My Clean Break column this past week looks at the missed opportunity of growing crops for biofuel production when making green chemicals is a higher value proposition, both economically and environmentally.
About seven million tonnes of grain corn was grown in Ontario in 2011, and by year’s end roughly 30 per cent of that is expected to go toward ethanol fuel production.
Let’s ignore for the moment the whole food-versus-fuel debate, and assume that devoting nearly a third of Ontario corn production to making renewable fuel doesn’t help drive up global food prices, or for that matter, reduce our capacity to feed the world.
Let’s focus instead on the use of corn as part of a greenhouse-gas reduction strategy that returns more economic value per harvested bushel. Through this lens, is biofuel production the best use of a renewable but also land-limited resource?
Corn, after all, doesn’t have to be made into ethanol and burned in the gas tanks of our cars to reduce our dependence on fossil fuels. It can also be used to make a variety of “green” chemicals that form the basis of a wide variety of products currently made from petroleum-based chemicals.
Let’s take, for example, Burlington, Ont.-based EcoSynthetix, which takes starch from corn to make certain biopolymers. These biodegradable biopolymers can displace petroleum-based ingredients used to make coatings for packaging and cardboard, adhesives, carpet backing, building materials and a wide range of other products.
John van Leeuwen, chairman and chief executive of EcoSynthetix, which had a successful initial public offering on the Toronto Stock Exchange in August, says he can make $35 worth of biolatex for every bushel of corn the company consumes in its process.
Ethanol, by comparison, fetches about $10 for every bushel of corn, he says. Indeed, the amount of corn that’s consumed annually by 10 large ethanol production plants – out of about 200 in North America—could probably supply enough starch for the entire emulsion polymer market worldwide if it were to switch to 100 per cent biopolymers.
More than that, EcoSynthetix’s biopolymer can compete head on with petroleum-based polymers that currently dominate the marketplace, unlike the heavily-subsidized ethanol industry. “We don’t need subsidies. We can actually go into a deal and offer a discount against petroleum-based products to win business,” says van Leeuwen.
Asked about the growing volume of corn consumed by the ethanol industry, van Leeuwen, without pointing fingers, responds sensibly. “We really need to be thoughtful as an industry to make sure what we make derives maximum value from our agricultural feedstocks.”
Such wise advice could be directed to Canada’s bioproducts sector as a whole, which as I wrote in August has been shrinking when it should be flourishing. That was the conclusion of a report by the Richard Ivey School of Business, which called Canada’s performance on the global stage “disappointing.”
In that report, ethanol represented more than two-thirds of Canada’s bio-products market, while higher-value polymers accounted for just 2 per cent and organic chemicals 12 per cent. In the area of green chemicals, Canada’s landscape was described as “stagnant.”
This isn’t just about corn; it’s also about how we choose to use agricultural residues, municipal organic waste, wood waste, algae biomass, and non-food crops.
Does it make sense to just burn this material for energy, or convert it into fuel so it can be burned? Or, should we be doing a better job of targeting niche markets with high-value “green” products that are just as effective at reducing our dependence on fossil fuels?
“There is an overemphasis on biomaterials as a source for energy,” says Dr. Rui Resendes, executive director of Kingston-based GreenCentre Canada, which helps commercialize green chemistry innovations coming out of Canadian universities.
And that energy isn’t as green as often claimed. After all, Resendes points out, the fertilizers used to grow crops are petroleum-based, as are many other products consumed along the supply chain.
“Just because you pluck it out of farmer’s field doesn’t mean it’s sustainable,” he says, adding that the entire value chain has to be considered. This is where green chemistry and the products it supports play a crucial role. “I’m a firm believer in technologies that are addressing niche markets where volumes are much smaller and margins are much higher.”
Green chemicals may be a broad category, but it’s one that serves highly targeted markets where petroleum-based products currently dominate, including the manufacture of fertilizers, polymers, and lubricants, to name a few.
And, as EcoSynthetix is demonstrating, you can be competitive and aim for profitability without relying on subsidies.
December 24, 2011
Posted by aletho |
Economics, Environmentalism, Timeless or most popular |
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Each Chevy Volt sold thus far may have as much as $250,000 in state and federal dollars in incentives behind it – a total of $3 billion altogether, according to an analysis by James Hohman, assistant director of fiscal policy at the Mackinac Center for Public Policy.
Hohman looked at total state and federal assistance offered for the development and production of the Chevy Volt, General Motors’ plug-in hybrid electric vehicle. His analysis included 18 government deals that included loans, rebates, grants and tax credits. The amount of government assistance does not include the fact that General Motors is currently 26 percent owned by the federal government.
The Volt subsidies flow through multiple companies involved in production. The analysis includes adding up the amount of government subsidies via tax credits and direct funding for not only General Motors, but other companies supplying parts for the vehicle. For example, the Department of Energy awarded a $105.9 million grant to the GM Brownstown plant that assembles the batteries. The company was also awarded approximately $106 million for its Hamtramck assembly plant in state credits to retain jobs. The company that supplies the Volt’s batteries, Compact Power, was awarded up to $100 million in refundable battery credits (combination tax breaks and cash subsidies). These are among many of the subsidies and tax credits for the vehicle.
It’s unlikely that all the companies involved in Volt production will ever receive all the $3 billion in incentives, Hohman said, because many of them are linked to meeting various employment and other milestones. But the analysis looks at the total value that has been offered to the Volt in different aspects of production – from the assembly line to the dealerships to the battery manufacturers. Some tax credits and subsidies are offered for periods up to 20 years, though most have a much shorter time frame.
GM has estimated they’ve sold 6,000 Volts so far. That would mean each of the 6,000 Volts sold would be subsidized between $50,000 and $250,000, depending on how many government subsidy milestones are realized.
If those manufacturers awarded incentives to produce batteries the Volt may use are included in the analysis, the potential government subsidy per Volt increases to $256,824. For example, A123 Systems has received extensive state and federal support, and bid to be a supplier to the Volt, but the deal instead went to Compact Power. The $256,824 figure includes adding up the subsidies to both companies.
The $3 billion total subsidy figure includes $690.4 million offered by the state of Michigan and $2.3 billion in federal money. That’s enough to purchase 75,222 Volts with a sticker price of $39,828.
Additional state and local support provided to Volt suppliers was not included in the analysis, Hohman said, and could increase the level of government aid. For instance, the Volt is being assembled at the Poletown plant in Detroit/Hamtramck, which was built on land acquired by General Motors through eminent domain.
“It just goes to show there are certain folks that will spend anything to get their vision of what people should do,” said State Representative Tom McMillin, R-Rochester Hills.
According to GM CEO Dan Akerson, the average Volt owner makes $170,000 per year.
Greg Martin, director of Policy and Washington Communications for GM, wrote in an email, “While much less than the hundreds of billions of dollars that Japanese and Korean auto and battery manufacturers have received over the years, the investments provided by several different Administrations and Congresses to jump-start the country’s fledgling battery technology and domestic electric vehicle industries (not just specifically for the Volt as Ford’s offering will also use LG Chem batteries and Fisker will use the A123 system for example) matches the same foresight and innovation leadership that other countries are exhibiting and which America has historically taken pride in.”
Martin added that the Mackinac Center’s math was “simple and selective.” However, he offered no data or specifics to support his assertion.
“This is a matter of simple math,” said Hohman. “I added the known state and federal incentives that have been offered and divided by the number of Volts sold. If GM has additional information to add to the public data on the use of taxpayer money, I look forward to seeing it.”
December 23, 2011
Posted by aletho |
Corruption, Economics, Nuclear Power, Timeless or most popular |
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Public sector workers across Belgium have gone on strike to protest against the new coalition government’s austerity measures aimed at reducing budget deficit.
The 24-hour stoppage, scheduled on the day Belgian parliament debated the measures, shut down the country’s schools, post offices and almost its entire transport grid on Thursday.
“Workers aren’t responsible for the crisis,” said Andrea Della Vechia of the General Federation of Belgian Labour (FGTB union). “If funds be needed, they should go to the financial markets or the banks for cash, not the workers.”
Belgium’s new socialist Prime Minister Elio Di Rupo is trying to raise the early retirement age from 60 to 62, thus making it harder for workers in some professions to stop working and get retirement benefits at the age of 60.
The official retirement age is 65 years.
The pension reform is part of the government’s 2012 budget plan aimed at bringing the country’s budget deficit in line with European Union (EU) rules and keeping the government out of the eurozone debt crisis.
Ratings agencies Standard & Poor’s and Moody’s have both cut their ratings for Belgium in the past month, citing its high debt level, slow economic growth, lingering political crisis and the cost of rescuing its financial sector, notably banking group Dexia.
The strike is the second show of opposition to the two-week-old government’s spending cuts after some 50,000 Belgians took to the streets at the start of December.
Workers in Greece, Italy, Portugal, Cyprus and Britain have held strikes or protests in recent weeks to denounce expenditure reductions.
December 22, 2011
Posted by aletho |
Economics, Solidarity and Activism |
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Venezuela has launched its energy assistance program for the seventh consecutive year, which helps poor Americans to pay for their home heating oil during the winter, Press TV reports.
The aid, which is provided by Citgo, a branch of the Venezuelan state oil company, PDVSA, will be received by more than 400,000 poor Americans next year, a Press TV correspondent reported on Thursday.
