Saturday, September 24, 2011

Does the United States Acutally Have An Economy Anymore?

The latest crash was apparently averted by a hair today yesterday as markets stabilized after yesterday's sell off the day before. But these stock market gyrations and speculative run ups and declines have become the New Normal for the Investor Class.

Down below, we get to watch the show -- not that we actually know what's going on, mind you -- and we are welcome to acquire a queasy feeling that something just ain't right.

For all of us, the economy has lurched along from bubble to bubble for more than a decade. In fact, it seems from appearances that except for the bubbles and periodic speculative fevers, there's been no economic growth in the United States for a very long time.

And we see that statistically, wages have been stagnant for nigh on 30 or even 40 years, and lately -- since the enormity of the Endless Recession settled in -- they've been declining, precipitously for the Lower Orders, not so fast for the working professionals, but trending downward, ever downward, for more and more Americans, until finally wages and benefits cease altogether when the jobs are not there and the unemployment insurance runs out.

Then what do you do?

In the Lehigh Valley, they go to work for the Amazon warehouses, and they say they're glad to have a job, any job, until the required pace of work becomes too much or the heat in the building lays them low. These are working conditions equivalent to a century ago or more, working conditions that scandalized a nation when they were reported and widely known, but now? Enh. Shrug. Oh well. Too bad for them.

These are the kinds of working conditions that would lead to strikes and sabotage and worse back in the day, but now?

I remember reading some material about the Indianapolis streetcar strike of 1913, material which unfortunately I can't easily retrieve now. It was testimony from the arbitration hearings that took place after the strike, and it depicted a situation that at once oppressive and Kafka-esque for transit workers in Indianapolis on both their urban and interurban lines. (As it happens, my mother's father was a streetcar conductor in Indianapolis during the period and was killed in either an accident or deliberately -- "crushed between the cars" -- following the strike. I have always believed it was deliberate because he was a strike leader.)

Working conditions were grossly unsafe, pay was extraordinarily low, hours were very long, there were no benefits of any kind. Workers were subject to arbitrary firing, extended hours, no consideration for on the job injuries, and on and on. The transit company made it a point to forbid workers to unionize. Anyone who joined the transit union was fired.

But this was typical of the era, and were it not for risk-taking labor leaders, workers and strikers, conditions would not have improved. That most working conditions are marginally better now is a tribute to those many workers who took risks a century and more ago, but what of the deterioration of pay, benefits and working conditions since the late-1970's? Is that because workers haven't been taking risks to force improvements or is it something else?

My question can be put this way: "Is there actually an economy -- greater than subsistence -- in this country?"

If not, why not, and how long has it been so?

We're always talking about the Crisis of Capitalism, and it is very real; certainly the period we're in right now is one of constant capitalist crises, crises that are widely seen by capitalists themselves as opportunities for consolidating their positions. Of course the consolidation is happening at the expense of workers and everyone else, simply to ensure that the best off are not discommoded in any way. Their gambling debts are paid off (not forgiven, note; they are paid off) by governments around the world, and they are paid off again and again. With the money, they then inflate more and more bubbles, but after a while, it becomes clear there is no "real" economic activity going on. Yes, commodity prices are inflated over and over again, and the poorest are forced to once again pay or starve -- after a relatively long period when starvation was rare. We've reached that stage again. There is terrible suffering among the very poorest; for the rest, it is a precipitous -- or slow -- decline into poverty and penury. Survivable subsistence for most.

But is that the natural state of an economy without bubbles?

To get through the initial phases of the recession, I and others proposed very simple actions that could be taken to relieve the suffering of the masses: a comprehensive jobs program to put people back to work immediately, and substantial household debt relief. Bingo, the initial phase of the recession would have been tamed right out of the gate. I would have also canceled all derivative contracts -- those were fueling the collapse after all -- imposed a significant speculation tax and halted foreclosures.

That would have halted -- or rather slowed -- the decline for most people, and it would have kept the consumer economy going for a time at a slightly lower level. Credit would no doubt have been restricted even so, and it would be the relative difficulty of obtaining credit that would ultimately slow the economy significantly.

Ultimately we'd wind up at a quasi-subsistence level anyway.

But the route to it would have been different, and forcing tens of millions of Americans into poverty likely would have been unnecessary.

Those tens of millions have been forced into poverty in order to ensure that those on top not only remain there but continue to profit handsomely from their positions and continue to be able to speculate and gamble in the markets at will.

