People Before Profit blog

Election 2012: Alternative History and its Real-World Lessons

Wed, 01 Jun 2011 10:00:00 +0000

Imagine if you woke up tomorrow morning in Bizarro World and John McCain was president. Scary, right? In devising a strategy both for the reelection of President Obama and the installation of a progressive Democratic congressional majority, it is worthwhile stopping to consider where we would be if John McCain and Sarah Palin had won the 2008 election.

Of course, in planning a strategy for the next 18 months, the discussion will extend well beyond the counter-factual arguments presented here about what might have happened if Obama had been defeated by Mcain-Palin. But applying a "Seinfeldian" worldview for a moment, as we contemplate the bizarre and disturbing world of a McCain-Palin presidency, is a very effective way of highlighting the extremely negative consequences of a Republican victory in 2012.

In terms of the key issues confronting us, Americans are today, in reality, in a far different place (and mostly a better one) than they would have been under a John McCain presidency.

First, the hateful rhetoric – that disturbing nexus of claims that President Obama's race, national origins and supposed religion marked him as lying outside of and possibly being a threat to the interests of "hard-working" (code for white, Christian, native-born) Americans – that characterized the McCain-Palin campaign would have been victorious. It cannot be underestimated the extent to which right-wing forces that rely on such claims would have felt empowered and emboldened, and indeed would have extended their control over the machinery of government. Instead of a concession speech announcing the "end of racism," McCain's victory speech would have been a lengthy white supremacist gloat. Following his election victory, racist forces fueled with unparalleled viciousness successful campaigns to pass anti-immigrant, racial-profiling laws in Arizona and Georgia. But if President McCain were sitting in the Oval Office, he wouldn't have directed the Department of Justice to challenge those laws in federal court.

The people and forces – hard right billionaires like the Koch brothers, corporate-funded conservative think tanks and front groups and Republican Party personalities – that drive the Tea Party would now be at the very center of power in the Republican Party. But if today there is palpable, sometimes self-destructive struggle between the Tea Party and the Republican establishment over control of the far-right and its agenda, after a McCain victory these forces would have been united.

On health reform, McCain campaigned and voted against reforms that are right now checking the enormous power of the health insurance companies. He opposed making it illegal for them to deny coverage based on previous conditions. He voted against expanding public programs like Medicaid and S-CHIP for the country's lowest income families, those who will now get coverage under President Obama's Affordable Coverage Act. And McCain also voted to block tax credits to help small business owners afford health care benefits for themselves and their employees.

One thing McCain did favor was taxing people's employer-sponsored health benefits. What the plan McCain favored did not do was to expand coverage to 31 million currently uninsured people (which Obama's health plan does, while also making health insurance more affordable for the rest). That was never the intention of the plan McCain favored. The goal was to force companies – especially small and medium-sized ones – to purchase cheaper, lower-quality health coverage for their employees so the bill's Republican sponsors (and, in turn, their insurance company donors) could claim that health care costs had gone down. The bill was a gimmick that did nothing to make quality, affordable health care available to the American people. If McCain had been elected, there would be no health care reform.

At home

In our alternative world where John McCain, like the Mad Hatter, sits grinning in the White House, there would be no stimulus package, or any of the economic benefits we have in reality seen (new jobs, jobs saved, infrastructure renewed, etc.). As a candidate McCain rejected all calls for a stimulus package – except in the form of more tax breaks for the big corporations and the wealthy. But this sort of misdirected "stimulus," as the state of the American economy today empirically demonstrates, has contributed next to nothing toward the creation of new jobs and economic stimulation. The wealthy already have everything they need, while the corporations are devoted to sharing their extra cash with shareholders or hoarding it in banks. Experience has now convincingly proven that the “trickle-down approach” first promoted by Reagan, has turned out never to have provided any economic stimulus (jobs!) at all. During the debate on the Senate floor in January and February 2009, McCain rejected President Obama's stimulus package, which included aid to the states for education budgets and infrastructure investments, the largest clean energy investments ever, tax cuts for working families, the expansion of anti-poverty programs, and many other job-creating programs that are still, in the real world, putting hundreds of thousands of people to work today.

Also McCain would never have tried to put together an aid package for the U.S. auto industry before it completely collapsed. As he made clear during the 2008 presidential campaign, McCain believes manufacturing in the U.S. can just disappear and the government shouldn't lift a finger to stop it. "Have people lost jobs? Yes, they have, and they're gonna lose jobs," McCain remarked during the 2008 campaign on the collapse of the manufacturing sector. A McCain administration wasn't going to do much to rebuild manufacturing, he said. Six million jobs that economists say are tied, directly or indirectly, to the auto industry would vanish – or rather never have existed – in the middle of the worst recession since the 1930s. And President McCain wouldn't have batted an eye.

The world of John McCain is a zero-stimulus world. On this rightward-tilting planet the national unemployment rate would undoubtedly still be in the double digits, with no end in sight.

In terms of other domestic issues, such as economic equality for women ("equal pay for equal work") Pres. McCain would have immediately vetoed the Lily Ledbetter Fair Pay Act, a law that strengthens the hand of women workers to fight discrimination on the job. As a Senator, he downplayed the need to fight inequality by denouncing the law as creating an opportunity for "frivolous" lawsuits.

Debate over Wall Street reform would also either be completely stalled or off the table completely. McCain would never have taken steps to reform the credit card industry or the college student loan program, and he certainly would never have taken steps to strength environmental regulation and enforcement. On the environment, McCain did support a cap-and-trade program prior to the election of President Obama, but since then he has inexplicably worked to block it. With his record of flip-flopping on the issue, and given his party's fierce resistance to protecting the environment, it is hard to imagine how, as President, he could have any unused political capital to expend on environmental protections.

The Republicans' current state-by-state fight to end funding for Planned Parenthood would already be won – the law of the land on the federal level – if McCain sat in the Oval Office. There would have been no repeal of the "don't ask, don't tell" policy in the military, and the Justice Department would continue to defend the anti-gay Defense of Marriage Act in the courts.

Abroad

On foreign policy issues, we can be sure that 110,000 combat troops would still be in Iraq. Osama bin Laden would still be in hiding in Pakistan. Engaging Pakistan wouldn't even be on President McCain's radar. Under McCain it is extremely likely there would have been a disastrous war with Iran. Recall candidate McCain singing "bomb, bomb, bomb, bomb, bomb Iran" to the Beach Boys' timeless classic “Barbara Ann.”) The Arab Spring” would struggle on, close to withering, as the McCain administration undoubtedly would have supported repressive regimes and military dictatorships against the Arab people and their struggle for democracy. Israel would still be operating with a steady green light from the White House. U.S.-Cuba policy would not have budged an inch.

It is difficult to say what the McCain administration would have done in Afghanistan. McCain seemed little interested in that country during the campaign, in contrast with Obama (who, by the way, has done in Afghanistan, including the elimination of Osama bin Laden, the head of al Qaeda in neighboring Pakistan, exactly what he promised to do during the election campaign). Indeed, the McCain administration's foreign policy goals would have been primarily weighted toward militarism and intervention, organized around the same Bush-like adventurism that today fosters global hostility towards the U.S. Furthermore, the peace movement would have absolutely no influence or leverage on him. He simply wouldn't care what the peace movement, or any part of the people's movement, wanted.

McCain's foreign policy would be focused on fabricating a hostile relationship with Russia, as he sought to do in the run-up to the election. In the summer of 2008, McCain overstepped his position as a Senator and intervened in the Georgia-Russia conflict over South Ossetia after a referendum in which the province's residents voted for independence from Georgia. McCain sided with the right-wing authoritarian regime in Georgia against the independence vote, essentially making promises to them about how he'd help them out if elected. When the Russians intervened to oust Georgian military forces from South Ossetia, McCain pressed for sanctions against Russia. McCain's hostility toward Russia also extended to his support for a fiscally unsustainable and unworkable "Star Wars" missile defense system in Europe, widely regarded as little more than a provocation against the Russia. Further, in 2010 Sen. McCain voted against the new START treaty with the Russians which will eliminate hundreds of nuclear weapons, so it is very doubtful that such a deal would have been part of his presidential agenda. In McCain's world, the Cold War would be in full gear and peace wouldn't stand a chance.

Could this Bizarro World nightmare still come true?

If McCain had won the presidency, Republican attacks on workers' rights, now erupting at the state level in Wisconsin, Ohio, Indiana, New Jersey and elsewhere, would be enthusiastically backed by the federal government. A frontal assault on the American labor movement and the right to join a union would be national government policy. So instead of debating an expansion of union rights under federal law – like passing the Employee Free Choice Act – we'd be debating whether it would be better for the U.S. to be a nonunion country.

Right now, Republicans are fighting tooth-and-nail to kill Medicare. Can you imagine what would be on the chopping block today if McCain had won the 2008 election? Social Security? Public education? Environmental research? OSHA or the EPA? The Department of Labor? McCain and the Republicans would have used the recession as an excuse – as they are doing now on the state and local level – to push right-wing "social engineering" programs, as former Republican frontrunner Newt “Breakfast at Tiffany's” Gingrich recently described it.

Under McCain, Republicans at the national, state and local level would be mounting a full-court press to gut public education, healthcare, Social Security, and environmental protections, along with any other programs that benefit America's working families. They would have pushed through even more tax breaks for the rich and super-rich (the second-fastest-growing income group in the USA today) with no strings attached, except perhaps a polite reminder about where campaign donations should be sent.

There would have been little or no response from the McCain administration to the BP oil spill, let alone any significant effort to enforce compensation from the company for this unprecedented environmental and economic disaster. The gobs of cash his party takes from Big Oil and the apology his party offered BP after the Obama administration ordered reparations for the spill says everything about McCain's love for oil.

In many ways, a McCain administration would actually have been far worse than the Bush presidency. With right-wing ideology and policies in the ascendant during the worst recession since the Great Depression, working families would have suffered tremendously.

Beginning now, there needs to be a straightforward discussion among progressives about what the most effective electoral strategy for 2012 is. The discussion should examine how to successfully reassemble the broad people's coalition that swept Obama into the White House in 2008. Our discussion needs to consider the ability of independent political structures to help progressive, labor-backed candidates win local, state, and national elections, while broadening the political enfranchisement of working-class Americans and their active participation in the democratic process (not just by casting a vote on Election Day). Plus we need to keep steadily in mind what is at stake in 2012.

The broad people's coalition effectively defeated McCain and Palin in 2008 and prevented the realization of the Bizarro World described above. Resisting Republican policies now is important, but because the GOP controls government at the state level, working families' demands will likely go unheeded. Therefore, harnessing this anger to mobilize a big electoral victory in 2012, including the reelection of the President, a progressive majority in Congress, and key state and local-level candidates and issues, will be just as important. The successes and shortcomings of the Obama administration, given the present balance of political forces, also need to be part of the discussion, and will be addressed in a future PA commentary.

Photo by PeoplesWorld/cc by 2.0/Flickr

There's No Recovery Without Job Recovery

Wed, 01 Jun 2011 09:40:00 +0000

The main issue in the 2012 elections is jobs. The main way to get the economy out of the current recession is job creation. The only way for real job is for a massive reconstruction of the country's infrastructure now.

There are no meaningful fundamental jobs bills coming out of Congress because the republicans don't want them; because Wall Street doesn't want them. They are fighting to maintain an artificially high unemployment figure so they can use it to blame it on the Obama administration in the 2012 elections. It is they who have blocked every jobs bill and minimized job creation stimulus. They campaigned on "jobs, jobs, jobs" in 2010 but have done nothing since – nothing. Worse than that, republican governors like Scott Walker of Wisconsin, Mitch Daniels of Indiana and Rick Scott of Florida have refused federal high speed rail construction money which would have created thousands of immediate and long-term jobs. A special case is Chris Christie of New Jersey who shut down the construction of a sorely needed tunnel between New Jersey and New York. There was a loss of 6,000 jobs and the long-term benefit of a new tunnel. Additionally, Christie lost $400 million in federal education funds because of gross incompetence. This pattern is prevalent in states with republican governors. 50 million people are affected by unemployment. Republicans think that is a hot issue for them in 2012.

The only way to get out of this decrepit recession and to bring about longer term job and economic stability is for massive federal government intrusion into the economy with massive amounts of capital infusion. Government must become the first resort for reconstruction of the economy, separate from the so-called "market economy". The "market economy" has failed and/or refused to rebuild and maintain the country's infrastructure.

Nowhere in the constitution does it say what the country's economy should be. The responsibility of government is to guarantee a full measure of "life, liberty and the pursuit of happiness;" that includes a decent job, a decent home and a healthy and happy life for all its inhabitants. As President Franklin Roosevelt said in 1944 in his Economic Bill of Rights, that Americans have "the right to a useful and remunerative job in the industries or shops or farms or mines of the nation, and the right to earn enough to provide adequate food and clothing and recreation." That is a damn sight closer to the meaning and intent of the constitution than the pursuit of profits and happiness for the 400 wealthiest Americans who have more wealth than the bottom 150 million people in our country.

Massive government involvement in the economy should be in competition with the "free market" not necessarily aimed at ending it. The "free market" could play a useful role in this development if it understands that maximum profits cannot be its goal. It must make itself useful to the common good.

There are several sectors of the economy which require direct massive government intervention. President Barack Obama said, "the government shouldn't be in the automobile production business." The successful loan intervention in GM and Chrysler proves how wrong he was. Government can and does do it right. Ask anyone if they want to give up their medicare and social security. Ask GM workers how they feel about government loans. GM posted a profit of $3.2 billion in the first quarter of 2011. It is expected that they will hire 4,200 additional workers and hope to reach employment levels of 2008 soon according to Rep. Gary Peters, D-Mich. Peters also said that the parts and feeder plants are also hiring. So government does work when it is allowed to work without deliberate obstacles.

Here's how we can put government to work.

In 2009, the American Society of Civil Engineers made a study of the nation's infrastructure. They gave an overall rating of "D" to the national infrastructure. They estimated that it would cost $2.2 trillion over the next 5 years to rebuild the infrastructure. Just imagine how many jobs these projects would create. The last time such a massive overhaul of the country's bridges, tunnels, rivers, lakes, forests, ports, dams, etc was during Roosevelt's WPA jobs creation program.

Some of the main areas of the economy which require government action to produce massive job growth for immediate and long-term health of our country and its people are:

·    Energy: The government can purchase petroleum on the open market, refine it in its own refineries and retail it at honest prices in its own network of gasoline stations. This would create tens of thousands of jobs and stop the price gouging at the pump by Exxon-Mobil and the other oil monopolies.

·    Electricity: Twenty five percent of the nation's electricity is publicly owned and their consumer rates are substantially lower than private utilities. The government is providing billions of dollars for wind, solar and other renewable energy sources. This should not continue to be a give-away. The public should own a substantial share of these enterprises and share in the profits.

·    Transportation: The government should build Amtrak into a uniform interstate and intrastate transportation system. This should be part of an integrated transportation plan of rail, high speed rail, bus, ferry, light rail, air and shipping. Without such a program, our country cannot keep abreast of other industrialized countries.

·    Housing: A long-term federal housing program is fundamental for the revitalization of the construction industry. The program should take into account all aspects of life that impact on housing such as demographics, climate, urban, suburban and rural needs, fair and equitable housing loans and/or rent. Such a construction program, would permanently end unemployment in the building trades and will require additional tens of thousands of construction workers. This program would also revitalize related industries.

·    Schools: It is to our country's shame that public school buildings throughout the country have become decrepit, dangerous and useless. They are a menace to the health, safety and education of our children. A national school reconstruction program is needed.

·    Banking: The government should establish a national bank to finance all these projects and to engage in all phases of banking so as to provide fair loans at reasonable rates for consumers, small businesses and others who need banking services. Such a banking system would operate along side and in competition with the present private banking system. Credit unions, Savings and Loan associations and small Main Street banks which did not get caught up in the mortgage swindle, already could provide a 50 state network on which to build. This type of public service banking came out of the 1930's New Deal. A good example is the public bank established in North Dakota that still operates profitably today.

All of these projects would produce profits which can be used to pay for providing services such as health care and education. The hundreds of billions of dollars in wages and salaries and the purchase and sale of commodities for the reconstruction would create an on-going bonanza of tax income which could help in reducing the national debt.

Where will all the money come from for the job creation reconstruction program? First, Wall Street should start paying back the trillions in bailout money, just like GM is doing. Next, tax loopholes, such as the one GE uses to avoid paying taxes should be eliminated. Tax subsidies to the oil monopolies, GE, corporate farms and other corporations should be eliminated. A national transfer tax should be levied on all stock and bond transactions. Restore the Reagan, Bush I and Bush II tax cuts. The discriminatory cap on Social Security taxes should be eliminated. Workers pay social security taxes on every dollar earned; the rich pay no taxes on income over $106,000. The military budget should be cut by 50 percent. Finally, if still needed, the government should float project bonds for reconstruction.

