies with the IMF for the purpose of maintaining the process of capital accumulation, inevitably flowing from the periphery to the metropolis. How does capital accumulation take place when Goldman Sachs among other investment banks engage in swaps (credit-default swaps, CDS), when semi-periphery nations such as the four PIIGS (Portugal, Ireland, Italy, Greece and Spain) share the strongest reserve currency in the world, yet, their role is to buttress the core countries within the Eurozone (France and Germany) than to operate as equal partners? In the early 21st century the issue of capital concentration and centralization is further complicated by massive deals involving weapons sales from the advanced capitalist countries themselves as debt-ridden as the debtor nations to whom they extend credit for weapons, followed by stabilization loans to repay interest on previous loans, a process designed to make sure that the weaker debtor nations remain credit-worthy thus integrated as financial dependencies of the world-system. During the expansionary cycles of the economy, the advanced nations concentrate capital by extending credit to chronically net debtor nations in order for the latter to purchase products and services, including weapons, from the creditor. Deutsche Bank along with other banks in Germany–the same holds true for banks in France, Holland, Belgium, Switzerland, and UK–extend credits to the rest of Europe and to non-European countries to finance purchases of everything from pharmaceuticals and consumer products to heavy machinery and submarines. CITI and other US banks do the same for their client nations. This process ensures that capital will continue to flow from the borrower purchasing products and services to the creditor who receives the benefit of stimulating the domestic industries and financial services back home. But what happens if the borrowing governments in the periphery that are the best customers and borrow heavily reach a point of inability to service their debt? This took place in the 1930s, and Cordell Hull had to arrive at individual rescheduling loan arrangements with each nation that defaulted in order to stimulate US trade and to recapture lost market share. Capital accumulation in the 1930s had to restart largely by a new line of credit by European and US creditors to debtor nations that needed to grow their economies in order to repay interest on the debt. Capital accumulation through credit extended by the creditor nation for civilian and military goods and services does not apply during the cyclical downturn when credit is at a premium, thus the state steps in to extend credit to debtor nations so they can continue servicing their loans, a process that adds nothing to goods and services to the debtor but only transfers capital from the domestic economy, leaving much weaker and much more susceptible to predatory takeover of its most lucrative sectors by foreign companies. One way that the US helped its own economy recover from the Great Depression, it introduced the Export-Import Bank (EXIMBANK) that became an instrument of strengthening domestic industries doing business abroad, and a bargaining chip for the debtor nations to resume payment on their defaulted debt. EXIMBANK was a state instrument of capital accumulation at a time when the state itself was engaged in deficit spending. In a post-Keynesian environment when core countries are facing the same percentage of debt-to-GDP ratios, it is much more difficult to introduce a super-EXIMBANK type institution. Given that the surplus countries led by China practicing statism and are not in the “traditional core (US, Western Europe, Japan, Australia) of the world-system,” the accumulation process needs the state more than ever. Part of the answer for the “traditional core” rests with the strategy of forcing the surplus countries to adjust their currencies upwards and stimulate domestic consumer demand. Another part of the strategy is to create “periphery-like” (Third-World-like) conditions in their own countries while at the same time transferring capital from the debtor nations through IMF-style stabilization programs (massive loans from the core to the periphery designed to meet interest payments). During the current contracting cycle, to speed up capital accumulation it has become necessary in the advanced, semi-developed and and less developed countries to reduce labor values across the board–lower wages/salaries, lower benefits, cuts in social programs and higher indirect taxes–while pouring government resources directly or indirectly to the strongest players private sector starting with finance institutions. The result is that global institutions such as the IMF for example, working with member governments, are managing the world economy back to health through concentration and centralization so that there is impetus for the next expansionary cycle to be followed by the inevitable contracting cycle. Keynesian-based expansion is less an option, as it has been out of favor since the Reagan-Thatcher era. IMF-style monetarism backed by the large banks around the world, backed by a shrinking welfare state, an expanding corporate-welfare state, accompanied by a much leaner middle class and a debilitated labor force is the way capital accumulation takes place today.

