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Keynesian Checkers versus Monetarist Three Dimensional Chess
You can almost smell the frustration pouring off Paul Krugman these days, as he once again proclaims the latest in a series of victories of Keynesian economic theory over its monetarists opponents.
Says Krugman:
“Sorry, guys, but as a practical matter the Fed – while it should be doing more – can’t make up for contractionary fiscal policy in the face of a depressed economy.”
Krugman’s argument, which is a continuation and expansion on a more extensive argument by Mike Konczal can be simplified: Keynesian policies are better at generating an overworked working class than monetarist policies.
Anarchists, Libertarians and Marxists need to change the debate on jobs and debt (1)
We have to change the terms of the debate on jobs and debt. We need to insist a job is nothing more than wage slavery and we don’t need Washington’s effort to create more of it adding to this wage slavery even with more debt slavery. It is not like we have to argue existing jobs need to go away; why is Washington creating more of them, when existing hours can be reduced to solve the problem of unemployment rather than more debt?
1. Fiscal policy, or how to create one job on Main Street by borrowing five jobs from Wall Street
In 2011, a congressman made the argument that Obama’s stimulus program had produced jobs at the cost of $278,000 per job. Although the charge was nothing new, it made its rounds on the conservative GOP talking points circuit, and even ended up in the congressional record. This number, of course, was so outrageous by any measure of efficiency that it had to be analyzed by what we might call “clear thinking persons with no agenda”, i.e., the news media.
One “news source” in particular known for its ability to vet these things is PolitiFact.com, and it went after the congressman’s charge. PolitiFact established that the congressman, a Republican, was deliberately distorting facts against Obama’s stimulus program.
At $666 billion, the bill was estimated by the White house to have “saved or created” between 2.4 to 3.6 million jobs. What the congressman did, was employ the low end of the number of jobs “created or saved” and apply it to the total of the bill.
The Obama administration responded that this was unfair, since the money went to more than just creating jobs, it also invested in infrastructure, energy, education etc. Which is an odd response, since obviously the administration included those “investments” in its estimate of jobs “created or saved”. The Associated Press made the further argument that,
“Any cost-per-job figure pays not just for the worker, but for the material, supplies and that workers’ output — a portion of a road paved, patients treated in a health clinic, goods shipped from a factory floor, railroad tracks laid,”
So what AP is stating is that a job created by economic stimulus must account not just for the labor power directly expended, but also the constant capital used up in the course of this expenditure. But then AP performs an almost unnoticed sleight of hand and counts everything twice. So we count the money spent to build a road in terms of wages and materials, then we count the road as a finished product; we count the wages and material employed to build a clinic, and then we count the clinic as an operating concern.
Once we remove the misleading double counting from our calculation in the argument in the AP version of this story, how this differed from what the congressman said, is unclear. Indeed his criticism was later refined by one conservative media outlet this way:
“He says he never said that $278,000 per job went to salaries, but ‘rather that each job has cost taxpayers $278,000.'”
Five dollars of debt to produce one dollar of wages
So what the worker actually receives of the $278,000 spent to create her job is one thing, and the cost of creating that job is another. Assuming the worker received an average hourly wage of around $19, she would have an annual wage of $38,760, minus taxes. But to receive this $38,760 minus taxes in wages, the taxpayer must pony up $278,000 minus the taxes paid by the worker.
Which is to say, it roughly takes about 7 dollars of spending to create 1 dollar worth of wages using fiscal stimulus. Moreover, this fiscal stimulus must be newly created money, through debt, and, therefore, created out of nothing. If we take the administrations preferred figure of $185,000 per job, this still amounts to 5 dollars of new debt to produce 1 dollar of wages.
Between the GOP and the Democrats, then, there is agreement that it takes somewhere between $5 and $7 of debt to create $1 of wages. For some reason, despite the general validity of the congressman’s claim, Politifact.com decided it was not true on a technicality:
“Contrary to Dewhurst’s statement, the cited cost-per-job figure was not aired by the Obama administration. At bottom, his statement leaves the misimpression that the money went solely for jobs rather than a range of projects and programs, including tax breaks. We rate his claim False.”
There is, of course, another way of looking at this from the point of view of Wall Street banksters. From their point of view, it only takes 1 dollar of wages to create 5 dollars of new debt. Since the banksters are only interested in the accumulation of debt, which sits on his book as an asset, this is a fine ratio.
