Like What, Exactly? (3)

1937 – The 9th Party Congress was called the “Rally of Labour”. It celebrated full employment in Germany since the Nazi rise to power.

Part Three: Conceived in Nazi Germany, Born in the USA

The search for a solution to the financial crisis

You probably are not aware of this, but in 2008-2009, when the world market faced its darkest hours of the financial crisis, the attention of many mainstream economists, who were desperately looking for a way out of that mess, turned to the halcyon years of the early Nazi regime. Yep, that’s right — economists scrambled to study fucking Nazi economic policies. Most Marxists don’t realize this, but the template for their cherished “social state” was the Nazi policies of the Great Depression.

Really, I am not making this up. Have a look at this quite interesting article from the New York Times in 2009:

“Every so often, history serves up an analogy that’s uncomfortable, a little distracting and yet still very relevant. In the summer of 1933, just as they will do on Thursday, heads of government and their finance ministers met in London to talk about a global economic crisis. They accomplished little and went home to battle the crisis in their own ways. More than any other country, Germany — Nazi Germany — then set out on a serious stimulus program. The government built up the military, expanded the autobahn, put up stadiums for the 1936 Berlin Olympics and built monuments to the Nazi Party across Munich and Berlin.”

Letter to the Occupy Movement: The jobs number you never hear about says Washington’s fucked

Here is an interesting chart from Zero Hedge: In data going back to 1980, employment for younger workers aged 20-24 has never increased — that is, it has never increased until this year:

I know what you are thinking: the data provided by Washington is a fraud. I am going to show why, even if we take that chart on its face value as genuine, Washington is completely fucked. I am going to subject the entire category “employment” to an analysis using Marx’s labor theory of value. By “employment”. of course, I mean wage slavery; which means, although it is commonly treated as a good, it is actually an evil. But, I intend to treat this “employment” on its own terms, as it is commonly held a some sort of social good.

Let’s begin with this morning’s non-farm payroll report — 114,000 net hires in the economy and an unemployment rate of 7.8%. Both of these numbers are, of course, cooked beyond all credibility, but this is not the point. It doesn’t get us any closer to the actual situation to state (as the GOP will, no doubt) that Washington cooks the unemployment numbers. Dems cook the books when they control Washington, the GOP cooks them when they are in control.

Washington has always cooked the numbers — now the numbers are burnt beyond all recognition.

(First a note about this morning’s serving of cooked data: According Mish Shedlock, the minimum net new hires needed just to keep the unemployment rate flat is 125,000 per month. Last month there were 114,000 net new hires, however the unemployment rate declined from 8.1% to 7.8%. So, before you Obama voters celebrate, you should be aware than the economy did not even provide enough new hires to offset people coming into the labor force looking for jobs.)

Compulsory employment growth and inflation

It is the labor force participation rate that is most revealing in the numbers. The labor force participation rate (the blue line in the chart provided by Calculated Risk below) peaked in 2000-2001 and has been on a slow decline since that recession. From a high of just over 67%, that rate has now fallen to about 64% in this report. This reverses a trend of increasing participation in the labor force — folks actively seeking work — that goes back at least to 1962, according to the data available to me. Since 1962, in other words, as a general rule each year has seen more people trying to get a job than the year before. This trend higher reverses in the 2001 recession, and as a general rule, each year fewer people are participating in the labor force.

Why is this reversal in labor force participation important to analysis? Well, let’s look at this statement by President Truman in 1950 speaking of the military buildup that commenced with the start of the Cold War:

“In terms of manpower, our present defense targets will require an increase of nearly one million men and women in the armed forces within a few months, and probably not less than four million more in defense production by the end of the year. This means that an additional 8 percent of our labor force, and possibly much more, will be required by direct defense needs by the end of the year.

These manpower needs will call both for increasing our labor force by reducing unemployment and drawing in women and older workers, and for lengthening hours of work in essential industries. These manpower requirements can be met. There will be manpower shortages, but they can be solved.”

Following World War II, Washington set it as a priority that the labor force should steadily increase each year, in order to siphon off a portion of this growth for its military expansion. This goal was secretly given legal form as National Security Council Report 68. The goal of “full employment” was made the primary labor policy of Washington in 1946 and renewed in 1978.

“Full employment” in this case should be understood as full employment of labor power resources. In other words, it was the policy of the United States to seek full employment of its labor power resources for its strategic national ends. This “full employment” policy was sold to Americans as Washington’s commitment to providing a job to everyone who needed a job.

Which is fine and dandy, except at the same time, Washington was deliberately debasing the currency, driving up prices, and forcing more folks (particularly women) into the labor force to compensate for falling consumption, and moreover, forcing people to work well past their retirement. So what at first appears to be a benign policy, even an commendable agreement between Washington and its citizens that it would do everything in its power to create jobs, turns out to be a policy of forcing every person under its domination to look for work.

Children barely off the breast were abandoned to daycare warehouses, so mothers could find work just to pay for daycare; even substitute formulas for the breast were devised, so children could grow up attached to a rubber substitute for their mothers; essential functions within the home like child-rearing were thus commodified. And this, in turn, led to its own set of social ills, as women were assaulted by their bosses, discriminated against in their careers and under-paid — as the nation was convulsed with real or imagined terror of child abuse in day care centers. A generation of children were now referred to as “latch-key kids”, and teenage pregnancies proliferated. The elderly went back into the work force and became greeters at Wal-Mart, as people delayed or altogether gave up on the idea of retirement, unable to amass sufficient savings to stop working. Taking care of the elderly itself became a commodity sold as nursing home care.

Still, labor force participation increased despite these horrors.

Compulsory employment growth and debt: the hidden relationship

Hand in hand with this goes the ever increasing accumulation of consumer debt that working folk used to compensate for stagnant wages, despite the fact that each family was working more hours than their parents had. And all of these ills, which list could be extended almost indefinitely, appeared to have no cause other than the individuals themselves. If someone ended up working in a Wal-Mart at 70, it was because they had not saved enough; if a woman abandoned her child to day care, it was because she or her husband had not spent enough time in college; if teenagers were now getting pregnant at 13, it was because the morals of society were collapsing.

