Bulletin N°442

 

Object: ON THE CORPORATE CONTROL OF THE STATE AND OTHER BOURGEOIS ACHIEVEMENTS: PAST, PRESENT, AND FUTURE.

25 March 2010
Grenoble, France


Dear Colleagues and Friends of CEIMSA,
When the bourgeoisie first began to challenge the political power of the landed aristocracy more than 350 years ago in England, their objective was to remove the Old Ruling Class [the ORC] and to place the nouveau riche class of investors, merchants, and industrialists in control of important state apparatuses --such as the military, the police, the schools, and, yes, the tax-exempt religious institutions. All the other components of state power came under their monopoly control as well. The policies of the Modern Ruling Class [MRC] were radically different from the governing policies of the landed aristocracy. The fierce military conquest of Ireland (1649-1653) by Oliver Cromwell's New Model Army is just one example of bourgeois innovations. The MRC of capitalists, of course, made some compromises with the traditional aristocracy and their indispensable ally, religious institutions; but the nature of social control was fundamentally different from the start: new objectives focused on economic expansion and a higher level of labor exploitation. The English peasantry was displaced and hundreds of thousands of children, women, and men were subjected to new forms of misery. They were impoverished as never before. This brutal departure from the traditional relationships within the feudal system constituted a violent usurpation of the lives of ordinary people, who were unprepared for the new wrenching hardships. The ideology of acquisitive individualism served to protect the nouveau riche as it neutralized the wrath of ordinary people, dissolving their moral outrage into anxieties and helpless confusions. [See the 17th-century documentation by William Hogarth.]

In the modern era of The Bourgeois Republic [TBR] --ruled by capitalist investors, industrialists, and bankers-- militarism has always been an important source of power, but economic power and political power require their own strategies and tactics, as does ideological power. The thesis that working-class subordination in capitalist societies is largely the outcome of cultural dominance achieved by the capitalist ruling class has been criticized by some as being an exaggeration. Nicholas Abercrombie, professor of sociology at University of Lancaster, is one of those who has criticized the "dominant ideology" thesis, arguing that it overestimates the importance of cultural integration and "shared values" and underestimates the extent to which subordinate groups are capable of generating beliefs and values which run counter to prevailing ideologies.

With the seizure of state power centuries ago, the bourgeois owners of capital took control of all state institutions that are essential for the reproduction of capitalist relationships. Institutions like schools, religious organizations, and media function to support the capitalist ideology, and repressive institutions like police forces and the military are used to maintain order with the threat of violence. However the economic power of social control via bank loans, low wages, high unemployment, poverty and homelessness are part of the formula for MRC hegemony, which requires constant economic and psychological warfare against the general population. Thus Artificial Scarcity, in combination with the ideological apparatuses, produces a social environment in which ideologies of resistance appear and disappear to the consternation of Governments, while the entrenched MRC is largely unaffected, except for the fact that the appearance of new resistance movements occasionally offers unique investment opportunities, such as can be seen in the recent growth of the Homeland Security and Surveillance industries. [For an interesting discussion of the role of the state and the role of government in capitalist society, see Ralph Miliband, The State in Capitalist Society, The Analysis of the Western System of Power (1969). Also, see our Colloquium Program on "War, Resistance, and Counter-Resistance" (April 2008) at L'Université Paris 10 - Nanterre, and for a copy of the Publications des ACTES, contact Mme. Maithe Capdessus at maithe.capdessus@u-paris10.fr.]

Marx wrote in The German Ideology (1846) that: "The ideas of the ruling class are, in every age, the ruling ideas , i.e. the class which is the dominant material force in society is at the same time its dominant intellectual force." In this sense, the "ruling" class may "rule" even though it does not "govern." In some circumstances, it may be to the clear advantage of the economically "dominant" class that it does not govern directly. At these times we see the MRC willing to share political power with other groups, thus relinquishing some of its control over other sources of power --military, economic, and ideological forces-- which are nevertheless perceived as functioning as one political center. However, in those circumstances --such as "Bonapartism" in France in the 1850s, or as today's US political economy now unraveling under President Obama-- it also can be argued that the lack of capitalist class capacity to rule through constitutional procedures and the inability of the working class to achieve dominance has led to a stalemate, a state of affairs in which there exists no economically or politically dominant class. Along the same lines of analyzing the interrelationships of government, the MRC, and state power, but in a different context, Franz Neumann wrote that during  the final days of Nazi Germany the National Socialist Party attempted to seize control of all other sources of power --economic and military sources, as well as maintaining their ideological control over the already saturated political sources of power. It was the last suicidal attempt by the Party to impose an "ideal solution" for the Third Reich, and the industrialists and German military leaders revolted : they did not wish to be confused with school teachers and policemen!