Tuesday, 12 October 2010


A few weeks ago (27 August) I wrote a piece about “Propaganda as Subjective Reality,” and indeed we see it very clearly these few weeks remaining before the US elections. Examples of propaganda as subjective reality: Jerry Brown called Meg Whitman, his gubernatorial opponent in California, a “whore”; Democrats are solely responsible for government fraud and do not wish to eliminate it by rejecting the generous assistance of the benevolent corporate world; Democrats are solely responsible for the real estate bubble; Democrats are solely responsible for the banking crisis; Democrats are running fiefdoms by staying in office for half a century, instead of practicing honest democratic politics and serving limited terms like those hard-working, honest, people-oriented benevolent Republicans. All of this and more is to be expected from Fox News and other Tea Party backers, and we will see more of it in the future. But here is what the LA Times is actually reporting on Jerry Brown. “Republican gubernatorial nominee Meg Whitman declined to comment Sunday about a recording on which someone associated with rival Jerry Brown’s campaign suggested characterizing her as a “whore” for allegedly limiting her pension plan’s effect on public safety officers in order to garner their endorsements.”
Such language is not so unusual among politicians. Nixon had a rather loose tongue especially when drinking his favorite whiskey–but so what, such language humanized him. What really matters is policy not colorful language, sense of humor, or any trait unrelated to how politicians govern. The larger issue is whether the epithet “whore” does a gross injustice to prostitutes. Political elites whether Democrat or Republican, Conservative or Liberal, whether in the US or outside, serve as conduits for the financial elites with only a marginal role as caretakers of society’s welfare that includes all people. In short, politicians are “Machiavellian whores,” and why is anyone surprised? Politicians are indeed “Machiavellian whores” about which the only doubt is the price (power, glory, money, prestige, etc.) they extract from the financial elites, not about their chosen profession. To blame either Democrats or Republicans for the state of the US economy–health care problems, fraud and waste, high unemployment, banking crisis, real estate bubble, and campaign funding sources–serves no purpose because both parties are responsible and both serve the same master, namely, corporate America. On the IBM story offering its services to save the government $900 billion annually, do we not need to know why the White House rejected the offer before we accept IBM’s version of the truth as God’s word! The IBM story is making the rounds in all the right-wing media and blogs, but they do not mention that in November 2008 IBM requested that the incoming Obama adopt a techno-fix for all problems facing the country from health care to traffic jams. Obama rejected the IBM offer that many saw as a self-serving or even bailout for tech companies like IBM with a history of trying to monopolize the mainframe market around the world. The only thing that IBM has been pushing since the 2008 election is securing lucrative contracts for itself, while it has been shipping jobs to China, India, and Brazil. Is it not true that building a data processing systems for health care (Medicare and Medicaid) turned out to be a very profitable enterprise for Ross Perot almost half a century ago? Could IBM, which is considered the master of jobs outsourcing, be after the same lucrative market as Perot 45 years ago? And is it not true that in late July 2010, the EU launched anti-trust investigations against IBM for “abusing its position in the mainframe computer market”? Incidentally, what do Oracle, Cisco among other companies have to say about IBM having its foot in the door with freebies at the outset as bait for shark-like bites out of the US tech budget that follow?