Photo by Takver/cc by 2.0/Flickr

Podcast: The Road to the 2012 Elections (Part 1)

Wed, 01 Jun 2011 09:38:00 +0000

The 2012 elections may be 18 months away but it time now to organize for a people's victory. Labor has declared its independent role in the fight to defeat Republicans at the polls in November 2012. (Listen to the second part of this interview here.)

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Book Review: Malcolm X: A Life of Reinvention

Wed, 01 Jun 2011 09:37:00 +0000

Malcolm X: A Life of Reinvention
by Manning Marable
New York: The Viking Press, 2011

The esteemed late professor of African American studies and author Manning Marable closes his powerful biography of Malcolm X with these words:

A deep respect for, and a belief in, black humanity was at the heart of this revolutionary visionary's faith. And as his social vision expanded to include people of divergent nationalities and racial identities, his gentle humanism and antiracism could have become a platform for a new kind of radical, global ethnic politics. Instead of the fiery symbol of ethnic violence and religious hatred … Malcolm X should become a representative for hope and human dignity. At least for the African-American people, he has already come to embody those loftier aspirations.

Marable's conclusions reflect the fact that the outpouring of love and honor shown by African Americans at the time of his assassination show they have always held him in high esteem despite ideological or programmatic differences. Positive public opinion of Malcolm X among whites, however, as Marable writes, is a new phenomenon.

For most whites, during and after his life ended, Malcolm X served as little more than a symbol of imagined reverse racism and the supposed danger of violence by African American men. Disdainful attitudes among the police (especially white officers, detectives and the "brass"), as recorded by Marable in the book, reveal the level of fear and hate many in the power structure held for Malcolm X. The decision by Doubleday, the original contracted publisher for the famous Autobiography, to drop the book after the assassination also suggests the level of hostility that corporation felt whites held toward the civil rights leader.

Spike Lee's epic 1992 biopic X and the emergence of the multicultural popularity of hip hop, which frequently appropriated images of and words by Malcolm X, helped to change those hostile perceptions of the civil rights leader, however. The widespread use of the Autobiography of Malcolm X (as told to Alex Haley), especially in universities, also played an important role in propelling this change, Marable explains. In these settings, the autobiography has often been read as a "rags to riches" tale; a story of the poor but exceptionally intelligent Black man who rises to his calling, a narrative that fits well with the dominant individualist "bootstraps" myth of American social mobility.

Marable carefully shows the extent to which that famous book should be viewed skeptically. His reading of the record of the communications between Malcolm X and Alexa Haley, as well as those between Haley and agent and publishers, for example, show Haley delaying publication for more than a year because of Malcolm's own rapid, ongoing ideological transformation as well as the drama over his break with the Nation of Islam. Haley repeatedly asks his publishers for more time in order to gain a stronger sense of how these changes were impacting Malcolm X's thinking and the new directions he sought to move in. Even further, three important politically laden chapters were not included in the final book.

While the Autobiography remains one of the most significant American political works of the 20th century, it shouldn't be regarded as the definitive account of Malcolm X's life. For example, as Marable documents, Malcolm X's description of his criminal exploits in his early life are likely exaggerated in the Autobiography. Marable points out that through this exaggerated account, Malcolm X sought to replicate the myth of "bootstraps" in a new framework, where the story of personal transformation takes place not within and because of an idealized capitalist democratic America, but rather despite the realities of a society rife with inequality. Malcolm wanted to highlight the impact the Nation of Islam – the discipline, education, and sense of community pride it instilled – had on his life. Within the organizational framework of a separated and idealized community that rejected white supremacy and the pervasive denigration and structural inequality it imposed on African Americans, Malcolm X sought to suggest his personal narrative was proof of America's failures and of the Nation's righteousness. Later he would seek to have it read as the potential for self-actualization through the political struggles of the world's oppressed, Marable suggests.

Even as he broke with the Nation of Islam, Malcolm X recognized and remained loyal to this particular influence it had on his life as long as he could. That conflict also reveals how, as Marable argues, Malcolm X articulated a process of transformation away from accepting or reproducing the images or stereotypes created, imposed and demanded by white society – in much the same manner as Fanon's more focused theoretical and scientific writings. (Fanon's writings wouldn't have significant readership in the U.S. until several years after Malcolm X's death.) It is in this context – the unrelenting critique of white supremacy and colonialism – that his life must be read. In addition, the common refusal by his critics to examine the transformative and transformational elements of Malcolm's thought and work is no longer warranted. Marable's work makes plain that attempts by his critics to dismiss him as simply violent or racist or separatist is baseless.

Controversial elements of the book – corruption and questionable practices in the Nation of Islam, sexual infidelities, sexuality, infighting, Marable's reading of the events and subsequent police investigation of the assassination – should not detract from the importance of Malcolm X's life or from our joint effort to understand his contributions to American radical politics. Those difficult details humanize the man and the people who surrounded him. The controversial dimensions of the story also highlight the importance of unity, the need to forge political and communitarian alliances across and through socially constructed differences, something Malcolm increasingly saw as the most important factor in the struggle against white supremacy.

Other features of the book add to the political significance of Marable's work. Marable's meticulous use of secret FBI and police surveillance files reveals an important part of the story. The role of police and FBI informers and agents within Malcolm X's and the Nation's circles is given detailed examination. Marable also relentlessly critiques and contextualizes sexism within the Nation and in Malcolm X's thinking and life, though his ability to reinvent and develop his thinking, as well as the fact that women were leaders among the people who gathered around him in the Organization of Afro-American Unity, suggest the possibility that this behavior, too, may have taken a turn had he survived his conflict with the Nation of Islam.

Much has been made of Marable's examination of Malcolm X's sexuality and the threads of evidence that suggest he may have had sexual relationships with at least one man. That this informed speculation has been labeled "allegations" or "charges" or "accusations" suggests the need to still take steps forward with respect to an egalitarian understanding sexual orientation. Human sexuality isn't a crime. And I for one feel a deeper connection to Malcolm X's humanity knowing he may have sought physical and emotional intimacy with other men. Is he a new gay icon? Probably not yet.

This is one of the most important new books out this year. Readable and ground-breaking, it will be hard to put down once you begin reading it.

Karl Marx on Eugen Dühring

Wed, 01 Jun 2011 08:39:00 +0000

Anti-Dühring is Engels' enduring criticism of the mishmash of philosophy, science, and socialism published in Germany by Eugen Dühring (1833-1921) in the middle of the 19th century as an alternative to the thought of Karl Marx. Engels' book is divided into three parts – philosophy, political science, and socialism. But Engels did not write every chapter in his famous book. Chapter 10, the last of the section on political economy, was written by his friend and life long collaborator Karl Marx. This article discusses Marx's opinions of Dühring in that chapter, entitled, "From the Critical History."

It is Dühring's 1871 work Critical History of Political Economy that Marx intends to critique, beginning with Dühring's claim that his work in Political Economy "is absolutely without precedent." Here we will find, Dühring says, a definitive treatment of the subject in a scientific manner. The science is, he says, "peculiarly mine."

Dühring's first great "discovery" is that Political Science is a modern creation with no medieval or ancient roots. Marx points out, however, that this claim to modernity was already put forth by him in Capital and Contribution to the Critique of Political Economy. The difference is that Marx begins with the great founders of this science(from William Petty (1623-1687) and Boisguillebert (1646-1714) to Ricardo (1772-1823) and Sismondi (1773-1842)) while Dühring begins with the "wretched abortions" of later bourgeois economists. Marx also has respect for the medieval and classical traditions.

Of course, since Political Science was founded in an attempt to scientifically understand modern CAPITALISM, you will not find it in the classical (slave) world , nor the middle ages (feudal). Capitalist societies are based on commodity production and exchange but there was limited commodity production and exchange in both the classical period and the Middle Ages and what the Ancients and other pre-moderns had to say about it is still worth while; Marx especially defends the economic writings of Aristotle (384-322 BC) and Plato (427-347 BC) from Dühring's unerudite "criticisms."

Dühring is also ignorant of the history and development of political economy in the modern period. For example, he takes a minor work [Antonio Serra's Breve trattato of 1613 as a defining work of Mercantilism – the dominant economic theory of capitalism for its first 250 years of existence, ending around the time of Adam Smith (1723-1790)] while completely ignoring Thomas Mun's (1571-1641) A Discourse of Trade of 1609 which was "the mercantilist gospel" for the entire Seventeenth Century.

Worse than that is Dühring's treatment of William Petty, "the founder of modern political economy." After much hard thinking and many investigations, Petty in 1662 formulated one of the bed rock foundations of political economy as a science (Treatise on Taxes and Contributions). Here, Marx says he "lays it down in a definite and general form that the values of commodities must be measured by equal labour." Further, in a work of 1672 (Anatomy of Ireland) Petty has overcome "the last vestiges of mercantilist views."

These are great intellectual feats for the founder of the new science. Marx says about Petty, and this applies to Marx himself in our day, that what is "quite natural in a writer who is laying the foundations of political economy and is necessarily feeling his way, experimenting and struggling with a chaos of ideas which are only just taking shape, may seem strange in a writer who is surveying and summarizing more than a hundred and fifty years of investigation whose results have already passed in part from books into the consciousness of the generality." That Dühring fails to grasp this and thinks that "there is fair measure of superficiality" in Petty's thinking, only shows, Marx avers, that Dühring is a "vainglorious and pedantic mediocrity."

One of Petty's great successors was the the philosopher John Locke (1632-1704) who, besides his works on the social contract and the foundations of epistemology, also wrote an important work in the fledgling science of political economy: Some Considerations of the Consequences of the Lowering of Interests and Raising the Value of Money, 1691.

Petty had already compared interest to "rent on money" – i.e. to "rent of land and houses." His position was that all rent should be unregulated and determined by the market. This, of course, is a reactionary view today but not so in 1691. This was part of the fight against Mercantilism which progressives in those days rightly viewed as a system that held back social and economic progress by using the state to impose import duties and taxes to defend domestic markets and subsidize exports.

Trying to regulate interest rates, i.e., rent on money, Petty felt was "against the law of nature." Petty, Marx wrote, "declared that legislative regulation of the rate of interest was as stupid as regulation of exports of precious metals [a pillar of Mercantilism] or regulation of exchange rates." Ideas that are reactionary and unworkable today (just think of the ridiculous economic and philosophical bloviations of Ayn Rand and her followers) in the end stage of capitalism, were forward looking and progressive during it birth pangs.

Locke, whose economic essay, basically followed Petty's lead, had a great influence in those European countries struggling to go beyond the strictures of the Mercanilists or economic nationalists. Petty, who is, incidentally credited with the invention of the laissie faire school, was also supported by Sir Dudley North (1641-1691) in A Discourse on Trade, 1691, a contemporary of Locke's, whose work, Marx says "is a classical exposition, driven home with relentless logic, of the doctrine of free trade – both foreign and internal…."

Locke and North deserve credit for furthering Petty's views and in developing them along new lines. But Dühring sees none of this. For Marx, the period 1691-1752 is crucial for the understanding of the development of political science. In was in this period that the writers influenced by Petty, Locke, North, and others, laid down the foundations for overthrowing Mercantilism. This period is a blank page for Herr Dühring. Dühring passes directly to David Hume (1711-1776) and the physiocrats. Marx has many interesting things to say about Hume as an economist (his philosophy is not mentioned) and why Dühring is so enamored with him.

Hume published his Economic Essays in 1752 and they are, in our current terminology, basically a plagerised version of the 1734 work of Jacob Vanderlint (died 1740) Money Answers All Things. While Hume almost literally follows Vanderlint, he is, according to Marx, "less profound." Dühring is unaware of Vanderlint and praises Hume while none the less failing to understand what he says.

Since Dühring doesn't have a real understanding of Hume I will just present Marx's views for the record. Hume's theory of money is that money is just a TOKEN of value and, ceteris paribus, "commodity prices rise in proportion to the increase in the volume of money in circulation, and fall in proportion to its decrease." Hume is basically saying that the increase in the amount of gold and silver in circulation, due to the imports from the New World, increases the prices of commodities. He also notes that this takes some time to spread through out the country until it finally trickles down to the working people: in Hume's words "it must first quicken the diligence of every individual before it increases the price of labour." So old is Reaganomics.

But Hume is not, according to Marx, addressing the "real scientific question" in this description-- i.e., how an increase in money "affects the prices of commodities." However, Marx does not answer this question here as he really wants to remark on Hume's theory of INTEREST. Hume says it is the not the money supply but the rate of profit that regulates the amount of interest (here he attacks Locke's view). Hume's theory is not original. Just as he got almost all his ideas from Vanderlint on most economic issues, his interest theory is just a rehash, and not as exact, of the work of J. Massie (died 1784) An Essay on the Governing Causes of the Natural Rate of Interest, 1750.

Hume, by the way, maintains a low interest rate means a nation is in a "flourishing condition." Well maybe in his day – but we have low interest rates in the USA and we are hardly "flourishing," at least with respect to the majority of the population which is made up of working people.

There are other problems with Hume's ideas, according to Marx. Marx says "he had not the slightest understanding of the function of the precious metals as the measure of value." This is because he didn't know what "value" itself meant in terms of capitalist production. For example, he corrects Locke for holding that the precious metals only have "an imaginary value" by saying what they really have is "a fictitious value." These views are "much inferior" not only to those of Petty but to his contemporaries as well who were writing on these subjects – esp. his friend Adam Smith.

Hume also is blind to the economic world coming into existence all around him. He holds to the outmoded view "that the 'merchant' is the mainspring of production." Despite these limitations, Marx concedes that in his day Hume was still a "respectable" political economist. His criticism is meant to dispel the over wrought praise Hume is given by Dühring. Because, while respectable, Marx adds, "he is anything but an original investigator, an even less an epoch making one."

Why does Marx think that Dühring likes Hume so much? It is because Dühring identified with Hume. Hume was denounced by the church for some of his views, but not so much as Gibbon was for his, Dühring too fell afoul of the authorities for some of his views. Hume attained a better reputation as a philosopher, and Dühring thinks that will also be his fate (it was not to be.)

Marx can't resist giving two quotes which many Hume fans would resent. The first is from a popular German world history book by Friedrich Schlosser (1766-1861): "In politics Hume was and always remained conservative and strongly monarchist in his views." He was also highly racist in his views on Africans. And William Cobbett (1762-1835) calls him "selfish" and a "lying Historian" [Hume wrote a history of England] and implies he was an hypocrite for attacking monks for their fatness, their not having wives or children and begging for their bread while he himself was without "a family or a wife and was a great fat fellow, fed, in considerable part, out of public money, without having merited it by any real public services."

Well, enough about Hume. Marx next turns his attention to Dühring and the physiocrats, especially the Tableau Economique of Francois Quesnay (1694-1744). Marx says Dühring's attempt to explain Quesnay's economic theories (the physiocrats were the first real school of modern economics, not counting the Mercantilists as modern!, and Quesnay was the founder) is completely mixed up and confused and shows, once again, that Dühring doesn't know what he is talking about. But so that WE can understand what the school was all about, Marx undertakes to explain it for our benefit.

The physiocrats divided society into three classes: the PRODUCTIVE class – i.e., agricultural workers and farmers – all wealth comes from a nation's agricultural production; the LANDLORDS [landowners, the nobility, the Church] who live off of the surplus produced by the farmers; and the STERILE class [the industrial bourgeoisie, merchants, etc, who live off of the raw materials and surpluses of the productive class. Where's the proletariat? Sorry, 17th century France was too backward to have noticed this newly developing class.

Quesnay is not describing the actually real existing economy of France – he is constructing a simple MODEL that represents a starting point for understanding the actual economy (just as Marx did in Das Kapital). Marx says Quesnay makes three premises to simplify the model: 1) he only looks at circulation between the classes and not within them; 2) he only deals with simple reproduction and constant prices; and 3) he treats all the annual purchases between the classes as a lump sum. Marx also notes that at this time almost all the non-food articles consumed by peasant families in Europe were home made and "treated as supplementary to agriculture."

Lets start the ball rolling: the Tableau (all figures are based on the value of French money in the 17th century) the total value of the harvest for one year is the starting point. This amount will be the "total reproduction" in France for that year – let us refer to it as five economic units [5EU – this was 5 million livres in those days].

Since the farmers are the only productive class they have the entire 5EU to themselves. They produced it by investing 2EU in seeds, etc., so they have a surplus of 3EU. They give 2EU to the landlords as RENT and the landlords then buy food from them in the amount of 1EU for the year so now the farmers have 2EU and the landlords 1EU.

With their 1EU left, the landlords buy the things they need to live on, etc., [other than agricultural goods] from the STERILE class. The farmers also buy from the Sterile class say 1EU but the sterile class has to buy food from the farmers but it does not buy back as much in EUs from the farmers as the farmers gave to it because, instead of a fair trade in equivalents, the sterile class has extracted a profit from the farmers by selling their commodities to them above the cost of production AND above their real value.

By the end of the year it is time to reap another harvest and the cycle continues. I have simplified Marx's exposition because the physiocrats are now only of historical interest and the main point has been shown – i.e., that for them all wealth is produced by the farmers and is then distributed about society to the other classes.

