An Untold Marxist Story of Financial Crises: Japan, the United States, and the European Union

This is the story that Marxists haven't told yet. In my view, though, this story is perfectly consistent with not only most Marxists' theories of capitalism but also their traditional (usually implicit) policy preferences.

Let's evaluate policy responses in the wake of the most recent financial crises of Japan, the United States, and Europe, beginning not in 2008 but in 1991, with the ranking based on policy impacts on the overall economy and more importantly on the working class.

Central Banks

1. The Fed: Could have been better, but it's clear Bernanke knew what he needed to do and was determined to do it
2. BOJ: Confused and feckless
3. ECB: OMG, WTF

Stimulus and Output

1. Japan: The sum total of public spending for this purpose is respectable, and so is per capita GDP (as opposed to total GDP) growth
2. US: Way too small, ending too soon, leaving the US infrastructural deficit intact, though it's not as if it did nothing to sustain GDP and consumption as the Right claims
3. EU: Terrible squeeze of the periphery from Day 1, disaster capitalism par excellence

Composition of Fiscal Policy + Labor Market Policy + Budget Financing Method

Here there is no ranking. It's a story of "every unhappy family is unhappy in its own way." This is basically where the Japanese working class were done in: even as the government spent a great deal on contingent public works, structurally it made (by the standard of rich nations already small) social benefits smaller, especially for old people, while facilitating the rise of contingent labor without establishing a new social safety net for the precariat; and moreover taxes on corporations were cut while those on workers were raised. The same is now being done to American and European workers, though exactly how it's done politically varies.

Conclusion

Don't make it sound like a Great Depression is what the working class should fear facing a financial crisis; if you do, you are only defending a Maginot Line and motivating workers to turn to bastard Keynesians rather than Marxists. A modern state knows how to avoid a Great Depression, by breaking up a panicked financial crowd by a big monetary water cannon, except in cases where it wants to deliberately inflict a depression on workers for the purpose of effecting structural change, as the ECB is doing to the euro periphery.

Make sure the working class bark, and bark up the right tree. The right tree in the case where the state has its own money and controls its own monetary policy, with little to no pressure from foreign creditors, (as in the cases of Japan and the United States), is people determining the composition of fiscal policy, the labor market policy, and the budget financing method. To get the working class to bark up the right tree, Marxists must fight against right-wing populist mystification about "always uniformly bad and morally hazardous bailouts," (bailouts are not at all alike in their impacts on workers -- it all depends on how they are done and how they are financed; and, if workers are well organized, politically conscious, and militant, they can turn them into opportunities to assert social control over the bailed-out enterprises and/or sectors), without leaving that battle to Keynesians.

No Green Goddesses

Here is an important intervention by Janet Biehl, published in the latest issue of Le Monde diplomatique: "No Green Goddesses: Ecofeminism Isn't Feminist or Eco Either." Unfortunately, the English version is for subscribers only, and the French version won't be available till next month. But the Portugese and Italian versions are already online. A funny thing is that people who wouldn't put up with the god of the Abrahamic religions often love Pachamama. One reason is that Pachamama is cast as female while the God of Jews, Christians, and Muslims is commonly cast as male. Goddesses can be useful for reactionary, patriarchal thought, though. Amaterasu is female and kind of cool in the original tellings of the myth about her, but Japan's ruling class at one time successfully built patriarchal capitalism and imperialism in part using an ideology based on the claimed kinship with her. Another reason is that there are two kinds of "otherness": one (e.g., Muslims, hijab) is cast as frightening; the other (e.g., indigenous peoples of the Americas, Indian saris) is cast as cute. A deeper reason, though, lies in what Janet Biehl touches on in her article: the Left's neglect of the questions of the gendered division of labor and social reproduction. Given that most struggles on the Left today are defensive rather than offensive, there is a tendency to employ the rhetoric of uncommodified = good versus commodified =bad and adopt the posture of defending the remaining space of the former against the encroachment of the latter. But a lot of oppression of women takes place in the sphere of uncommodified relations, which gets scant attention in the aforementioned rhetoric.