No one looked at Washington and said, “You fuckers are responsible for this!” And, if by chance, someone did say this, it was only in the form: “You democrat fuckers have tied up the economy with your regulations”; or, “You Republican fuckers have crippled Washington to the point that government can’t provide enough stimulus to create full employment.”

No matter what the policy advocated — tax cuts or spending increases — there was always someone to assure us it would create jobs and pay for itself with “increased economic growth”. Through most of the period from at least 1980 until now the growth of employment has always been proportional to the increase in debt. From 1980 until at least 2006, the savings rate of American declined until it went negative entirely in 2004-2005. It is particularly interesting that the saving rate actually touched near zero just as the labor force participation rate reached its peak.

The problem with the latest employment figures, however, is not to be found in the effects of a rising participation rate on working families, either in the form of social ills or the accumulation of debt. It is that, no matter these ills and no matter the accumulation of debt, total hours of labor must increase — the fate of capitalism depends on this growth.

But, it is not increasing.

Why compulsory growth of employment is necessary for Washington

Capitalism is a mode of production where the employment of labor power must constantly increase, no matter what the consequences. This mean, the duration of labor must constantly rise, a duration that is a function of the number of workers times their hours of work. Washington and the political parties always directs our attention to the unemployment rate, which figures are usually cooked, but, what really matters for Washington, is not the unemployment rate, but the duration of the social working day. At least this seems to be what is relevant, from the standpoint of Marx’s theory.

According to the date I have access to, social labor day has fallen only four times in the last 36 years: briefly in 1991 and again in 2001, and in a sustained way from 2007 to 2009. In other words, since this depression began in 2001, the total hours of work has fallen 3 years between 2001 and 2009. The response to this fall the first time, was the Bush tax cuts, Paul Krugman calling for a housing bubble to replace the NASDAQ bubble Bernanke’s speech on deflation, and Alan Greenspan being asked to retire from the Fed.

The second and third times the total social labor day shrank, coincided with the collapse of the financial system and Fed monetary policy.

This argues that this measure of economic activity is more significant than the hype over non-farm payroll numbers would have you believe. Such an argument might be said to be based entirely on coincidence, were it not itself based on the arguments of Postone and Kurz. They suggested the social labor day must constantly expand if existing relations of production are to be maintained.

What is more, each writer comes to this conclusion from different premises, i.e., different and contradictory notions of value. Postone’s argument suggests that the total labor time of society must expand despite the contraction of socially necessary labor time in the forms of value and surplus value; while Kurz suggests the increasingly fictional quality of credit, of fictional claims to future profits, requires the constant expansion of total labor time of society. In either case, Postone in 1993, and Kurz in 1995, using different notions of value, argue the total labor time of society must increase. And when, in fact, this total labor time actually did not increase, first a depression was triggered, then a financial collapse.

But, I hear you: ‘I am still not convinced by the evidence — it could, after all, be a really good scientific wild-assed guess on the part of those writers.’

Good point! Evidence suggests each writer, Postone and Kurx, was familiar with the writings of the other — so this could be just another instance of group-think. Instead of just going from Postone and Kurz to the empirical data, we need to go from Postone and Kurz back to Marx’s argument to establish a logical chain of reasoning, and figure out if, in fact, these guys were just making a wild guess.

In Marx’s argument, capitalism is not just a system of commodity production; it is a system of surplus commodity production, of the production of surplus in the form of commodities, of the production of surplus values. As a system of commodity production that aims always at the production of surplus value, capitalism relentlessly aims toward self-expansion beyond its given limits — as Marx put it, it employs existing value to create surplus value. Both Postone and Kurz employ this argument to uncover the absolute necessity of capitalism, at a certain stage in its development, to produce a sector consisting entirely of superfluous labor. In fact, Marx himself hints at just this result in volume 3, when he writes:

“If, as shown, a falling rate of profit is bound up with an increase in the mass of profit, a larger portion of the annual product of labour is appropriated by the capitalist under the category of capital (as a replacement for consumed capital) and a relatively smaller portion under the category of profit. Hence the fantastic idea of priest Chalmers, that the less of the annual product is expended by capitalists as capital, the greater the profits they pocket. In which case the state church comes to their assistance, to care for the consumption of the greater part of the surplus-product, rather than having it used as capital.”

Marx is clearly suggesting the unproductive consumption of the total social product becomes increasingly necessary when he closes with the wry comment:

“The preacher confounds cause with effect.”

Still later, Marx decries the result of this process:

“In the first place, too large a portion of the produced population is not really capable of working, and is through force of circumstances made dependent on exploiting the labour of others, or on labour which can pass under this name only under a miserable mode of production.”

Which is to say, a growing mass of workers makes its living by subsisting on the surplus value of the productively employed population. So, for me at least, there is a clear line beginning with Marx, through the argument of Postone and Kurz, that is expressed graphically below in the empirical data on the social labor day:

This decline is far more significant than the manipulated data foisted on the population of voters this morning. It suggests there is a real material dysfunction in fascist state economic policy that cannot be altered with a set of misleading stats. Beyond the convenient and willful ignoring of the shrinking labor participation rate, and the mass of unemployed no longer counted, the data suggests a situation that cannot be repaired by confidence tricks designed to keep the two parties in power.

Almost a fifth of the population is now permanently locked out of the labor force — the highest on record — according to Zero Hedge calculations:

If hours of labor do not expand at a sufficient rate to sustain existing relations of production, the entire Ponzi scheme must collapse. This process has probably already begun, which explains the insanely desperate actions of the Federal Reserve over the past month.

Can Capital survive the abolition of the State?