As far as Mort Zuckerman, it is hardly a secret that the billionaire real estate and media mogul is feeding this story, for he has been an Obama critic and Joe Lieberman-style Democrat (Conservative in Liberal clothing). All the noise these days before the mid-term election is due to the fact that Obama and the Democrats want to institutionalize some moderate reforms in an economic system that will weaken substantially in the next cyclical recession. The distortions of policies and policy proposals are not driven just by the election in November but mostly by Obama’s concern that if he does not take additional steps to “rationalize the market economy” as some EU and other G-20 leaders are demanding, the system will be seriously debilitated and China along with the other BRIC nations will indeed emerge much stronger much faster than any one now believes. Stephen Schwarzman, CEO of Blackstone Group, a Zuckerman ally who has received lots of press in business media and in Zuckerman’s publications, has stated that “it’s war with Obama.” Why war and why compare Obama’s attempt to raise taxes on private equity firms to “Hitler invading Poland?” The US business community does not want higher taxes, stricter environmental regulation, greater oversight for banks and Wall Street, and tighter energy and labor regulation. The are the same people that created the current global crisis for which millions of Americans and billions of people around the world are paying with their livelihoods and those of their children; these are the same people who have weakened the middle class and devastated the working class; these are the same people engaged in massive schemes (Lehman Brothers, Goldman Sachs, etc.) of fraud; yet, they have the audacity to demand a “free hand” from the government that bailed them out at taxpayer expense so they can continue to ruin the lives of the middle class and workers, so they can enjoy their privileges. Greed is the only driving force behind the current and ongoing propaganda campaign against Obama, who is an otherwise moderate Democrat president trying to prevent the worst from taking place in the future. Finally, those who disagree with everything I have written on ideological/political grounds, may argue that my essay falls in the category of “propaganda as subjective reality.” Yes it does indeed! The only question is one of honesty whether it comes from the right, center or left–the ability to publicly state that one is a propagandist and the constituency I serve is the financial elite, the trade unions, lower middle class professionals. Nor is there is moral equivalence in propaganda, because one may propagate to defraud the public and another to prevent such developments. A good example of an establishment politician who has come clean with the public about propaganda and hidden political and business interests is Jean-Claude Juncker, Euro-Group President and Luxembourg Premier, who last week admitted at the IMF-World Bank meeting of foreign ministers that the EU knew of the impending Greek debt crisis before the outbreak of the current global recession, and did nothing about it, allowing French and German corporate interests to rake in billions in profits.