Kucinich to the Left of All Too Many Socialists

Dennis Kucinich isn't a socialist and doesn't claim to be one, but his position on Libya is more sensible and also more in keeping with socialist activism than the kind of argument we have heard, and are still hearing sometimes, from all too many US and other socialists about the Libyan debacle ("revolution" in their lingo). The way the US government went to war against Libya was undemocratic and is now illegal too, and that's the point that Kucinich is focusing on, unlike those socialists who think that democracy begins with uncritical support for other people's rebellions far from home, regardless of the political character of their leadership.

Kucinich's resolution got voted down 148-265. It's noteworthy, though, that more Republicans (87) than Democrats (61) voted for his resolution, too, not just John Boehner's counter-resolution (presented to weaken support for Kucinich's) which only criticized the POTUS without committing the USG to withdrawing troops from the Libya war.

It all says a lot about the state of the left-of-center side of US politics, from Trotskyists to Democrats.

Embedding Environmentalism in Marxist Theory of Development

Environmentalism should be embedded in a Marxist theory of socioeconomic development like Kalecki's, revisited by Jayati Ghosh in "Michal Kalecki and the Economics of Development." The main question underlying Kalecki's theory, as Ghosh sums up, was this: "which groups in society (or outside) would bear the burden of increasing capital formation through reductions in consumption"? This question can and should be supplemented by anthropocentric environmental concerns, i.e. quality of life questions: Which groups in society (or outside) would bear the burden of increasing capital formation through reductions in the environmental quality of life? Which groups in society (or outside) would bear the burden of increasing the environmental quality of life through reductions in consumption? Explicitly asked thus, the fact that it's all a matter of politically determined trade-offs becomes clear. Such an approach would be more useful to leftists actively involved in governments, political parties, and social movements than an approach that seeks to develop an enviro-Marxist crisis theory.

How Secular Is Post-revolutionary Tunisia?

Not very, according to Graham Usher's dispatch: "The Reawakening of Nahda in Tunisia" (MERIP, 30 April 2011). A few days before the publication of this article, moreover, the Financial Times reported: "Politicians . . . agree that the Islamist party [Nahda] could well emerge as the single largest in the assembly. Secular parties, both liberal and leftist, are fragmented while traditional parties are just learning how to run for genuine elections." Tunisia is said to be among the most secular countries in North Africa and West Asia. But even here the balance of ideological and organizational forces does not appear to favor secular leftists after the revolution.

Leftists for Chaos?

There is an opinion like this on the left side of the blogosphere:

Arab regimes (and Iran) often warn against change and revolutions: they try to scare us by warning of the potential for chaos. I say: we should work for the overthrow of all those regimes (Arab regimes and Iran) because chaos is far superior to those regime. At least, under chaos there is a stronger chance for change and sabotage (sabotage of oppression and injustice and occupation and conspiracies).

But I doubt that most leftists in the oppositions in Iran and the Arab world are looking for "chaos." In any case, they are too few in number and too unorganized to take advantage of it if that's the idea. Instead, such leftists as exist there are looking to establish better governments than they have and wish to lead organized mass action for that purpose, though in most cases they end up following rather than leading rebellious largely-non-left-wing crowds when such arise.

If you want chaos, you can find it in Somalia, for instance, and increasingly in Libya as well, but Libya and Somalia (unlike Egypt and Tunisia), if anything, are in all likelihood disincentives, not incentives, for would-be left-wing revolutionaries elsewhere.

Are the Libyan Rebels for Us or against Us?

Here's a comic footnote to the Libya war: Neither side of the Libyan conflict was actually looking for any real solidarity with leftists (least of all Marxists), but somehow one side (the regime) got a lot of gratuitous, undeserved Latin American leftist support and the other side (the rebels) got a lot of gratuitous, undeserved Western leftist as well as (both secular and religious) Arab and Iranian support.

As a matter of fact, both the regime and the rebels were looking for Western imperialist support, and they didn't hide it either. The Western imperialists -- unlike the world Left, the Arabs, and the Iranians, who all jumped into the Libyan fray without examining what they were jumping into -- first took a good, hard look at both sides and then decided to back the rebels.

The rebels got what they wanted, and that's that.