The 6 items below should remind CEIMSA readers that the tail doesn't wag the dog and that if you grab the tail, then you are likely to be bitten. "Change you can believe in" (to coin a cliché) will come only when the MRC is replaced by a New Ruling Class [NRC], which can successfully demonstrate its will and its capacity to guarantee the rights of ordinary people by using the power of the state and by facilitating the formation of appropriate coalitions to create governments "of the people, by the people, and for the people" at every level of society. The newly released creative energies protected by the NRC will give birth to new formations of government, all of which will be encouraged to contribute to the purpose of The Workers' Republic [TWR], i.e. "The world upside down," in which the development of humanity is more important than private profits.

Item A., sent to us by NYU professor Mark Crispin Miller is a critical article on the Obama Health Care Plan, recently passed by Congress.

Item B. sent to us by Reader Supported News, is the New Yorker article by John Cassidy on "ObamaCare".

Item C., from the Real News, is an article and an invitation to practice investigative journalism on the question : "Why are we afraid to tax the super-rich?"

Item D., from ZMagazine, is an article by American University economics professor Robin Hahnel, who  made this three-part presentation on "the global economic crisis" at New Left Project - a new UK based alternative media project: http://www.newleftproject.org/.

Item E., from Information Clearing House, is a video broadcast by Anton R. Valukas, detailing Lehman's “materially misleading” accounting and “actionable balance sheet manipulation.”

Item F. is the remarkably candid  exchange between John Jay of The Real News and William K. Black, the former senior regulator who cracked down on banks during the savings and loan crisis of the 1980s, on the "the causes and likely consequences of 'crony capitalism' in the USA."


And finally, we invite CEIMSA readers to view the short video interview below with Michael Moore on the Obama "Health Care Disgrace" at Democracy Now!

http://www.democracynow.org/2010/3/23/michael_moore_health_care_bill_a


and Dr. Norman Finkelstein's two-part analysis of the necessary "Steps Towards Resolution in Israel-Palestine" :

Part I
http://www.democracynow.org/2010/3/23/norman_finkelstein_responds_to_clinton_netanyahu


Part II
http://www.democracynow.org/blog/2010/3/23/part_ii_scholar_norman_finkelstein_on_next_steps_towards_resolution_in_israel_palestine



Sincerely,
Francis McCollum Feeley
Professor of American Studies
Director of Research
Université Stendhal Grenoble 3
http://www.ceimsa.org/


___________________
A.
from  Mark Crispin Miller :
Date: 25 March 2010
Subject: [MCM] What's right--and wrong--with Obama's health care bill?
<markcrispinmiller@gmail.com>


"But there is also cause for serious concern. Never before has the government mandated that its citizens pay directly to private corporations almost as much as they do in federal taxes, especially when those corporations have been granted unregulated monopolies."


http://fdlaction.firedoglake.com/2010/03/22/fdl-statement-on-the-passage-of-the-health-care-bill/


______________________
B.
From: ReaderSupportedNews :
Date: 25 March 2010
Subject: John Cassidy | ObamaCare by the Numbers: Part 1.
The New Yorker



John Cassidy does a nice (non-hysterical) job of analyzing the real implications of what the health care package means.


RSN Godot Logo

Reader Supported News | 24 March 10 PM
It's Live on the HomePage Now:

Reader Supported News


http://readersupportednews.org/off-site-opinion-section/61-health-care/1321-obamacare-by-the-numbers-part-1


______________
C.
from The Real News :
Date: 14 March 2010
Subject: Class Struggle and Nationalist Militarism.
http://therealnews.com/t2/


We are told that we’re already living well beyond our means, that we’ve got to cut back on government programs at all levels. Meanwhile, the super-rich are still having a ball.