If the fascist state wants to create one job, it has to borrow the equivalent of five jobs to create this one job. The accumulation of the public debt outruns the income of the members of society who must eventually pay off the debt with their income. For every dollar they get in increased income, their debt obligation increases by five dollars. They must work to pay off this debt, requiring a further extension of wage slavery beyond what is required just to satisfy their needs.
Since after the housing market meltdown citizens can no longer be relied upon to accumulate this debt on their own (they have all become subprime borrowers) the state now takes on this obligation on their behalf, and raises the funds to service it by slashing their retirement and health benefits, reducing their access to public services like education, and inflating the prices of commodities by depreciating the currency.
This is how the scam works, folks!
You vote for Obama and the Democrats, and they mortgage your life and labor to banksters. They call this mortgaging of your life “progressive fiscal policy”, and sell it to you as a benefit.
However, since the congressman hails from the GOP, an avowed political opponent of the democrat president, he failed to add this additional fact: The argument does not change if, instead of democrat spending, we substitute GOP tax cuts, except that tax cuts are even more inefficient at “creating jobs” than fiscal spending. With GOP tax cuts, as the research suggest, the actual relation between the debt accumulated and the jobs created is aimless and dispersed and rather a bit more difficult to assess. Rather than aiming at some specific form of wage slavery as the democrats do, GOP tax cuts aim solely at subsidizing all wage slavery.
Tax cuts only have some definite targeted effect to the extent they increase the deficit and the flows of state expenditures into the coffers of banksters. While both spending and tax cuts result in a massive expansion of the public debt, in general, the less targeted the accumulation of the public debt, the more it directly favors only the banksters, who, in any case, underwrite this debt. The question is only one of degree, not result.
With democrat spending, the accumulation of debt takes a specific form — a road, a school, or an industry. It is targeted, and, therefore, can be more precisely applied, no matter that is still wasteful. What’s more, as Democrats and Republicans alike already know, the produced product can now be renamed the Obama Bridge-Tunnel Highway to Nowhere, or the Obama Elementary School, or the Obama Green Energy Research Park, or, as is always inevitable, no matter which party incurs the debt, the USS Obama.
If the outrageous cost of creating unnecessary jobs by fiscal policy is staggering, just wait until I next explain what knowledgeable insiders are saying about the cost of the Federal Reserve’s monetary policy.
Skepoet interviewed me, covering a range of issues related to my core argument in my occupation of the Marxist Academy.
Dumenil, Levy and FDR’s Fascist Revolution
As part of my continuing occupation of the Marxist Academy, I have been looking at various Marxist theories of the crisis of neoliberalism. This is the final part of my critique of “The Crisis of Neoliberalism” (PDF) by Gerard Dumenil and Dominique Levy, first published in 2009. I am using the 2011 version of the book.
Since I am getting bored with Dumenil and Levy, this will be the last post on them.
I tried to show in my last post (Speculation, Greed and Chart Porn for Fun and Profit) even based on their own data Dumenil and Levy can’t explain how the 1930s is similar to today’s crisis. They argue the Great Depression, like the present one, resulted from causes other than a fall in the rate of profit. But, the chart they offer clearly shows a pronounced fall in the rate of profit even exceeding that leading into the depression of the 1890s.
The data is not mine — it is theirs. And it shows the profit rate, as they calculate it, fell from about 15-20 percent to about 2 percent. The fall in the profit rate to 2 percent is more severe even than the fall to 9 percent that occurred in the 1890s depression. Further, if you look at the data series back to 1870 there is a clear down slope both in terms of highs and lows in the profit rate. A series high is established in 1880 and the series low is established in 1933. Fluctuations in the rate of profit are a succession of lower highs and lower lows between 1880 and 1933. Any day trader would argue the series up to 1933 shows a clear downward trend in the profit rate.
An interesting interview with two market anarchists about their vision of a market-based voluntary cooperative society.
Declaration of the Occupation of New York City
Declaration of the Occupation of New York City
This document was accepted by the NYC General Assembly on september 29, 2011
As we gather together in solidarity to express a feeling of mass injustice, we must not lose sight of what brought us together. We write so that all people who feel wronged by the corporate forces of the world can know that we are your allies.