Having finished with the physiocrats Marx makes two more observations on Dühring's incompetence. First, Dühring thinks that the physiocratic school ended with Turgot (1727-1781) the originator of the Idea of Progress and controller-general of France, 1774-76, in charge of economic reforms under Louis XVI. But Marx says the school actually ended with Mirabeau (1749-1791) "the leading economic authority in the Constituent Assembly of 1789."

Second, Dühring barely mentions Sir James Steuart (1712-1780) whose work was between Hume and Adam Smith and who "permanently enriched the domain of political economy" (with An Inquiry into the Principles of Political Economy, 1767). And what he does say about him is wrong.

Marx ends his chapter with the opinion that Dühring's Critical History is not worth reading, and he is particularly upset that Dühring begins his history with the large landlords of ancient history and doesn't know anything about "the common ownership of land in the tribal and village communities, which is the real starting-point of all history."

And with that said, we conclude our review of Part II of Herr Eugen Dühring's Revolution in Science.

Photo by alisdair/ cc by 2.0/Flickr

The Case for and Potential of a Financial Transaction Tax

Wed, 01 Jun 2011 08:38:00 +0000

Keynes proposed it. Oxfam is circulating a petition world-wide to garner support. Gordon Brown has urged its implementation. Bob Herbert has urged it in the New York Times. James Tobin called for it. And Larry Summers (and his wife) wrote an article advocating it. What is “it?” – a tax on financial transactions, an FTT. In its broadest and most effective form an FTT would be levied on all trades in three financial asset markets: equity, debt and currencies as well as the derivatives that are priced off each the underlying markets for each asset class.

An FTT has multiple appeals. First, the revenue that could be generated is significant in terms of both the absolute dollar amount and when considered in the context of the financial needs of the U.S. government as it responds to the ongoing economic crisis. Second, and equally important, an FTT would impact relatively few individuals and institutions with benefits potentially flowing to many. Finally, the political logic of an FTT – the dynamics of Wall Street vs Main Street – makes the tax a timely one that should have significant appeal in today’s political climate. In this paper we focus on the revenue raising potential and the economic impact of an FTT and conclude with a few comments on the political appeal of the tax. We also briefly address some of the counter arguments that opponents could be expected to make to the imposition of an FTT.

A.    How Much Revenue Could a Financial Transaction Tax Generate?

An effective FTT must recognize not only the three financial asset classes but also the different venues for trading and the types of instruments that are traded in each of these asset classes. Equity, debt and currencies are traded both on and off exchanges, the latter normally referred to as the OTC market. In addition, in each class there are trades in the underlying asset (“cash market’) and in instruments based on the underlying asset (“derivative market”), particularly futures and options. An effective FTT should cover both venues and all instruments in a manner that does not advantage one venue or instrument over others. Failure to do so may simply shift volume of trading between venues or instruments.

Much of the earlier work done by advocates of an FTT was based on data from the 1980s or 1990s. [1] Although the revenue raised from calculations using this data is significant, it misses the huge growth in trading of financial assets, both in the underlying cash markets and in derivative markets, that has occurred as financialization has proceeded apace in the US (and other) political economies during the last decade. Thus, as we argue below, the amount of revenue that can be raised has increased, both absolutely and as a percentage of GDP or federal government revenue.

1.    Equity Markets

In 1998, the total value of stock trading on the New York Stock Exchange (NYSE) and the NASDAQ Stock market was $13.1 trillion; in 2008 the traded value on these two markets, that together account for well over 90 percent of stock trading in the US, totaled slightly over $64 trillion, an almost five-fold increase in a ten years. The value of trading in currency and debt markets has increased at similar rates over the period of financialization in the U.S.

In thinking about the social costs and benefits of an FTT, it is imperative to keep in mind that this five fold increase in equity traded value, like the increases in traded value of currencies and debt markets, is not primarily the result of more stocks listed for trading, an increase in market capitalization. At year-end 1998, the total capitalization of the US equity market was $13.4 trillion; at year-end 2008 US market capitalization was actually lower than in 1998: $11.6 trillion. Even taking into account the 2008 market collapse and using year end 2007 data, total US market capitalization was $19.7 trillion. Thus US equity market capitalization grew 49.2 percent in the 1998 – 2007 decade but traded value in the cash market jumped 245 percent. As a measure of financialization this means that, on average, shares in the US stock market changed hands about once/year in 1998; by contrast, in 2007 shares changed hands about every five months. It is difficult to ascertain any benefits that have accrued to the US economy or to the average equity investor as a result of this increase in turnover rate (in 2008 the average share change hands every two months). [2]

In 2008, an FTT of only 0.25 percent on cash market equity trading would have generated $160 billion, one side only. Levied on both the buy and sell side it would have generated $320 billion. Of course, as is apparent from the foregoing discussion, 2008 was an unusually active year for stock trading, however, the same FTT on the 2007 trading value would have raised $260 billion (two sides).

As emphasized above, however, an effective FTT must be levied on all forms of equity trading. Thus, these numbers, as impressive as they may be, far from exhaust the revenue that could generated from an equity market FTT. In addition to the $64 trillion in equity trading that occurred in 2008, another $54 trillion of equity notional value [3] was traded in the S&P 500 Index Futures on the CME ($49 trillion in 2007) and $26 trillion in S&P 500 Index options on the CBOE ($25 trillion in 2007). [4]

The existence of multiple methods of trading in equities (and other financial asserts) raises an important question: at what level should an FTT be set on the different products so that volume would not simply be shifted from one product to another? Identical FTT rates on cash and derivatives probably disadvantages the derivative market since these products, futures and options, have expiration dates while actual (cash) equities can be held indefinitely. At the same time, however, because a cash portfolio of S&P 500 stocks can be easily replicated using derivatives and short term bills, exempting or under taxing derivatives would unfairly disadvantage the cash equity markets. Rather than undertaking a detailed analysis of this issue we apply FTT levels in the range considered by previous commentators. In addition to the 0.25 percent/side for cash equity trading (used for example by Baker, 1989), we apply 0.05 percent of the notional value per side for index futures and calculate an index options FTT at both the same rate as that for index futures and at a 0.5 percent of the premium rate. In both cases these levies are per side. These levels of FTT would have generated $54.6 billion from index futures trading in 2008 ($50 billion in 2007) and, using the 0.5 percent of premium rate, an additional $5.3 billion from index option trading in 2008 ($5.0 billion in 2007).

We believe that levying and FTT on the notional value of index option trading is more appropriate than a tax based on the premium. This follows from the same reasoning as in the case of futures. It is easy to replicate a cash portfolio by simply buying a call and selling a put. The premium paid for these two transactions would be only a small portion of the cost of executing the equivalent trade in the cash equity market. Thus, a tax set as a percentage of the premium would significantly advantage the trading of index options over either the cash equity market or the equity index futures market. Index options, like index futures, are settled in cash with no exercise into the component stocks. Thus there is no additional transaction on which an FTT could be levied. An FTT of 0.1 percent/side, the same as for index futures, on the notional value of index option trading would have raised an additional $25 billion in 2007 and $26 billion in 2008. The premium based approach to an FTT may be more appropriate for options on individual stocks where exercise into the underlying equity is possible. Because the value of such trading is small relative to that for index options and futures we do not include an estimate of the additional revenue that could be raised from this source.

Taking the above calculations that cover only equity and equity derivative trading, an FTT would raise the amounts listed in the table below.

2. Currency Markets

Equity trading is the most transparent in terms of value and equities are the most widely held financial asset class. The equity and equity derivative markets represent only one of the three for financial assets and are considerably smaller than the currency markets. Currency (and debt) markets are less transparent with the result that it is more difficult to estimate the revenue that could be raised from an FTT. However, the Bank for International Settlements (BIS) compiles a triennial report on the volume and value of spot (cash) currency trading and OTC trading of both currency and debt derivatives. This data allows us to develop estimates for the revenue potentially generated by an FTT. The most recent BIS report is from December 2007 and, as is the case for all of these reports, covers trading during the previous April. All major and most smaller central banks in the world provide data for the BIS report.5

In April of 2007 the BIS reported world-wide average daily value of currency trading to be $3.2 trillion. The largest amount of trading was USD/EURO but USD/Pound and USD/Yen also accounted for significant trading.

By location the center of trading was London, accounting for more than 35 percent of the total with NYC second at almost 17 percent and Tokyo a distant third at less than seven percent. The first issue, then in calculating the possible revenue from applying an FTT to currency trading is to determine the scope of what could be taxed by a single government entity such as the US federal government.

At a minimum, an FTT could be applied to trades executed by entities located in the country levying the FTT. Thus a US FTT could cover the 17 percent of currency trading executed in NYC. In addition, an FTT could be levied on all trades executed by subsidiaries of US based financial institutions, raising the potential revenue sources significantly. The BIS does not break out currency trading by national origin of the executing entities; however, a conservative allocation of 25 percent of London currency trading to US firms would raise the percent of trading subject to an FTT to at least 25 percent, or approximately $800 billion/day. With a levy of only 0.01 percent/side an FTT would generate $80 billion/year, applied to both sides of the trade, assuming 250 trading days/year.

As was the case in equity trading, the cash currency markets account for only a portion of total currency trading. Trading in the OTC currency derivatives markets reached the level of $2.3 trillion/day in the BIS survey while trading in exchange listed currency derivatives totaled $1.7 trillion/day in 2007 ($2.4 trillion/day in 2008). [6] Applying the same 0.02 percent FTT (0.01 percent/side) to these markets would generate another $200 billion in a 250 trading day year.

Another approach to the scope of an FTT levied on currency trading would suggest applying the tax on the basis of the currencies involved in the transaction. The USD is by far the most frequent currency traded, represented on one leg of almost 90 percent of the transactions in the 2007 BIS survey. In this case the same levy would raise considerably more revenue, generating approximately $360 billion/year. It may be objected that other countries are unlikely to cooperate in collecting an FTT for the US on currency trades where the sales desk executing the trade (the geographical basis use by the BIS) is not located in the U.S. However, the political dynamics of the FTT in the context of the 2008 financial crisis may open possibilities for cross border taxation that did not exist previously. For example, the head financial regulator in the UK, Alistair Darling, has repeatedly called for an FTT. The US would find a willing partner should we decide to pursue such a tax.

Trading in US markets has also grown significantly over the past two decades and, as was the case for currencies, exceeds total trading in the equity markets. Also as in the case for currencies, a large portion of this trading occurs in the OTC market although exchange listed interest rate products are significant in volume and value.

The table below summarizes the potential revenue raised from the FTT applied to both long dated and short dated debt derivatives in 2007 and 2008.

B.    The Economic Logic of an FTT: Who Would Bear the Tax Burden?

Taxes are best levied when they meet two criteria: first, that they are progressive in impact and, second, that the tax discourages unproductive resource use and may even encourage a shift of resources to socially productive uses. [7] A progressive tax raises more revenue from those individuals or institutions that have more income and or wealth while a tax that discourages unproductive resource may encourage reallocation of resources such as labor and money to uses that are at least as productive as those to which the taxed individuals or institutions would otherwise apply them. An FTT meets both conditions.

1.    The FTT is a Progressive Tax

A tax on the trading of financial assets will, obviously, be paid by those who trade such assets. Consider the most widely held of the three asset classes, equities and equity derivatives. While almost half of all households in the US own some stocks, the majority of these households own stocks indirectly, that is through a pooled investment scheme of some type. This is commonly a mutual fund or a pension fund (that may itself be invested in a series of mutual funds). Only slightly over 20 percent of US households own stock directly and the bulk of this ownership is concentrated in a much smaller number of households. It is only among the top 10 percent of households by income that more than half report direct ownership of stocks and only among this group that the value of such holdings exceeds $20,000/household. [8] Therefore a tax on trading activity will fall heavily on this affluent 10 percent of all households. Of course, even in this case, if a household follows a buy and hold strategy, they will pay very little tax.

Households that own stock indirectly will pay the tax indirectly to the extent that the portfolio managers who invest their savings engage in trading activity. These households can also exercise considerable control over the extent to which they pay the FTT by choosing funds that trade infrequently. Such funds also tend to be those that charge lower management fees, for example index funds that simply track a particular measure of the stock market such as the S&P 500. Since there is no evidence that increased trading by active managers out performs index funds (although it does generate increased revenue to the active managers), any shift by households into such funds will certainly not depress and will probably improve their long run returns. A significant shift of savings out of the hands of active managers and into the hands of index fund managers would likely reduce the compensation of the former and diminish the flow of individuals into these highly paid jobs. Any concerns about a possible resulting diminution of investment choice are unfounded. There are more mutual funds than individual stocks listed on the NYSE. We could experience a considerable decline in the number of the former without imperiling individual choice of investment vehicles.

Further, there is no evidence that a decrease in the number of highly educated individuals entering the financial sector would have a negative impact on either the markets or the larger economy. In fact, it can be plausibly argued that fewer MBAs going into finance and more bright young people into education, medicine, or research careers would be a net positive impact of an FTT. The cost of carrying the financial sector suggests the desirability of reducing the portion of our economy accounted for and the share of our economic resources devoted to these activities.

Aside from the relatively small percentage of households who own a significant amount of equities and are also active traders, who else would pay an FTT levied on equity and equity derivatives? There are two other categories of individuals and institutional traders that would be expected to bear most of the taxation: day traders and institutions such as hedge funds, proprietary trading desks at broker-dealers, and a large number of non-financial corporations who have borrowed to engage in financial activities that were frequently unrelated to their core business. [9]

The percentage of trading accounted for by day traders is undoubtedly down from the glory years of the late 1990s but, at least for NASDAQ listed stocks, it is still quite significant. We wish no ill to day traders but we also do not see any compelling reason to believe that a decline in their number would be detrimental to our economic well being. Stock markets survived and thrived for centuries without relying on people investing for returns of less than 0.5 percent (the round turn impact of our proposed FTT) and we are confident they will continue to do so. Day traders who seek larger returns will undoubtedly continue their activities although at somewhat reduced levels of profitability.

2. The FTT is a Socially Positive Tax

The question of institutions such as hedge funds and proprietary trading desks is more interesting and goes directly to the question of productive and unproductive use of resources. The unprecedented increase in equity trading over the past 30 years is not primarily the result of increased activity by that small percentage of households with significant equity holdings or the emergence of day trading. Instead it is the result of (i) a shift in focus and activity of broker-dealers away from their brokerage function and towards their dealer function and (ii) the rapid growth in proprietary trading activity by components of the shadow banking sector, especially investment bank trading desks and hedge funds.

In 1975 proprietary trading and associated revenue accounted for less than 25 percent of NYSE member firm broker-dealer revenues while commission revenues were 46 percent of revenues (although a minority of all broker-dealers, the NYSE members are the largest broker-dealers and account for the bulk of all broker-dealer activity and revenues). By 2000 the proportion of NYSE broker-dealer revenues accounted for by trading and associated revenue was over 56 percent and commission revenues represented only slightly over 40 percent of NYSE broker-dealer revenues. [10] What was happening to NYSE member broker-dealers, and at other financial services firms, is a shift into trading and fee collection and a move away from the brokerage function. The increase in proprietary trading drove growth in stock trading, accounting for a significant portion daily stock market activity. Within the broker-dealer category, the proprietary trading desks of major firms such as Goldman-Sachs and Morgan Stanley (and others such as Bear Sterns and Lehman Bros before their collapse) have dramatically increased their market activity and share of total equity trading.

Broker-dealers, then, would be among the entities that would pay the FTT. To the extent these firms are simply skimming a few cents/share, e.g. the flash trading that has been in the news lately, any loss of activity would be of no concern to other market participants since it would reduce trading that is of very questionable legality anyway and, again, activity without which stock markets survived and thrived for centuries. Other proprietary trading that seeks returns in excess of the 0.5 percent FTT should be only slightly affected. Further, as argued in our discussion of active and index portfolio managers, any diminution in the salaries of proprietary traders that reduces the flow of bright young people into these jobs is likely a plus for the economy as a whole.

The arguments that apply to broker-dealers also apply to hedge funds and other participants in the shadow banking sector that contribute to the growth in equity and equity derivative trading as well as to non-financial corporations that have sharply increased their participation in financial markets over the past two decades. Any loss of small profit margin (less than the FTT amount) trading is not a loss to the economic well being of the US economy or economic well being of the vast majority of the US population.

The growth in proprietary trading activity among equity market participants is paralleled in the currency and debt markets. Currency trading has grown rapidly particularly over the past several years. At the same time, however, as the market has gotten bigger it has also gotten narrower. Thus the number of banks that are major players has actually declined. For example, in the 1998 BIS survey, there were 20 US banks that accounted for 75 percent of currency trading in the US; in contrast, in 2007 there were only 10 banks that accounted for 75 percent of US currency trading. [11] The impact of an FTT would therefore be felt primarily by a few very large banks. Again, this suggests the potential net beneficial impact of an FTT since it may be expected to diminish the dominance of these few large – too big to fail? – banks.