Citgo’s president, Alejandro Granado, has said that rising energy costs continue to affect millions of Americans, impairing their quality of life.
Granado added that his company does not want the US families to be forced to choose between keeping their homes heated, and paying for other basic needs like food or medicines.
“United States is not all roses like people think there are lots of people under poverty, below their standards” Oil industry analyst, Elio Ohep says.
The heating oil program began in 2005, following the aftermath of hurricanes Rita and Katrina. The PDVSA’s subsidiary has so far invested over 400 million dollars in energy assistance for US citizens facing economic hardship.
December 22, 2011
Posted by aletho |
Economics, Solidarity and Activism |
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One of the first things any journalist covering the Middle East should learn is that rumors of tension between Israel and the West are very much exaggerated. The latest “row” over the expansion of settlements is no exception.
According to the news agency AFP, Britain, France and Germany have led condemnation of Israel’s newly-announced plans to build more houses in the Jewish-only settlements of East Jerusalem and the wider West Bank. Predictably, the Israeli foreign ministry appears disgruntled by this stance. Avigdor Lieberman’s officials are telling the European Union to focus on Iran and Syria, rather than on “inappropriate bickering with one country,” namely Israel.
With a little bit of background research, AFP could have learned that far from being appalled by Israeli settlements, the EU’s governments are accommodating their construction.
A statement made to Britain’s members of Parliament (MPs) on 5 December illustrates that point. Alistair Burt, a Foreign Office minister in the London government, was asked about the statistics provided by Israel to the Organization for Economic Cooperation and Development (OECD). Israel joined that club of industrialised countries last year, in a diplomatic triumph for Benjamin Netanyahu and his colleagues.
Compromise of convenience
Burt told his fellow MPs of a compromise reached whereby the OECD has agreed to consider the occupied West Bank (including East Jerusalem) and the Golan Heights as property of Israel for certain purposes. Following a visit by OECD officials to the Israeli Central Bureau of Statistics in the summer this year, it was agreed that Israel would not need to provide “disaggregated data” on macroeconomic issues that distinguish between “pre-1967 Israel and the post-1967 areas.”
Although Burt tried to present the issue as a technical one, his choice of language is revealing. Instead of spelling out that Israel occupies the West Bank (including East Jerusalem), Gaza and the Golan Heights in violation of international law, he simply referred to those territories as “post-1967 areas.” He went on to hint that the compromise was made on practical grounds because the “post-1967 areas” only account for 4 percent of Israel’s gross domestic product.
So there you have it: the West is happy to accommodate the Israeli occupation for the sake of convenience.
If I was so inclined to buy Burt a Christmas present, it would have to be a copy of Shir Hever’s book The Political Economy of Israel’s Occupation. It shows how claims that the occupation is of negligible importance to Israel’s economy are made habitually by mainstream analysts. Hever demolishes those claims by highlighting how the territories that Israel occupies comprise its second largest export market and how Israel has built a lucrative military and “homeland security” industry around the occupation. You can be sure that the 4% estimate cited by Burt does not take such critically important factors into account.
“Remarkable success story”
Exactly one week after Burt made those comments, he attended the annual lunch of the Conservative Friends of Israel (CFI), a lobby group within the main party of the UK’s ruling coalition.
The keynote address to that gathering of 120 parliamentarians and 400 business people was given by George Osborne, the Chancellor of the Exchequer (in a country less wedded to imperial bombast, he would simply be called the finance minister). Osborne told his audience that “Israel’s a remarkable success story when it comes to the development of hi-tech industry and it’s really a beacon to the world of how you can foster these small companies that grow into world-beating businesses.”
The review of this sumptuous banquet on the CFI’s website doesn’t give the impression that Osborne was intent on “inappropriate bickering” with Israel. Rather, he seemed more interested in nurturing closer commercial ties with this “remarkable success story.”
Nobody with any knowledge of history would be surprised that the elites in Europe’s one-time colonial powers feel an affinity with Israel. Journalists should bear that in mind the next time they hear rumors of tension.
December 22, 2011
Posted by aletho |
Deception, Economics, Illegal Occupation |
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Without substantial social reform and redistribution of economic assets, representative institutions – no matter how ‘democratic’ in form – will simply mirror the undemocratic power relations of society. Democracy requires a change in the balance of forces in society. Concentration of economic power in the hands of a small elite is a structural obstacle to democracy. It must be displaced if democracy is to emerge.1
All reformers, no matter how radical they thought themselves to be, could be (and have been) caught up in reform structures whose underlying purpose is to reduce the inharmonics of the existing social system.2
Even as attempts to curb protests through evictions and violence are conducted across the country, the movement is spreading – every day, more and more flock to their local parks and city centers, rallying under the banner of “Occupy!” First it was Occupy Wall Street, a call put out by Adbusters, a quasi-Situationist organization that has been at the forefront of the “culture jamming” ethos since 1989. From there, it was Occupy Chicago, Occupy Los Angeles, Occupy Boston, Occupy Omaha. The movement has gone global, with protestors catching the Zeitgeist in London and Rome. Regionalized discontent led to international solidarity in Greece, as further austerity measures loom on the horizon – imposed by none other than a government that dares to call itself socialist.
The central concept of the OWS movement is populist in nature, harking back to those that resisted capitalism’s harsh realities in the earlier parts of the 1900s: there is a major disconnect between the 99% of the population and the 1% that acts as the center of wealth and power. At the core, this division is rooted in Marxist terminology, the proletariat versus the bourgeois and their exploitation. We demand democracy, the multitude is saying, from Lexington, Kentucky to Madrid, Spain. We demand freedom from economic exploitation, freedom from indentured servitude to the moneyed class, freedom to live our lives with a higher degree of autonomy than has been allowed by those who seek to manipulate and oppress for their own material gain. Be they students in the universities, underpaid workers who need government aid to live, or citizens horrified that a piece of every paycheck is going to bail-out reckless firms and to support foreign wars, the multitude is gradually realizing that they are the engine of this world, and that it is time for them to sit in the driver seat. But all is not right in the movement. It is in times of unrest and cries to social change that hegemony rears its ugly head. Since time immemorial, overt repression has been swapped for the far more subtle process of assimilation – the system acknowledges its defects, and then harnesses people power and guides it by hand into compromises that leave the primary mechanisms of domination intact. Radical change is exchanged for the more “mature” approach of working within the system. This is a very real threat to the Occupy movement, one that needs to be acknowledged and resisted by any member who truly believes in striving for a better tomorrow.
Egypt: The Inspiration
OWS’s genesis lies not just in Adbusters, but in the Spanish Indignants movement, a coalition advocating grassroots democracy in reaction to the impact of the international financial crisis on their nation. Leading the coalition is a group by the name of ¡Democracia Real YA! (Real Democracy NOW!), which called for international solidarity and protests on October 15th. Adbusters responded with a poster portraying a dancer atop the Wall Street bull, and a request for people to join together to occupy the “second capital” of wealth and power in the United States – Wall Street.
¡Democracia Real YA!’s initial inspiration for the international protest was the shocking success of Arab Spring,3 the multi-country revolt that succeeded in toppling one of the world’s worst dictators, the US-backed Egyptian president Hosni Mubarak. The opposing coalition, consisting mainly of tech-savy youth organizations such as the Coalition of the Youth of the Revolution and the 6 April Youth Movement, has been a consistent icon and inspiration for the Occupy movement, and rightfully so – it is one of the rare examples of people pushing for social change and getting it. So often we see revolt being crushed under the wheels of power, organization shattered, and violence suppressing hope. But even with Egypt, questions must be asked.
Ideological solidarity is giving way now to direct ties being formed between these desperate threads that are disrupting the international order. Egyptian activist Mohammed Ezzeldin gave a rousing speech to protestors in NYC’s Washington Square Park, discussing the direct lineage between the two revolts. “”I am coming from there — from the Arab Spring. From the Arab Spring to the fall of Wall Street,” he said. “From Liberation Square to Washington Square, to the fall of Wall Street and market domination, and capitalist domination.”4
Wired magazine has also reported that Ahmed Maher, one of the founding members of the 6 April Youth Movement, has traveled from Egypt to Washington D.C.’s McPherson Square to directly interact with the Occupiers there and advise them on courses of action. For sometime now Maher has been communicating with the protestors in the multitude’s medium of choice – “We talk on the internet about what happened in Egypt, about our structure, about our organization, how to organize a flash mob, how to organize a sit-in, how to be non-violent with police”5 – but this will mark the first time that he has come face to face with the people he refers to as his “brothers.”
Behind and Below the Masses: the revolution factory
The Egyptian revolt, much like its counterparts in Tunisia and Libya, was a direct fall-out from the processes of globalization; namely, the domestic impact of US policies that were driving high the price of essential living commodities. As reported in the McClatchy Newspapers:
The Fed [Federal Reserve Bank] has been engaged in what economists call “quantitative easing,” buying U.S. Treasury bonds to attack the threat of deflation — the phenomenon of falling prices across an economy.