As one people, united, we acknowledge the reality: that the future of the human race requires the cooperation of its members; that our system must protect our rights, and upon corruption of that system, it is up to the individuals to protect their own rights, and those of their neighbors; that a democratic government derives its just power from the people, but corporations do not seek consent to extract wealth from the people and the Earth; and that no true democracy is attainable when the process is determined by economic power. We come to you at a time when corporations, which place profit over people, self-interest over justice, and oppression over equality, run our governments. We have peaceably assembled here, as is our right, to let these facts be known.
They have taken our houses through an illegal foreclosure process, despite not having the original mortgage.
They have taken bailouts from taxpayers with impunity, and continue to give Executives exorbitant bonuses.
They have perpetuated inequality and discrimination in the workplace based on age, the color of one’s skin, sex, gender identity and sexual orientation.
They have poisoned the food supply through negligence, and undermined the farming system through monopolization.
They have profited off of the torture, confinement, and cruel treatment of countless animals, and actively hide these practices.
They have continuously sought to strip employees of the right to negotiate for better pay and safer working conditions.
They have held students hostage with tens of thousands of dollars of debt on education, which is itself a human right.
They have consistently outsourced labor and used that outsourcing as leverage to cut workers’ healthcare and pay.
They have influenced the courts to achieve the same rights as people, with none of the culpability or responsibility.
They have spent millions of dollars on legal teams that look for ways to get them out of contracts in regards to health insurance.
They have sold our privacy as a commodity.
They have used the military and police force to prevent freedom of the press. They have deliberately declined to recall faulty products endangering lives in pursuit of profit.
They determine economic policy, despite the catastrophic failures their policies have produced and continue to produce.
They have donated large sums of money to politicians, who are responsible for regulating them.
They continue to block alternate forms of energy to keep us dependent on oil.
They continue to block generic forms of medicine that could save people’s lives or provide relief in order to protect investments that have already turned a substantial profit.
They have purposely covered up oil spills, accidents, faulty bookkeeping, and inactive ingredients in pursuit of profit.
They purposefully keep people misinformed and fearful through their control of the media.
They have accepted private contracts to murder prisoners even when presented with serious doubts about their guilt.
They have perpetuated colonialism at home and abroad. They have participated in the torture and murder of innocent civilians overseas.
They continue to create weapons of mass destruction in order to receive government contracts. *
To the people of the world,
We, the New York City General Assembly occupying Wall Street in Liberty Square, urge you to assert your power.
Exercise your right to peaceably assemble; occupy public space; create a process to address the problems we face, and generate solutions accessible to everyone.
To all communities that take action and form groups in the spirit of direct democracy, we offer support, documentation, and all of the resources at our disposal.
Join us and make your voices heard!
*These grievances are not all-inclusive.
Zizek and the Golden Calf
What is the point of our celebrated freedom of choice when the only choice is between playing by the rules and (self-)destructive violence?
Zizek was never so completely wrong as in his recent post on the problem of analysis posed by the London riots:
“Today’s left faces the problem of ‘determinate negation’: what new order should replace the old…”
In fact, London shows there is no determinate negation!
Zizek asks,
“who will succeed in directing the rage of the poor? Who will translate it into a political programme…”
Unfortunately, this is absolute crap. Heinous! Zizek needs to stop calling for a blueprint for the new society, and see what society is actually doing. Everyone wants to render the riot more profound — Sorry, it ain’t gonna happen. There are no stand-ins in this act. The riot did not lack “a strong body able to reach quick decisions and to implement them with all necessary harshness…” We already have such a body in the executive of the fascist state — the object is to abolish it, not replace it.
Zizek shows the limitations of his philosophy — it seeks THE answer. There is no THE answer, only 6 billion individuals. The only TRUTH is the dollar — it is morality, ethics, and law. The point is not to replace this TRUTH with another one, but to abolish it once and for all time. The moment Egypt became preoccupied with what should replace the masses in the street, the revolution was doomed. There is no plan for the future of society, only the management of things — dead objects we created that must be treated as such.
Everybody wants a new Golden Calf — and communists are like Aaron trying to satisfy this silly demand.
Zizek states:
Although the riots in the UK were triggered by the suspicious shooting of Mark Duggan, everyone agrees that they express a deeper unease – but of what kind? As with the car burnings in the Paris banlieues in 2005, the UK rioters had no message to deliver. (There is a clear contrast with the massive student demonstrations in November 2010, which also turned to violence. The students were making clear that they rejected the proposed reforms to higher education.) This is why it is difficult to conceive of the UK rioters in Marxist terms, as an instance of the emergence of the revolutionary subject; they fit much better the Hegelian notion of the ‘rabble’, those outside organised social space, who can express their discontent only through ‘irrational’ outbursts of destructive violence – what Hegel called ‘abstract negativity’.