As in the case of equity trading, very little of the activity in the currency and currency derivative markets is related to commercial enterprise. The BIS reports that over 75 percent of currency trades executed in April 2007 had a time duration of less than one week. Further, the entities that represented the bulk of trading activity were not commercial enterprises engaged in the import and export of goods or services. Instead it is again hedge funds, mutual funds, pension funds and insurance companies that have been the drivers of growth in the currency and currency derivatives markets. “Technical” trading now dominates these markets, much as it does in equity markets. [12] As a result, turnover in the currency markets is almost 25 times the actual value of international trade. [13]

3. Two Arguments Against an FTT

Although there will be very loud opposition to an FTT, it is important to realize that very little of this trading activity that would be impacted has anything to do with generating new economic activity with long term growth potential or even with growing the GDP. Most of the trading that occurs in financial asset markets today is unconnected to actual commercial transactions between companies or to long term investment strategies. As James Tobin observed 25 years ago, “very little of the work of the securities industry, as gauged by the volume of market activity, has to do with the financing of real investment in any very direct way." [14] If some of this trading activity was to disappear because of a very small FTT and there were therefore fewer jobs for equity, currency, or bond traders, it is not at all clear that this would represent a net loss to society.

Of course, those engaged in trading financial assets as well as many economists who study financial markets will not agree with this conclusion. We cannot consider in depth all the arguments against an FTT that may be raised but will touch on only two here. [15] These arguments fall largely into two categories. First, many argue that an FTT, by increasing the costs of trading will reduce the level of market activity, lowering the level of liquidity thus increasing transaction costs and market volatility. According to this line of argument, everyone who invests in these markets, whether directly or indirectly, will suffer a loss of economic well being. Second, it is also argued that imposing and FTT will drive business to other venues that lack a tax. [16]

We believe that neither of these arguments is born out by the weight of the evidence. More importantly, we also believe that any impact of an FTT that reduced the role of finance in the U.S. political economy, shifting resources into other uses would be positive rather than negative. Following is a brief summary of the basis for our conclusion.

First, would an FTT reduce liquidity in the financial markets? As we have illustrated, trading in financial assets has grown dramatically over the past few decades. Opponents of FTTs take the position that more trading is always better; however, if increased trading produces increased liquidity and lower volatility, it should surely have done so over the past two decades. There is no evidence that volatility has declined; in fact it may actually have increased. In this respect a study by French and Roll 17 is quite suggestive. They compared equity market inter-day volatility in two different circumstances: first, from Tuesday – Thursday when the NYSE was open on the intervening Wednesday and from Tuesday – Thursday during the period when the NYSE was closed on the intervening Wednesday in order for the trade clearing process to catch up with volume. They found that volatility in the second instance was only half that of the former and concluded that trading itself may be a source of volatility. This conclusion is consistent with the notion that herd behavior dominates markets for financial assets, at least in the short run, and generates considerable volatility and resulting higher costs for investors.

More generally, financial economists judged the U.S. equity market and other markets for financial assets to be efficient when trading levels were less than a fourth of those that prevail today. It is, therefore, hard to imagine a convincing argument that a decrease in trading activity of even 50 percent would result in inefficient markets. Transaction costs would increase slightly with the FTT we propose. However, the actual costs would be less than those prevailing in the 1970s and 1980s, again a time when the U.S. equity market was judged to be efficient.

On the question of an FTT shifting business to other locations it is useful to consider the London Stock Market (LSE). The LSE has functioned with stamp tax that is much like the FTT we have been discussing for many years. The stamp tax has some flaws – for example it is not levied on derivatives but only on cash equities – but this makes the case even more interesting. The LSE has been one of the largest equity markets in the world for decades and has not grown more slowly than other major markets. In fact, during the 1999 – 2009 period the LSE moved from 3rd place to 2nd place in the world equity tables. Clearly the stamp tax has not moved business to other trading centers. Further, an FTT on US stocks would be applied to the stock without regard to where the trade occurred so long as the issue was listed on a US market. It is also interesting and suggestive that the imposition of stamp tax on the cash equity market has not resulted in any shift of business to the derivative markets in London. Nonetheless, we believe that the logic of an FTT across all related instruments is compelling.

C. Conclusion

We have argued that a financial transaction tax has the potential for raising a significant amount of revenue. An FTT should be designed to apply to all classes or financial assets and to apply across the range of products traded in financial asset markets. At current trading levels an FTT could generate well over $1 trillion in revenue. Spot currency and currency derivative markets would be the largest source of tax revenues with equity the second largest source. Of course if trading were reduced because of such a tax, the revenue raising potential would also be reduced but would still appear to be significant.

An FTT is progressive in impact and would also have the potential to assist in restructuring the U.S. political economy away from an overdependence on finance and financial services. It is widely urged that such shift out of financial activities is a goal but, to date, very little has been done along these lines.

Perhaps more important, however, is the political significance of an FTT. This is cast in terms of Wall Street vs Main Street or it can be articulated as a matter of economic justice. In either case the financial sector would be called upon to return some of the assistance that was rendered to it during the melt down of 2008. This formulation would have immense political appeal and, we think, help the U.S. break out of the politics as usual gridlock into which we have drifted after the initial enthusiasm of the Obama election and the sense that the times were right for change. As our earlier reference to Gordon Brown and Alistair Darling of the UK suggests, we believe that the political appeal of a well structured FTT would also transcend national borders.

In urging an FTT progressives should, we believe, tie the revenues to programs and policies that are widely beneficial and would be seen to be such. For example, a significant portion of FTT revenues could be earmarked for a jobs program that no simply designed to recover the over 8 million jobs lost since December 2007 but to expand access to good jobs across the U.S. labor force. Revenues from an FTT tied to a jobs program could also be the basis for an industrial policy that restructured the U.S. economy along the lines of sustained and sustainable growth that increases equality rather than inequality. [17] The possibilities are visionary in scope – what we need now is the political will to move forward.

Notes:

See for example, Lawrence and Victoria Summers, “When Financial Markets work too Well: A Cautious Case for a Securities Transaction Tax,” Journal of Financial Services Research, 3:261-286 (1989) or Dean Baker, “The Benefits of a Financial Transactions Tax,” Center for Economic and Policy Research, Dec 2008. Both of these articles raise excellent points in their discussions of an FTT but both are based on data from a period in which financial markets were significantly smaller than today. In late 2009, Dean Baker, Robert Pollin, Travis McArthur & Matt Sherman have published an assessment of potential FTT revenue using recent market data: “The Potential Revenue from Financial Transaction Taxes,” PERI Working Paper #212.

1.    Data in these two paragraphs are taken from the 1999 Securities Industry Fact Book and the 2008 Annual Report of the World Federation of Exchanges (WFE).
2.    In derivative trading, e.g. options or futures, notional value refers to the value of the underlying instrument represented by the derivatives contract. For example, if the S&P index is at 1000 and the futures contract is value at $100 x the index, the notional value of each contract is $100,000.
3.    Data on notional value are taken from the World Federation of Exchanges 2009 Annual Report. See www.world-exchanges.org.
4.    See BIS: Triennial Central Bank Survey of Foreign Exchange and Derivative Market Activity in 2007 – Final Results.
5.    See WFE, op cit.
6.    William Funk, “On and Over the Horizon: Emerging Issues in US. Taxation of Investments”, Houston Business and Tax Journal. Funk discusses FTTs on pp 40 – 44.
7.    “Changes in U.S. Family Finances from 2004 to 2007: Evidence from the Survey of Consumer Finances,” Federal Reserve Bulletin, February 2009.
8.    On non-financial corporations move into financial activities, see Robert Pollin and Dean Baker, “Public Investment Policy and U.S. Economic Renewal,” PERI Working Paper #211, esp. pp10 - 12.
9.    Calculated from Securities Industry Association Fact Books, relevant years tables on the NYSE member firm revenues and expenses.
10.    See BIS, op cit, p. 9.
11.    See BIS, op cit, p. 6.
12.    See BIS, op cit, p. 5.
13.    James Tobin, “On the Efficiency of the Financial System,” Lloyds Bank review, July 1984
14.    See Summers and Summers for a good treatment of many of the arguments against an FTT. We draw heavily on their discussion.
15.    See for example, Habermeier and Kirilenko, “Securities Transaction Taxes and Financial Markets” in Debating the Tobin Tax, New Rules for Global Finance Coalition, Washington DC, 2003.
16.    Kenneth French and Richard Roll, “Stock Return Variances: The Arrival of Information and the Reaction of Traders,” Journal of Financial Economics, 1987, pp.5 – 26, cited in Summers & Summers, op. cit.
17.    For one example of such a jobs program, see “A Permanent Jobs Program form the U.S: Economic Restructuring to meet Human Needs,” at www.cpegonline.org

Photo by Eneas de Troya/cc by 2.0/Flickr

A Communist’s View: Urgency of Tackling 21st Century “Paradox”

Wed, 01 Jun 2011 08:37:00 +0000

Introduction

I appreciate Sam Webb’s invitation to contribute to finding collective solutions to some of the most perplexing and challenging questions of the day.

The time when one could bottle up a controversial yet necessary discussion in some half-lit room and then emerge to announce the results to the world are gone, at least for the foreseeable future.

Through online communication, modern technology has let loose the genie of democracy in an unprecedented way.

And the working class, popular, left and socialist/communist movements have learned through ruling class-imposed dominance and self-imposed errors that to score a sustainable political victory requires the people’s fullest possible participation in the battle of ideas.

To concede this fight to the class enemy by limiting the discussion, whether by commission or omission, is deadly.

While much of the discourse surrounding his article has been thoughtful, I believe some has dealt with appearance rather than essence.

Some of the exchanges around the meaning of the terms Marxism-Leninism and democratic centralism are a case in point. Historical eras, like Stalin’s, have meaning in so far as they help shed light on the path ahead.

I am reserving my opinion on these particular subjects until later because I want to focus on other essential elements of Webb’s article requiring, in my opinion, greater reader attention.

I will ignore the posturing and phrase-mongering, in isolated cases, which largely fell flat.

I believe Webb challenges himself and the reader to dig under the surface and uncover the essence of social phenomena in searching for the truth.

Central Challenges

In point 1, Webb outlines the main interdependent challenges facing the working class and humanity around which a communist party today must wrap its theory and practice.

He says (I’m paraphrasing): A capitalist social system appearing to reach its limits; a hegemonic shift in power potentially resulting in generalized war and chaos; global processes – like global warming and nuclear proliferation – threatening humanity’s very existence; new technologies (especially communication) reshaping production methods, social relations and the nature of war.

Webb adds that there is a “fierce urgency” of resolving these challenges in a timely manner lest they “could make the world unlivable.”

Compelled by the insatiable drive for maximum profit and the resulting concentration of capital and wealth in ever-fewer private hands, modern capitalism has unleashed a series of processes (including global warming, nuclear proliferation and others) that are bringing humanity to the brink of unimaginable horror.

The flip side of this interdependent and contradictory dynamic is that modern capitalism has also given rise to increasingly social and interdependent forces of production on an unparalleled international scale.

This phenomenon has tended to intensify the need and the potential for working-class and people-to-people global collaboration on the class and democratic (in the broadest sense) struggles, in the face of powerful imperialist countercurrents trying to head off and squash this process.

While still in its infancy and somewhat tenuous, in recent years (since the socialist camp debacle) there has been a growing recognition of common interests by millions on a global scale, by nations, and by progressive class and social forces.

This is precisely the process to which the broad left, including the Communist Party, labor and other progressive popular movements need to give greater collective attention, and help to propel forward.

Needed on a grander scale are united expressions and actions, however loosely assembled at this stage, on a regional and global basis taking into account national peculiarities and conditions.

The role of online communication in recent events – in Egypt and the region, in Wisconsin and nationally coordinated days of solidarity action – are proof positive that united organized expression around common goals on a national and potentially an international level are more possible than ever.

More robust united struggle on the ground regionally and internationally will strengthen the role of the United Nations as a crucial force for peace and a more equitable, sustainable economic and political world order.

Some of the forces at the international, regional, state and popular level already in motion with common interests and needing greater convergence include:

Nations breaking away from the dominance of imperialism, especially U.S. imperialism, including those at various stages of transformation away from capitalism and toward socialist construction.
The rise of China as a constructive counterweight to U.S. imperialist world hegemony.
Regional international blocs of an economic/financial nature without the imperialist powers.
World-wide and regional labor federations which share a coincidence of views on broad democratic and trade union issues.
Industry-wide global labor federations which in a few instances have organized job-related coordinated actions with some degree of success.
U.S.-Canada based national unions collaborating, and sometimes merging, with unions in other countries.
The peace, environmental and other progressive social movements.

These processes and movements need further development in their own right and in their interrelationships.

Webb is absolutely right when he says:

The ‘fierce urgency of now’ is not yet matched by the popular movements at the state and global level that possess…the vision and capacity to resolve these…challenges” which “must begin well before the arrival of socialism on a global level. (My emphasis)

And that is the “paradox,” as Webb puts it, needing urgent attention.

Webb argues the role of the U.S. Communist Party is to “assist” the process for “international unity and peace, against its own imperialism, and to articulate an alternative vision of the place of the U.S. in the world.”

Our nation’s working class and people have a pivotal role to play in this process both as a matter of self-interest and international responsibility/solidarity, given the dominant role of U.S. imperialism in the world.

That means greater attention overall to issues of ending wars, cutting military spending, and promoting nuclear disarmament.

In the fight against austerity measures being imposed by major industrial powers, it means international labor-to-labor-to-people cooperation in the fight for environmentally sustainable economic recovery and jobs-creating measures.

For us here, these goals will at best bear limited success unless (as Webb emphasizes) we succeed in fulfilling the “overriding strategic task” on which the “country’s future depends,” enlarging the organized section of the working class.

He argues this is the task for labor but also for “every democratic-minded organization and person.”

Facilitating this critical task, Webb adds, is the “continued evolution of labor into a social movement” and the need to defeat “right-wing extremism,” which will open the door to a more “labor-friendly environment” including – I would add – the passage of the Employee Free Choice Act.

Integral to labor’s resurgence is the “urgent” need to encourage the continued evolution of the U.S. labor movement’s internationalist outlook and activity, as a matter of self-interest and international solidarity and unity.

When combined with a larger membership at the head of a broad social movement, U.S. labor’s increased international role will strengthen exponentially the working class’ leverage at home and globally.

It will strengthen our labor movement’s bargaining power in the workplace and its social and political power nationally and internationally.

In addition to political and practical assistance, the role of the broad left in labor and beyond, including communists, is to help working people see through divisive rightwing ruling-class ideas and to project an alternate progressive vision.

The class and democratic struggles

Webb does a wonderful job of weaving together the “internal and organic” connection of the class struggle and racial and gender equality, and related struggles for the rights of immigrants and the LGBT community.

Also to be noted is the interdependence of class and democratic struggles on the road to socialism and in the construction of socialism itself.

Current experience in Latin America, with Venezuela and other nations in the region, speaks volumes about several questions Webb develops, including:

The potential for peaceful transition to socialism, including in our country.

The relationship between the struggle within the state and against the state.

His conclusions about the transition to and construction of socialism are very insightful. On this score, I would direct attention to the Central Report by Raul Castro to the 6th Congress of the Communist Party of Cuba and his closing remarks, because they are living proof of what Webb is elaborating.

In a move to correct tendencies that were stymieing the economy and other aspects of life, Cuba is phasing in over a five-year period a more productive economic model and moving to more fully empower the people on the political as well as the economic fronts.

While the economy will function in a regulated socialist market with a mix of property forms, maintaining the pivotal socialist state enterprises, it will move away from an overly centralized model to one more decentralized where planning is essential.

The adjustments will more clearly delineate the role played by state institutions and state enterprises with “gradual decentralization of powers from central to local government, and from ministries and other national entities in favor of the increasing autonomy of socialist state enterprises,” Castro explained.

“Excessive centralization inhibits initiative in society and in the entire productive chain,” Castro said. He noted the aim is to “release the development of the productive forces.”

Citing the phasing out of the ration book, as part of a broader restructuring plan, Castro said the idea is to bring economic life in line with the “principle of distribution which should characterize socialism” - in other words, “From each according to his ability, to each according to his work.”

Marxism-Leninism and Stalin

Webb proposes dropping the designation of “Marxist-Leninist” (M-L) in favor of simply “Marxist.”

He argues the term “took formal shape during the Stalin period” which led to “simplification” of Marxism and hemmed our party in “theoretically and practically.”

Perhaps I’m missing something, but to most people the origin of the term M-L is an obscure fact of history. More important, it seems to me, is to recognize the essence of what Marx and Lenin imparted to future generations, as Webb says, “a scientifically grounded mode of analysis” and “compass of struggle.”

As to Stalin, I am in the camp of those who believe Stalin stultified theory and practice, and engaged in outright criminal acts.

His actions are indefensible and undermine the essence of Marx, Lenin and socialism/communism, and the humanistic values they represent.

I’m sure some will disagree with me. No matter how much we argue, we’ll never see eye to eye.