In recent days, though, I have noticed that the propaganda machine of the Islamic Republic of Iran began to change tack. Maybe the IRI establishment finally realized that the Libyan rebels aren't pro-Iranian -- in fact, the rebels are as likely to be against Shia Muslims as against Africans, Marxists, and so on. Hezbollah and Trotskyists, perhaps more selflessly idealistic than IRI officials, apparently have yet to ask a crucial question of international solidarity, which unlike charity is a two-way street: Are the rebels for us or against us?

Post-Vanguard

First Ben Ali, and now Mubarak. The empire has failed to stop the momentum of the Arab revolt that started in Sidi Bouzid. It is a time of great transition in West Asia and North Africa. What kind of transition will it be?

Samir Amin fears that, in the case of Egypt and perhaps elsewhere if not in Tunisia, it may result in the ascent of religious obscurantists into power, bringing about a new alliance of religious forces with the military establishment, a kind of Pakistanization so to speak. Aijaz Ahmad, on the other hand, hails the revolutionary wave as an upsurge of "secularity" as well as of democracy. Both appear to miss the most striking feature of what is going on: the absence of any vanguard ideology or vanguard party, religious or secular.

Some have named this absence "post-ideological," but that does not quite capture the fluidity of the moment. Ideologies are at work in the intifadas in the region today -- what is clear is that none is in hegemony. No single ideology is in the vanguard, nor is any political party seeking to be the vanguard party of the kind that led 20th-century revolutions. Competing political currents all appear to sense that people are not looking for a charismatic leader, a new Lenin or a new Khomeini. There is a refreshing absence of the quintessential iconography of past revolutions: larger-than-life images of the leader of the revolution.

The question is if the leaderless revolts, without any vanguard party or ideology, can fully dismantle the ancien regimes, which are decapitated but are otherwise more or less intact, establish new ones, and defend and develop them.

Dawn of the Dead Again in America

It's dawn of the dead again in America.  It's not, however, because hard-pressed Americans en masse rejected "socialism," voting for austerity, against bread and peace, as the Right would have us believe.  As is usually the case with mid-term elections, the turnout was low: just "42 percent of registered voters" voted.  Which means this re-run of the dawn of the dead is brought to you by a minority, upper-class America mobilized by corporate America, voting against the working-class American majority, just as capitalist democracy American-style is designed to work.

Which Democrats ended up becoming zombie meals?  Not the bread and peace wing of the Democratic Party: progressives in progressive districts by and large survived.  Take Dennis Kucinich and Marcy Kaptur of Ohio: they even voted against the 2008 bank bailout and lived to tell about it.  Who got eaten up by zombies, then?  "23 of the 46 Blue Dogs up for re-election went down."   In other words, the very people who fed working-class meat to living dead capitalists to reanimate them in the aftermath of the financial crisis.  The lesson is clear: Don't feed the zombies -- they'll come back for more and bite your ass.

This, however, is not a moment for Marxists to indulge in schadenfreude.  The rest of America has not even noticed the existence of American socialists, who have been saying: "Obama Ain't No Socialist -- We Are!"  Hard as it may be to admit, we have failed to build an organized Left, under Bush or Obama, despite two shooting wars and now a nearly 10% unemployment rate.

And hard luck for the Left in hard times isn't a story of "Only in America."  Whether we look at a country whose working class is powerful (France) or a country whose ruling class is weak (Greece), 20th-century socialism (Cuba) or 21st-century socialism (Venezuela), the crisis has made left-wing lives more difficult, not less.

How can American socialists help build an organized Left here, in the decades of slow growth and high unemployment ahead of us?  Can we at least help squash the most voracious zombies who would like nothing better than making Americans work till death while killing Iranians to boost the economy?

Monopoly Capital Blocks Rational Policy of Wage-led Growth

What lesson might the working classes of the global North take from what's happening in China? Canadian journalist Paul Jay spells it out in plain English.