Quantitative easing has the effect of raising asset prices, whether they’re the prices of stocks or what traders are willing to pay for commodities such as wheat or corn. One of the side effects of this policy is that the dollar weakens against other currencies, and that’s helped push up the global prices of commodities.6
As the article notes, the Fed’s quantitative easing has led to wheat prices rising 70% over the past year, certainly bad news for the country of Egypt, which stands as the US’s eight largest export market. With an economy pried open by the International Monetary Fund to a flood of international products under the banner of benevolent “structural adjustments,” the skyrocketing prices in the US means skyrocketing prices in Egypt. With an oppressive leader under the thumb of the United States military, the stage was ripe for revolution. In other words, Egypt, like the other countries involved in the Arab Spring, was on the surface revolting against domestic policies; at its core; however, the revolt was against the structures of Late Capitalism, the mechanics of what Michael Hardt and Antonio Negri refer to as “Empire” – the international monetary system that is rapidly rendering the concept of the “nation-state” obsolete.
So Mubarak is toppled and the Egyptian people seemingly liberate themselves. And what is the result? The country comes under the rule of the Supreme Council of the Armed Forces. Led by Mohamed Hussein Tantawi (a man described as “Mubarak’s poodle” for his loyalty to the disposed leader7 the Council has declared it will honor all existing political treaties and agreements, as well as maintaining the neoliberal stance of its predecessor. “We are not moving back to a socialist past,” Egypt’s temporary government has declared,8 as the World Bank, the International Finance Corporation, and the European Investment Bank plan to descend upon the country with an “action plan” for foreign investment and “sustainable growth.9
Thus, Washington and the IMF’s program will go unchanged as it moves from Mubarak’s dictatorship to the new parliamentary democracy. How did it happen? How did we get from point A (the masses, infused with revolutionary potential) to point B (a cosmetic facelift of the prevailing economic system)? An analogous situation can be found in South Africa, where the spirit of the revolution was laid down in a document known as the Freedom Charter. In this document we can find declarations such as “the national wealth of our country, the heritage of South Africans, shall be restored to the people… the Banks and monopoly industry shall be transferred to the ownership of the people as a whole.10 Yet when the dust settled after 1994, a radically different picture emerged: the apartheid-era finance minister, Derek Keyes, remained in his position as head of the South African bank; the ANC signed onto the international General Agreement on Tariffs and Trade; the World Bank was free to impose restrictions on socialized business models; and the IMF exerted authority over the approach to issues such as minimum wage. In the words of one activist, “they never freed us. They only took the chain from around our neck and put it around our ankles.”11
The dominant system will always resist widespread structural change, and the most common method of doing this is through the power of non-governmental institutions. Foundations constitute a main apparatus of this process – “everything the Foundation did could be regarded as ‘making the World safe for capitalism’, reducing social tensions by helping to comfort the afflicted, provide safety valves for the angry, and improve the functioning of government,” said McGeorge Bundy, the long-time president of the Ford Foundation.12 There is also the National Endowment for Democracy (NED), a brainchild of the Reagan administration that seeks to provide a capitalist economic framework for developing nations, and ease former left-wing states into a financial and militaristic stance in line with Washington’s key values. The NED receives its funding from the State Department through the US Agency for International Development (USAID), and in turn funnels the money into four subsidiary organizations: the National Democratic Institute (NDI), the International Republican Institute (IRI), the Center for International Private Enterprise (CIPE), and the American Center for International Labor Solidarity (Solidarity Center). The NDI and IRI are allied with their respective American political parties, while the CIPE is affiliated with the US Chamber of Commerce. The Solidarity Center, on the other hand, is a program of the AFL-CIO labor union consortium. Other NED funds flow into Freedom House, a US-based human rights organization that has been described as a “Who’s Who of neoconservatives from government, business, academia, labor, and the press.”13 American libertarian politician Ron Paul has provided an excellent analysis and critique of the whole “democracy promoting” apparatus:
The misnamed National Endowment for Democracy is nothing more than a costly program that takes US taxpayer funds to promote favored politicians and political parties abroad. What the NED does in foreign countries, through its recipient organizations the National Democratic Institute and the International Republican Institute (would be rightly illegal in the United States. The NED injects “soft money” into the domestic elections of foreign countries in favor of one party or the other. Imagine what a couple of hundred thousand dollars will do to assist a politician or political party in a relatively poor country abroad. It is particularly Orwellian to call US manipulation of foreign elections “promoting democracy.” How would Americans feel if the Chinese arrived with millions of dollars to support certain candidates deemed friendly to China? Would this be viewed as a democratic development?14
After playing a role in the “color revolutions” of Georgia and the Ukraine, the NED’s attention then turned to Egypt. A recent New York Times article has revealed, citing WikiLeaks cables, that the disparate bands of dissident groups have been receiving “training and financing from groups like the International Republican Institute, the National Democratic Institute, and Freedom House.”15 Verification independent of the New York Times article can be found as well. Madeleine Albright, former Clinton-era Secretary of State and chairman of the NDI, appeared on MSNBC’s Rachel Maddow Show to give her analysis of the events in Egypt. “You mentioned that I was chairman of the board of the National Democratic Institute,” Albright says to Maddow in the interview, responding to the pundit’s questions concerning the post-Mubarak government. “We have been working within Egypt for a very long time, in terms of developing various aspects of civil society, and dealing with various and talking to opposition groups who are prepared to participate in a fair and free election.”
Freedom House also openly admits their role in fomenting the unrest. In a May 2009 report, the organization discusses their “New Generation Project” within Egypt, seeking to empower the nation’s “Youtube generation” by “promoting exchange” between “democracy advocates” and “emerging democracies” to “share best practices,” “providing advanced training on civil mobilization” and helping them understand the benefits of “new media.”16 In 2008, representatives from the organization attended the “Alliance of Youth Movements,” an activist summit funded by the State Department, Facebook, MTV, Google, and Youtube to provide a fertile meeting ground for ‘digital activists’ and the corporate leaders behind “new media.” The summit has subsequently been the topic of a set of leaked WikiLeaks cables, describing an ‘unnamed activist’ who there presented “his movement’s goals for democratic change in Egypt.” This same unnamed activist then met with a series of US Congressmen, discussing with them an “unwritten plan for democratic transition” of Egypt into a parliamentary democracy, a plan that had been accepted by “several opposition parties and movements.”17
Disturbingly, this is the same milieu that Ahmed Maher, now an adviser to OWS, travelled in. As researcher Tony Cartalucci has reported:
This of course isn’t Maher’s first trip to the United States. Years before the Egyptian revolution, the United States was quietly preparing a global army of youth cannon fodder to fuel region wide conflagrations throughout the world, both politically and literally. Maher’s April 6 organization had been in New York City for the US State Department’s first ‘Alliance for Youth Movements Summit’ in 2008. His group then traveled to Serbia to train under the US-funded ‘CANVAS’ organization before returning to Egypt in 2010 with US International Crisis Group (ICG) operative Mohamed ElBaradei to spend the next year building up for the ‘Arab Spring.18
CANVAS (Centre for Applied Non Violent Action and Strategies) was founded in 2003 by the Serbian youth organization Optor! (Resistance!), which utilized nonviolent methods of revolt to bring down Slobodan Milošević. Not surprisingly in the least, the organization had received millions of dollars in funding from both the NED and IRI19 while CANVAS itself has worked closely with Freedom House.20 Given the close ties between these youth-based activist organizations and US State Department’s bureaucracy, perhaps it is distressing to note that former Optor! Member and leader of CANVAS, Ivan Marovic, has given talks at the OWS rallies in NYC.21
The Right’s Favorite Boogeyman – and a useful opportunity
Perhaps the centerpiece of the Egyptian Revolution was the individual Mohamed ElBaradei, a director general of the International Atomic Energy Agency and presidential hopeful for Egypt’s parliamentary democracy. ElBaradei, however, has ties of his own to suspicious Western interests – he sits on the board of trustees of the International Crisis Group, which has been described by Madeleine Albright as a “full-service conflict prevention organization.” Despite this astute observation, the membership rosters of the Crisis Group’s various chairmen, trustees, and directors shows a significant overlap with affiliates of the National Endowment for Democracy: Zbigniew Brzezinski, Morton I. Abramowitz, and Stephen Solarz are just a handful of Crisis Group members who represent the interests of both. Here we can find the favorite whipping boy of the right-wing media, the billionaire philanthropist George Soros. Vilified as some sort of a socialist by the likes of Glenn Beck and Michael Savage, Soros, in truth, is far from that sort of ideology. A key figure in the transition of former Soviet states into the world of globalized capitalism, Soros helped engineer the economic ‘shock therapy’ that thrust Poland into a financial tail spin as extensive structural adjustments rattled the already crumbling economy.22
Soros, despite being a clear member of the 1%, has publicly stated his support of OWS:
Billionaire financier George Soros says he sympathizes with protesters speaking out against corporate greed in ongoing protests on Wall Street… Soros says he understands the frustrations of small business owners, for instance those who have seen credit card charges soar during the current crisis.23
There are ties, albeit indirect ones, that can tie Soros to the fledgling Occupy movement. MoveOn.org, a regular recipient of Soros funding, has thrown its weight behind the protestors in an apparent sign of solidarity. As TruthOut’s Steve Horn writes:
On October 5, Day 19 of Occupy Wall Street, MoveOn.org sent out an email calling on clicktivists (as opposed to activists) to “Join the Virtual March on Wall Street.” “The 99% are both an inspiration and a call that needs to be answered. So we’re answering it today, in a nationwide Virtual March on Wall Street to support their demand for an economy that serves the many, not the few … Join in the virtual march by doing what hundreds have done spontaneously across the web: Take your picture holding a sign that tells your story, along with the words ‘I am the 99%,’” wrote Daniel Mintz of MoveOn.org.24
MoveOn.org has a long history of left-wing co-option; as people flooded the streets of American cities in protest of the Iraq War, the online institution dove right into the populist fervor and proceeded to utilize people’s discontent with the Bush administration to garner support for John Kerry’s presidential campaign. The same process was repeated just a handful of years later, with MoveOn.org acting the second largest lobbying organization for Barack Obama (aside from the President’s own Organizing for America). Through a strategic ad campaign – one of MoveOn’s personnel is John Hlinko, a “social media marketing expert” – the organization managed to create a literal army of voters for Obama, reinforcing that the same “hope and change” imagery that was being pumped out by the campaign itself. Both MoveOn and Organizing America’s methodology was a foreshadow to the systems of new media utilized by the Arab Spring protestors; this tool is now being called “netroots,” the transporting of traditional grassroots activities into the virtual sphere.