So, I say, let’s shelve this issue and move on…

Party Standards & Democratic Centralism

Webb calls for dropping the term “democratic centralism,” which I favor, because a party with a “high degree of discipline and centralized structure” doesn’t fit our party’s present status and the spirit of the times.

In my view, there are two bottom-line principles that characterize the unique political and organizational character of a communist party.

Referring to democratic centralism, Webb says, “I’m for dropping the term (my emphasis). Now don’t get me wrong. I’m for collective discussion, broad interaction, democratic decisions, testing decisions in life, and the struggle for unity in action.”

Just like a strike, the correctness of a decision has to be tested in life. If unity in action – that is everyone abiding by the majority decision – is to be expected, the goal must be majority decision reached democratically after a vigorous discussion by an informed membership in command of the union.

But, there is a second overriding principle captured by Marx and Engels in the Communist Manifesto:

The communists fight for the attainment of the immediate aims, for the enforcement of the momentary interests of the working class, but in the movement of the present, they represent and take care of the future of that movement (my emphasis).

Other than these two general principles, party organizational structure and operational mode should be determined by the prevailing conditions in any one country at any particular stage of struggle and the condition of the party itself at the time.

We have a unique contribution to make. Webb says, “Our experience, our broad and flexible strategic and tactical concepts of struggle, our keen appreciation of the imperative of broad unity, our class, internationalist, and dialectical approach, our willingness to embrace new forms of organization, communication, and united action, and our (socialist) vision allow us to make a vital contribution to the project of the left and to the struggle for human emancipation.” I would say this is the outlook of a leader with a deep understanding of the role of the Communist party in our country, in today’s world.

I agree with Webb’s arguments that our party should “open the door to new members” and be “more flexible as far as structures of organization and membership expectations.”

As for leadership standards, especially for those in leading bodies, a more rigorously self-imposed standard of leadership should be expected that, as he says, “politically engages the membership and leads by force of argument,” and I would add, “by example.”

There are also practices that have characterized communist parties that should be encouraged in new members when possible but should be expected of leading bodies and those elected to leading positions. These include a collective style of work in reaching and carrying out decisions, regular collective review and evaluation of all major policies, decisions and work, to draw lessons from successes as well as mistakes.

Work in Progress

Webb describes his article as a “work in progress.” In a sense, all theoretical postulates are “a work in progress” because reality at any particular point is infinitely richer than what the best minds can conjure up.

Reality at any particular point is literally changing before our eyes and beyond our eyes’ capacity to perceive. It is ever-changing, in constant motion.

The scientific “trick” is to discover/uncover the main processes and contradictions that affect humanity, on the natural and social planes, at any particular stage in the universe’s development, and to test in practice ways to resolve those contradictions in humanity’s favor.

Photo by John Bachtell/PeoplesWorld.org

Book Review: Rise Again: A Zombie Thriller

Wed, 01 Jun 2011 08:36:00 +0000

Rise Again: A Zombie Thriller
Benjamin Tripp
New York, Gallery Books, 2010

Zombies are back from the dead, and they are better than ever! The last few years have seen an influx of books, movies, and television shows all featuring zombies, and for this reviewer, it is most welcome. Ben Tripp’s novel “Rise Again” is one of the latest entries in the book category, and it is alternately horrifying, bleak, and hopeful.

The book opens on the 4th of July in the small town of Forest Peak, California. Forest Peak is an hour’s drive from Los Angeles, and is inundated with tourists for the holiday. Tripp’s choice of locale and date for the novel is quite deliberate. The opening pages reveal the skeletons hiding in the town’s closets, and introduces us to both town people and tourists alike, who will be key as the plot unfolds. Having the zombie uprising happen on the 4th of July makes what occurs in later chapters all the more forceful, as the government and military fail miserably and at times deliberately at protecting living citizens.

At the heart of the book is Danielle “Danny” Adelman, who is the sheriff of Forest Peak. Danny is an Iraq war veteran, suffering from both physical problems and PTSD due to her service in the war. She is no stranger to alcohol and pills in an effort to dull her pain. Her only family is her younger sister Kelley, who has spent time in foster homes when Danny was in the service. As the book opens, Kelley has decided to leave Forest Peak permanently, without telling Danny where she is moving to. Kelley feels abandoned by Danny since her return from the war, and wants a fresh start. Kelley leaves a letter for Danny detailing the town’s secrets, and her reasons for moving on, and this letter drives many of Danny’s actions throughout the book.

However, before Danny has a chance to read the letter, or we as readers have a chance to digest what Kelley has revealed about the town and her relationship with her sister, the book kicks into high gear. Something is causing people to run like mad, drop dead while running, and then come back “alive” from death. Initially thought to be harmless, we soon see just how deadly they are. As these events unfold rapidly, we are introduced to other important characters, such as Amy, the lesbian town veterinarian and Danny’s oldest friend, Wulf, the town drunk who is also a Vietnam vet sharp shooter, and Patrick and Weaver, a gay couple from Los Angeles who have stopped in Forest Peak with their RV. Each of these people will make great sacrifices as the zombie uprising progresses, and all are written with care and verisimilitude.

To divulge more of the plot at this point would not be fair. What the characters go through as they try to make their way in the world after zombies (not to mention the horribly misguided government and rogue military personnel) have taken over is something to be experienced for yourself, and not through any condensed review. Suffice it to say that the final words in the book are some of the most poignant and heart wrenching I have ever read, and I look forward to Ben Tripp’s next effort, be it a sequel to “Rise Again” or anything else he wants to put on paper.

Podcast: The Road to the 2012 Elections (Part 2)

Wed, 01 Jun 2011 08:33:00 +0000

This episode is the second part of an extended interview in which we discuss the road to the 2012 elections with Communist Party political action commission chair Joelle Fishman. (Listen to the first part of the interview here.)

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Reconsidering Democratic Centralism

Wed, 01 Jun 2011 08:32:00 +0000

In his article, "A Party of Socialism in the 21st Century," Sam Webb argues for dropping the term and the concept of democratic centralism as our main organizing principle. Terminology is of lesser importance. As Shakespeare said “What’s in a name? A rose by any other name would smell as sweet.” We can change our terminology to facilitate our communications with different audiences, though we cause confusion when we overdo that also. But I would like to defend the basic concept of “democratic centralism” as still being valid for us, and for other kinds of organizations as well.

Different kinds of entities require different organizational principles.

A labor union, for example, can not be organized on the basis of uniformity of ideology, because its strength lies in including everybody in the shop, except the bosses. Yet there is still a minimum of “democratic centralism” in labor union functioning: When a strike is called, even those workers who voted against the strike authorization are required to refrain from crossing the picket line. Members of a union local who violate this are sometimes severely chastised, and always subjected to sharp criticism as “scabs.”

A mistake the leaders of the old U.S.S.R. made was to think that it was possible or desirable to use “democratic centralism” as the method of organizing an entire nation, in all its variety and with all its internal contradictions. So “democratic centralism” as an organizing principle for society was written into the U.S.S.R.’s constitution. This, in my opinion, may have restricted the ability of the socialist government to deal creatively with the inevitable internal conflicts and complexities of a large modern state. In fact a nation can not be organized on the basis of democratic centralism. Even socialist governments will always have to deal with the task of governing people who have strong disagreements with the way things are being done, being flexible enough not to push such people over from dissidence into a state of outright rebellion.

Yet in any country, no matter how democratic, people are expected to obey the laws. Is that not, to a certain extent, democratic centralism?

That said, there were extremes to which the concept of democratic centralism has been taken in the past, which we might very well leave behind us as sectarian foolishness or relics of another time.

When I first entered the Party in November 1987, people still talked about not being allowed to have political discussions with Party members who were members of other clubs or at any rate did not participate in the same collective as oneself. At the same time, there was supposedly a rule that husbands and wives were not supposed to belong to the same Party club. The reader may surmise that this led to some long silences across the dinner table in some people’s homes. But I doubt that anybody ever was "brought up on charges" for talking politics with his or her spouse!

In the age of the internet and social media, such rules are impossible to enforce, and can, I think, be safely put behind us. People will talk.

Another thing that is impossible to enforce in modern conditions is the rule that after the Party Convention has finished, discussion stops except on the subject of how to carry out the decisions of the Convention. The speed of social, economic and political change in the modern world is simply to fast for this to be feasible. There need to be mechanisms for ongoing discussion, involving the whole party, and not restricted by topic.

Finally, while we are talking about jettisoning certain vocabulary, I think the word “vanguard’ can definitely be put in mothballs until such time as we can definitely state that we are the “vanguard” in deeds and not just in words. The left in the United States has a long history of little sects popping up overnight and declaring themselves to be the new, authentic “vanguard” of the working class, based on their claims to possess some sort of divinely revealed truth about the meanings of the writings of Trotsky, Mao or Hoxha. Some of these groups could have held their Party Congresses in a telephone booth, yet God almighty has somehow declared them to be the “vanguard of the working class.” I believe in the slogan “Be more than you seem.” So “vanguard” goes into the attic until further need. It is too often a pretentious and empty boast.

What remains is the need to have a coherent structure, focused on action and not allowing us to degenerate into a talking shop, or a mere passive membership organization. And this is where I take issue with the idea of dropping the central elements of “democratic centralism” in our practice.

According to Lenin, “democratic centralism” in the Bolshevik Party, later the Communist Party of the U.S.S.R., had the following key characteristics:

1.    All leadership at all levels was elected, and party policies were determined by democratic votes of the appropriate collectives. That’s the “democratic” part of democratic centralism.

2.    All leadership was to be accountable to the collective. That’s another “democratic” aspect. Leaders who resist accountability are not being democratic.

3.    All subordinate bodies of the party were required to carry out the (democratically arrived at) decisions of the upper bodies. That’s the centralist part.

4.    All party members were required to carry out the (democratically arrived at) decisions of the collective. Again, centralism within democracy.

Later, the Bolsheviks added a ban on factionalism. But the above four points constituted the essence of the concept that Lenin laid out in his 1902 book: “What is to be Done? Burning Questions of Our Movement.” I think it is important to note that Lenin did not argue that such organizational principles were necessary only to protect the party and its members from repression, but also to maintain a coherent decision making structure and to keep the activities of the party members focused on collectively derived goals. Democratic centralism was designed also to prevent the party from becoming a diffuse talking shop instead of a fighting political organization. In “What is to be Done” Lenin pointed out that membership in the Bolshevik Party was voluntary; nobody was forced to be a member if they did not agree with the Party’s principles. Organizational democracy did not imply paralysis.

All accounts of the early period of the Bolshevik party, out of and then in power, suggest that there was a large amount of internal discussion and disagreement, for which one was not generally punished by expulsion.

But running an opposition party is different from running a ruling party and through it, the government of a huge and conflict filled state. After Lenin became incapacitated by a series of strokes, dying finally in February of 1924, the amount of conflict within the leadership of the Communist Party of the Soviet Union (as it came to be known) became destabilizing for the whole country. And out of this situation Josef Stalin, playing one faction off against another, was able to distort the concept of democratic centralism, and a lot of other things also, so as to create a the basis for his personal dictatorship. Stalin did not continue to implement democratic centralism the way Lenin had conceptualized it, but worked to undermine it, producing what might better be called “bureaucratic centralism.” Stalin and his closest collaborators did everything in the name of the Party, but by diverging from the “democratic” dimension of democratic centralism, they undermined the Party, killing hundreds of thousands of active members and cowing the rest into submission to the Stalinist state. One of the ways they accomplished this was by creating internal cliques within the Party that were not accountable to the mechanisms of “democratic centralism” – the infamous “troikas.”

So if anybody suggests that democratic centralism is a relic of Stalinism, I think he or she is wrong. Stalin’s practices in party and government were a negation of democratic centralism.

I have never written on subjects such as the Stalin Period or even the reasons for the collapse of the USSR, for the simple reason that I do not read Russian and do not have access even to a good academic library, let alone the archives of the Soviet government and Party. However, I have a strong suspicion that David Laibman, in his 2007 book “Deep History: A Study in Social Evolution and Human Potential.” is right when he identifies the undemocratic practices of the Stalin period as the poisonous seeds which eventually grew into the forces that destroyed the USSR.

Now the CPUSA faces many new situations which require adaptation of old concepts and practices. As I have said above, I would shed no tears for the ditching of phraseology such as “vanguard,” or practices such as impeding communication within the party, or stopping all discussion between Party Conferences. Yet I think the core concepts of democratic centralism are still valid for running a coherent organization, and for having an impact in the class struggle.

•    Districts and clubs are asked to raise money for the Party and its press. As few of us have much in the way of personal resources, this means organizing fundraising activities: Dinners, banquets, phone calls to possible contributors, etc. This requires the mobilization and, if necessary, creation of collective groups to plan and carry out such activities. All of this work can not be on the shoulders of a handful of leaders in each area. We need to be able to come together collectively, and bring in as many party members and friends as we can to make the appropriate decisions, create a plan of work, assign responsibilities and do check up to make sure that people who take on tasks actually carry them out.

•    There are many new applicants for Party membership, perhaps as many as a thousand over the past year when one includes both people who have joined online and people who have joined (or expressed interest) in the context of mass struggles. Though some of these folks would be satisfied with a nominal membership, others really do look for the leadership and guidance of the Party as a whole. They want a sense of being part of an active organization, not just to be names on a membership list. How do I know? Because in my district they call us up, send me e-mails etc. and tell us so Someone has to do follow-up with these new comrades, to meet with them or at least talk to them by phone, to plug them into educational activities, to consult with them about mass struggles in which they are involved, and other such things. We need to have strong district organizations and clubs to plan that follow up work. It can’t all be left to individuals to jump in and start doing things without any collective support structure. But if we drop the concept of democratic centralism, I fear that these district organizations and clubs will atrophy.

•    The class struggle is heating up. There are demonstrations and other actions going on constantly and all over the place. For us to have a maximal impact we need to coordinate and focus our efforts at every level, from shops and local neighborhoods to the national and international scene. This requires collective decision making, strategic planning, assignment of tasks, and checkup/accountability.

•    There is always a danger of disruption either by conscious agents-provocateurs, or by people who simply can’t deal with accountability. In my own 24 years in the CPUSA, I have seen some wildly disruptive behavior. There has to be a mechanism whereby some authoritative body says “look, shape up or ship out.” For this kind of action to have credibility, a collective approach is essential or it would be seen as, and would indeed be, a bureaucratic and not democratic control mechanism: Some individual pulling rank.

For all of these things and more, we need well functioning collectives: National bodies, district organizations, clubs, commissions and topic-specific task forces. We have always worked well when our collectives are strong, and, whether we like the phrase or not, our collectives have always been based on democratic centralism.

At the same time, in all the clubs I have been in, there have always been passive members who don’t show up for the meetings or otherwise participate in the club’s activities. The main problem with such people (some of whom had good excuses, such as advanced age, health problems, work schedule conflicts, security problems and logistical problems for getting to activities) was that an active member of the club had to spend time doing such things as going around collecting their dues—not a big deal. This did not impede us from doing what we set out to do, and it would not today. Not all individual members are going to be active to the same degree. But to let collectives, as collectives, become atrophied is a big problem.

So pick another phrase than “democratic centralism” if you prefer, but let’s keep the essence of the concept, adapting it flexibly to new situations that have arisen and will arise in the future.

Growing the Communist Party: Looking at Organizing Methods in a Historical Context

Wed, 01 Jun 2011 08:31:00 +0000

Millions of Americans, especially young ones, prefer socialism to capitalism. The capitol domes in state after state ring with the voices of tens of thousands of labor activists and their allies. The need for study and popular explanation of tactics of unity is urgent. Who could NOT want a much larger Communist Party – one with the capacity to engage with millions?

I agree with Tony Pecinovsky’s recent article, "Organizational Rubric, Power and Relevance: A Close Look At a Proud Organization," that the Communist Party needs to get in fighting trim. Tony gets right to the point: We should not spend our resources on activities that do not build that capacity.

The Communist Party needs to change and it needs to change fast. We’re not open enough to volunteers. Not open enough to member initiatives. There’s too much waiting for the go-ahead from on high. Too much worry about doing things exactly right rather than not doing them at all. Too much feeling that this is OUR party and not that of the whole class and especially that of the younger generation.

We need a quicker response time – we literally need to get back to new members within 24 hours, not 24 days. We need to be open to other forms of organization and points of engagement in addition to clubs. We need to be willing to experiment to provide every form of participation and connection possible. And we need to build our organization corresponding to how people and this generation live, open to different levels of participation. Just because we always did something some way doesn’t mean it is still right. And yes, we do need to meet deadlines and carry out tasks.

I share Tony’s frustration with organizational practices that are too often big on talk but slow on action.

But the distinction Tony proposes between ideology and getting results leads in a wrong direction and I don’t think will get us results.

Perhaps to emphasize the urgency of the need for quick and effective change, Tony also minimizes the history and impact of our organization. I think that’s historically inaccurate.

We all agree on the goals, but will we achieve them if we remove ideology from the discussion of organization and focus instead on a rubric based on stakeholder accountability, deliverables, rating performance, timelines, mutually agreed upon contracts for success, stakeholder buy–in, investor base, leveraging, and new definitions of power and self-interest? I don’t think so.