Why Are We Afraid to Tax the Super-Rich?
http://www.alternet.org/story/146020/why_are_we_afraid_to_tax_the_super-rich

 

____________
D.
from Zmag :
Date: 27 February 2010
Subject:
http://www.zcommunications.org/znet



A Guide through the Economic Crisis
by Robin Hahnel


[Robin Hahnel is Professor of Economics at American University. His most recent book is Economic Justice and Democracy. He is co-author with Michael Albert of The Political Economy of Participatory Economics. He spoke to NLP (http://www.newleftproject.org/) on the global economic crisis. ]

1.Economics is often seen as a rather mysterious and impenetrable subject. Are you able to explain in straightforward terms why the global financial crisis occurred?
 
The principal causes of the “perfect economic storm” that broke in the fall of 2008 were (1) the dramatic increases in economic inequality which made the system less stable as well as less fair, and (2) the reckless deregulation of the financial sector. Both trends began in earnest with President Reagan in 1980, continued under Bush I and Clinton, and accelerated during Bush II. These trends were the result of a steady increase in corporate power, and the power of mega financial corporations in particular, and a dramatic decrease in the countervailing power of workers, consumers, and governments.

We can add more detail – which is important­because there are important lessons to be re-learned. I say re-learned because many of these lessons were learned once before in the aftermath of the Great Depression of the 1930s, but unfortunately were unlearned by the economics profession, the major media, and politicians who then conspired to help the general public forget hard learned lessons as well. Last century during what was known as the “Roaring Twenties” economic inequality also increased dramatically, and when an unregulated, highly speculative financial sector crashed in 1929 the Great Depression was the result. What many Americans – including our President at the time­learned from that terrible experience was that free market finance is an accident waiting to happen. Result? Prudent regulation of banking and stock trading was imposed over the objections of those who argued then, just as some argue today, that these measures are unnecessary and counterproductive. People – including our President at the time­also learned that unless wages keep pace with productivity increases not only will the economy become more unfair, it will also become more unstable. Result? With their right to form unions and engage in collective bargaining newly established in law, organized labor created the underlying conditions for the “Golden Age of American capitalism” lasting from 1940 into the mid 1970s­the only time large numbers of American workers have shared widely in increases in their own productivity.

The conditions for today’s perfect economic storm were created once again by dramatic increases in economic inequality that took place over the past thirty years making the system less stable, and by reckless deregulation of an increasingly powerful financial sector. And once again, what we need to do immediately is stem the recessionary slide and get the credit system working again. But we also need to rectify the underlying conditions that made this recession possible. We need to reform and regulate a financial sector that was allowed to get completely out of control and implement policies that will make income distribution much more equal so this kind of breakdown cannot happen again.

1. Large inequalities of income and wealth are not only unfair, they also increase the likelihood of economic crises for the simple reason that more of the income of the wealthy is not automatically turned into consumption demand. The poorer you are the more likely you are to spend what little income you have relatively quickly, and thereby provide adequate demand for all that was produced. The richer you are the more likely you are not to consume all your income. Unless the savings of the wealthy are successfully channeled into spending on goods and services by someone else, the demand for goods in general will fall short of the supply. When this happens businesses unable to sell all they are producing cut back on production and lay off workers, which of course, further aggravates the problem. This self-reinforcing, downward spiral is what we are now experiencing, more strongly than at any time since the Great Depression eighty years ago.

Lesson 1: We need a massive fiscal stimulus because there is no other way to stem the recessionary slide that has become the overriding problem.

Household income is falling, few have any equity left in their homes they can borrow against, and most people’s credit cards are maxed out. Clearly the increased spending needed right now is not going to come from the household sector. Nor will it come from the business sector since businesses are not going to invest in new plant and machinery when they cannot sell all they are making already. For now the only way to stem the downward recessionary spiral is for government to spend more than it collects in taxes – a lot more!

Yes, this means we need a big government budget deficit right now. Bigger deficit now…. Good. Smaller deficit now…. Bad. Even if all one cares about is minimizing the size of the national debt five years from now, the best policy is to run a larger deficit now. The logic is simple enough: Nothing increases the national debt more than a recession because tax receipts go down when incomes goes down – which is what a recession is, falling production and incomes. Many Americans, many politicians, and most of the mainstream media refuse to acknowledge this counterintuitive truth, and unwarranted concern about present deficits has become the single biggest obstacle to ending the recessionary slide.