I recently came across this excerpt from a short paper by the Marxist writer, Raya Dunayevskaya. The argument is a very dense consideration of a fundamental point of Marx’s theory. If it appears obscure and incomprehensible, that is okay; I offer it only as a reference for those familiar with the more arcane points of Marx’s theory. For everyone else, you can skip below, where I will address it directly in a way that makes its import both obvious and rather astounding:

Let me state right here that we have greatly underestimated Volume III of CAPITAL, which deals with these transformations. It is true that we caught its ESSENCE when from the start we put our finger on the spot and said the DECLINE in the rate of profit is crucial; the average rate of profit is completely secondary. Look at the mess we would have been in if we had not seen THAT and suddenly found ourselves, as did the Fourth [International], tailending the Stalinists’ sudden “discovery” (which had been precisely the PERVERSION with which the Second International PLANNERS had long ago tried to corrupt Marxism) that it was the AVERAGE rate of profit which was the “law of capitalism.”

Good, we saw the essence, but that is insufficient, and because that is completely insufficient, we were incapable of being sharp enough even here. For it is insufficient merely to state that the decline [in the] rate of profit, not the average, is crucial for understanding VOLUME III. The full truth is: JUST AS MARX’S THEORY OF VALUE IS HIS THEORY OF SURPLUS VALUE, SO HIS THEORY OF SURPLUS VALUE IS IN REALITY THE THEORY OF THE DECLINING RATE OF PROFIT.

Why couldn’t we state it this simply before? It is because we have been too busy showing that profit is only a disguise which surplus value wears and must be removed, again to see “the real essence”: exploitation of labor. Because the opponents we were facing were Workers Party underconsumptionists, we had to overemphasize this EVIDENT truth. But to overemphasize the obvious means to stand on the ground the opponents have chosen. Freed from these opponents and faced with PLANNERS WHO ARE NOT UNDERCONSUMPTIONISTS the greater truth of what Marx was saying suddenly hits us in the eyes with such force that now we can say: How could we have not seen what Marx was saying? It is all so clear: Since the realization of surplus value IS the decline in the rate of profit, the poor capitalist MUST search for profits.

The argument Dunayevskaya is making here is simple: Marx proposed that capitalism would be increasingly hamstrung by a decline in the rate of profit. This decline was not an accident or aberration, since it rested on a fundamental feature of the economy: On the one hand, the capitalist was always seeking to maximize his profits by reducing labor costs. This drive leads businesses to produce more output with fewer workers. On the other hand, the source of profits were the unpaid labor time of the employed workers. Thus, even as the capitalist tried to maximize profit by reducing its work force, its success at reducing its work force reduced the pool of unpaid labor time that was the source of its profits.

So far, not much of interest, right? Just another cat fight among the followers of Marx over interpretation of his theory; and Marxists are, if anything, more prone to cat fights than a bag of wet cats. But, then Raya does something jarring: she throws in that sentence at the end and changes the entire nature of the argument:

Since the realization of surplus value IS the decline in the rate of profit, the poor capitalist MUST search for profits.

Let me perform an intellectual shortcut here: Although it may not be obvious what she has just done, Raya has just stated that Marx is setting the reader up, not for an explanation why prices of goods reflect the values of those goods, but why they can never reflect the values of those goods. On a micro-level, Marx is explaining why that $600 iPad you got for Christmas probably cost no more than $3 to manufacture in China.

To put this another way: Marx was describing why the actual labor time expended in a capitalist economy must always and increasingly be greater than what is socially necessary. The tendency built into a capitalist economy toward a secular decline in the rate of profit produces its opposite: a mad scramble on the part of each capital, and all of them together, to find every avenue to maintain profitability in the face of this tendency; and this tendency can only be countered by effort to extend the social work day beyond what is actually required by society. As we have argued elsewhere, if Marx is correct in his analysis, there is a vast pool of superfluous labor within existing society that can be abolished without touching on the material living standard of society.

To put it bluntly, Marx’s law of the tendency toward a fall in the rate of profit predicts that if total debt, total consumption and total hours of labor don’t constantly increase capitalism will collapse. The social relation is not only incapable of achieving equilibrium, but it becomes increasingly self-disequilibrating as the productivity of labor increases. Assuming Raya was saying what I understand her to be saying, I think this self-induced, self-reinforcing, disequilibrium results in, at least, the following 5 symptoms:

1. The Market for output must constantly expand.
2. Total employment must always rise more quickly than productive employment. And, total hours of labor must always increase more quickly than productive hours of labor.
3. Because of the above, total consumption must always increase more rapidly than necessary consumption (i.e., production). Which is to say, waste and unnecessary consumption becomes a matter of life or death for the economy.
4. Since waste becomes a permanent feature of the economy and the rising cost of wasted effort must be borne by society, total prices must always increase more rapidly than total value.
5. Since, wasted effort itself produces no new value, exchange itself is increasingly founded on debt; hence, the financial sector must always increase more rapidly than the industrial sector, and debt more rapidly than equity — leverage, which is, at root, only the relation between the sum total of social labor to the sum total of productively employed labor, must always increase.

Assuming I am correct about Raya’s comments about Marx’s third volume of Capital, and, that she is correct in her reading of the volume — two very big ifs, I admit — in his third volume of Capital, Marx is setting us up to understand how the State becomes an absolutely critical and absolutely necessary feature of capitalist society — a matter of life and death for capital. Each of the five symptoms of modern society I cited above are no more than functions taken on by the State to manage capitalist society through its increasingly devastating cycles of booms and busts.

Marx’s law of the tendency toward a decline in the rate of profit is, in reality, a theory of the State. To extend Raya’s statement: Marx’s theory of value is the foundation for his theory of surplus value; his theory of surplus value is the foundation for his theory of the decline in the rate of profit; and, finally, his theory of a decline in the rate of profit is the foundation for his theory of the modern State.