Let’s look at the question of growth of the Communist Party from a wider lens, that of history. The size and organizational level of the Communist Party is first and foremost a result of material conditions of the working class and the class struggle. Like the labor movement, the party’s size and very existence are linked to the conditions of the class struggle.

The Party experienced its biggest growth in the years of the 30s and 40s – the time of the Great Depression and the organization of the industrial unions. The cause of this growth can be traced not to the adoption of better organizing techniques but to a mass uprising of the people. The primary driving force was objective conditions. Having said that, the subjective factors – the factors that we CAN control - can be decisive. And we saw that in that period of the 30s and 40s, our movement responded heart and soul to the crises enveloping our nation’s people. No doubt they were moved by the dynamic input of the new members. The Communist Party then, along with the whole peoples movement, adopted new mass approaches including vibrant culture and militant action. The Party’s bold ideology was a key element in that growth – the fight against racism, industrial unionism, free speech.

I agree with the urgency of making changes but to imply, as "Organizational Rubric, Power and Relevance" does, that the Communist Party has not been relevant for a long, long time is to look at history shallowly.

Today as we’re riding the current of an upsurge, we should temper our pride in our accomplishments with some working class modesty. The comrades who preceded us somehow preserved our organization through arrests, mass firings, seizures of assets and unrelenting ideological assault.

In fact, the bulk of our organization’s 90+ year history has not been riding the crest of a mass upsurge, such as the 15 year period spanning the 30’s and 40’s or the student upsurge of the early 70s. Rather it was the tough slog of breaking through the isolation of the 20s, the McCarthy attack of the 50s, the domination of the labor movement by the right wing business unionists of the 60s, 70s, and 80s.

When we talk about the “labor led peoples coalition” today it’s out there on the streets to see. But in those days, it was a theoretical concept that took a lot of explaining and a stretch of faith. Yet it was the Communist Party that noted the fresh winds in the labor movement, participated in the building of rank and file caucuses, black caucuses and women's caucuses, worked with every small opening available, working on the ground, below ground, finding the possibilities in the most difficult situations. That’s a tough row to hoe.

The Party’s impact in those challenging times couldn’t be measured in the elections influenced or the folks who were willing to openly embrace it or its members. Nevertheless, not a decade nor a generation has passed in which the Communist Party has not impacted the class struggle in a positive way. Through thick and thin the Communist Party has linked labor with the African American struggle and the immigrant rights movement, stood up for affirmative action, peace and international solidarity. We have always been practitioners of the science of working class unity.

Now that we see the floodgates open to participating in the big stream, it’s not necessary to denigrate the work that we’ve done and in another period might also return to.

Here’s an example that comes to my mind: communist organizers Claude Lightfoot and Jack Kling were two leaders, black and white, in Chicago’s unemployed movement in the 30’s. They spoke at street corner rallies to tens of thousands. They led delegations that put peoples’ furniture back in their house. They led a Communist party in Chicago of thousands. When I met them in the 70s they still led the party in Chicago, with the same skills and organizing methods. But in between had been a period of severe reaction and a labor movement that allied itself with the bosses. Membership stagnated; growth almost stopped. However, the lack of growth could not be attributed to bad organizational methods. And despite difficulties, many important things were still accomplished under their leadership.

Recently there was an experiment within the labor movement to institute some what were described at the time as transformational changes in organizing practices. Although some of the changes were positive (others weren’t) the radical growth predicted by the proponents failed to materialize. In the labor movement, good organizing methods are very important, but they don’t make up for underlying objective factors.

So at this moment, when members are again streaming into our party, it is important to accurately gauge the reason for past difficulties so as not to incorrectly attribute them to subjective conditions.

Now I’d like to register a friendly disagreement with some new concepts of “power” and “self-interest” put forward in Tony’s article in relation to the question of building the Communist Party.

First we have to make clear that despite its name the Communist Party USA is not a political party in the way most Americans understand that term – that is, our main activity is not to raise money to run or oppose candidates for elected office. Nor, however, are we a charity or a social service or even social justice group. We are fighting for the welfare of the working class – present and future, understanding that this is the path to peace and justice and survival for humanity and our planet.

So while it’s appropriate to talk about “building power,” our focus can’t be on building power for our organization. Instead, it should be about building power for our class. This is a meaningful distinction, not just a play on words. Our task is ambitious – to see the labor movement stronger, other working class and peoples’ movements stronger and the class consciousness of the whole class stronger. The definition of power cited in Tony’s article “the ability to control, prevent or cause change” does not quite fit the bill. We need a class-based definition. Our organization has no power it exercises by itself. As Karl and Fred told us “we have no interests apart from the class.”

Tony calls on us to organize based on “self interest” and he’s right. But self interest is very connected to ideology. Everyone operates out of self interest; the challenge is how they see their self interest. Why contrast those who would join for “altruistic” reasons (altruistic = concern for the welfare of others) with those who want to be in an an organization that’s effective and relevant to their immediate needs? I think it’s a false dichotomy. The point of class consciousness is one can and must be both to be effective in either. The magic appeal of class consciousness is that being for others is the most effective way I can be for myself.

I understand that a lot of the concepts mentioned in Tony’s article come to us from the not-for-profit movement. The not for profit is the dominant organizational form of today’s social justice movement. The not for profit movement is also a place where we meet with some of our most valued allies. Many of the new and valuable organizational tools and methods have been developed there.

However, we must also keep in mind that the main source of funding for not for profits is corporate foundations (subsidized by substantial tax breaks). Therefore not-for-profits by and large are forced into an organizational form, and, dare I say, rubric that corresponds to the requirements of their funders. They impose a corporate model of organization: with boards whose dual responsibilities a) are to make policy; and b) to appeal to the funders. Paid staff carry out the day to day work. The rubrics they use to evaluate and make grants in the first place comes from schools of business, Thus, the demand for deliverables, results based methods, etc. Corporations pretend to use "objective" measures for evaluation but there is no proof that these measurement criteria are valid.

“Results oriented” sounds good; the concept was developed in opposition to process oriented. However, in the “business” of building class consciousness, process IS important. For example, in union organizing, do we judge our work only by how many members sign up (results oriented) or also by achievement of an organizing committee (process)? In our line of work – building class consciousness – I would say that we care a lot about the process as well as the measurable results. Building unity, class consciousness, leadership and experience in struggle are hard to quantify.

We can’t treat our members, whether they are on the payroll or volunteers as employees and measure them by corporate standards. Our motivator is ideology – a high level understanding of self-interest. I don’t think production goals are suited to peoples organizations.

There are, of course, some very important social justice organizations that are NOT dependent on corporate funding: unions. And thus unions are among the most democratic, grass roots-based organizations in American life. They follow a working class model of organization – a place with elected leadership and an opportunity for working class people to develop in leadership: as shop steward, local committee member (civil rights, health and safety, solidarity) local union officer, central labor council member and so on.

Another notable exception is that the Communist Party was born in working class struggles and is funded through contributions of its members and supporters. This is not a small achievement over almost 100 years of persecution. Consistency and stability on questions like the importance of the fight against racism, anti imperialism, class-struggle trade unionism, union democracy and coalition building tactics have made an incalculable contribution to the peoples movement in this country.

The successes and sustainability of the Communist Party deserve to be studied and given credence every bit as much as the organizational principles proclaimed which do not have a proven success record.

There are many lessons to learn from every generation of fighters.

I still agree with Tony’s main point. We need more discussion about what works and what doesn’t. And we need to draw our new and young members into the discussion.

Thanks to Tony for getting the ball rolling.

Photo: Map showing locations of hundreds of new members since 2010. (PA photo services)

On Imagining Socialism and Confronting the Unknowns

Wed, 01 Jun 2011 08:29:00 +0000

Sam Webb's latest foray on socialism appears to be a continuing series of his imagining the society that happens after capitalism, but that must evolve from it. Its a practice all writers on the left should emulate, in my view. Engels late 1880’s encouragement to American socialists to “be the future in the movements of the present” seems a timely inspiration to each generation, including this one, to re-envision the rise and fulfillment of the socialist ideal from the conditions of their own lives and times.

Sam opens with a classic Northern New England folk tale about a stranger asking directions of a a native. The native's reply after some contemplation on the topic is: "you can't get there from here". The story has variations in Maine, New Hampshire and Vermont. His point is that we need to be a bit better than that advice on the questions of socialism, and all conceptions of post capitalist, or post - commodity-based economic and social relations.

In Vermont, the tale has a useful extension (only they are Vermonters, of course). After the native Vermonters observe that they think "you can't get there from here", the irritated traveler seeking directions – in Vermont lore, usually called a "flatlander" – barks back: "Don't you know anything??"

"Why yes! We ain't lost, friend," the Vermonters reply.

The folk tale brings to mind the borderland between what we know, and don't know but need to know better, to move both the democratic-progressive, and socialist, visions closer to reality, and how close the problems confronting both agendas are to each other.

Not starting from ground zero

Knowing "we ain't lost" means we understand some basics for both democratic and socialist economic development. The first law and bottom line metric of progress vs going backwards is this: working class income and wealth should be rising in proportion to productivity. Period. That has to happen or disorder spreads beyond control. And there does not appear to be an option to NOT raise productivity, at least in the industrial era. It is not an accident that this principle, officially endorsed the chief index of equity by all but the most whacked-out economic policy trends, is an abbreviated version of the governing socialist principle enunciated by Marx and Engels, the guide for the transition from capitalist to an advanced society: "from each according to their ability; to each according to their work."

The correspondence between mean (working-class) incomes and productivity must hold, or bring instability, regardless the particular proportion of public vs. private that is favored in a particular country at a given time, regardless which coalition of classes is in political power. In addition, history is very persuasive that it takes the working class and its friends' organized and mass political power to achieve this principle. The bosses, even if they were in principle to agree, and no matter how liberal-minded they may be – and some actually do agree – cannot get this done.

This necessity for mass, independent, self-aware mobilization of working people to effect social change has been verified repeatedly in our own history. The American revolution required the mobilization of farmers into militia, their terms being economic and political liberty and enfranchisement – what the more elite Founders like Adams and Hamilton considered "mob republicanism."

The Civil War would have persisted unresolved without the liberation and mobilization of enslaved peoples and their allies.

Social collapse threatened in the Great Depression and earlier in the century if labor and anti-monopoly reforms were not passed. But only Roosevelt's coalition with labor – and labor's ability to organize the multitudes into motion – made it doable, an act for which the corporations and reactionaries never forgave him, even though, in the words of Jim Matles, founder of the UE, "he [Roosevelt] saved the system for them!!"

Stuff we know that we don't have to worry about

We know a lot about how we got where we are today. Beyond that, there are some other matters that could be put in the category of: we know that we don't know, and don't need to spend too much time thinking about. I put all the left-wing debates about revolution vs reform in this category, along with who is the purest Marxist. Our history teaches both 1) that modest reforms can demand rebellion, and 2) that changes that radically shift class alignments and power can also take place within a constitutional and (relatively) peaceful bourgeois democratic government. We don't know what course events will take. But we know what we favor! To the extent that meaningful reforms can be enforced through constitutional means, it strengthens all democratic institutions from unions to the management of entitlements, to equality before law, to civil liberties honored by courts, to the right to vote, to institutions sustaining a more equitable distribution of wealth (education, health care, retirement).

Stuff we don't know, but need to know

Despite not being lost, there are many matters very pertinent to debates about recovery from the current crisis that also have big implications for the path, or paths to socialist society, and the viability of a society seeking to realize the socialist principles of equity.

Public goods and human capital

Two of the most immediate challenges, and yet also the most complex and profound for socialist or any post-capitalist theory, I raise here: “public goods” and “human capital.”

1. What are public goods? What is their value beyond the cost of production? What kind of "economy" can be sustained by their production?

The term "public goods" has two meanings. The first is the obvious and intuitive one: products and services provided by government financed primarily through taxes. The second is a technical, economic definition devised by Paul Samuelson in a famous paper (see more here). It partially overlaps with the intuitive definition. Wikipedia provides a concise version:

a public good is a good that is non-rival and non-excludable. Non-rivalry means that consumption of the good by one individual does not reduce availability of the good for consumption by others; and non-excludability that no one can be effectively excluded from using the good.

To give a sense of the scope of commodities and enterprises involved in providing mostly non-rival, not excludable public goods, consider: a) all software (can be, and is, copied and distributed free at very low cost); b) pharmaceuticals (are 98 percent composed of research in the public domain); c) all copyrighted material in the digital universe; d) all intellectual property.

When added to the host of public works and institutions which have evolved, including other goods and services that were market failures when they needed to be universal (electric power, e.g.), its possible that a majority of capital in the US is essentially more “public”, or public controlled, than private, and a large part of the private – all those technical “public goods” that remain dressed as commodities solely by virtue of extensive public protection (e.g. patents, copyrights, licensing) – constitute assets that can walk out the door in an employee’s thumb drive, or merely inside his or her head. Can a capitalist economy be sustained on such "commodities." No one knows. Most software corporations have changed their business model from licensed software to software services (i.e. pure labor), a move arguably reflecting the unacceptable risks of believing intellectual property can survive as a viable market commodity.

Economic recovery from the Great Recession must include an even larger public and non-profit sector engaged in the production of economic public goods: universal health care, big investments in education, green and high-tech manufacturing development – all items where science, best advice, and working class interests coincide and agree. These are things and services for which there is "strong demand" but which a market economy comprised of profit maximizing firms cannot deliver in sufficient scale. Further, when binges, monopolies, oligopolies, over-financialization, manias, crashes become more of a rule than efficiency and innovation, the demand for public goods rises, as we are seeing now, and rarely subsides.

But there is a big and growing problem in making a solid case for these expanded public goods and services. That problem is: There is no agreement on how to assign public goods an economic value above and beyond the cost of their inputs.

Firm profitability in physical commodity producing enterprises, combined with market price, determines a more or less reliable measure for productivity and thus economic efficiency: the increase in value added by labor, the most important input. Conversely its hard to determine public goods and non-profits successes, from the not-successes. The problem suggests the need for a new thinking on accountability for programs. But incentives in public bureaucracies are hard to structure. For example, a department budget in federal government that is unspent at years end is usually not rewarded with a bonus. Instead legislators will use the surplus as an argument to cut the agency’s budget for the following year. Thus department managers have an actual disincentive to save money. The truth is, that the added value of public goods is essentially political. Together the providers and consumers of public goods and services should constitute the most important voices in their life-cycle.

For example, inefficient or not, the first bridge built from public funds to connect formerly separated Minneapolis and St Paul was a public good of immense economic value. If only there were a way to enumerate all the economic activity it engendered, we could put to bed any and all arguments about waste! But no numbers beyond guesses exist, even though we intuitively know the value far exceeds the original inputs. In the case of each of the bridges now linking Minneapolis-St Paul, the taxpayers got full value and many times more, including a physical asset worth billions.

Some economists argue persuasively that because public goods are not usually marketed, they have no economic value that can be reflected in a price. So what is their value? Another way to consider this question is from the point of view of the consumer of a public good. If I live in a modest rent controlled apartment, and I have access to a public pool, public arts, educational and cultural programs, public parks and museums of great natural and artistic, public transportation and quality public health care, I might need several hundred thousand dollars of annual income to purchase all these goods and services privately.

Currently we have only legislators to decide if expensive public goods are successful, or not, and when they should be retired or renewed. That is a very cumbersome, slow-moving, un-scalable and likely unsustainable means of managing public goods. The demands for public goods are complex and multi-faceted and frequently reflect conflicting efforts to remedy environmental, class, race, nationality and gender offenses.

Finding ways to manage public goods

There are some successful models for autonomous public goods that use donated labor and have a relatively short lifespan. Witness the umpteen iterations and variations in open source software that have come and gone. There are also some sustained success stories: the Apache Software Foundation, for example.

The public goods arguments around how to measure their value permeates the entire debate around health care and education reforms within the Obama administraton and its allies.

We talk a lot about health outcomes vs. "piece-work" incentives in health care, but how do we quantify health outcomes, which in any real world scenario, with finite resources, must be prioritized – prioritized by who? How do the obstacles to transforming health care for profit into a Mayo Clinic style outcomes based care get overcome on a national scale? What mechanism can determine the value of the public goods provided? Is there a business model – that cannot rely on a pricing mechanism – for firms or organizations providing public goods that links their income to the satisfaction of the public they serve?

Likewise in education, how do desirable educational outcomes – public goods – get measured and best incentivized? This is the entire challenge of the administration’s “Race to the Top” program. Teachers, principals and students/parents are the biggest stakeholders in education. The taxpayers as a whole are the 4th leg of the chair. But most critical questions at the root of educational challenges in many states and cities require the full commitment and agreement of all stakeholders to succeed. The big question is: What expanded democratic institutions or organizations or assemblies are needed to move forward. In Wisconsin, public unions had to step way beyond collective bargaining toward a political coalition with those they serve to push back attempts to solve education with “issuing orders” to teachers.