Which is to say, the rioters of London made no demands on the existing state. From Zizek, it is clear that because London did not deliver a political demand, analysis of it escapes Marxist critical thought. The limitation must be assigned to Marxist critical thinking: it is incapable of conceiving of any but political and economic demands. When confronted by a movement that makes no demands on the existing state, Marxism must, fall back into outmoded and thoroughly discredited Hegelian notions.
From Zizek we find out this about London:
The protesters, though underprivileged and de facto socially excluded, weren’t living on the edge of starvation. People in much worse material straits, let alone conditions of physical and ideological oppression, have been able to organise themselves into political forces with clear agendas. The fact that the rioters have no programme is therefore itself a fact to be interpreted: it tells us a great deal about our ideological-political predicament and about the kind of society we inhabit, a society which celebrates choice but in which the only available alternative to enforced democratic consensus is a blind acting out. Opposition to the system can no longer articulate itself in the form of a realistic alternative, or even as a utopian project, but can only take the shape of a meaningless outburst. What is the point of our celebrated freedom of choice when the only choice is between playing by the rules and (self-)destructive violence?
The lack of political and economic demands by the rioters on the existing state, says Zizek, “is therefore itself a fact to be interpreted” Are our existing options limited to political conformity within the existing state and “blind acting out” against it? One has to wonder how Zizek manages to arrive this close to the heart of the matter, without tripping over it. Empirically, opposition to the existing state cannot be articulated in the form of political program, or utopian vision; but only in “blind acting out.” Which is to say: the riot placed no demand on the state except that it go away. To the inherently political Marxism, this can only appear as “enigma”, as “blind acting out.” Marxism, which wants nothing more than to replace the existing state with its own “workers’ state”, cannot absorb this message. To demand the state just go away is nihilism, “(self-)destructive violence”.
It never occurs to Zizek that there is no political demand against a state founded on universal suffrage except its abolition. Just as there is no economic demand against Capitalism except the abolition of wage slavery. The fascist state can accommodate any demand except its own abolition, and this demand appears irrational and can only appear this way; since, politically, it is asking for the abolition of universal suffrage itself. Politically, the demand for the end to government by consent of the governed can only be satisfied by the absolute indifference of the fascist state. The larger context of the riot, therefore, is the indifference of the fascist state to the rioter — who seeks only to abolish this indifference. How Zizek manages to miss this is completely fucking beyond me.
Taking from Badiou, Zizek proposes: capitalism is empty of content of its own, “there is no global ‘capitalist worldview…”
Okay, fine. So what now?
Zizek proposes that all critiques of London that begin in the premises of capitalism are inadequate. The conservative view holds the riot was unjustifiable. Zizek argues by contrast, that the riot was not man reduced to beast but the beast itself. The liberal blamed the failure of social programs to fix society’s ills. Zizek argues this failure does not explain the riot itself; the cynical response of the rioter might be to blame society for an act he himself already knew was inappropriate: “He knows what he is doing, then, but is doing it nonetheless.” If Zizek can acknowledge this consciousness of the inappropriateness of the riot, he can only weakly defend it as an entirely appropriate conscious response to the inappropriateness of existing social relations. He wants to play the worldly disinterested observer of events occurring under his own nose. Indeed, his objective here appears no more than to insert himself as necessary interpreter to us of our own actions.
Having disposed of the riot as the blind acting out of the beast, he can now admonish both Right and Left of their failure to grasp the significance of this beast in their midst. It never occurs to him to state boldly that, from premises of communist society, the riot is nothing more than a blind attempt to abolish property.