Powerful support for my interpretation of Raya’s argument can be found simply by looking at the title of the paper from which the above quote was drawn: “The despotic plan of capital vs. freely associated labor”. In this paper, Raya counterposes the modern State to the free association of individuals, explicitly arguing that planning arrived at by free association is completely incompatible with the various forms of State management of the economy with which we are familiar: everything from the centralized planning of the Soviet type to the fiscal and monetary levers of neoliberal political-economy. In 1950, with the ink still drying on National Security Council Report 68, Raya was making the argument that, in her words, “If the order of the factory were also in the market, you’d have complete totalitarianism.”

Effort by the State to manage the economy, as envisioned by the Truman administration, had to lead to an increasingly totalitarian reorganization of society. This, apart even from consideration of the aim of that management — which, for Truman, was a means of accruing the resources for a long-term conflict with the Soviet Union — implies the subjugation of the whole of social relationships to the despotism of capital.

Marxists and progressives who see in the increasing entanglement of the State in the economy — as borrower, lender, consumer and employer of last resort — some realization of the possibility for a humane society are not only wrong, but dangerously misguided in their approach to every social issue from the present intractable unemployment, to poverty, to every form of inequality, the environment and global relations. They are trying to use as a solution the very instrument of society which maintains those evils and makes their continuation possible.

What help for the 99ers? (Part three)

Why is Washington so implacably hostile to a reduction of hours of work as the solution to unemployment? And, why has it abandoned the 99ers to their fate?

The answer to these questions is simple: Washington depends on the unpaid hours of labor wrung from the working population as much as capital itself. Washington is not a neutral party when it comes to hours of labor; it is, without exception, the largest single consumer of surplus labor time in society. The entirety of its revenues amount to the unpaid labor of society either directly, in the form of taxes, or indirectly, in the resources it controls through debt or money printing.

This fact is never admitted by progressives, nor even by vulgar proponents of Marx’s theory. The argument made by the Marxists against the current State amounts not to a recognition that the machinery of state shares with capital the total pot of surplus labor time, and, as a result, must be interested in the longest possible duration of unpaid labor, but only that this machinery is under the control of capital and should instead be controlled by the working class. The progressive critique of the State amounts to a demand that this unpaid labor time be devoted to the “improvement of society”; the typical vulgar proponent of Marx differs from this only in that he proposes this be under the direction of a working class party. Neither raises the demand for the abolition of all unnecessary labor, and with it, the state in its entirety.

When the Great Depression erupted Washington suddenly had access to billions of hours of unpaid social labor which it, along with the other great powers, immediately set about throwing into preparation for World War II. Government, already the largest single consumer of unpaid labor time in society, expanded monstrously – consuming perhaps as much as 40 percent of national output. But, in the aftermath of that horrible conflict, we really see its voracious hunger, and insatiable lust for surplus as the Truman administration conceived of and implemented a policy of a permanent war footing: The Cold War.

In his annual message to the Congress, delivered January 12, 1951, Truman opened with these words announcing the birth of the national security state:

We face enormously greater economic problems, as I transmit this fifth annual Economic Report, than at any time since the end of World War II. Although our economic strength is now greater than ever before, very large new burdens of long duration are now being imposed upon it.

The United States is pledged and determined, along with other free peoples, to cheek [sic] aggression and to advance freedom. Arrayed against the free world are large and menacing forces. The great manpower under the control of Soviet communism is being driven with fanatic zeal to build up military and industrial strength. We invite disaster if we underestimate the forces working against us.

The economic strength of the free peoples of the world is, however, superior to that of their enemies. If the free nations mobilize and direct their strength properly, they can support whatever military effort may be necessary to avert a general war or to win such a war if it comes. The resources are on our side. The only question is whether they will be used with speed and determination. The answer will depend upon unity of purpose and of action–unity among the free nations, unity here in the United States.

Unity is imperative on the economic front. On this front, under the American system, everybody is involved–every businessman, worker and farmer; every banker and scientist and housewife; every man and woman. We can win our way through to ultimate triumph if we all pull together. Decisive action, essential to our safety, should not be halted by controversy now.

Truman, in his report, explains the implications of a conflict with the Soviet Union of a very long duration:

These manpower needs will call both for increasing our labor force by reducing unemployment and drawing in women and older workers, and for lengthening hours of work in essential industries. These manpower requirements can be met. There will be manpower shortages, but they can be solved.

For those readers whose critical facilities have been dulled by countless hours of exposure to American Idol, what we have here are the words of a craven hustler — a two-bit con artist trying to sell you something you don’t need. Washington is in the business of selling security and its sales methodology is the practice of sowing fear of chaos, terror, and the unspeakable strange unknown. This sales strategy required the creation of an adversary to the “American system”, as well as its domestic avatar buried deep within the populace, to create a pervasive sense of vulnerability and distress among the population. It doesn’t matter that this adversary is Soviet communism or “Islamofascism”, nor that its domestic avatar appear in the form of a devout Muslim citizen or communist trade union activist; what matters is that the threat be, at the same time, pervasive and discrete, universal and particular, potentially life-threatening and merely strange.

This impeccably crafted direct appeal to the collective lizard brain of society, which paralyzes critical thought as our painfully slow brain tries to calculate the odds that the Sikh gentleman sitting in front of us on the bus might be strapped with explosives — renders critical thinking useless, and, therefore, a mere impediment to the apprehension of our empirical circumstances, reduces each of us to a suggestible sheeple, and set us up for acquiescence to the burden of providing Washington with ever greater hours of unpaid labor.

On the one hand, this “service” provided by Washington is very profitable to capital in its own right, since it requires enormous amounts of otherwise unprofitable output in the form of every imaginable thing from paperclips to the most advanced spy satellites, and launchers to put them in orbit. On the other hand, the demand for these products are the very kinds of superfluous expenditures that become increasingly necessary for the continuation of this social form of production.