Extensions of democracy are the only way to evaluate public goods. Happily, finding that path is the only way to understand a big unanswered question about “socialist economics”: can society prosper and satisfy all legitimate aspirations through the production of ONLY public goods? I think not at this time. But it will become an ever more important question, especially if an “efficient” means of determining good vs bad public goods, and how they may be terminated or replaced, is found.

Human capital

2. What is “human capital”?

Wikipedia offers the following definition: “the stock of competences, knowledge and personality attributes embodied in the ability to perform labor so as to produce economic value. It is the attributes gained by a worker through education and experience.”

One of the many interesting aspects of a worker considered as, in part, “human capital” is that as a capital input into a firm, it should be entitled to a return on the investment, a division of the firm’s capital in proportion to the its value-creating potential,like any other capital input. The proportions of occupations requiring a college degree is steadily rising in every area of the economy. Even bigger proportions if two-year college requirement is included. Employment is contracting not just labor power, but for capital too, for the set of specialized tools this "investment" brings – witness the largely unenforcible non-disclosure agreements demanded everywhere.

But treating “your capital input” like it deserves no return on investment, only a wage rate, is an invitation to it being withdrawn and applied against, instead of for, your interests. Laws enhancing the rights of the owners of human capital would be important, income-enhancing reforms in employee compensation in many occupations, as well as huge productivity incentive if they are credible. Stock options granted employees under current law can be erased and diluted to nothing by the largest holders.

Of course the value of “human capital,” somewhat analogous to that of “public goods,” must be accounted greater on average than the costs of its production (education, family support, health, preparation, etc). But how much greater? Especially if the content of the work itself is also engaged in the production of public, or quasi-public goods? Labor markets supposedly provide the answer, and at some level competing services (a market) can be a very democratic means of determining the values of both public goods (a la open source) or “human capital.” But they are not applicable to many scenarios without a change in "political efficiency" of employing labor in public institutions. How that market should be structured to enhance equity and balance, to take a “more socialist,” more working class empowered direction – its an unknown.

There are of course many other questions linking the current struggle to the future, all involving a mix of “we ain’t lost,” and working on some unknowns. How to approach the unknowns:

With curiosity. With imagination. Collectively – more minds will get to solutions faster. With humility. With as rich an historical knowledge as you can muster. With a mind prepared to be persuaded, and to persuade others, by evidence, and good faith.

Thanks to Sam for essays on socialism. I think every one should write one they can believe in and sustain us in what may be some dark nights ahead.

Photo by Antony Adolf/ cc by 2.0/Flickr

You Might Be a Marxist If ... You Believe Fascism is Inherent in Capitalism

Wed, 01 Jun 2011 08:28:00 +0000

Capitalists always deny the plain truth that their system is propped up by fraud, violence, and terror. Capitalist criminality follows from the reality that capitalism is fundamentally about exploiting workers; consequently, capitalists have a vested interest in crushing all working-class resistance to exploitation. Once these facts are acknowledged, it doesn’t take a big stretch of the imagination to realize that the capitalist class will resort to the most extreme forms of savagery imaginable if they decide this is necessary to keep the working class in line and themselves in control. This conclusion follows in the abstract just from analyzing the nature of capitalism and it is borne out in reality by the long history of capitalist attempts to tyrannize over the working class.

Violence is not the only tool that capitalists use to get workers to tolerate exploitation, for the bourgeoisie rule through a combination of force and fraud. They will use deception in lieu of violence as long as it proves effective. Capitalists are always willing to trick workers into accepting the capitalist system through the ceaseless propaganda of the profit-driven, capitalist-controlled media and to dupe the working class into believing that it possesses a real political voice through corporate-controlled “bourgeois democracy.” With its Fox News and other corporate media outlets and its pay-to-play, winner-take-all political system, the United States is a good example of a country with a capitalist-controlled culture and a democracy of the rich that strongly favors the interests of for-profit corporations and top income earners. But whenever capitalists sense that workers are becoming class conscious, that socialist ideas are taking root among the populace, and that mere propaganda and a falsely representative “democracy” are no longer enough to keep the working class docile and socialism off the agenda, then the capitalists use their control of the state apparatus to implement extreme methods of repression including state-sponsored murder and mayhem.

Fascism is the name for the ferociously brutal form of dictatorship that capitalists impose on society whenever they fear that their usual methods of pacifying the working class are failing. Fascism wreaks violence and terror upon the working class in an attempt to prevent any moves toward socialist revolution. The great Bulgarian communist, Georgi Dimitrov (1882˗1949), called fascism “the open terrorist dictatorship of the most reactionary, most chauvinistic and most imperialist elements of finance capital.” Hitler’s Germany, Mussolini’s Italy, Franco’s Spain, and Pinochet’s Chile are often cited as textbook examples of fascist regimes, but fascism exists to one degree or another wherever capitalist regimes are exercising state repression against their working classes. Dimitrov pointed out that fascist tendencies are found in all capitalist countries; bourgeois ruling classes resort to full-fledged fascism when capitalism’s general crisis becomes so acute that the bourgeoisie fear losing power to an increasingly radicalized and militant working class. Since fascism is inherent in capitalism, a pertinent question to ask about any capitalist country is to what degree the seeds of fascism have developed along the path to full maturity.

Dimitrov also enumerated several uses of fascism that will sound strikingly familiar to workers around the world who are now living through an unusually dire and critical period of the capitalist crisis: 1) capitalists use fascism to enforce the shifting of the entire burden of the economic crisis onto the backs of working people; 2) they use fascism to launch and sustain perpetual imperialist wars in order to wrest control of foreign markets, command access to natural resources, and spread capitalist exploitation all over the globe; and 3) they use fascism to attack and destroy revolutionary movements for working class emancipation in their home countries and throughout the world.

Many definitions of fascism can be found on the Internet and in printed literature. Most of them define fascism by placing all emphasis on its use of violence, terror, racism, militaristic nationalism, and harsh suppression of democratic freedoms to achieve its goals. Yes, fascism uses state violence and terror and many other malignant, reactionary tactics to achieve its political aims, but it takes a Marxist, class-based analysis to identify fascism’s essence and overriding goal. Fascism is political violence, but it cannot be reduced to political violence in general. In its mature form, it is the organized, state-sponsored violence of the capitalist class against the working class. It is a tool used to facilitate capitalism’s general goal of preserving its hegemony over the working class on both the national and global levels by suppressing all attempts by workers to emancipate their class through progressive reforms and socialist revolution. Fascism is the most ferocious form of capitalist oppression of the working class. Any definition that disregards the class nature of fascist violence fails to capture fascism’s essence.

Although a clear understanding of what fascism is and how to fight it is fundamental to the Marxist outlook, Marx and Engels, never wrote about fascism per se. That is because fascism didn’t arise until the early 20th century, long after Marx and Engels were dead. But it is likely that the rise of fascism would not have surprised them had they lived to witness it. They were both well aware that social progress, whether through reform or revolution, always gives rise to violent resistance by the most reactionary elements of society. As young men, Marx and Engels experienced the violent counterrevolutions that turned back virtually all democratic gains of the bourgeois revolutions of 1848, and they also lived through the brief triumph and brutal suppression of the world’s first working-class government during the Paris Commune of 1871. Perhaps Marx and Engels came closest to anticipating fascism in their idea of the “pro-slavery rebellion.” Marx and Engels had taken to calling the American Civil War a pro-slavery rebellion in reference to slave owners’ attempts to preserve the slave system through state violence. They later extended this idea to any form of counterrevolution or rebellion against both revolutionary and reformist threats to capitalism. For example, in an 1886 preface to the English edition of Capital Engels said that Marx did not expect the English ruling class to submit even to a peaceful transition to socialism without launching a “pro-slavery rebellion.”

Is the United States ruled by fascists? Let’s first consider the way our ruling class treats the rest of the world. For much of our history our rulers have used our people’s energies and talents as well as our country’s vast resources to suppress national liberation movements, support right-wing, anti-socialist dictators, and engage in numerous imperialist wars and interventions while attempting to disrupt and destroy all major socialist movements and countries. Thus a very strong case can be made that our ruling class has imposed a fascist foreign policy on the world. This is true notwithstanding our country’s fight against European and Japanese fascism in World War II—whoever said that fascist countries can’t fight one another? What about our rulers’ behavior at home? There is no questioning the fact that slavery, genocide, xenophobia, racism, religious hatred, attacks against working people, attempts to curtail and suppress democratic liberties, and countless other reactionary tactics have been used by our ruling class to mold this country into the world’s leading right-wing imperialist power. Still it cannot be said that our rulers have succeeded in imposing a full-fledged fascist regime in this country. If they had, this writer and many like him would have been silenced long ago. What has prevented our fascistically inclined ruling class from turning this country into an ultra-right capitalist dictatorship is the survival, despite all right wing assaults upon them and albeit in increasingly restricted forms, of the democratic rights and liberties enumerated in our constitution’s Bill of Rights.

This brings us to the question of how to combat fascism, a subject that could fill volumes. Suffice it to say that if the working class in general and American workers in particular fail to form militant mass organizations dedicated to protecting their democratic rights and liberties and purging them of their capitalist imposed limitations; if they fail to supplement these with additional rights to employment, education, housing, and healthcare; if they fail to put an end to imperialism, then the United States will continue its drift towards fascism.

If you believe that fascism is capitalist political violence against the working class, that it must be fought and defeated in order to preserve the political space necessary to protect and expand workers’ democratic rights, and that the elimination of fascism must be part of any transition to socialism, then you might be a Marxist already, or you might be ready to become one.

Note:

1. A number of references in his Collected Works show that Lenin was aware of Italian fascism and deeply interested in the Italian communists’ efforts to combat it. He and the Bolsheviks also had plenty of first-hand experience fighting against right-wing counterrevolutionary warlords in the bloody Russian civil war of 1917-20.

Photo by djbones/cc by 2.0/Flickr

Book Review: Of Divine Warning: Reading Disaster in the Modern Age

Wed, 01 Jun 2011 08:27:00 +0000

Of Divine Warning: Reading Disaster in the Modern Age
by Jane Anna Gordon and Lewis R. Gordon
Boulder, Colo., Paradigm Publishers, 2009

Though the May 21st Judgment Day, as predicted by Harold Camping and his cult, was a flop, it likely won't stop people from believing in "divine warnings." Zombies, vampires, monsters, mad scientists, apocalyptic thinking and the supernatural are part of a cultural continuum we must heed, argue Jane Anna Gordon and Lewis R. Gordon argue in the recent book, Of Divine Warning if we are to craft realistic and equitable solutions to social and natural problems.

Disasters and monsters provide warnings about real dangers, which to some extent are sometimes beyond human control. As the authors argue, disaster may reveal human weakness but it also demands "our agency, for a political response." We may believe that God sends us warnings about our sins in hurricanes and earthquakes, but what makes them disasters have very much to do with us, our social organization, how we respond (or fail to respond).

For at least a generation, the authors contend, right-wing policies of privatization or elimination of public services have ensured that natural events become disasters. The social inequalities starkly revealed in the aftermath of Hurricane Katrina are only the most notorious recent example.

Natural disasters worsened by human inaction or irrational responses produce monstrous survivors, the authors contend. Because of their association with disaster, survivors appear to the dominant institutions such as media and law enforcement as kinds of monsters, especially when they are from marginalized groups, such as African Americans or the poor.

In popular culture monsters and zombies signify mass thought patterns as well as "phenomena in the social world." Monsters seem to be a reflection of social fears about the loss of control in the face of imbalances of power in the social system. They may also reflect broad anxieties about immigrants. Consider viewing the white supremacist Birth of a Nation alongside the anti-Semitic Nosferatu in this light, as the authors suggest. Both were produced in a period of serious racial, ethnic and patriarchal anxiety in the dominant social group of the time.

Another pertinent example not addressed in the book may be the first Men in Black movie, starring Will Smith and Tomm yLee Jones. About space aliens on earth and the global "border patrol," that movie opens with U.S. federal agents chasing and capturing undocumented immigrants crossing what seems to the border with Mexico.

The authors develop this connection between the appearance of monsters in the popular imagination and systemic racial and ethnic hierarchies in an absorbing chapter that comparatively reads Mary Shelly's Frankenstein with Franz Fanon's Black Skin, White Masks. This chapter explores and links the formation of an image of the monster in the former with the construction of an image of colonized people of color.

In each narrative, the colonizer (represented by Victor Frankenstein in the novel who literally creates a monster) produces an image of the colonized which fulfills the imaginary expectations (e.g. stereotypes) and material needs (e.g. exploited labor) of the colonizer. In each narrative, the colonized (the African in Fanon and the monster in Shelly) eloquently struggles with his relationship to the monstrous image constructed by the colonizer.

While Frankenstein's monster ultimately kills himself and his creator, Fanon's colonized African through articulation and political action "hopes for recognition of the openness of his own and potentially all human consciousness." Indeed, in the post colonial world, creators of monsters have turned the eloquently verbose monster into the indiscriminate, monosyllabic zombie perhaps in response to a fear about the consequences of Fanon's vision.

Readers may find this compact book (120 pages, excluding notes and bibliography) a challenging read as it employs complex arguments and research from a variety of academic fields like cultural studies, history, philosophy, and political science. However, I found its difficulty balanced well by its discussion of entertaining contemporary popular cultural topics and issues. In addition, its insights make it definitely worth the work of reading and understanding it.

Interview: Imperial Education from the New South to West Africa

Wed, 25 May 2011 09:12:00 +0000

Editor's note: Andrew Zimmerman teaches history at George Washington University and is the author of Alabama in Africa: Booker T. Washington, the German Empire, and the Globalization of the New South.

PA: The story of Booker T. Washington, the post Civil War South and the struggle of African Americans for education is a pretty well known story. What compelled you to place it in this global context, with Germany and Africa as part of the story?

ANDREW ZIMMERMAN: There are two components to that. First of all, there is a kind of biographical component. I was trained as a German historian and was interested in German imperialism from my earlier work. Then I just sort of stumbled on this fascinating episode in the German sources. The Germans had hired Booker T. Washington to send one faculty member and some students to set up a cotton-growing school in Togo, and the Germans were incredibly excited by this, and this was surprising to me.

Then my thought was how can I go beyond this as just a mere curiosity. I mean it’s interesting, but is it more than interesting, and is it actually going to tell us something about imperialism, about race, about the Atlantic world, and about the United States? So that’s when I began to really trace this story outside of its German context, first into its U.S. context and then into its African context. I think it’s an interesting story; but beyond being an interesting story, it helps challenge what historians sometimes call American exceptionalism, the idea that there is something about America that makes it not just different from other nations, the way every nation is different from every other nation, but that it’s exceptional, exceptionally democratic or exceptionally open, or exceptional in that it’s not an imperialist power. I think a lot of historians cast doubt on that now and I am definitely one of them.

I began to understand the United States as part of the network of imperialism, and that the U.S. South and the kinds of racial oppression that existed there, not only during slavery but even more so after slavery, really were interlinked with forms of racial oppression and imperialism around the world and especially in Africa. I also got interested in African Americans as global actors. That’s something that a lot of historians are working on now, and for me – especially in the U.S. South in the 1890s and before and after the First World War – that a group so singled out for oppression is also acting globally is, I think, a surprising and important aspect. So I had an important story to tell.

And finally, thinking in terms of international labor history, I am telling a labor history that links together a lot of different kinds of workers who might seem to be separate. African American sharecropping cotton-growers were working with African farmers and workers, but this isn’t a story of, well, they’re both workers and both separate. They are actually part of a story that is connected, not just because they are similar but because there are real links between those two stories. Those are some of the things that really got me interested in pursuing this beyond just being a kind of interesting story to being really a meaningful story, I hope.

PA: You mention the role of African Americans as global actors. One of the parts of the story I think you do so well to tell is about how their aspirations for freedom, for education, and for landownership propelled or shaped this narrative you write about in the book. Could you talk about that a little?

ANDREW ZIMMERMAN: One of my fundamental approaches – and it’s something that I don’t want to approach dogmatically – but I always think that to understand situations of extreme oppression, we have to start with the desires and activities of the people who end up being oppressed. Oppression works by power seizing hold of either the spontaneous or organized efforts of the people they are seeking to oppress and exploit.

For African Americans, both in slavery and in freedom, the two primary and almost spontaneous demands and efforts were for education and for independent landownership, and these are both fundamentally means, good and quick means, of achieving political and economic freedom and autonomy. In education, it’s primarily about literacy. Precisely because so many African Americans tried to achieve it, literacy was something white elites in slave-holding times and afterward sought to deny.

What literacy meant was a kind of personal autonomy, what we call maybe self-cultivation or reading, whether it was the Bible or literature or the newspaper. That allowed a lot of people to participate in a world beyond their immediate surroundings and maybe achieve directly political action, but it also was about just self-cultivation and personal interests. Literacy, especially after slavery, also allowed African Americans to read, for example, the contracts they were often forced to sign, and at least, while the power was very much against them, to take some action, to at least be able to negotiate somewhat. In slavery times, literacy even allowed some African Americans to forge passes that allowed travel without being harassed by slave patrols. So literacy led to a lot of directly practical forms of resistance and also cultural forms of resistance – just allowing people to enjoy life more than the white elites were allowing them to, away from those kinds of oppression.