Paul Jay: So we've been talking about macroeconomic policy, the G-20, austerity. And there was one little line in the G-20 document I thought was interesting, and it's sort of buried in amongst everything. It said countries could facilitate wages going up proportional to productivity, which is rather interesting, 'cause it's the only time I've ever heard it even mentioned by these guys. There's quite a big section about how wages need to go up in China. There they understand the need for increasing demand. And we've heard President Obama say, we can't be the consumer engine of the world anymore, you guys have to do it, looking at China. And they talk about increasing the social safety net in China. They even talk about allowing strike struggles in China so wages can go up, but they sure don't talk about it when it comes to their own places. . . . So the problem is -- and this is where it becomes a political problem. I mean, it's not that difficult to sit down and kind of envision a rational solution to all of this -- you just can't pass it anywhere. The way that the politics is controlled and the small gang of people that actually own the commanding heights of the economy, starting with the banks, they don't allow any of this to actually get passed, so you get to an impasse. You can talk rational visions, but you can't execute on it.

The lesson given by Jay is a Kaleckian one, one of the most important lessons, especially today, as we struggle against the drive to austerity in the North. First of all, make clear what obstacle needs to be removed if the rational alternative is to be implemented.

To that Kaleckian lesson, however, we want to add a Gorzian one, especially in the United States: take productivity gains more in the form of gains in disposable time than in the form of more consumption. That's our socialist ticket out of crisis, economic and environmental.

Minimum transitional demands: retirement at 50 with full benefits; free education and social wages for students (all the way up to doctoral degrees for those who want them); paid parental leaves (six years for each new child); two months of paid vacations per year at minimum; indefinite unemployment benefits (to last till the ruling classes come up with worthy jobs at worthy wages for the unemployed).

Fiscal Crisis of States

In the wake of the financial crisis of 2008, what next?  In the United States,¹ a "fiscal crisis" of states and municipalities, both real (masses of public-sector workers are getting laid off even now²) and imagined (bogus public pension liabilities stats used in right-wing propaganda to attack unions³).

Money is out there, though, if only we had a powerful coalition to tax the rich!

There's a very good pro-labor, anti-racist, Green rationale to prioritize this fight above all, since one of the sectors under attack is urban mass transportation, whose workers are often unionized and, as in many other sectors of civil service, are often non-white.  Needless to say, state and municipal public service is the most feminist thing in the United States, in terms of profiles of both workers and beneficiaries.

Leftists can't win everywhere pursuing this battle to tax the rich, but we can win here and there,⁴ which would help build more durable bases for future actions than anything else.  There's nothing like victories to build a Left!

Taxing the rich is also better financial reform than any "oversight" of finance that the Democrats come up with at the federal level.  The less money the rich have, the less money for their gambles.  The financial reform PR message here is to tax the rich and spend their money here, so they won't spend it to bid up, say, real estate prices in China or something like that.


1  In the eurozone, the fiscal crisis expresses itself as the euro core of Germany versus the euro periphery of PIIGS.  See Jayati Ghosh, Heiner Flassbeck, Joseph Halevi, Costas Lapavitsas, and Mark Weisbrot.

2  Dean Baker, "State and Local Governments Have Shed 72,000 Jobs since December," MRZine, 2 April 2010).

3  Nathan Newman, "No Crisis in Public Retirement Systems: Debunking the Hype and the Attacks on Employee Benefits" (MRZine, 17 April 2010).

4  Rick Wolff, "Oregon Counters Massachusetts" (MRZine, 27 January 2010).

Jacobinism with Islamic Characteristics

The best way to understand the Islamic Republic of Iran is to see it not as "theocracy" but as "Jacobinism with Islamic Characteristics."

The power elite of Iran don't care about Islam as such (Islam, after all, is diverse, and some varieties of it, as conceived by Nader Hashemi, Mohsen Kadivar, Ahmad Sadri, and the like, are perfectly compatible with liberal democracy). What they care about is their revolution and their republic and their ideology (in which Islam does play a part but an increasingly smaller one). As IRGC General Mohammad Ali Jafari reportedly said:

حفظ نظام جمهوری اسلامی ایران از ادای نماز واجب‌تر است

They love their politico-economic order much more than prayers.

Unlike the USSR and the Eastern Bloc, whose legitimating ideology came from outside (Western Europe) and was instilled from above (the Marxist-Leninist Party), though, their ideology is one that has organically grown out of Iranian history, which is what is going for them.