MoveOn.org is not the only group chiming in to support for OWS. Rebuild the Dream, a progressive-style organization founded by former Obama White House adviser Van Jones, has championed the protestors – “Let’s all support Occupy Wall St.” reads a blurb on their website homepage. During an MSNBC interview, Van Jones directly linked the OWS movement to the Arab Spring, stating “you are going to see an American Fall, an American Autumn, just like we saw the Arab Spring.”
However, the institution changes that OWS is calling for contrast sharply with Jones’ vision of how to take America back: “We’re talking about U.S. senators who want to run as American Dream candidates – soon to be announced. We’ve reached out to the House Democratic Caucus; there are House members who want to run as American Dream candidates.25 Simply put, Rebuild the Dream is an unofficial organ of the Democrat Party, much like how MoveOn.org utilized, mobilized anti-war protestors to generate a large sector of the Democrat’s voting base. In actuality the ties run closer than that – Jones had worked hand in hand with MoveOn.org to initially launch Rebuild the Dream. Furthermore, he had been a senior fellow at Center for American Progress; the progressive institution has received funding from both George Soros26 and the Democracy Alliance organization, where Soros sits on the board of directors.
Co-option of social activism has always been the modus operandi of the Democrat Party. They play “’the role of shock absorber, trying to head off and co-opt restive [and potentially radical] segments of the electorate’” by posing as ‘the party of the people.27 President Obama, riding the crest of the MoveOn.orgs of the country – and not to mention a well orchestrated propaganda campaign – has fit this concept to a T, something that has even been noted by members of the liberal establishment:
Two and a half weeks after Obama’s victory in the 2008 presidential election, David Rothkopf, a former Clinton administration official, commented on the president-elect’s corporatist and militarist transition team and cabinet appointments with a musical analogy. Obama, Rothkopf told the New York Times, was following “the violin model: you hold power with the left hand and you play the music with the right.27
Liberal commentator Thomas Frank has observed the process of “voting for one thing, getting another” at work in the Republican Party:
The trick never ages; the illusion never wears off. Vote to stop abortion; receive a rollback in capital gains taxes. Vote to make our country strong again, receive deindustrialization … Vote to get governments off our backs; receive conglomeration and monopoly everywhere from media to meatpacking … Vote to strike a blow against elitism; receive a social order in which wealth is more concentrated than ever before in our lifetimes, in which workers have been stripped of power and CEOs are rewarded in a manner beyond imagining.28
Is it really any different for the Democrat Party? Vote to end wars, receive troop escalation and change only years after the fact. Vote to allow workers to retain their rights, receive trade agreements that export jobs overseas. Vote to reign in the power of Wall Street, receive taxpayer-funded bail-outs that create moral hazards and prop up corrupt financial regimes. From the left to the right, the story is the same – the great violin keeps playing cheerfully as the world burns. It’s only the hands grasping it, not the system, that change.
One of the clearest portraits of co-option in recent history would be the history of the conservative Tea Party Movement. In its infancy, the Tea Party was a movement launched by libertarian politician Ron Paul, a staunch opponent of the government’s infringement on civil liberties, its use of military force on foreign soil, the monopolization of the financial market by entities such as the Federal Reserve Bank, and the crony capitalism that eventually erupted into the bail-outs. Aside from certain economics views, there is certainly a great deal in Ron Paul’s – and the early Tea Party Movement’s – agenda that is entirely compatible with the demands of the Occupy Movement; it is for this very reason that libertarians have begun to reach out and join in solidarity with the protestors. Furthermore, given the anti-foreign aid and anti-Federal Reserve stance of the early Tea Party Movement, there can perhaps be observed an unspoken lineage between the Tea Party and the uprisings in Egypt and surrounding countries, triggered by Western support of the people’s oppressors and the monetary policies of the Federal Reserve.
Just as Soros controls the purse strings to disrupt and redirect leftist movements into positions aligned with the Democrat Party, the right can find his counterpart in the Koch brothers, the billionaire owners of the little-known Koch Industries. With their money bankrolling organizations such as Americans for Prosperity, David and Charles Koch were able to train torrents of so-called Tea Party activists whose espoused viewpoints are far more in line with typical Republican dialogue than with Ron Paul’s libertarian ethos. The focus was shifted from attacking the Fed and ending the wars and towards union-busting, securing borders, and more often than not, reinforcing unequivocal US support for Israel – a direct clash with the stance that Paul has taken on the topic.
This “astro-turfing” of grassroots movements, of course, requires multiple organizations and front groups to create the veneer of a unified public opinion, and operating alongside Americans for Prosperity is FreedomWorks. Perhaps it is worthy to take into consideration that when the organization was created from a 2004 merger between the Koch-funded Citizens for a Sound Economy and the neoconservative Empower America, several prominent NED officials sat on the board of directors of the former – including Vin Weber (an adviser to Mitt Romney’s ill-fated 2008 presidential campaign), Jeane J. Kirkpatrick (one of the most prominent of Cold War-era hardliners), and Michael Novak (an expert at the neoconservative think-tank American Enterprise Institute).
The Tea Party’s assimilation into the broader spectrum of the Republican political arena was marked by the establishment of the Tea Party Caucus, a coalition of House of Representatives and Senate members that represents perhaps the most powerful political body sitting in the US government – this consortium of leaders are essentially calling the shots when it comes to the right-wing of the American political system. Its members show utter disregard for the original protests of the Tea Party: Louie Gohmert has been a strong and vocal supporter of the war in Iraq, Steve King has openly supported the lobbying industry for their “effective and useful job”[s]29 and Dennis A. Ross was a member of the United States House Oversight Subcommittee on TARP, Financial Services and Bailouts of Public and Private Programs. Joe Barton eviscerated any ideological tie between himself and the early stages of the movement that he claims to rally behind (not to mention a disregard for any allegiance to the notion of really existing free markets) by arguing that the removal of subsidies to oil companies would act as a “disincentive” and result in the corporations going out of business.30
Curiously, the place where this whole process of right-wing co-option began – the corporate-financed milieu of Americans for Prosperity and FreedomWorks – was intended to be a “powerful answer to the challenge presented by the Left and groups like America Coming Together (ACT), MoveOn.org, and the Media Fund.31 All three of these organizations are Soros-financed, revealing the hidden irony that ultimately, these seemingly opposing institutions are simply moving potentially disruptive individuals into an entirely compatible paradigm of power that sits in the dual capitals of Washington D.C. and Wall Street. However, this odd dialectic can be entirely useful. Realizing this process will allow individuals who yearn for legitimate change on either side of the aisle to separate themselves from the system, and hopefully, discover the disparate strands that are ideologically compatible between them and their counterparts. It is a rare opportunity for the discontents of “left” and the “right” to shake off the labels applied to them and create an open dialogue and eventual solidarity with one another.
Conclusions and Other Thoughts
Though it may certainly seem like it, this essay was not written to belittle the OWS movement, or attack the actions of those who stood in opposition to Milosevic, apartheid, or Mubarak. However, it was my intention to acknowledge the shortcomings in the aftermath of these fights – Serbia and South Africa both jumped into bed with the IMF, imposing austerity measures in their nations that allowed persistent poverty to fester and even continue to grow. Egypt is certainly following suit now, so even though the brutal fist of the American-backed regime is gone, the slow-burning fires of neoliberalism continue to carry on the torch. For Serbia and Egypt, their revolts, though brilliant displays of the potential of people power, were in no small part shaped by the technicians in State Department, operating through the long arm of the NED. For South Africa, money from George Soros ended up in the coffers of activist groups who quickly changed their tune from the ANC’s quasi-socialist demands to jump starting South African neoliberalism.32 Not surprisingly, these same groups showed a willingness to work closely with the NED.33
The NED, much like Soros’ civil society empowering programs, promotes a little known methodology called low-intensity democracy.