"In a recent statement after president Bush's visit to the Vatican, the Pope cautioned the American people to be less materialistic and to seek contentment in spirituality. Though such a statement may appear rather typical, I found it intriguing because public opinion polls indicate that more than 60% of the American people identify themselves as religious while only 10% of Europeans. This is a reflection of the level of American political, social, and cultural conservatism in comparison with Europeans. Yet, the Pope has the same perception as the rest of the world that American society is immersed in materialism/hedonism, despite the public proclamations of religious convictions. How do we reconcile the 60% public opinion poll with the widespread perception throughout the world that we are indeed the most materialistic and by implication least spiritual society? Do the forces of economic determinism supercede those of faith? Are India and Brazil, and the entire Third World, more spiritual because they have the vast majority of the poor on this planet, so people turn to religion as a core value with which to cope with life's daily adversities, while in bourgeois America, and the G-7 for that matter, we seek satisfaction in automobiles, houses, DVD players, etc. etc.?"

George Frederickson comments on the posting by Jon Kofas: "An hypothesis from a comparative historian of Europe and America: The Pope's comment reflects a deeply-rooted European assumption that the acquisition of wealth is morally suspect and probably sinful. The traditional Christian view is that avarice or greed is one of the deadly sins and that voluntary poverty is virtuous. (Think of the rich man trying to get through the eye of the needle.) If we follow Max Weber, the rise of Protestantism led to a modification of this viewpoint. For Calvinists particularly, wealth could be a sign of divine favor, provided that one led an abstemious life and engaged in sanctioned form of philanthropy (which did not include giving alms to the "undeserving poor.") This more permissive attitude toward weath-seeking became strongly rooted in the American colonies and later in the United States. Whereas a neo-Calvinist form of Protestantism has declined or become thoroughly secularized the in the parts of Europe where it got established at all, it has clearly thrived in the US. Even after it became detached from its original asceticism by the rise of a consumption-oriented capitalism in the twentieth century, it continued to sanction the American belief that materialism (in the sense of acquisitiveness) and religious dedication or devotion are thoroughly compatible. Baptist John D. Rockefeller said "God gave my money," and Ronald Reagan, the hero of the religious right, contended that "Greed is not a sin." In Europe, from which charges of American materialism frequently emanate, such attitudes would be shocking if not incomprehensible to many people. The residual strength of Catholicism and the rise of socialism and social democracy have combined to make the ardent pursuit of wealth and its self-satisfied attainment sources of suspicion if not of outright disapproval. Sociologist Michelle Lamont's comparative study of the social attitudes of working men in the United States and France reveals a great disjucture in their attitudes toward "the people above" them economically. Most of the Americans workers she interviewed want to emulate the economic elite and move into their ranks. The French tend to regard them as owing their position to personal corruption or to an unjust system and, if not reduced to cynicism, favor redistributive reforms"