Despite his shortcomings thus far in the essay, however, Zizek’s insight into the sudden appearance of the “vigilante units” is surprisingly good:
It is meaningless to ponder which of these two reactions, conservative or liberal, is the worse: as Stalin would have put it, they are both worse, and that includes the warning given by both sides that the real danger of these outbursts resides in the predictable racist reaction of the ‘silent majority’. One of the forms this reaction took was the ‘tribal’ activity of the local (Turkish, Caribbean, Sikh) communities which quickly organised their own vigilante units to protect their property. Are the shopkeepers a small bourgeoisie defending their property against a genuine, if violent, protest against the system; or are they representatives of the working class, fighting the forces of social disintegration? Here too one should reject the demand to take sides. The truth is that the conflict was between two poles of the underprivileged: those who have succeeded in functioning within the system versus those who are too frustrated to go on trying. The rioters’ violence was almost exclusively directed against their own. The cars burned and the shops looted were not in rich neighbourhoods, but in the rioters’ own. The conflict is not between different parts of society; it is, at its most radical, the conflict between society and society, between those with everything, and those with nothing, to lose; between those with no stake in their community and those whose stakes are the highest.
Zizek rightly warns us not to take sides in this internecine conflict, but misses the fact that the whole of political relations are only these two conflicting sides writ large. There is, in reality, a massive population of “those with nothing” to lose, facing a negligible residual of “those with everything” to lose. In fact, all conflict within present day society are fought out within the greater population, while the latter is rarely or ever glimpsed. “The rioters’ violence was almost exclusively directed against their own” because there isn’t anyone else against whom it can be directed. The entire capitalist class has been reduced to a tiny handful of parasites clipping coupons and engaged in speculation, just as Engels predicted. The capitalist class is merely kept alive on life support by the franchise of the vast proletarian majority. For purposes of analysis, it is possible to assume the capitalist class does not exist at all; which clarifies the dilemma facing Marxism:
What is the fascist state?
Once we begin asking this question we can go beyond Bauman, who “characterised the riots as acts of ‘defective and disqualified consumers’” Bauman’s argument only allows Zizek to pass himself as the uniquely disentangled observer decrying, “envy masked as triumphant carnival.” I am sorry, but that view is unacceptable for a communist.
Zizek then links the riot to terrorism and the failed Arab uprisings — the latter having now sunk to a rivalry between the CIA and the Muslim Brotherhood. I am not sure this works, since clearly Egypt and Islam have a different relationship with universal suffrage. Terrorism is an attack on universal suffrage from the outside, while Egypt is only trying to realize a local instance of it. To place the three in the same basket only confuses things, and makes it difficult to understand what is unique about London itself.
I could be wrong about this, but it seems to me this is why Zizek follows this invalid linkage with a demand for a “determinate negation.” The “determinate negation” of Mubarak’s regime is limited government; the “determinate negation” of the insults which led to 9-11 is US exit from Islam’s holy lands. Both of these “determinate negations” is limited in relation to the state.
London, on the other hand, is directed at the existing state itself, at universal suffrage and government by consent of the governed — it is, therefore, neither limited, nor determinate by its very nature.
Okay fine — I hate change as much as Threecrow, but…
…the white on black was killing some folks. I will stay with INove for now. Thanks for the feedback!
P.S. I will try to bring back my posse, who have stood watch over this blog since its inception. Once i figure out how this theme actually works.
This the second theme I am considering for this blog (Greyzed)
I am trying to decide on a new theme. So, over the next few days, I will be switching between themes to make a final decision. If you have an opinion, let it fly.
Less corporate? Any thoughts?
Re: The People 
NIGHT TRAIN TO WALL STREET
There is this vision that keeps arriving. The muddle heads on television, even those who encourage viewers to “Lean Forward,” seem completely at a loss when asking themselves and each other what this movement may mean, this organic rising of a people to stand and occupy the scene of the crime, Wall Street. The great question is how long will this last. How long will it last and how large will it become. Those with the greatest interest in seeing this movement disappear quietly into the night are holding their collective breaths, while their talking heads heap verbal garbage upon the people, sounding, it might be said, a great deal like Marie and Louis XVI while dining and discussing the riff raff hanging about the palace in the summer of 1789.
The vision is this: NIGHT TRAIN TO WALL STREET. Mobilization of people from Boston to Atlanta and points West could stand together, each weekend a different city could use Amtrak to fill every car and make the run to Penn Station and move in concert to Wall Street for the purpose of creating this image: You want to keep things at the economic status quo of injustice, you will have to do so against the will of your own people.
Remember, it is the image we seek here.
We are talking about an awful lot of congressional districts here folks. Using Amtrak is a symbol of the people itself. And train rides are fun and exciting. In any event, it would sure shake them up on Wall Street and D.C. Think about it.
All Aboard?
Threecrow