Low-intensity democracies are limited democracies in that they achieve important political changes, such as the formal reduction of the military’s former institutional power or greater individual freedoms, but stop short in addressing the extreme social inequalities within… societies. …they provide a more transparent and secure environment for the investments of transnational capital… these regimes function as legitimizing institutions for capitalist states, effectively co-opting the social opposition that arises from the destructive consequences of neoliberal austerity, or as Cyrus Vance and Henry Kissinger have argued, the promotion of “pre-emptive” reform in order to co-opt popular movements that may press for more radical, or even revolutionary, change.34
Thus, it can be considered to be worrisome that individuals who were trained under institutions that implement this system are turning up at OWS rallies. While the NED’s agenda is to establish low-intensity democracies around the world, this is precisely the type of governance that we are dealing with in the United States, the very system that produced the antagonism found in both the Tea Party and OWS. To consent to it would be a rejection of the spirit of the protest and an embrace of what is opposes.
It is the Democrat Party that could possibly represent this system even more so than the Republicans. It is the party of Social Security, government-provided medical care, and other welfare programs. Does this function of the party not dim and obfuscate the fact that it is also the party of bail-outs and NAFTA? Realizing this simple fact is paramount to creating a movement of legitimate change in the world; we must seek to deconstruct low-intensity democracy and replace it with Really Existing Democracy. We have already seen this functioning in a micro-sense at OWS rallies, where leadership positions are voluntary and voted in by the whole of the people. Decisions are made in a similar matter, putting the course of action and the direction of the movement in its entirety in the hands of the protestors, not in bureaucrats and moneymen with agendas of their own. It is organic and autonomous, and on an international level holds to be what Gilles Deleuze and Félix Guattari referred to as a ‘rhizome’ – “a nonhierarchal and noncentered network structure.35
There are further reasons to be optimistic about the movement’s direction. The official OWS website hosts a petition with a “formal demand that MoveOn.org leaves” – “this is OUR movement and it is NOT Obama’s personal reelection campaign,” it reads.36 The leftist online newspaper TruthOut has called attention to MoveOn.Org and Rebuild the Dream’s attempts to cozy up to the protestors, while Michel Chossudovsky, the professor emeritus of the economics department at the University of Ottowa, has published a piece for his Centre for Research on Globalization detailing the arrival of NED associates at OWS rallies.
There is an opportunity here. We live in a time marked by crisis, catastrophe, poverty, and war, but it is in times of disruption like these that rifts open in the landscapes of the global system, providing people with a chance to take the wheel, if they so choose. For America, this time arises from the great disappointments of our so-called democratic process – the hookwinking of the masses by the left-right one-two punch by the back to back presidencies of George W. Bush and Barack H. Obama has led more people to step back, reconsider their presumptions about the world’s machinery, and begin to demand that their voices be heard. What happens from here, with the choices marked by the path to liberation or the well-worn roads of hegemony, is entirely contingent on the will of the people.
Edmund Berger is an independent writer and researcher from Louisville Kentucky, where he has been active in the pro-Palestinian movement.
December 21, 2011
Posted by aletho |
Deception, Economics, Progressive Hypocrite, Solidarity and Activism, Timeless or most popular |
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Japanese Foreign Minister Koichiro Gemba says his country will not stop importing oil from the Islamic Republic of Iran.
Gemba made the remarks on Monday during a visit to Washington after talks with US Secretary of State Hillary Clinton, noting that stopping crude imports from Iran could endanger the entire global economy.
“Specifically in relation to the (US) national defense authorization act, which targets the central bank of Iran, I conveyed my view that there is a danger of causing damage to the entire global economy if the imports of Iranian crude oil stop,” he said.
According to a report published in a Japanese newspaper on Sunday, Japan, which gets 10 percent of its oil imports from Iran, would be hardest hit in case sanctions were slapped against the Iranian oil industry over the Islamic Republic’s nuclear program.
Earlier in the last week, both houses of the US Congress passed a bill that included provisions that would impose sanctions on the foreign financial institutions that did business with the Central Bank of Iran.
The United States, Britain, and Canada imposed unilateral sanctions on Iran’s energy and financial sectors on November 21 in the wake of the latest report by the International Atomic Energy Agency (IAEA) on the country’s nuclear activities.
The report accused Iran of seeking military objectives in its nuclear program.
Iran has dismissed the report as “unbalanced, unprofessional and prepared with political motivation and under political pressure by mostly the United States.”
The US, the Israeli regime, and some of their allies have repeatedly and rhetorically accused Tehran of pursuing military objectives in its nuclear program.
Iran argues that, as a signatory to the nuclear Non-Proliferation Treaty and a member of the IAEA, it has the right to develop and acquire nuclear technology for peaceful purposes.
The IAEA has conducted numerous inspections of Iran’s nuclear facilities, but has never reported any specific evidence indicating that Tehran’s civilian nuclear program has been diverted to nuclear weapons production.
December 19, 2011
Posted by aletho |
Economics, Wars for Israel |
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Public sector workers in Italy are once again holding a strike to protest against the imposition of the government’s harsh austerity measures aimed at saving the country from financial ruin.
Italian postal and health workers were joined by teachers on Monday in a one day strike to protest a package of cost-cutting measures the government aims to pass by the end of the year.
Protesters in Rome are expected to march on parliament to oppose Prime Minister Mario Monti’s 30-billion euros budget bill.
Italy’s main union leaders say the measures are too tough for pensioners and workers and not tough enough on the wealthy.
The main objections are the introduction of property taxes on primary residences as well as pension cuts and the hefty raise of the retirement age.
Monti believes Italy will “collapse” like Greece without the new austerity measures, saying the package will also help solve the eurozone debt crisis.
Italy’s debt, totaling around 1.9 trillion euros, is 120 percent of its Gross Domestic Product. Rome has been under intense pressure to act quickly ahead of a key European Union summit on Thursday and Friday.
The government has said it will meet its target of balancing the budget by 2013 but has warned the Italian economy will slip back into recession next year.
December 19, 2011
Posted by aletho |
Economics, Solidarity and Activism |
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“A study of the struggle waged by the English working class reveals that, in order to oppose their workers, the employers either bring in workers from abroad or else transfer manufacture to countries where there is a cheap labor force. Given this state of affairs, if the working class wishes to continue its struggle with some chance of success, the national organisations must become international.”
–Karl Marx
To borrow a metaphor from the medical sciences, an effective cure requires a sound diagnosis. Yet, in the face of the current plague of unemployment the Keynesian economists issue all kinds of passionate prescriptions to remedy the problem of joblessness without paying necessary attention to its root causes.
According to these economists, the origins of the ongoing high rates of unemployment (and of the underlying economic crisis in general) can be traced back to Ronald Reagan: his election to the presidency in 1980 and the subsequent rise of Neoliberalism brought forth an economic doctrine that has gradually led to the reversal of the Keynesian demand-management strategies of economic stimulation. So, for most Keynesian/liberal economists and politicians, Reagan is the pivotal figure and 1980 is the watershed year:
“Before 1980, economic policy was designed to achieve full employment, and the economy was characterized by a system in which wages grew with productivity. This configuration created a virtuous circle of growth. Rising wages meant robust aggregate demand, which contributed to full employment. Full employment in turn provided an incentive to invest, which raised productivity, thereby supporting higher wages.
“After 1980, with the advent of the new [Neoliberal] growth model, the commitment to full employment was abandoned as inflationary, with the result that the link between productivity growth and wages was severed. In place of wage growth as the engine of demand growth, the new model substituted borrowing and asset price inflation. Adherents of the neo-liberal orthodoxy made controlling inflation their primary policy concern, and set about attacking unions, the minimum wage, and other worker protections” [1].
While this account of US economic policies and developments of the past several decades is shared by most Keynesians and other critics of Neoliberalism, it suffers from a number of weaknesses.
First, the claim that the abandonment of Keynesian policies in favor of Neoliberal ones began with the 1980 arrival of Ronald Reagan in the White House is factually false. Indisputable evidence shows that the date on the Keynesian prescriptions of economic stimulation expired at least a dozen years earlier. Keynesian policies of economic expansion through demand management had run out of steam (i.e., reached their systemic limits) by the late 1960s and early 1970s; they did not come to a sudden, screeching halt the moment Reagan sat at the helm.
The questioning and the gradual abandonment of the Keynesian strategies took place not simply because of purely ideological proclivities or personal preferences of Ronald Reagan and other “right-wing” Republicans, as many Keynesians argue, but because of actual structural changes in economic or market conditions, both nationally and internationally. As discussed in my previous essay on this subject [2], Keynesian-type policies were pursued in response to the Great Depression and in the immediate aftermath of WW II as long as political forces and economic conditions of the time rendered those policies effective, or profitable. Those favorable conditions included nearly unlimited demand for US manufactures, both at home and abroad, and the lack of competition for both US capital and labor, which allowed US workers to demand decent wages and benefits while at the same time enjoying higher rates of employment.
By the late 1960s and early 1970s, however, both US capital and labor were no longer unrivaled in global markets. Furthermore, during the long cycle of the immediate post-war expansion US producers had invested so much in fixed/constant capital, or capacity building, that by the late 1960s their profit rates had begun to decline as the capital-labor ratio and other “sunk costs” of their operations had become too high. More than anything else, it was these profound changes in the actual conditions of production that precipitated the gradual rejection of the Keynesian economics.