Sunday, 10 October 2010

China: Global Anti-China Campaign

Posted on October 10th, 2010

The well-thought out comments of Tor Guimaraes and Alain de Benoist (both from 9 October) regarding the Nobel Peace Prize, address the various WAIS critiques of the Nobel Peace Prize, because the essence of the issue here is not the recipient, who I too believe is indeed worthy as a heroic dissident, but rather the politics behind the Prize. In fact, the Nobel Foundation has just made Liu a “tradable commodity,” so it is very unlikely he will serve even a fraction of the 11-year prison term. However, the issue is much larger than one person no matter how worthy; and on the larger issue, a few comments on the campaign of West against China. Global criticism of China extends beyond its one-party Communist state that does not respect human rights, maintains control of media and curtails individual freedoms; beyond the Nobel Foundation opting to send a political message by awarding the Peace Prize to dissident Professor Liu; beyond Chinese treatment of Tibetan Buddhists, other minorities, and Internet policies intended to curtail dissident activity; beyond the undervalued currency and dumping trade practices; beyond the increasingly larger role of China in the underdeveloped areas, especially Africa that Europeans consider their “backyard,” but now accusing China of neo-colonial practices–imagine the Europeans with their legacy as slave traders and colonialists for centuries now accusing China of neocolonialism! Centered in the US, with Western Europe and Japan following faithfully because they too are in similar economic fate as the US, the global anti-China campaign is centered on the realization that West, which declined after WWI and revived after WWII, is on a relative decline again and this time for the duration. Having enjoyed global economic hegemony since the Commercial Revolution, the West is entering the 21st century in decline relative to the rise of China, India, Russia and Brazil. Of the BRIC nations, China is the real powerhouse not only economically, destined to become the world’s leading economy later this century, but militarily as well. The current global recession that furthered weakened the West, especially the core economies (G-7), helped to strengthen China and that is the major reason the US, Japan, and EU want to slow down China’s phenomenal growth. Premier Wen has reminded the G-7 that have been pressuring China to adjust its “cheap” currency and trade (dumping) practices, that the current recession would have been much worse if it were not for China providing the stimulus for growth on a world scale. Indeed, if China had adopted growth-by-debt policies like the G-7 and if it had adopted the position of European governments and their banks when the Great Depression erupted, the world recession could have unfolded into another Great Depression. On the other hand, China could have done more to lessen the burden on the G-7. On 9 October 2010 at an IMF meeting of finance ministers, only the US was vociferously demanding that there be a resolution to deal with the undervalued yuan (Chinese currency) while the rest decided the decision must be postponed until the G-20 meeting in November in Seoul. That EU and US economies are not growing rapidly, has meant capital outflow to China and to a lesser extent South Korea, India, Mexico, Brazil and a few other non-G-7 countries. How to slow down China is the question, and the answer rests with forcing China to convert its economy from an over-producer to and over-consumer like the G-7, to force compliance with environmental standards that not even the US observes, to force it to share developing area markets in areas once the exclusive domain of the G-7, to force it to import more products–everything from essentials to luxuries. While the US has criticized China for its police and interrogation practices of dissidents, in a typical case of American Exceptionalism the US has afforded itself the right to expand the CIA “Shadow War” that resulted in the assassination of more than 400 presumably Islamic militants in 2010; all under very questionable compliance of international law. And while political assassinations are nothing new, neither are government practices of using US and non-US citizens for medical experiments that resulted in horrific illnesses and deaths (Tuskegee & Guatemala). The global anti-China campaign is also used to keep wages low. “A rising media chorus in both Mexico and the US has argued that Mexico is losing a low-wage competition with China.” Plants have closed and moved as a result, the argument goes. “With the advances of the giant Asian power,” says Rolando Gonzalez Barron, national president of the Maquila Export Industry Association, all these companies are trying to compete with China with cheap labor.” He advises factory owners to move to southern Mexico, where wages are much lower. “The border has no possibility of competing with China.”
Is it not ironic that California Republican Senate candidate Carly Fiorina, former CEO of Hewlett-Packard, is accusing Senate Democrat Barbara Boxer of being “soft on China,” when the fact is that Fiorina exported jobs to China in order to raise corporate profits? The EU also uses China to keep wages low and to cry out that businesses need subsidies–to maintain welfare capitalism. Of course trade unions from the AFL-CIO to more progressive European trade unions have been fallen into the trap of joining the global anti-China campaign along with journalists and academics, instead of focusing on how that campaign is used to strengthen finance capital. Politicians too are exploiting the popular anti-China sentiment. Just a few weeks before US mid-term elections, the NY Times is reporting that 19 Democrat and 10 Republican candidates are running anti-China ads, knowing that at least 40% of the American people according to a recent poll believe China is the world’s leading economic power. The systematic manipulation of public opinion in the West to distract public opinion from focusing on what has gone wrong with the market economy and how to best fix it for the benefit of all people will continue and intensify because the G-7 are in decline and their political elites need to squeeze everything they can out of the middle class and workers to strengthen finance capital. However, such efforts will not weaken China, which next year will surpass the US and Japan in new patent applications, indicative that its production and export-oriented strategy is likely to continue and not replaced by a consumerist orientation that the G-7 demand of China. The global anti-China campaign serves many agendas some that do in fact have to do with China’s unfair trade and monetary policies, most designed as pretext to the current weakness, which could become a permanent decline, of the West.