My back-of-the-napkin calculation, however, says that about 20% of the Iranian population, largely of economically upper strata, are liberals who are tired of this politico-economic order and its legitimating ideology. Give Iran a couple of decades in which its social dialectic can unfold without foreign intervention, and liberals are likely to grow more numerous in the country as it undergoes its capitalist development; and liberals inside Iran might eventually transform the country in a way that liberals outside it would like, through passive revolution (much as the AKP has done in Turkey, which too was once ruled by men of the Jacobin mentalité).

Meanwhile, the duty of Iranian patriots, even liberals in exile, is not to let imperialists bomb Iran.

Sex, Drugs, Islam, Communism, and Terrorism

How does the ruling class destroy liberty, often in the name of liberalism, today? By exploiting fear, especially specters of Sex, Drugs, Islam, Communism, and Terrorism. The ruling class defines each of these categories in such a way that each becomes a mixed bag of defensible and indefensible. To take just one example, in the category of terrorism, class justice and propaganda of the Western powers insidiously merges together national liberation movements such as the Popular Front for the Liberation of Palestine (defensible) and Al Qaeda (indefensible).

Alistair Hulett

Scottish singer and socialist Alistair Hulett died yesterday. He was only 59 years old.

It's about Time

Despite all the activism and writing about Copenhagen, few are putting shorter work hours (i.e., consuming productivity gains in the form of more leisure than commodified goods and services) on the environmental agenda. Why?

Looking for the Boss

Ever since I began working for Monthly Review, I've had a number of opportunities to see leftists display an attitude that one wouldn't expect from those who profess to stand for freedom, democracy, and the socialist way. The attitude in question basically is one of "I'm gonna complain to the boss if I don't see an employee jump when I tell her to." Today I had it spelled out by one such self-identified leftist, who wrote me: "Please also provide me with the contact details of your supervisor / line manager."

What It Takes to Make Keynes Work

John Ross wrote in the Guardian ("No Secrets to China's Success," 18 August 2009):

Keynes noted in the final chapter of his General Theory, in a point highly relevant to a situation where mass unemployment is again soaring, that "a somewhat comprehensive socialisation of investment will prove the only means of securing an approximation to full employment".

That "somewhat comprehensive socialisation of investment" is impossible in a private sector-dominated economy. The decisive advantage China has in the present crisis is that it does not have to rely only on indirect means (reduction of interest rates, budget deficits etc) to attempt to reverse the plunging investment that is the driving force of this as with every major recession. China can use its large state-owned company sector to increase investment and instruct its state-owned banks to lend. That is why its economy is growing, while Alistair Darling is still pleading ineffectually for UK banks to increase their lending and while UK investment in housing and transport is plunging by 30% and more.

A good point.

The thing about Keynes is that you can make Keynes work but not under a normal capitalist state in a normal capitalist market economy. It takes something like (1) China's one-party state or (2) war economy (of not capital-intensive wars like today's Afghanistan and Iraq wars but labor-intensive wars of total mobilization subordinating capital and labor alike to the state, like WW2) or (3) the working class so awesomely powerful that it might as well go ahead and do socialism instead of Keynes.

That's what typical Keynesians and typical anti-Keynesians (either of the Marxist or of the capitalist liquidationist kind) don't understand.

Notes on the Japanese Elections of 2009

Decades of increasing poverty, inequality, and insecurity, which created a powerful backlash against the ruling coalition of the Liberal Democratic Party and Komeito, finally put an end to Japan's de facto one-party state on 30 August 2009. But the backlash only benefited the social liberal Democratic Party of Japan, which increased its seats from 115 to 308 (the DPJ block now enjoys 322 seats, more than a two-thirds majority). The Communist Party and the Social Democratic Party barely hanged onto the same numbers of seats that they had before the elections: 9 for the CP^* and 7 for the SDP. On the face of it, it is not a debacle for the Left like those suffered by Communists in India and Italy in the most recent elections. But, one of the items on the DPJ agenda is a plan to eliminate 80 proportional representation seats, and it just so happens that all the Communist representatives are elected to proportional representation seats.

Why did the Japanese Left fail to advance? Take a look at this video of the 21 August 2009 press conference of JCP Chaiman Shii Kazuo (which comes with English translation), and you'll get a clue.

JCP criticisms of the DPJ agenda are to the point more often than not (which you can see in more detail in 「国民が主人公」の新しい日本を -- 日本共産党の総選挙政策), but those criticisms don't amount to a compelling vision of a new socialist society that the party should be presenting.