Republicans raise concerns about fiscal deficits for opportunistic reasons. They showed no concern over massive deficits caused by tax cuts for the wealthy and increases in military spending and corporate welfare during the Bush Presidency­even when the economy was not in dire need of fiscal stimulus. Clearly they are hypocrites to raise deficits as a reason we cannot afford a massive fiscal stimulus now when the economy desperately needs one. However, Republicans also fan the flames of concern over deficits now to prevent Obama and the Democratic Congress from doing what is necessary to get the economy moving again and reduce unemployment, hoping to prolong the crisis and create the political conditions for Republican victories in the Congressional elections of 2010, and eventually make Obama a one term President in 2012.  Surprise, surprise! Republicans are behaving like an opposition political party that is willing to damage the country for their own political gain.

The many Liberals and ordinary people who express and support concern over budget deficits badly mistake their own as well as the national interest and fall into the Republican trap by doing so. They either never learned the most important lesson Lord Keynes taught the world in the 1930s­which is quite possible since the economics profession has worked hard to write Keynes out of their text books and curriculum over the past thirty years – or they have forgotten the lesson and allowed themselves to be stampeded by the mainstream media which is predominantly a right wing media.

Centrist Democrats, which describes President Obama and his economic policy team perfectly, are currently responsible for failure to provide a sufficient fiscal stimulus by pandering to what they legitimate as “popular concern” over deficits rather than explain why fighting to reduce deficits now is counterproductive, and denouncing those who fan the flames of popular concern over deficits for the unpatriotic, political opportunists they are.

2. However, the underlying problem that created the conditions for the macroeconomic imbalance, and also make it difficult to reverse, is the dramatic growth of inequality over the previous decades leaving too little purchasing power in the hands of those who use it fully and quickly. This problem must be rectified as well.

Lesson 2: Wages must keep pace with productivity increases or the economy will not only become more unfair it will also become more unstable.

What can be done to protect wages immediately? Passage of the Employee Free Choice Act­which was stalled in 2007 by a Republican filibuster in the US Senate­would remove barriers preventing workers from forming unions, eliminate incentives for employers to stall negotiations over a first contract, and increase penalties for employers who break the law during union organizing campaigns. Eliminating tax breaks for companies that outsource jobs abroad, and insisting on adequate and enforceable labor standards in all international trade agreements would help reduce downward pressure on US wages and working conditions. The Trade Reform, Accountability, Development and Employment Act of 2009 (HR 3012) would move us in the right direction. It currently has 97 sponsors and needs more to move forward.

Of course passage of these bills would only be a beginning. Much more is needed to increase income equality. But new legislation to empower unions, new legislation to undo the damage wreaked by neoliberal international economic treaties, increasing the minimum wage, and strengthening the social safety net through funding increases for unemployment insurance, social security, welfare programs, and passing single payer health care are all necessary steps that would increase income equality and make economic crises like this one less likely. Of course economic justice will never be achieved in a capitalist economy no matter how many social democratic reforms we manage to win – which is one reason we must eventually replace the economics of competition and greed, a.k.a. capitalism, with the economics of equitable cooperation, a.k.a. participatory eco-socialism.

3. The financial crisis today is not simply the result of some mortgages that should never have been made. Less than 20% of mortgages were in arrears when the financial crisis hit last fall, which means that 80% of mortgagees were current with their payments. Only because prudent regulation of the banking industry dating back to the Great Depression was systematically dismantled by politicians in both the Republican and Democratic parties under pressure from the financial industry, only because people like Larry Summers and Timothy Geithner intervened on numerous occasions in the past to prevent regulation of highly speculative Wall Street investment banks and hedge funds, only because lack of competent regulation created opportunities for financial players to make large profits in socially dangerous ways was it possible for the worst financial crisis in eighty years to unravel when a housing bubble­which had to come to an end at some point­finally did.

A short list of a few of the perverse incentives incompetent regulation permitted and still permits is enough to boggle the mind.