Once the identity of interest between capital and the State in the longest possible extension of hours of labor is established, it is possible to understand not only Washington’s hostility to work time reduction as the means to end unemployment, but also its imposition of the regime of global competition on the American economy, its facilitation of companies moving industrial facilities and service jobs off-shore, and its hypocritical promotion of amnesty for undocumented immigrants: the capitalist state is a state that must operate according the laws of capital because it is founded entirely on the consumption of the surplus labor created by capital.

It also helps us explain the abandonment of the 99ers to their fate, the impending evisceration of the social safety net and the brutality of the austerity regime now being prepared by Washington. Far from merely falling under the control of Wall Street, Washington itself wants and needs this brutal assault on the living standards of Americans because all other methods of increasing the extraction of surplus value have failed.

What help for the 99ers? (Part two)

In my rant yesterday, What help for the 99ers?, I made an argument why folks who support the 99ers should nevertheless oppose extension of unemployment compensation beyond 99 weeks. That argument made what might be considered an obscure connection between the unemployed and the large body of “public servants” who compose the state machinery of repression, totalitarian control and imperial expansion.

Let me add a few remarks to clarify how I see this connection.

To do this, we have to look at Karl Marx — not the infamous icon of Marxism, but the real guy, the writer and, to some extent, anthropologist of capitalist society — Often the two get conflated, so that, for instance, the utterances of any knucklehead running around with a copy of the Communist Manifesto sometimes is mistaken for the actual words written down on paper by the original person.

In Marx’s model of capitalist society, the unemployed worker is not an accidental occurrence and should not be treated apart from the labor force itself. The unemployed worker is a reserve force available to capital for those periods where new profitable opportunities or requirements for additional labor suddenly open up. The idled worker makes it possible for these new areas to be exploited by providing the additional labor capacity necessary to take advantage of them. This reserve also serves a function of depressing wages during times of depressions, when capital rationalizes its operation to resume profitable expansion by pressing wages below their cyclical average.

Thus, unlike economists, who treat unemployment as an aberration, a defect, or failure of the market, Marx believed a relative surplus population of workers was essential to the functioning of the capitalist system of production itself. The constant expansion and contraction of the labor reserve is consistent with his comprehensive model of capital in which, for example, the price of a good had to fluctuate according to the laws of supply and demand, and only reflected the value of the good through the moving average of these fluctuations. Capitalism is a social system of production carried on by millions of individuals acting privately — unless the system itself had flexibility to adjust to billions of differing and even contradictory decisions each day it would soon break apart.

In times of unusually vigorous expansion, and even for war, the great mass of this population of unemployed would be “called up” (both metaphorically and actually in the case of the military draft) to fill needed positions in industry or on the battlefield. Thus, the “liquidity” of the reserve source of labor power is not simply a matter of business concern, but also a matter of state. So, for example, it is not a surprise to see a statement by White House in the debate over the DREAM Act explaining why the act would be useful for its ongoing military operations:

Secretary of Defense Gates has written to DREAM Act sponsors citing the rich precedent of non-citizens serving in the U.S. military and stating that “the DREAM Act represents an opportunity to expand [the recruiting] pool, to the advantage of military recruiting and readiness.

The size of the reserve labor force is not determined by the means available to expand the scale of productive activity, but to expand activity that creates profit and for purposes of State. But, this purely cyclical movement in unemployment is not of the least concern to us, because it merely masks a longer term trend identified by Marx: the conversion of this reserve labor force from a relative oversupply of labor into an absolute oversupply of labor.

Over time the improvement in the productive capacity of labor — by augmentation with new types of machinery, new methods of organizing work, application of new scientific knowledge, and technology — is increased to such an extent that the relative proportion of workers who can be employed productively shrinks and a permanently unemployable reserve of labor emerges. (Today, this unemployable reserve consists not only of the 99ers, but also a massive hidden population of young people who have never entered the labor force and who, in addition,  compose the largest part of the swollen prison population.) This permanently unemployable reserve — a growing stratum of the labor force rendered entirely superfluous by the advance of industry — loses its opportunity to engage in productive labor and is reduced to serving only as a market for the output of the productively employed labor force.

Along with the emergence of a permanently displaced population of workers we find the emergence of the fascist state — a peculiar type of state organism combining both a permanent war footing with an extensive social safety network of state provided services. Although this state is typically identified with German Nazism and Italian Fascism it is not limited to them, but emerges in all the industrialized nations during the Great Depression, and is the essential feature of Franklin Roosevelt’s New Deal. The social basis of these fascistic entities is the general clamor among all classes in capitalist society for state action to preserve the conditions of existence of the society; namely, the purchase and sale of labor power. It is for this reason the fascist state appears on the scene as the embodiment of the national interest and asserts the populist idea of a national rebirth through a pan-class coalition.

The charge of this state, as imposed by general social demand on it, is to employ the unemployable, and hence, to provide the demand for the output of industry. From this point, political-economy becomes concerned with the problem of consumption of the massive and ever growing output of industry. The fact that the emergence of an absolute oversupply of labor implies the possibility of a drastic reduction in hours of labor for all in society, and, therefore, the awareness of the possibility that society might be entirely freed from labor and the system of domination inherent in the division of labor is, from this point, not only ignored, but actively suppressed. Thus, we see, from the end of World War II, that discussion of the idea improving productivity would lead to the abolition of labor disappears from economic textbooks — to be replaced by the phrase, “the lump of labor fallacy”.

The erasure from economic textbooks of the idea that a reduction and ultimate abolition of labor was the probable outcome of improving productivity foreshadowed last night’s news that the House of Representatives had abandoned the 99ers to their fate. As we showed in the case of the Obama administration, Washington is not merely unaware that unemployment can be wiped out by drastically reducing hours of work, it is hostile to the idea.

Why is Washington ignoring the 99ers, and why is it hostile to the great question of work time reduction? We will answer this in the next post.

What help for the 99ers?

I am having a “marxist moment” today. The Obama tax deal, in addition to its other flaws, has completely excluded mention of those who first lost their jobs in 2008 and early 2009, when the worst of the layoffs hit the economy. Millions have already exhausted their benefits, and perhaps 4 million more will join them in the next few months.