Saturday, 9 October 2010

Universities: Abuse and Corruption in College Administration

When I started college in Chicago in 1970, university and college administrators were professors with solid credentials and strong commitment to teaching and scholarship in the Liberal Arts tradition intended to help the student toward self-discovery, to cultivate her/his creative potential, and to become a productive member of society which included securing a career. University/college bureaucracy was limited, salary differentials between administration and faculty were not that great, there were very few part-time faculty, a “democratic” and in some cases “collective” process through faculty senate was respected, and there was no faculty-administration dichotomy. By the time I left higher education and the US in 2005, the picture had changed completely. The bureaucracy and administration salaries had become bloated, part-time exploded (and of course exploited), administrators were not rooted in scholarship but had evolved into “professional administrator-business managers,” the model of college administration was based on a management-labor dialectic with the faculty senate invariably the enemy of the administration, tuition and taxpayer costs skyrocketing while the quality especially at the undergraduate level declining. Then there were the publicized cases of abuse and corruption and not those that involved college athletics, about which so much has been written. The problem went beyond sports corruption. Those of us who worked in higher education had heard of or knew about abuse and corruption in our own campuses and in others from colleagues, but we could not prove anything or we felt that we could do nothing about it even when we had circumstantial evidence.
Who is at fault?
Complacent and otherwise lazy faculty that teaches a few hours a week, placates students with grade inflation and has not published since the last promotion, resents broad and non-rigged mechanisms of accountability, and seeks to secure an administrative position because she/he is no longer effective in the classroom and too “out-of-it” to conduct research? Perhaps it is the fault of the business community for demanding and securing increasingly inordinate influence in higher education, molding it because of funding that comes from the private sector and of course because it is the place where graduates will be seeking work. Is it the fault of politicians who want a certain type to fulfill an agenda (must have a woman, must have a minority, must have a Liberal, must have a pro-business, must have a going-along type college leader)? Or is it the fault of society that is moving toward a culture of image without substance that is responsible for administrators who reflect the shallowness of our modern materialistic world? The following is but a small sample of cases regarding abuses and corruption. “New Jersey’s Stevens Institute of Technology is the latest in the long line of education corruption scandals. The state attorney general is suing the school and its president, Harold J. Raveche, on accusation of plundering the school’s endowment and receiving nearly $2 million in illegal low-interest loans for vacation homes. Over the course of a decade (1990s), the board of trustees at Stevens increased Dr. Raveche’s salary to $1.1 million–which earned him a higher salary than the presidents of Harvard, MIT, and Princeton. Stevens reportedly used multiple sets of books to conceal its rapidly deteriorating financial condition. Click here to find out which other college presidents make more than $1 million per year.”
The average salary for academic staff is five to ten times lower than that of college presidents, and if all the perks are considered it is 15-20 times lower. In 2002 The Chronicle of Higher Education reported that the $500,000 annual salary for college presidents or chancellors was no longer an exclusive club, but rather widespread in America. The business of top college administrators is so lucrative that head hunters are paid large fees to find such people, and all at the expense of the taxpayers, donors, and of course tuition-paying students. The question of course in a market economy is one of value a president/chancellor may be offering. Are colleges and universities adding value to the quality of education because of administrators paid salaries historically reserved for CEOs? One of the major criticisms in articles and books about abuse and corruption in higher education concerns the rule by committee for political ends, often to placate the board made up of businesspeople and politicians, and in some cases “stacked” by the university presidents or college chancellors. The lack of solid academic credentials and the use of the position to secure a position with private sector or enter government adds nothing to the institution that pays the price for the luxury of high-paying administration. Again the question is one of value to higher education as a result of college administrators who are more businesspeople running a corporation than academics. Another key issue that goes hand in hand with the skyrocketing salaries of top administrators is the skyrocketing bureaucratization of college administration whose purpose is to create a very strong administration at the cost of quality classroom teaching. The larger the bureaucracy the larger the part-time and contract academic staff. Faculty in their quest to have fewer administrative tasks invariably contributed to the bloated bureaucracy, just as faculty in their quest to be satisfied as long as they received their inflation-adjusted salary raises permitted the abuse and corruption of administration. Controlling the budget and using it within guidelines as well as the manipulation of guidelines–top administrators going on domestic and international destinations for pleasure and justifying it as “college-related” adds considerably to the cost for taxpayers and students. When the economy is growing and the university or college is growing, faculty are receiving their salary raises, their grants, and sabbatical, there is no noise. But when crisis hits and budgets tighten, then the rats come out of their hiding places.
Conservatives always point to faculty as the source of the problem in higher education, and it is true that faculty share in the responsibility for so much ranging from lack of enthusiasm for their profession to abuse of the system by not fulfilling their teaching and research obligations. Higher education is the key to progress and far too important to allow it to the whims of what I recently analyzed as “the culture of image and pseudo-events” prevailing in contemporary society, especially in the US, but more broadly in the West.
While the US has the best graduate schools in the world along with the best talent in academic staff, while there are extraordinary universities and colleges that are beyond abuse and corruption, and while even in universities and colleges that have fallen victims to abuse and corruption at the top there are significant accomplishments by individual researchers and teachers, the question is institutional that concerns primarily the schools not in the top 50 list, where mostly the children of the financial and political elites attend. At a time that conservatives and elements of the business community want to perpetuate education’s “commodification,” the “mass consumer of education” who cannot attend the top 50 colleges and universities, and the general taxpayer need to decide what they want out of higher education, how they want it to serve society’s needs that go beyond careerism that has dominated Western culture since Reagan, and segments of Eastern culture in the last decade?