(1) Local banks no longer hold the mortgages whose applications they approve. Instead, they immediately sell those mortgages to large banks and institutional investors. This leaves little incentive for local banks processing mortgage applications to care if applicants are really credit worthy or not.

(2) Wall Street banks created securities composed of tiny fractions of the monthly payments due from thousands of different home mortgages, which they sold to institutional investors and also kept on their own books as assets. However, the agencies responsible for rating these mortgage based securities are paid by the banks whose securities they are rating. The pressure on rating agencies to routinely stamp securities as triple-A for their paymasters, i.e. rate them of high quality and low risk, should be obvious to anyone.

(3) Securitization is not primarily a way to spread risk – as its supporters claimed – more importantly it is a way to hide risk from outside detection allowing banks to pass off low quality securities as if they were high quality. However, since prospective buyers cannot distinguish low quality from high quality mortgage based securities, once mortgages start to fall in arrears, the market for all mortgage based securities, even the good ones, dries up. Those are the so-called toxic assets we hear so much about on the books of the big Wall Street banks, and that is why the banks discovered to their surprise they could not sell even the good ones for more than a song.

(3) CEO pay is often linked to the value of their company stock in the short-run. But CEOs have many ways at their disposal to manipulate the price of their company stock in the short-run to their advantage, even if by doing so they weaken the company and endanger the economy.

(4) Discounting what are known as financial black swans – outcomes with very large negative consequences but which are very unlikely to occur ­is the basis for hedge fund profits. Unfortunately for the rest of us, undervaluing black swans is extremely dangerous for the financial system as a whole.

(5) When a financial institution is so important that its failure might trigger a financial panic it creates a perverse incentive known as moral hazard. An institution that is “too big to fail” can engage in risky behavior knowing it will reap the high rewards from risky investments when they prove profitable, but be rescued by the government with taxpayer dollars whenever they prove otherwise. Wall Street is the best example of “lemon socialism” the capitalist world has ever seen. When things go well Wall Street wins. When things go badly the taxpayer, not Wall Street, loses.

(6) And of course, last but not least: More leverage, i.e. playing with more of other people’s money and less of its own, means higher rates of profit for any financial institution. But it also means greater financial fragility for the system as a whole, and a bigger collapse when a crisis materializes.

Lesson 3: Unregulated, free market finance is an accident waiting to happen. If the credit system is going to be left in private hands, not only must regulations over traditional financial institutions be restored and strengthened, but the new financial sector of Wall Street investment banks and hedge funds that grew up outside the old regulatory structures must be subjected to regulations that prohibit behavior that has proven detrimental to the public interest.

To keep it simple: When you let “boys” play with “house money”, perverse moral hazard incentives combined with the tendency for “boys” getting wealthy to get carried away with themselves and “be boys,” creates an accident waiting to happen.

_______________
Parts two and three of this interview will be published at New Left Project - a new UK based alternative media project: http://www.newleftproject.org/


______________
E.
from Information Clearing House :
Date: 14 March 2010
Subject: The mega-scam that brought the American economy to its knees.
http://www.informationclearinghouse.info/

They Cooked The Books

The Video That Will Put Geithner Behind Bars
http://www.informationclearinghouse.info/article24980.htm

One Of The Greatest Crimes Ever Perpetrated

By Mike Whitney

March 13, 2010 "Information Clearing House" -- You gotta see this! If this doesn't convince you that the Timothy Geithner knew about the securities shenanigans that were going on at Lehman, than I don't know what will.

Keep in mind, that Geithner ran Lehman through 3 "stress tests" prior to bankruptcy; all of which Lehman failed, and yet, nothing was done. Anton R. Valukas--the examiner who wrote the 2,200 page investigative-report which was released on Thursday-- has provided plenty of information detailing Lehman's “materially misleading” accounting and “actionable balance sheet manipulation.”

In other words, they cooked the books.

 
_____________
F.
from The Real News :
Date: 21 March 2010
Subject: The causes and likely consequences of "crony capitalism" in the USA.
http://therealnews.com/t2/




The Causes and Consequences of 'CRONY CAPITALISM'

http://therealnews.com/t2/index.php?option=com_content&task=view&id=33&Itemid=74&jumival=539