Second, not only is the Keynesians’ narrative of the actual developments that led to the demise of Keynesian policies and the rise of Neoliberalism inaccurate, but also their theory or explanation of the ongoing problem of unemployment (and of the economic crisis in general) is woefully deficient. By blaming the unemployment on Neoliberalism, or “Neoliberal capitalism,” as some Keynesians argue [3], instead of capitalism per se, proponents of Keynesian economics tend to lose sight of the structural or systemic causes of unemployment: the secular and/or systemic tendency of capitalist production to constantly replace labor with machine, and to thereby create a sizable pool of the unemployed, or a “reserve army of labor,” as Karl Marx put it. This means, of course, the higher the degree of industrialization and automation, the higher the potential of the reserve army of labor to expand. Marx described this tendency of capitalism to constantly create high levels of unemployment (or low levels of wages) as an essential condition for profitable production in the following words:
“The greater the social wealth, the functioning capital, the extent and energy of its growth… the greater is the industrial army…. The relative mass of the industrial reserve army increases therefore with the potential energy of wealth. But the greater this reserve army in proportion to the active labor army, the greater is the mass of a consolidated surplus population… This is the absolute general law of capitalist accumulation. Like all other laws it is modified in its working by many circumstances” [4].
The fundamental laws of demand and supply of labor under capitalism are therefore heavily influenced, Marx argued, by the market’s ability to regularly produce a reserve army of labor, or a “surplus population.” The reserve army of labor, whose size is determined largely by the imperatives of capitalist profitability, is therefore as important to capitalist production as is the active (or actually employed) army of labor. Just as the regular and timely adjustment of the level of water behind a dam is crucial to a smooth or stable use of water, so is an “appropriate” size of a pool of the unemployed critical to the profitability of capitalist production. “The industrial reserve army,” Marx wrote,
“during periods of stagnation … weighs down the active army of workers; during the period of over-production and feverish activity, it puts a curb on their pretensions. The relative surplus population is therefore the background against which the law of the demand and supply of labour does its work. It confines the field of action of this law to the limits absolutely convenient to capital’s drive to exploit and dominate the workers” [5].
It is clear that the Marxian theory of the reserve army of labor, which shows how unemployment arises and why it is necessary to capitalism, provides a much better understanding of the current plague of unemployment than the Keynesian view, which blames it on “Neoliberal” capitalism—and which is essentially tantamount to explaining something by itself.
In the era of globalization of production and employment, the reserve army of labor has drastically expanded beyond national borders. According to a recent report by the International Labor Organization (ILO), between 1980 and 2007 the global labor force rose from 1.9 billion to 3.1 billion, a growth rate of 63 percent. Historical transition to capitalism in many less-developed parts of the world, which has led to the so-called de-peasantization, or proletarianization and urbanization, especially in countries such as China and India, is obviously a major source of the enlargement of the worldwide labor force, and its availability to global capital. The ILO report further shows that, worldwide, the ratio of the active (or employed) to reserve (or unemployed) army of labor is less than 50%, that is, more than half of the global labor force is unemployed [6].
It is this huge and readily available pool of the unemployed, along with the ease of production anywhere in the world—not some abstract or evil intentions of “right-wing Republicans and wicked Neoliberals,” as Keynesians argue—that has forced the working class, especially in the US and other advanced capitalist countries, into submission: going along with the brutal austerity schemes of wage and benefit cuts, of layoffs and union busting, of part-time and contingency employment, and the like. Ruthless Neoliberal policies of the past several decades, by both Republican and Democratic parties, are more a product of the structural changes in the global capitalist production than their cause. This is not to say that economic policies do not matter; but that such policies should not be attributed simply to capricious decision, malicious intentions or conspiratorial schemes.
It might be argued: “who cares what caused the unemployment? The fact is that it is a huge problem for millions; and why not simply replicate the Keynesian-type stimulus policies that were adopted in the immediate aftermath of the Great Depression and World War II?” Indeed, this seems to be the view of most of the Keynesian economists and liberal policy makers.
While prima facie this sounds like a reasonable suggestion, it suffers from the problem of issuing useless or ineffectual prescriptions based on inaccurate or flawed diagnoses. Not surprising, repeated Keynesian calls of the recent years for embarking on Keynesian-type stimulus packages in order to help end the recession and alleviate unemployment continue to sound hollow. For, under the changed conditions of production from national to global level, and in the absence of overwhelming political pressure from workers and other grassroots, there are simply no refills for Dr. Keynes’s prescriptions, which were issued on a national (not international or global) level, and under radically different socio-economic conditions—the solution now needs to be global.
Theoretically, the Keynesian strategy of a “virtuous circle” of high employment, high wages and economic growth is rather simple: massive government spending in the face of a serious economic downturn would raise employment and wages, inject a strong purchasing power into the economy and create a strong demand, which would then spur producers to expand and hire, thereby further raising employment, wages, demand, supply. . . . Many well-known Keynesians (such as Paul Krugman, Dean Baker, Thomas Palley, Robert Reich, and Randall Wray, for example) have in recent years repeatedly put forth this strategy of economic stimulation—only to see them fall on deaf ears.
Why?
While in theory (and on the face of it), the “virtuous circle” proposition is a relatively simple and fairly reasonable strategy, it suffers from a number of problems. To begin with, it seems to assume that employers and their government policy makers are genuinely interested in bringing about full employment, but somehow do not know how to achieve this objective. Full employment production, however, may not necessarily be the ideal, or profit-maximizing, level of production; which means it may not be a real objective of employers. As explained above, a sizable pool of the unemployed is as essential to capitalist profitability as is the number of workers needed to be actually employed. In its drive to keep the labor cost as low as possible, by keeping the working class as docile as possible, capitalism tends to prefer high unemployment and low wages to low unemployment and high wages. This explains why, for example, in reaction to the ongoing high levels of unemployment in the United States, the Obama administration (and the US government in general) has been making a lot of hollow, echoing noise about “jobs programs” without seriously embarking on a genuine plan of job creation a la FDR.
Secondly, the Keynesian argument that a “virtuous circle” of high employment, high wages, strong demand and economic growth is relatively easily achievable only if it were not due to the opposition of employers, or “bad” policies of Neoliberalism, seems to be based on the assumption that employers/producers are oblivious to their own self-interest. In other words, the argument presumes that it is not in the interests of employers to drive the wages too low as this would be tantamount to undermining consumer demand for what they produce. If only they were mindful of the benefits of the proverbial “Ford wages” to their sales, the argument goes, could they help both themselves and their workers, and bring about economic growth and prosperity for all. The well-known liberal professor (and former Labor Secretary under President Clinton) Robert Reich’s view on this issue is typical of the Keynesian argument:
“For most of the last century, the basic bargain at the heart of the American economy was that employers paid their workers enough to buy what American employers were selling. . . . That basic bargain created a virtuous cycle of higher living standards, more jobs, and better wages. . . . The basic bargain is over. . . . Corporate profits are up right now largely because pay is down and companies aren’t hiring. But this is a losing game even for corporations over the long term. Without enough American consumers, their profitable days are numbered. After all, there’s a limit to how much profit they can get out of cutting American payrolls. . . .” [7].
There are two major problems with this argument. The first problem is that it assumes (implicitly) that US producers depend on domestic workers not only for employment but also for sale of their products—as if it were a closed economy. In reality, however, US producers are increasingly becoming less and less dependent on domestic labor for either employment or sales as they steadily expand their export/sales markets abroad. Transnational capital’s consumer and labor markets are now spread across the globe. As Professor Alan Nasser recently pointed out (in a CounterPunch article), “On both the supply [employment] side and the demand side, the US worker/consumer is perceived as incrementally inessential” [8].
President Obama and his top economic advisers have been specially keen, indeed aggressive, on expanding US export markets to make up for the loss of domestic purchasing power. For example, in a speech (on his National Export Initiative) to the annual conference of the Import-Export Bank (March 11, 2010) the president pointed out: “The world’s fastest-growing markets are outside our borders. We need to compete for those customers because other nations are competing for them.” Mr. Obama’s chairman of the Council on Jobs and Competitiveness, Jeffrey Immelt, likewise states: “Today we go to Brazil, we go to China, we go to India, because that’s where the customers are” [9].
The second problem with Professor Reich’s (and his Keynesian co-thinkers’) argument of “high wages as the engines of virtuous cycles” of growth and expansion is that wages and benefits are micro- or enterprise-level categories that are decided on by individual employers and corporate managers, not by some macro or national level planners (as in a centrally-planned economy) of aggregate demand. In other words, individual producers (large or small) view wages and benefits first, and foremost, as a major cost of production that needs to be minimized as much as possible; and only secondarily, if ever, as part of the national aggregate demand that may (in roundabout ways) contribute to the sale of their products. This is another example of how Marx’s theory of capitalist exploitation and wage-determination (as a subsistence-based historical category) is superior to the Keynesian view that, in a manner of wishful thinking, hopes that producers would be wise and generous enough to pay “sufficient” wages in order to sell their products!
Keynesian economists passionately talk about “virtuous cycles” of high employment, high wages and high growth as if there are no limits to such expanding, upward spiraling cycle. It is well established, however, both theoretically and empirically, that such virtuous cycles are bound to be temporary because as they expand they also sow the seeds of contraction. A discussion of economic cycles and the underlying theories of capitalist crisis is beyond the purview of this essay. Suffice it to point out that, contrary to the arguments of Keynesian economists, an expanding cycle of accumulation and high levels of employment may not necessarily be accompanied by rising wages. If it does, it would be temporary because, sooner or later, the rising wages would cut into profitability imperatives, which would then trigger the employers’ reaction to curtail wages and benefits—by either curtailing or outsourcing production and/or employment.