So what is to be done for them?

Think about a situation where an unemployment check is fifty, seventy or even ninety percent of the income in your household. And, now, that income is approaching imminent termination. You have probably run through your savings, stopped paying credit card debt and the mortgage; you may even be parking the car away from home to avoid repossession. The crisis was not your fault. You never made sub-prime loans, nor was your own home purchase financed by the deliberate fraud of a liar’s loan. You weren’t the one who bundled those loans and sold them to Iceland and pension funds. You probably never missed a payment on your mortgage, auto or credit card loans until that day the company announced it was shutting down your entire division and began handing out severance checks.

At the risk of personalizing this discussion, I know people like this — one is a neighbor, another is a friend and former co-worker at a debt mill run by a large financial company. The debt manufacturer has a seat on the Federal Reserve Bank, and when its debt creating operation ran into the difficulty, it ran to Uncle Sam to bail it out — just another welfare queen in an Armani suit.

I DVR’d the CEO of Motorola talking on PBS Newshour yesterday, because I couldn’t believe what I had heard — I had to record it, so I could look at it today and confirm that, yes, he is that much a self-absorbed bastard. The CEO had just exited a gathering with President Obama of corporate bosses discussing what it would take for the nation’s largest companies to start hiring again. He opined that the administration was moving in the right direction and that President Obama had made a good deal with the Republicans in congress for across the board extension of President Bush’s 2001 tax cuts, which are heavily weighted toward the income of the top one percent of the population. The CEO praised the agreement for its effect in ending much of the uncertainty surrounding the administration’s tax policy.

Now, he said, we had to get serious about the deficit and deal with entitlements.

This morning I am trying really hard to avoid playing the class war card. Playing the class war card in these circumstances doesn’t require any creativity or thoughtful response. It is the political equivalent of yanking back your hand from a hot stove. Yes, corporate CEOs are ruthless narcissistic bastards, who have stripped the nation of its productive assets, moved them offshore, and left us with a hollowed out economy devoted to imperial adventures. And, the situation of the 99ers is pitiable. In conversation with my friend and with my neighbor, I have survivor’s guilt — and this, when I just might be the next dead hostage.

Yes, President Obama is a shameless whore who sold out his sacred pact with his supporters at the first opportunity!

Yes, the 99ers are at the point of extreme financial duress and tilting dangerously on the edge of physical existence!

Yes, our corporate masters are little more than Caligula’s court!

Yet, for all of this the move by the Congressional Black Caucus to introduce an amendment to President Obama’s and the GOP’s tax cut deal by extending unemployment benefits beyond 99 weeks must be opposed. That, this deal is an ugly filthy thing from the progressive perspective is obvious. But, no amount of sweetner will make horse urine taste like champagne. No more than will allowing gays to serve openly change the fact that they are now allowed to be openly gay while carrying out the military policy of an empire.

But, my opposition goes beyond simply “rejecting the good for the perfect” — a child-like refusal to accept compromise: The CBC’s proposal is itself to be condemned because it extends the dependence of the 99ers on state handouts and does not call on both those who are working and those who are unemployed to put an end to this dependence, and the larger dependence on selling themselves into slavery to survive. I think we should be sickened by the recent AFL-CIO internet commercial which portrays the 99ers as helpless, vulnerable victims of economic forces over which they have no control. A depression is not a natural disaster; we are not helpless victims of some financial force of nature beyond our control.

It is a matter of demonstrable fact that the Obama administration knows that all it takes to eliminate unemployment in this society forever is a large reduction in hours of work. His former economic adviser, Larry Summers, former president of Harvard University, and former Treasury Secretary in the Clinton administration, stated this directly:

“I think we got the Recovery Act right,” Larry Summers, the president’s chief economic adviser, said in an interview. “The primary objective of our policy is having more work done, more product produced and more people earning more income. It may be desirable to have a given amount of work shared among more people. But that’s not as desirable as expanding the total amount of work.”

Preferable for whom? For the state, of course, which now has ample excess resources it can put to work expanding the empire. Resources that, having no possible productive employment opportunity, can be employed for whatever unproductive purpose Washington demands. Beyond simply holding down the wages of those who work, the unemployed are the cannon fodder of empire, the TSA gropers, the bureaucrats ceaselessly promulgating new directives that other bureaucrats enforce. They are the drug enforcement agents, the cultivators of every new would-be “muslim terrorist”, the operators of a vast systematic destruction of young minds in the guise of public education. They are the operator of the largest prison population on the planet — a filthy, vile, unspeakable chamber of horrors that excels only in spreading disease and moral breakdown.

The CBC’s proposal not only does not address these concerns, it reinforces them and promises only to extend them indefinitely. A consistent anti-statist position has to call for the end of all unemployment compensation and its replacement by a large reduction in hours of labor.

The vegetative State

If anyone was wondering if the economy is completely brain-dead and continuing to function solely on Washington’s extraordinary intervention, just have a look at these charts provided by The Global Macro Monitor blog, via Barry Ritholtz. According to the research of Steve Keen and others, employment growth has a .67 correlation with the rate of debt expansion. Private employment growth is unlikely unless we see clear signs of private debt expansion, but the source of debt expansion at present is that of the wholly unproductive national government sector.

The author of the post writes,

If, as the President says, ‘the flow of credit is the lifeblood of our economy”, the country would have died in 2009 had not the policymakers taken the extraordinary measures they did. These charts illustrate how close we were to the abyss and should give a clearer perspective on what Bernanke & Co. were/are up against. They are heroes, in our book, for stabilizing the situation and pulling us back from the abyss. The jury is still out, however, on long-term structural adjustment and preventing a global sovereign debt crisis.