Curbing the urge to speculate and gamble at will at the top is part of what is necessary to contain the effects of the Endless Recession, but what's been happening instead is that every effort is being made by those who set public policy to enable speculation and gambling at the top, with, I believe, an intention to encourage the inflation of more bubbles.

Apparently the financial class believes that is the only way "economic growth" can occur any more.

"Economic growth" in scare quotes because it isn't real growth at all. It is nothing more than gaming by extraction from the Lower Orders and accumulation and hoarding by those on top. There is no "growth."

At best on the whole it's economic stasis. For the Lower Orders, it's perpetual decline. For those on top, it is a scramble for more and ever more personal wealth, but with less and less purpose except to have and hold and gamble with.

Ultimately, it is decline for almost everyone since the upper tier keeps shrinking.

We've long known what this kind of economy looks like. It can be relatively stable for hundreds and hundreds of years but only by keeping the proles subdued through constant murder and state terror. The economy, however, does not "grow." Whatever benefits the economy provides go to the top; for everyone else, nothing. Or rather, in many cases, less and always less again goes to all the rest. The entire Third World was run this way for generations; still is, except we're all becoming Third World as the crises of capitalism compound. Generally the Third World is quite stable -- except for the periodic revolutions, most of which are put down with surpassing brutality.

A few succeed, but most of them are now little more than distant memories. Or they are more and more ridiculous seeming anachronisms.

It's clear that we, the people, have little or no effect on the economic course our rulers choose to follow. Our interests aren't even considered. The simple steps that could be taken to reverse the decline of the masses are ignored. In fact, in many cases, just the opposite steps are adopted.

Every sign suggest that not only has the American economy stalled, it has ceased altogether, much as Europe's has. China and India (among some few others) continue to grow but their markets are more and more domestic rather than export, and the crisis pattern is manifesting there as well.

Marxist analysis tells us what's wrong and hints at what to do about it, but the realization of what it means to really do something about it -- well beyond the half-measures of the revolutionaries of the past -- has yet to dawn.

And could we do it without going through the dystopian Mad Max phase so prominent in lore and legend (and movies)?

At this point, we aren't even trying. That is WE aren't trying. Other are. They haven't quite found a way yet, but the search continues.

I would only add that there is nothing intrinsically wrong with a subsistence economy.

It goes wrong when a handful of economic predators seek their own comfort from other people's more or less futile efforts at subsistence.


  1. When it comes down to it, we just can't go on with this system. Period. End of story. It's killing us and the planet, and makes absolutely zero sense. It's a completely irrational (and unsustainable) way to allocate resources. Why on earth would 95% of the world accept a system that strips us blind while making pashas out of the top 1 - 0.1%? Just in America alone, why on earth would we accept a system that makes it so the richest 400 Americans literally have as much wealth as the bottom 150 million? I mean, isn't that insane by definition?

    Of course, the super-wealthy can go one with crisis capitalism indefinitely. We can't. They can. And they make the rules.

    . . .

    Really excellent article on economics, David Harvey and subsistence:

    Not to be skimmed, though. It's long, important, and requires attentiveness, etc.

    I wish those from the "everyone wins in the free market" school would read it several times. Let it sink in, etc.

  2. Benjamin Kunkel's analysis of David Harvey's (and others) analysis of Marx's analysis of the ongoing crises of capitalism is a really nicely done wrap-up of The Economic Problem We Face. We have been facing it all along, at an accelerating pace of course.

    There are several key insights, but the one that struck me on first read is that the current economic collapse is due to the fact that Labor is grossly underpaid.

    Raise wages -- as many are starting to say "has to happen" (in the face of ever declining worker wages and benefits) -- and most of the economic stress we're currently experiencing is relieved.

    This should be obvious. But for some reason, those who ponder these things -- with the exception of a more and more vocal cadre of Marxists -- are oblivious to it.

    Raising wages is heresy, straight out. Worthy of burning at the stake.

    An alternate approach -- that has the same effect -- is working class debt relief. Again, it's heretical. Cannot be considered, while simultaneously governments all over the world are strategizing or implementing programs to further pay off the gambling debts of the highest of the mighty.

    The answers are obvious, but even mentioning them is enough to get you categorized as some kind of nutball.

    Everyone cannot win in a capitalist "free market." The whole point of which is that a few -- very few -- will win at the expense of everyone else. An expense that keeps growing.

    Ultimately the system cannot be sustained even for the mightiest of the few. No matter how crazy they get. No matter how cruel, no matter how greedy.