This means that not only may growth and expansion not be precipitates or accompanied by high wages, as Keynesian economists claim, but (on the contrary) by low wages, or low cost of labor. More often than not, capitalism flourishes on the poverty, compliance and, therefore, low cost of labor. Marx characterized capitalism’s ability to create a big pool of the unemployed, or “relative surplus population,” in order to create a largely poor and meek working class as “immiseration” of the labor force, a built-in mechanism that is essential to the “general law” of capitalist accumulation:
“In proportion as capital accumulates, the situation of the worker, be his payment high or low, must grow worse.… The law which always holds the relative surplus population in equilibrium with the extent and energy of accumulation rivets the worker to capital more firmly than the wedges of Hephaestus held Prometheus to the rock. It makes an accumulation of misery a necessary condition, corresponding to the accumulation of wealth. Accumulation at one pole is, therefore, at the same time accumulation of misery, the torment of labour, slavery, ignorance, brutalization and moral degradation at the opposite pole, i.e. on the side of the class that produces its own product as capital” [10].
A major flaw of the Keynesian reform or restructuring package is that it consists of a set of populist proposals that are devoid of politics, that is, of political mechanisms that would be necessary to carry them out. They rest largely on the hope that, in an independent or disinterested fashion, the state can control and manage capitalism in the interest of all. This is, however, no more than wishful thinking, since in reality it is the powerful capitalist interests that elect and control the government, not the other way around.
In response to criticisms of this kind, Keynesians are quick to invoke the experience of the “golden years” (1948-1968) of the US economy in support of their arguments. It is true that during that long cycle of expansion high employment, high wages, high demand and high growth reinforced each other in the fashion of a virtuous cycle. But the constellation or convergence of a set of propitious socioeconomic conditions (political pressure from workers and other grassroots, fear of revolution and radical change, unrivaled US labor and capital, unlimited demand for US goods and service, both on a national and international levels, and more) that precipitated and nurtured that long cycle of expansion were unique historical circumstances of the time. Empirical observations or conjunctural developments under certain/specific circumstances ought not to be facilely extrapolated, generalized, and elevated to the level of a general theory, or a universal/timeless pattern of actual developments. Such an intellectual exercise would be tantamount to empiricism through and through—not scientific or realistic inquiry into a theoretical understanding of the actual socioeconomic developments of the day.
To sum up, the Marxian theory of unemployment, based on his theory of the reserve army of labor, provides a much better explanation of the protracted high levels of unemployment than the Keynesian view that attributes the plague of unemployment to the “misguided” or “bad” policies of Neoliberalism. Likewise, the Marxian theory of subsistence or near-poverty wages, also based on his theory of the reserve army of labor, provides a more satisfactory understanding of how or why such poverty levels of wages, as well as a generalized or nationwide predominance of misery, can go hand-in-hand with “healthy” or high levels of corporate profits than the Keynesian perceptions, which view a high level of wages as a necessary condition for a “virtuous” or expansionary economic cycle. Perhaps more importantly, the Marxian view that meaningful, lasting economic safety-net programs can be carried out only through overwhelming pressure from the masses—and only on a coordinated global level—provides a more logical and promising solution to the problem of economic hardship for the overwhelming majority of the world population than the neat, purely intellectual, and apolitical Keynesian stimulus packages on a national level, which are based on the hope or illusion that the government can control and manage capitalism “in the interest of all.” No matter how long or loud or passionately our good-hearted Keynesians beg for jobs and other New Deal-type reform programs, their pleas for the implementation of such programs are bound to be ignored by the government of big business. Only by mobilizing the masses of workers and other grassroots and fighting, instead of begging, for an equitable share of what is truly the product of their labor, the wealth of nations, can the working majority achieve economic security and human dignity.
References
[1] Thomas I. Palley, “America’s Exhausted Paradigm,” http://newamerica.net/files/Thomas_Palley_America%27s_Exhausted_Paradigm.pdf
[2] Ismael Hossein-zadeh, “Keynesian Myths and Illusions,” http://www.counterpunch.org/2011/11/04/keynesian-myths-and-illusions/
[3] David M. Kotz, “The Financial and Economic Crisis of 2008: A Systemic Crisis of Neoliberal Capitalism,” Review of Radical Political Economics, Vol. 41, No. 3 (2009), pp. 305-317.
[4] Capital, Vol. 1 (Moscow, no date), pp. 592-93.
[5] Capital, vol. 1 (London: Penguin, 1976), P. 792.
[6] International Labor Organization (ILO), The Global Employment Challenge (Geneva, 2008); as cited in “The Global Reserve Army of Labor and the New Imperialism” (by John Bellamy Foster, Robert W. McChesney and R. Jamil Jonna): http://www.globalresearch.ca/index.php?context=va&aid=27549
[7] Robert Reich, “Restore the Basic Bargain” (November 28, 2011): http://robertreich.org/post/13469691304
[8] Alan Nasser, “The Political Economy of Redistribution: Outsourcing Jobs, Offshoring Markets,” http://www.counterpunch.org/2011/12/02/outsourcing-jobs-offshoring-markets/
[9] As cited by Alan Nasser, Ibid.
[10] Capital, vol. 1 (London: Penguin, 1976), p. 799.
~
Ismael Hossein-zadeh is Professor Emeritus of Economics, Drake University, Des Moines, Iowa. He is the author of The Political Economy of U.S. Militarism (Palgrave – Macmillan 2007) and the Soviet Non-capitalist Development: The Case of Nasser’s Egypt (Praeger Publishers 1989). He is a contributor to Hopeless: Barack Obama and the Politics of Illusion, forthcoming from AK Press.
December 17, 2011
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Rain clouds ringed the lush hillsides and poor neighborhoods cradling Caracas, Venezuela as dozens of Latin American and Caribbean heads of state trickled out of the airport and into motorcades and hotel rooms. They were gathering for the foundational summit of the Community of Latin American and Caribbean States (CELAC), a new regional bloc aimed at self-determination outside the scope of Washington’s power.
Notably absent were the presidents of the US and Canada – they were not invited to participate. “It’s the death sentence for the Monroe Doctrine,” Nicaraguan President Daniel Ortega said of the creation of the CELAC, referring to a US policy developed in 1823 that has served as a pretext for Washington’s interventions in the region. Indeed, the CELAC has been put forth by many participating presidents as an organization to replace the US-dominated Organization of American States (OAS), empower Latin American and Caribbean unity, and create a more equal and just society on the region’s own terms.
The CELAC meeting comes a time when Washington’s presence in the region is waning. Following the nightmarish decades of the Cold War, in which Washington propped up dictators and waged wars on Latin American nations, a new era has opened up; in the past decade a wave of leftist presidents have taken office on socialist and anti-imperialist platforms.
The creation of the CELAC reflected this new reality, and is one of various recent developments aimed at unifying Latin America and the Caribbean as a progressive alternative to US domination. Other such regional blocs include the Union of South American Nations (UNASUR) which has successfully resolved diplomatic crises without pressure from Washington, the Bank of the South, which is aimed at providing alternatives to the International Monetary Fund and the World Bank, and the Bolivarian Alliance of Latin America (ALBA), which was created as an alternative to the Free Trade Area of the Americas, a deal which would have expanded the North American Free Trade Agreement throughout Latin America, but failed due to regional opposition.
The global economic crisis was on many of the leaders’ minds during the CELAC conference. “It seems it’s a terminal, structural crisis of capitalism,” Bolivian President Evo Morales said in a speech at the gathering. “I feel we’re meeting at a good moment to debate … the great unity of the countries of America, without the United States.”
The 33 nations comprising the CELAC make up some 600 million people, and together are the number one food exporter on the planet. The combined GDP of the bloc is around $6 trillion, and in a time of global economic woes, the region now has its lowest poverty rate in 20 years; the growth rate in 2010 was over 6% – more than twice that of the US. These numbers reflect the success of the region’s social programs and anti-poverty initiatives.
In an interview with Telesur, Evo Morales said the space opened by the CELAC provides a great opportunity to expand the commerce of Latin America and the Caribbean in a way that does not depend on the precarious markets of the US and Europe. In this respect he saw a central goal of the CELAC being to “implement politics of solidarity, with complementary instead of competitive commerce to resolve social problems…”
While the US is the leading trading partner for most Latin American and Caribbean countries, China is making enormous inroads as well, becoming the main trade ally of the economic powerhouses of Brazil and Chile. This shift was underlined by the fact that Chinese President Hu Jintao sent a letter of congratulations to the leaders forming the CELAC. The letter, which Chávez read out loud to the summit participants, congratulated the heads of state on creating the CELAC, and promised that Hu would work toward expanding relations with the region’s new organization.
The US, for its part, did not send a word of congratulations. Indeed, Washington’s official take on the CELAC meeting downplayed the new group’s significance and reinforced US commitment to the OAS. Commenting on the CELAC, US Department of State spokesman Mark Toner said, “There [are] many sub-regional organizations in the hemisphere, some of which we belong to. Others, such as this, we don’t. We continue, obviously, to work through the OAS as the preeminent multilateral organization speaking for the hemisphere.”