The strongest point of the JCP criticisms of the DPJ is that the DPJ will pay for its promise to expand the social safety net, including the formerly excluded, by increasing the taxes on working-class incomes, leveling down the existing structures of entitlements such as pensions toward the new social minimums, decreasing public works and public-sector jobs, and so on, the trade-off that the DPJ will make inevitable given its refusal to tax big businesses and capitalists and to cut military spending.

But, in the process of making this point, the JCP ends up defending the old, such as tax exemptions for dependent spouses (usually housewives), which have discouraged many a woman from seeking full-time jobs since wives earning only part-time incomes (roughly up to 1,300,000 yen) are counted as dependents for the purpose of calculating taxes, insurance and pension contributions and benefits, etc. What's good for working-class families in material terms can be bad for working-class women looking to enhance their gender-bargaining power vis-a-vis men, and the structures of the Japanese welfare state that tacitly assume male family wages, lifetime monogamous marriages, female spousal dependency, etc. are textbook cases of the common class-gender contradiction under capitalism. This contradiction is intensifying as more and more Japanese women are clearly losing interest in marriage and childbearing, powerfully demonstrating their sharp rejection of the old gender settlement and silently erecting a strong demographic obstacle to the old methods of restoring economic growth. The JCP, or any other left-wing current in Japan, needs to offer women -- and young people in general -- a new socialist vision that addresses women as individuals in their own right and creates new networks of social solidarity other than biological families, rather than a maternalist Keynesian vision in which women are tacitly assumed to be, or become, or have been wives and mothers.

The same goes for the JCP's defense of the Peace Constitution. On one hand, any constitutional revision that the DPJ will put on the agenda will likely be one that pushes Japan onto the course that Germany took in the process of the dissolution of Yugoslavia, embarking on humanitarian imperialist adventures of its own, not just as a subordinate member of the US-led coalition of the willing. On the other hand, there is nothing democratic, let alone socialist, about defending the constitution that the occupier wrote for Japan, on which the Japanese people have not been allowed to vote. Socialists must present a new democratic vision for Japan. Why not a constitutional assembly in Japan, to write a new constitution as a step toward 21st century socialism?


* The proportion of the total vote for the Communists, however, registered a slight decline, from 7.25% to 7.03%.

"Saving the World's Women"

The entire issue of the New York Times Sunday Magazine this weekend is dedicated to the idea of "Saving the World's Women," essentially prompting the reader to blame everything from poverty to terrorism on patriarchal men in the South and to regard aid and philanthropy from the North as the solution. Such an idea is fit only for satire, but the magazine presents it earnestly, as a new idea, as if the world hadn't been through centuries of tandem development of liberal feminism and imperialism.

What little sense of irony in the issue is found in a short piece on the phenomenon of feminist-hawk spam.

The idea of giving aid to "female deliverance" seems to give a lot of liberals of both sexes the same pleasure as the idea of buying aid for "male enhancement" gives to all too many men. The difference is that the former, unlike the latter, is not felt as a guilty pleasure but on the contrary as a righteous one, especially since it's entirely forgotten that, once upon a time, America paid the same type of fundamentalists -- now featured as dark villains in a new literary genre called R2P, which is part Gothic-novel, part captivity-narrative -- to fight a jihad, throwing acid on the faces of women and castrating men who were, or were seen to be, in favor of the Marxist Modern.

Egypt!

Not getting any play in the Western media, but the struggle in Egypt is incomparably more promising for the advancement of the Left than whatever is going on in Iran: Per Bjorklund, "Egypt's State-Controlled Unions Under Pressure" (10 August 2009); and Per Bjorklund, "Tax Collectors Repeat Historical Sit-in" (11 August 2009).

BTW, have I mentioned that Hossam el-Hamalawy, referenced in Bjorklund's notes above, is very hot (and about four decades younger than Mousavi who is even older than Ahmadi) in case any of you is looking for a cute Middle Eastern youth to back, the fashion in this political season? He's a revolutionary Marxist, too (unlike probably 99.99999% of the Green protesters in Iran, no matter how cute they are) if that means anything to you.