We disagree with the author’s characterization of the 2009 intervention by Ben Bernanke and the Federal Reserve Bank — and the intervention by Washington generally. Of course, this disagreement stems from our differences over whether stabilization and “long-term structural adjustment” is preferable to the “abyss”. The only card Washington has in its hands right now is the constant, coordinated, relentless repetition from every “credible” source that the collapse of the bloated financial sector must lead to chaos and social breakdown.

Make no mistake, Washington and its supporters and paid hacks want you to believe that the economic security of the nation rests on these action, but the Too Big To Fail are being rescued in order to buy time for them to pass the “structural adjustment” of this crisis on to you. All the actions of Washington thus far has been aimed at this effort and none other.

This effort to spread panic and terror among the population — to cut off discussion and dissent — is no different than that which has you taking off your shoes and submitting to the impersonal gropes of would-be employees of McDonald’s just to board a plane — as well as that designed to make you acquiesce to the murder of thousands of Iraqi civilians and Afghanistan villagers.

Is this a US shopping list for other nations’ resources?

An interesting post on Operation Leakspin of a series of cables in the latest Wikileaks dump:

“Wish List for Terrorists” or “Covet thy Neighbor” · 10 December 2010

US State Department cables release by Wikileaks contained information being described as a “Wish List” for terrorist targets.

The cable subject is “REQUEST FOR INFORMATION: CRITICAL FOREIGN DEPENDENCIES (CRITICAL INFRASTRUCTURE AND KEY RESOURCES LOCATED ABROAD)” contained in the original cable.

The cable is based on Homeland Security Presidential Directive 7 (HSPD 7), which uses the statues of the USA Patriot Act of 2001 (42 U.S.C. 5195(e)), and Homeland Security Act of 2002 (6 U.S.C. 101(9)) to define both “Critical Infrastructure” and “Key Resources”.

Many media outlets and blogs had report this cable release as providing a “wish list” for terrorists.

See sources, or here.

On close examination of the actual cable, referenced above, the US State Department provided a list of critical infrastructure and key resources to US diplomats assigned overseas, under the National Infrastructure Protection Plan (NIPP) for annual review and reporting of “inventory”.

An excerpt from the cable:

The overarching goal of the NIPP is to build a safer, more secure, and more resilient America by enhancing protection of the nation’s CI/KR to prevent, deter, neutralize or mitigate the effects of deliberate efforts by terrorists to destroy, incapacitate or exploit them; and to strengthen national preparedness, timely response, and rapid recovery in the event of an attack, natural disaster or other emergency.

3. (U//FOUO) In addition to a list of critical domestic CI/KR, the NIPP requires compilation and annual update of a comprehensive inventory of CI/KR that are located outside U.S. borders and whose loss could critically impact the public health, economic security, and/or national and homeland security of the United States.

See full text of the NIPP.

Although both the USA Patriot Act and Homeland Security Act appear to apply only to the USA. However, this cable references CI/KR outside the US borders. This makes strategic sense when considering the nature of global infrastructure including many critical underwater telecommunication cable landings.

From the standpoint of protecting global communications the State Department directive includes names and location of the landing points of these telecommunication cables including Southern Cross undersea cable landing, Brookvale, Australia.

The name of the source is shown and was revealed in the Wikileaks cable release which was created at the State Department on 2 February 2009 and released by Wikileaks on 5 December 2010. A quick search of Wikipedia, the on-line Encyclopedia, shows the Southern Cross undersea cable landing;

Wiki Southern Cross Cable

The article by Wikipedia shows that the page was last edited on 15 November 2010, prior to the Wikileaks release.

Other “key resources” detailed in the cables includes minerals, oil/natural gas, private and publicly held corporations, including Pharmaceutical manufacturing.  Again upon examination and in reference to statues used to form this directive the purpose was to;

“mitigate the effects of deliberate efforts by terrorists to destroy, incapacitate or exploit them; and to strengthen national preparedness, timely response, and rapid recovery in the event of an attack, natural disaster or other emergency.”

A random search on Google for Niobium (Nb), one of the “key resources” reveals that 90% of the production is in Brazil. The cables mention the State of Goias, Brazil.

Wiki Niobium

Wiki Goias

In light of the facts the cables reveal the US Government is interested in the resources of other Nations to protect the United States.

In researching this cable release, the pictures changes from a “Wish List” for terrorist targets and looks more like a “shopping list” for key resources in other countries by the US Government.

So ask yourselves, were contents of the cables a “Wish List” for terrorists or for the United States.

The scope of the Homeland Security Presidential Directive 7 (HSPD 7), USA Patriot Act of 2001 (42 U.S.C. 5195(e)), and Homeland Security Act of 2002 (6 U.S.C. 101(9)) should be examined by the US Congress and the People of the United States of America.

IAC: Petition drive against US and South Korean military provocations against North Korea

STOP THE WAR PROVOCATIONS AND ATTACKS ON THE DEMOCRATIC PEOPLES REPUBLIC OF KOREA NOW!
KNOW THE UNDISPUTED FACTS!

SIGN THE ONLINE PETITION to the Obama Administration and s. Korean Govt.
at http://www.iacenter.org/korea/stopattackondprk NOW!

PLAN PROTESTS IN THE DAYS AHEAD TO COUNTER THE GROWING WAR THREAT

Tell the Obama Administration and the south Korean Government you want the U.S./south Korean war maneuvers and provocations against the DPRK stopped immediately, the removal of south Korean and U.S. war ships including the U.S. aircraft carrier George Washington, an end to the U.S. sponsored sanctions against the DPRK, the signing of a peace treaty NOW to end the state of war that has existed since the Korean war, and the immediate withdrawal of the 30,000 U.S. troops that still occupy south Korea, so that the Korean people can freely decide their own destiny. 

THESE ARE THE UNDISPUTED FACTS: On Nov. 23, the government of South Korea mobilized 70,000 troops for a week of military maneuvers just off the border of the Democratic Peoples Republic of Korea. The DPRK said that these military maneuvers simulated an invasion of the north.

The military deployment was provocatively held right off the sea borderline between the north and the south. This is an area considered to be disputed territory.