Many heads of state actually saw the CELAC meeting as the beginning of the end for the OAS in the region. This position, held most passionately by leaders from Ecuador, Bolivia, Venezuela, Nicaragua and Cuba, was best articulated by Venezuelan President, and host of the CELAC meeting, Hugo Chávez. “As the years pass, CELAC will leave behind the old OAS,” Chávez said at the summit. “OAS is far from the spirit of our peoples and integration in Latin America. CELAC is born with a new spirit; it is a platform for people’s economic, political and social development, which is very different from OAS.” He later told reporters, “There have been many coup d’états with total support from the OAS, and it won’t be this way with the CELAC.”
However, the presidents involved in the CELAC vary widely in political ideology and foreign policy, and there were differing opinions in regards to relations with the OAS. Some saw the CELAC as something that could work alongside the OAS. As Mexican chancellor Patricia Espinosa said, the OAS and the CELAC are “complementary forces of cooperation and dialogue.”
A test of the CELAC will be how it overcomes such differences and makes concrete steps toward developing regional integration, combating poverty, upholding human rights, protecting the environment and building peace, among other goals. The final agreements of the two day meeting touched upon expanding south to south business and trade deals, combating climate change and building better social programs across the region to impact marginalized communities. In addition, the CELAC participants backed the legalization of coca leaves (widely used as a medicine and for cultural purposes in the Andes), condemned the criminalization of immigrants and migrants, and criticized the US for its embargo against Cuba.
Various presidents at the CELAC spoke of how to approach these dominant issues. Nicaraguan President Daniel Ortega said the CELAC should “monitor and rate” the US anti-drug efforts. As long as the US continues its consumption of drugs, Ortega said, “All the money, regardless of by how much it’s multiplied, and all the blood, no matter how much is spilled” won’t end the drug trade.
Yet there are plenty of contradictions within the CELAC organization itself. The group is for democracy but includes the participation of Porfirio Lobo from Honduras, the president who replaced Manuel Zelaya in unfair elections following a 2009 military coup. The CELAC is for environmental protection, yet its largest participant, Brazil, is promoting an ecologically disastrous agricultural model of soy plantations, GMO crops and poisonous pesticides that are ruining the countryside and displacing small farmers. The group is for fairer trade networks and peace, yet various participating nations have already signed devastating trade deals with the US, and corrupt politicians at high levels of government across the region are deeply tied to the violence and profits of the transnational drug trade.
These are some of the serious challenges posed to Latin American and Caribbean unity and progress, but they do not cancel out the new bloc’s historical and political significance. The creation of the CELAC will likely prove to be a significant step toward the deepening of a struggle for independence and unity in the region, a struggle initiated nearly 200 years ago and largely led by Latin American liberator Simón Bolívar, whose legacy was regularly invoked at the CELAC conference.
In 1829, a year before his death, Bolívar famously said, “The United States appears destined by Providence to plague America with miseries in the name of Freedom.” Yet with the foundation of the CELAC under the clouds of Caracas, the march toward self-determination is still on.
***
Benjamin Dangl attended the CELAC conference, and is the author of Dancing with Dynamite: Social Movements and States in Latin America (AK Press, 2010).
December 7, 2011
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Venezuela is using public investment, foreign direct investment, public education, and the law in order to craft a sustainable solution to the rapidly growing demand for electricity that has resulted from economic growth and poverty reduction.
Through a campaign to promote energy conservation, the oil-producing South American nation has kept electricity consumption in check amidst economic growth in 2011, according Minister for Electricity Ali Rodriguez, who appeared last week on the Sunday talk show hosted by former Vice President Jose Vicente Rangel.
Normally, for a 2% increase in the GDP, electricity consumption is expected to increase by as much as 2,000 megawatts, Rodriguez explained. Venezuela’s GDP grew by 3.8% in the first nine months of this year, so the government was preparing for electricity consumption to reach 18,400 megawatts.
“We were expecting increases in consumption, but 17,000 megawatts at peak hour has been the upper limit until now”, Rodriguez said. “The campaign for the efficient use of electricity has been very successful”, said Rodriguez.
The government’s measures to reduce wasteful energy consumption began two years ago during a drought that reduced the water level at the Guri hydroelectric complex and nearly caused the collapse of the national electric system.
The state-owned electricity company, CORPOELEC, increased rates for high-consumption households and restricted imports of energy-intensive appliances. Meanwhile, the government replaced millions of incandescent light bulbs with energy-saving fluorescent bulbs, and implemented temporary energy rationing that included programmed reductions in the heavy industries. Private companies that invested in electricity infrastructure were given tax breaks.
The energy-saving measures helped avert a deeper and prolonged crisis. Nonetheless, the temporary electricity shortage aggravated Venezuela’s recession amidst the global economic downturn that began in 2009. It also came at a time of high electricity consumption following five-years of sustained economic growth and a 50% reduction in poverty.
EXPANDING ELECTRICITY PRODUCTION
As Venezuela now emerges from recession, propelled by increased social investments by the government, the country has begun a multi-billion dollar plan to expand its electricity infrastructure and prevent future crises.
On Sunday, Rodriguez said the wave of economic growth that is expected in the coming years could increase Venezuela’s electricity consumption from 17,000 megawatts to 40,000 megawatts.
The country cannot continue to rely on the Guri dam for the majority of its electricity, the minister asserted.
Specifically, the government’s latest plan to build more than two million homes and equip them with electric household appliances such as refrigerators, washers and dryers, ovens and stoves, televisions, and air conditioners will contribute to the increased energy consumption, Rodriguez contended.
The appliances are imported from China and distributed through the state-subsidized Bicentenario markets. They are sold at a discount of up to 50%, and consumers are offered low-interest financing from the state-owned Bank of Venezuela, Women’s Bank, People’s Bank.
To provide for the citizenry’s energy needs, CORPOELEC has invested 21.4 billion bolivars ($5 billion) in electricity production and transmission in 2011.
A large part of the funding went toward the construction of a decentralized system of local thermo-electric plants that generate between 45 and 450 megawatts each and are dispersed in cities and towns across the country.
The government also received a $700 million loan from the InterAmerican Development Bank, which was matched with $609 million of state funds, to renovate and improve the efficiency of six generators in the Guri dam.
To improve the electricity transmission system, Venezuela is building power lines connecting the eastern Bolivar state, where the Guri dam is located, with the Uribante hydroelectric complex in the western region.
Minister Rodriguez affirmed that 122 out of a planned 187 high-powered transformers have been installed.
“We have to advance in the construction of new transmission lines so that we do not depend on the three-line radial system that we have, which in the case of any incident could leave the country without energy”, Rodriguez said on Sunday.
The investments for this project came out of a bi-national investment accord signed by Venezuela and China. In the accord, China pledged to invest $28 billion over several years to increase Venezuela’s electricity production by 2,750 megawatts.
In the first six months of this year, the government added 1,300 megawatts to the national electric system. The company projects that it will add 3,618 megawatts to the system by the end of 2012. As of April 2011, Venezuela reported to have the capacity to produce 17,922 megawatts.
TEN TIMES MORE ELECTRICITY
During the decade before Venezuelan President Hugo Chavez was elected, 1989-1998, the national electric system’s production capacity was expanded by only 33 megawatts. In contrast, during the first ten years of the Chavez government, 3,229 megawatts were added to the system, according to Rodriguez.
While the government has focused primarily on the construction of thermo-electric generators so far, it has also increased its investments in renewable energies, in particular wind and solar power.
The state-run Foundation for the Development of Electricity Services has installed approximately 2,000 solar panels nationwide, mostly in poor rural communities where connecting to the electricity grid would incur serious environmental and economic costs.
The foundation’s wind energy projects in the Guajira region of Zulia state currently produce 24 megawatts. Windmills on the Paraguana Peninsula produce 100 megawatts. Experts from the Central University of Venezuela estimate that the region could potentially produce as many as 10,000 megawatts – approximately the output of the Guri dam.
In an April 2011 interview, Electricity Minister Rodriguez stated: “Another factor that propels demand is the sensation among the population that all of the problems in the electricity sector have been solved, so people return to their previous practices of excessive consumption”.
A far-reaching and consistent effort toward public education and publicity oriented toward the formation of energy-saving habits will be essential as Venezuela continues to grow in the coming years, Rodriguez added.
“It’s not about people having to give up electricity, it’s about the rational use of electricity, which is part of a worldwide campaign to contribute to better environmental conditions”, said the minister.
EFFICIENT USE OF ENERGY
To provide a legal instrument for the fulfillment of these objectives, the National Assembly passed the new Law for the Rational and Efficient Use of Energy last week. The law grants the Ministry for Electrical Energy six months to produce national guidelines for saving energy, conserving natural resources, minimizing the environmental impact of development, and promoting social equity. The ministry must also maintain a database of potential sources of renewable energy in the country.
The law also grants the Education Ministry one year to launch a national program for education about energy efficiency, to be carried out in primary schools, secondary schools, and universities. And, it sets the foundation for energy efficient building regulations to guide city planners and architects.
December 7, 2011
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Venezuela has launched its energy assistance program for the seventh consecutive year, which helps poor Americans to pay for their home heating oil during the winter, Press TV reports.
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