    The system is brittle and ultimately fragile. The right kind of push-back at the right time can have remarkably tonic effects.

    We aren't there yet, but I sense we're not that far from it. The Wall Street occupation seems to be having an effect, for example -- just the existence of it is working on an emotional and intellectual level -- and the upcoming Washington "occupation" should have something of the same effect.

    This is the "banging of pots and pans" that I've been advocating for years. This is the persistence of banging that's been missing up to now.

    The only problem with protest right now is the absence of a vision of Change. Unfortunately, that leaves the field wide open for all kinds of opportunists.

    Thanks for the link. I think that article is a keeper!



  3. Debt forgiveness. Jefferson was a major proponent. Probably one o his ideas the Tea Party folks want to ignore and Texas won't teach.

    The key in our insane world is to run up debt soooo large, it's just too big to fail and the government backstops ya. Owe less than that and the government won't help -- they'll make sure you hang.

    One would think (wink, nod) that they actually want us to take explosive, destructive risks, inflate bubbles to the breaking point over and over again, etc. etc. etc.

    Same thing seems to kick in with theft. Steal a few thousand, and do the time. Steal a few billion, and if you haven't stolen from "the wrong people" (a la Madoff), you're going to get a deal.

    Again, not only is this protecting the financial elite every which way, it also removes "moral hazard" from the high and mighty and locates it solely on the backs of everyone else.

    One would think they've actually planned to make our system crash.

    . . .

    But, yeah, wages are the key (outside of debt). If we're going to be stuck with this rotten economic system, then we need rising wages all over the world in order to prevent endless crashes and even more radical polarities of wealth, health, longevity, education, environments, etc. etc. -- which in turn create crashes, world without end.

    . . .

    Thanks for the updates on the Occupation as well.

    Good stuff.

  4. I'm told that Europeans don't carry the kind of personal debt load Americans do. They don't have big mortgages, nor do they run up their credit cards, nor do they buy cars with little or no down payments. So the "sovereign" debt crisis in Europe has got to be both confusing and shocking to them; I get the impression that the French and German governments, especially, just don't want the people to know what's happened, nor how bad the situation is, because it would implicate current and past governments in some truly rotten fiscal governance.

    If I'm understanding the problem correctly, it is ultimately a matter of derivatives and counterparty contracts, and how many tens of trillions are owed because of them. Like here, this gambling debt is far greater than the entire GDP of the whole world for centuries into the future.

    The answer has always been "cancel the contracts." Nobody will lose more than the tiny fraction of the payoff amount that was paid to begin with.

    Forbid derivatives. Tax speculation and stock trading.

    There. Solved.

    What is being done to the "peripheral Europeans" to prop up the German and French banks is shameful any way you look at it. The Greek people didn't run up their debt. Nor did the Spaniards. Nor did the Irish. We could go on and on.

    Speculators and financiers ran wild, though, and they convinced governments to back them (for a cut of the "profits" of course.) Now that it is all collapsing, they want governments -- ie: the Peoples of these "peripheral" countries -- to pay off the debts at 100%, just like the People of the USA are being forced to pay off the gambling debts of our own banksters. Granny can just eat cat food till it's paid off.

    But almost all this debt is fictitious. It's "air dollars/air euros" -- based on nothing except cons and gambling.

    The actual money involved in the transactions is very small. And that's all that would actually be lost if the contracts were canceled and derivatives were torn up.

    Of course the entire economic system would in a sense implode and we'd go back to an economy something like the early '90's... but that's happening anyway.

    What we're going through now is unnecessary. It's an attempt -- ultimately futile -- to maintain the wealth at the top as if it were real wealth (most of it is fictitious anyway) by impoverishing everyone else.

    In the end it will only compound the suffering to no object. The end result will be the same.


    The "occupations" seem to be taking on a life of their own. It is growing very quickly, maybe too quickly, but once something like this is launched, it's very hard -- indeed, impossible -- to control.

    The police riot in New York on Saturday has really galvanized a lot of folks who otherwise might not have paid attention, or who might have thought the whole effort was futile.

    It may be futile in the end, but I like a lot of its aspects. The participants (well, "protester" isn't the right word any more) really are trying to envision and effectuate a different and better future, though right now it's only vaguely outlined. They're trying to show a different and better way forward by discovering it as they go.

    It cannot satisfy everyone, of course, but it is the way these things (ie: revolutions) have to happen. You don't start it with the answer. You start with the question.