On Nov 23, at 1:00 p.m., South Korean forces fired many shells into waters right off the DPRK. This is an area that the north has a longstanding claim to be within its territory. This claim had been accepted by prior south Korean governments.

An hour and a half later, the DPRK retaliated to what it saw as an attack on its territory by firing shells at the South Korean island of Yeonpyeong.

And now the U.S. has announced plans to send  the nuclear-powered aircraft carrier USS George Washington and its battle group including war ships, destroyers and hundreds of fighter jets back into the area to participate in new war maneuver provocations.

It is urgent that all who stand for peace and justice make plans now for immediate protest actions in the days ahead.

The U.S. military has been involved in all the war maneuvers by South Korea, going back to the 1950-53 war, and has occupied South Korea since the end of World War II.

Why doesn’t the media ask why the U.S. was orchestrating a massive military deployment of troops, ships and aircraft right on the border of the DPRK?

The provocation here clearly comes from the U.S. government and the right-wing south Korean regime, not the DPRK. The regime of Lee Myung-bak has undone earlier moves that improved relations between the two halves of the Korean nation and has brought increased confrontation.

It can never be forgotten that U.S. imperialism waged a horrendous war against the Korean Revolution from 1950 to 1953, one that resulted in millions of deaths and total devastation of the Korean Peninsula.

For there to be peace on the Korean Peninsula, the U.S. should end its support of expansionist, right-wing forces in the south, sign a peace treaty with the north (a state of war still exists after 57 years!) and withdraw its troops so the Korean people can decide their own destiny.

Join us in the days ahead in taking to the streets to protest these U.S. war threats and sanctions that have created a powder keg in Asia. End the military occupation of South Korea! Sign a peace treaty and bring the troops home!

SIGN ONLINE AT http://www.iacenter.org/korea/stopattackondprk NOW!

SAMPLE PETITION TEXT:

To: President Barack Obama, President Lee Myung-bak, Secretary of State Hillary Clinton

CC: U.N. Secretary-General Ban Ki-moon, U.N. member delegations, U.S. Congressional leaders, members of the media.

• Stop the U.S./South Korean War maneuvers and provocations against the DPRK (north Korea) immediately!
• Remove the south Korean and U.S. war ships! DO NOT SEND ADDITIONAL U.S WARSHIPS AND PLANES INCLUDING THE U.S. AIRCRAFT CARRIER GEORGE WASHINGTON!
• End the U.S. sponsored sanctions against the DPRK!
• Sign a peace treaty NOW to end the state of war that has existed for 57 years since the Korean war!
• Withdraw all of the 30,000 U.S. troops that still occupy south Korea, so that the Korean people can freely decide their own destiny.

It is an undisputed fact that on Nov. 23, the government of South Korea mobilized 70,000 troops for a week of military maneuvers just off the border of the Democratic Peoples Republic of Korea. The DPRK said that these military maneuvers simulated an invasion of the north.

On Nov 23, at 1:00 p.m., South Korean forces fired many shells into waters right off the DPRK. This is an area that the north has a longstanding claim to be within its territory. This claim had been accepted by prior south Korean governments.

An hour and a half later, the DPRK retaliated to what it saw as an attack on its territory by firing shells at the South Korean island of Yeonpyeong.

And now the U.S. has announced plans to send the nuclear-powered aircraft carrier USS George Washington and its battle group including war ships, destroyers and hundreds of fighter jets back into the area to participate in new war maneuver provocations.

The U.S. military has been involved in all the war maneuvers by South Korea, going back to the 1950-53 war, and has occupied South Korea since the end of World War II. AND THE WAR DANGER IS GROWING!

Clearly the military provocation is from the U.S. government and the south Korean government of President Lee Myung-bak.

For there to be peace on the Korean Peninsula, the U.S. must withdraw its troops so the Korean people can decide their own destiny.

Sincerely,
(Your signature appended here)

SIGN ONLINE AT http://www.iacenter.org/korea/stopattackondprk NOW!

Rand Paul causing waves among the GOP

Rand Paul has the ability to force the Senate to raise sixty votes for every bill introduced that increases Washington’s spending for the next six years. He has, in other words, the power to create a massive ongoing political crisis for the bloated, wasteful perversity that passes for government in Washington D.C.

We think he will fold — we think he will pull an Obama and sell out the Tea Partiers who brought him to this quite spectacular position.

We would love it if he proved us wrong.

He has already signaled his willingness to cripple the earmark process in the Senate. And, now John “Maverick in Name Only” McCain is drawing a bead on Paul’s stated willingness to force massive cuts in the defense budget.

From the Huffington Post:

John McCain Attacks Rand Paul’s ‘Isolationism’ In Willingness To Cut Defense Spending

Sen. John McCain (R-Ariz.), the ranking member of the Senate Armed Services Committee, expressed concern Monday that some new Republican legislators would be defined by their “protectionism and isolationism,” two views that the Vietnam War veteran feared would result in a butting of heads within the party on Afghanistan and defense spending.

“I think there are going to be some tensions within our party,” McCain said during a conference put on by Foreign Policy Initiative, a DC-based think tank. “I worry a lot about the rise of protectionism and isolationism in the Republican Party.”

A prime example, McCain continued, was Rand Paul, Kentucky’s next U.S. Senator.

“I admire his victory, but … already he has talked about withdrawals [and] cuts in defense,” McCain said.

Indeed, Paul appears to have taken after the more libertarian side of foreign policy issues, much like his father, Texas Rep. Ron Paul (R).

Never, in our memory, has someone so apparently clueless, seemed so likely to deliver on the precisely those things that have to be done to kill this economy for good, and bring the empire to its knees.

If he is even vaguely successful in challenging the status quo, we expect McCain will take the entire millionaires’ club hostage, automatic rifle in hand, in a frightening outburst of PTSD-driven, alcohol-charged, delusional rage.

We wish Rand Paul all the luck (and backbone) in the world.