Landownership – typically small-hold farming – was the most immediate way to gain economic autonomy. These were people who had a lot of agricultural skills, who had been in the U.S., often farming and working as farm laborers, for generations, and owning a small piece of land would allow individuals and families to control their own labor. They could grow subsistence crops to feed themselves and crops for the market if they wanted to earn cash, and ideally it would be a kind of a mixed cultivation of both that would allow people to control their own labor in the most direct and immediate sense.

These were really spontaneous demands, and these were demands I also saw in West Africa and in Russia after the end of serfdom. You really see it globally. It is very immediate and maybe it’s almost kind of universal, the human demand for political and economic autonomy and self-control. But what we see the white elites after slavery doing is first attempting to just force African Americans into continuing the kinds of labor that existed under slavery but with a wage contract, and then gradually seizing on these aspirations and subverting them, partly because they have no choice: they simply cannot treat people as they want.

So these demands for literacy got channeled into what was called industrial education, which wasn’t vocational training, but really a kind of education to impart into African Americans what were seen to be the virtues of subordination and a willingness to do hard and poorly paid work for others, rather than work for themselves, just being channeled into sharecropping.

Initially the planters, that is, the plantation owners, had wanted African Americans to work in a gang system as much as possible like in slavery times, but African Americans simply refused to do this in large enough numbers, so the solution that they came up with was this sharecropping solution, in which African Americans were rented land in exchange for a share of the crop. That was a kind of standard arrangement. In the case of the South, the sharecropping contracts had a lot of stipulations that didn’t allow African Americans to be free, primarily by forcing them to grow only cotton. Then there was also an enormous amount of violence by the state, by the Klan, and simply informal violence by groups of managers and other white elites. So that desire for landownership was also subverted. It’s interesting that the forms of power ultimately have to mimic the forms of resistance, and I think that shows how resistance even in the most grim situations does have some effect.

PA: You allude to the need to impose industrial education, and a major figure in this, as we know, was Booker T. Washington. Given your particular perspective and your approach to this story, how do you assess the contradictory and controversial career of Washington?

ANDREW ZIMMERMAN: He is really fascinating, and I think one thing I noticed is that people from the beginning saw Booker T. Washington, even those who were his critics, as a contradictory figure. There were many people, including West Africans, who were observing industrial education from afar and were often critical of industrial education of the kind that Booker T. Washington was promoting, seeing it as a way to limit possibilities for Black achievement.

At the same time, everybody, and I would include myself here, is sort of astonished at someone like Booker T. Washington, who was born in slavery with nothing and had no special advantages, and simply by the force of his own ambition and organization and creativity became this major African American leader and an internationally-recognized leader by the time he was 40. And everybody was impressed by that, and there is often a contradiction there, where people would say, you know, he made so much of his life through literacy, through white collar work, through political organization, and yet he did that partly by promising to deny other African Americans those kinds of achievements. So he is already a kind of contradictory figure just in his own biography. You can admire him for his own achievement, and yet also criticize him for helping to deny other people those very achievements. Now one of things I discovered, I think, that is new about Booker T. Washington is the importance of European imperialism, and particularly German imperialism, in making him (if we want to see him as a conservative figure, which I think is right) the conservative figure he later became.

Booker T. Washington was a student of Samuel Chapman Armstrong who was a white educator and the founder of Hampton Institute. Initially Booker T. Washington was supported by Samuel Armstrong and by Hampton to found a new institute like Hampton in Tuskegee, Alabama –Tuskegee Institute. This was in 1881. In 1895, Booker T. Washington gave this famous speech in Atlanta – Du Bois later called it the Atlanta Compromise speech, in Washington described Blacks and whites as separate as the fingers in all things social, but as one hand in all things related to economic progress – I am more or less paraphrasing here. With this speech he became a nationally and internationally famous African American leader and achieved a significant amount of autonomy from Hampton Institute and from white elites in the South. He got a lot of philanthropic donations from people like Carnegie in the North, who certainly had an interest in keeping Black workers productive for a kind of ultimately authoritarian capitalist system, but it nonetheless gave Booker T. Washington a certain degree of autonomy for action.

What I found that he did between 1895 when he made this speech and 1900 when he began working with the German imperialists, was to develop a Tuskegee that is very different from the Tuskegee that we know about today. In that period, he hired George Washington Carver, the famous African American agricultural scientist, who is remembered today I think primarily as a figure who is associated with the conservative Tuskegee model that we have today, but at the time was really trying to, I would say, revolutionize Black agriculture. He was trying to come up with new kinds of crops, or trying to come up with ways for African Americans to grow crops that would get them out of the cycle of dependent cotton-growing, and allow them to grow things like peanuts and sweet potatoes that African Americans could consume themselves or sell on the market, so that they could achieve a kind of economic autonomy, even on their own sharecropping plots, that they were denied under the system of compulsory cotton cultivation.

Now Washington, I think, realized that one of the main reasons African Americans weren’t growing things like peanuts, yams and other crops for economic autonomy but were growing cotton for white planters, was not simply because they didn’t know how to grow peanuts or yams well, but because they weren’t allowed to grow peanuts and yams well. There needed to be political transformation as well as agricultural transformation.

It was at this time Booker T. Washington began working to hire someone he thought of as his enemy later, W.E.B. Du Bois. Du Bois at this time was a young sociologist just back from graduate education in Germany and at Harvard, and Washington wanted to hire Du Bois as a kind of sociological expert, parallel to Carver. Du Bois was to publish pamphlets not just for Tuskegee students but for Black farmers generally, and the hope I believe was to really transform the South insofar as it was possible. I don’t think Washington or Du Bois at this time were particularly revolutionary, but they did want to introduce political and economic transformations. So it is a very different Tuskegee that might have developed at this point.

In 1900, Washington and Du Bois, and many others, got involved in planning the first Pan-African Conference in London. This is the conference where Du Bois said: “The problem of the twentieth century is the problem of the color line.” Booker T. Washington was very involved in its planning and encouraged people to go, but the summer that Du Bois and so many others went to London, Washington was contacted by the German imperialists, asking him to help set up this cotton school in Togo in West Africa.

And through Washington’s imperial engagements, through his work with the German imperialists, Booker T. Washington began to think about the situation of African Americans differently, and the situation of the African diaspora in very different terms, than the pan-Africanism that Du Bois and others were developing in London. He began to think of African Americans as almost a colonial leader, maybe a colonial intermediary between white colonial powers and African colonial subjects, and took a very different trajectory than the one he had been developing between 1895 and 1900.

Most of the texts by which we know Booker T. Washington come from after this period when he works with German colonialism. His famous autobiography Up From Slavery was published in 1901. That’s after he took the imperial turn and began working with the Germans, and so he really rewrote, I think, a lot of his aspirations from that period and before in light of his later imperial engagements. We also know Washington from Du Bois’s famous critique of him in his 1903 book, The Souls of Black Folk, and that is also, again, a text from after the Du Bois and Washington split, and after Du Bois began developing a very strong critique of imperialism and Washington began developing a really strong collaboration with imperialism.

In a lot of ways this 5-year window is erased in Washington, when Washington and Du Bois might have worked together to create a very different Tuskegee and ideally a very different American South than developed in the period of the 1890s and afterward. So the legacy I found is even more ambivalent – and more possibly progressive in the period from 1895 to 1900 – than I think many people know about Washington, and then that legacy becomes even more entangled with white oppression both at home and abroad in the period after 1900, especially abroad, than people often know.

PA: What was driving German interests to link up with Booker T. Washington and African American educators?

ANDREW ZIMMERMAN: It was a couple of things. One is that German social scientists were more involved with the German state than social scientists in other countries. That was something the German state was especially interested in, social scientific expertise. The German social scientists had been interested in the American South as a model for the control of free labor all throughout the 19th century.

One thing that is important to remember is that the end of slavery in the United States and elsewhere in the New World was one of the great phenomena of free labor in the 19th century. But the eastern parts of Germany, particularly the eastern parts of the Kingdom of Prussia, which was part of Germany, also saw bonded labor as serfdom, and Russia saw serfdom ended in 1861.

So there was really this wave of emancipations, and Germany saw the U.S. South after emancipation already as a model for controlling free labor. They saw in segregation, in sharecropping, and in disfranchisement a kind of model. But when Germany began seizing colonies in Africa in the 1880s they looked to the US South even more as a model, because they not only saw it as a way to control free labor, they also saw it as a way to control Black labor. So Germany was already interested in the U.S. South.

They saw Booker T. Washington as somebody who promoted an image of the U.S. South as a productive model of Black labor, as especially productive and potentially subordinated labor. Germany really saw the US South, and was already kind of predisposed to admire the U.S. South, as a place of labor control and labor coercion, and when it seized its African colonies it began to see the US South as a model for the control of Black labor. Germany, like a lot of colonial powers, practiced a kind of oppressive pan-Africanism, where they saw Blacks in the United States and Blacks in Africa as connected not as people who were seeking common kinds of emancipation and liberation, but rather as people who could be oppressed in similar ways.

The German Embassy in Washington, DC sent an agricultural expert to tour around the South and observe Black labor and finally to contact Booker T. Washington as an expert in training and controlling Black labor for particular kinds of subordination. As I said before, I think this was partly a misunderstanding of what Washington wanted, but it gave Washington a lot of credibility among these colonialist elites. I know that white elites in the German colonies, including in Togo, thought that African Americans from Tuskegee would have a special understanding of Africans because of what they saw as the racial similarity between African Americans and Africans. They were very enthusiastic about the Tuskegee educators, but the German colonialists also worried that if they brought over too many African Americans as educators, they also might bring over African American resistance to white oppression, and they didn’t want that. There was a particular kind of model of African Americans that they saw in Tuskegee that they were interested in.

PA: You argue in the book that one of the things that German colonial policy aimed to do in Togo, in terms of controlling African labor, work habits and discipline – all of those things – was to try to transform families and gender relationships. How did that work? What were they trying to accomplish there, and how did Togolese families and the workers and farmers there resist those kinds of actions?

ANDREW ZIMMERMAN: That was something that was really interesting for me to learn, because it has always been kind of axiomatic to me that oppression of race, class and gender are always interlinked and inseparable from each other. But to really see how it worked so well in this particular episode was really illuminating for me. The Togolese, and particularly the Ewe of southern Togo, where German colonialism did most of its cotton experiments and the Tuskegee expedition worked, had a gender and household division of labor that imperialist elites recognized as a challenge to imperial political and economic control, and that also, maybe for that reason, seemed to be generally immoral.

The way southern Togolese households were set up, several women would share a single husband, so that while women were expected to do work in the household of their husband, there were multiple wives, and they had significant free time for their own economic activities. Each of the wives lived in her own household with her own fields separate from her husband’s household and her husband’s fields. Each of the wives had their own children in their household, and could produce their own crops and had their own independent economic activities.

Economic activities in each of these separate households, whether they were female-headed or male-headed were very diverse and included, for example, manufacturing pottery, crafts and spinning, or, in male households, weaving. These households were interlinked by trade and by gifts, with each other and with the husband’s household, and also with other households throughout the region, so that you had, women and men who were independent of each other and relatively economically independent.

I don’t want to make this seem like some kind of idealized African, pre-capitalist utopia. There were still significant class differences in southern Togo at this time. Slavery existed – household slavery – but nothing like the plantation slavery of the U.S. Nonetheless, household slavery did exist and there were a whole series of oppressions that existed, so I don’t want to present an idealized Togolese society, but nevertheless it was one that afforded a lot of its members a lot of economic autonomy and a lot of political autonomy.

One of the ways that capitalist agriculture, for sure, but also all forms of capitalist production, worked in the United States and in Europe, and they wanted to work in Togo, was through a patriarchal household in which a husband controls the labor and the property of his wife and children, so that you get a kind of articulation between capitalist forms of production and household forms of production, in which the labor of the wife and children is extracted by the patriarchal head of household and then generally not compensated, or at least not compensated in cash.

This kind of household farming was something that you see developing all over Europe and in the United States, and you can even see these patriarchal households working similar ways in cities among urban workers, with the unpaid labor of women and the unpaid labor of children as very much part of it. In Togo, this didn’t happen because women had a great deal of economic autonomy, so patriarchal husbands couldn’t be used as sort of sub-agents of colonial government and colonial capitalism.

Now, particularly what the Tuskegee expedition to Togo was helping the German state with its number one colonial priority, which was to produce cotton as a raw material in Africa for industrial spinning in Germany specifically and in Europe more broadly. Here also the household form of production you saw in Togo, with independent women’s households, presented an obstacle. The Togolese already grew cotton and spun cotton and wove their own cotton, and in fact produced excellent cotton cloth, much better than European cotton cloth, in West Africa.

A nice illustration of the superiority of Togolese cloth to European cloth at this time was that when Germans traveled in West Africa, they traveled like African elites, and the way elites traveled was in hammocks carried by people. There weren’t a lot of draft animals there or horses to ride on, so they were carried in hammocks. But the Germans, when they traveled in hammocks, would only travel in hammocks made of African cloth, because hammocks made of European cloth tended to rip open because the cloth was so shoddy and people would fall off onto the ground. So even Germans recognized that Africans produced better cloth, but the Germans didn’t want African-produced cloth, they wanted raw materials for European industry.

The way textiles were produced in Togo at this time – and this is kind of a comment on a lot of areas in this part of West Africa – is that there was a gender division of labor, where women in their own fields grew the cotton and picked the cotton, not in large quantities, not as an industrial product, not as a monoculture, but grew it for their own use. They spun the cotton by hand and dyed their own cotton, and then they would either sell it or trade it with male weavers. Most of the weavers were male and they wove this yarn into cloth. For the imperialists this was a problem for a number of reasons.

At the most obvious level, it was that the Germans didn’t want the Togolese to spin their own cotton. They wanted the cotton to be a raw material for European industry, so they wanted to get the cotton directly from the Togolese before they spun it, before they processed it. They also wanted to end male weaving and expand the amount of cotton production. They didn’t want the Togolese to grow just enough cotton for their own needs, or for their own needs plus some local commerce, they wanted to grow it in the massive quantities needed for European production.

The Germans thought that by imposing patriarchal households on the Togolese, they could make men grow cotton first of all and make the labor of the entire household work towards growing cotton in larger quantities than had been grown before, growing this cotton not for local processing but for export abroad. They hoped to leverage patriarchal authority to make it assist their own processes, which, really, were the de-industrialization of West Africa and the transformation of it from a kind of mixed craft-agricultural economy into an economy producing cotton for the world market.

A related thing is that this idea of a patriarchal male household with a dominant man, one subordinate wife, and subordinate children seemed moral to both Europeans and Americans, very much the way we hear the right talking about family values today. And what we see is that this morality – this so-called morality – is very much in the service of political oppression and in turn in the service of economic control, and it’s really also ultimately in the service of ending a lot of individual freedom for women and for children, as well as for men, too. So this was the system that the Germans wanted to impose and the Tuskegee Institute personnel also wanted to impose. It seemed to them like an improvement in morality to have patriarchal households producing cotton for the world market.

Let's talk now about resistance and how that worked. So this utopia, what they saw as a kind of patriarchal utopia, was something the Tuskegee personnel and the German colonial state would have liked to impose, but it’s not something that the colonial state or the Tuskegee educators could impose.

The colonial state is very different from the way we conceive of the modern state, where we think of a relatively bureaucratic state that has control over most of the region inside its borders. For example, think of the United States today, where the state is kind of ever-present; it rules through law and there is, of course, police power, but it’s not constantly exercised; it’s exercised to keep people obedient to the law. The colonial state had very few numbers of people. It was a very small number of German authorities with African soldiers and African police officers who collaborated with them, but still a relatively small number of them, ruling over a much, much larger African population and over a territory they had very little control over.

The way the colonial state worked in Togo, and I think probably in most places, was that it could exercise much greater violence than states in Europe or America could legitimately, or did at least, but it could exercise this violence only in very small areas. If we imagine the modern state in Europe, the United States and elsewhere as a kind of level of broad control, but not particularly, or at least not overtly, violent control, here there is an area where there is very spotty control but extremely violent control.

These were the places where the colonial state could exercise power, this kind of intense violence that included killing and whipping and threats of killing and whipping. It was violence that was legal in the colonial legal system but certainly would have stretched the norms of legality in Europe or in the United States.

There were a few places where this violent control was exercised. One was the cotton school that was set up by the Tuskegee educators in Togo, where about 30-40 students a year were forced to attend. They were just simply taken from their home districts, young men from each district in Togo, and they were forced to attend the school for three years. It was supposedly to learn to grow cotton, but what it really was was to learn to grow cotton for export to the world market. That was one place. Another was the district station. Togo, like most colonies, was divided up into a number of districts. Each district had a station with a German district officer, a number of police officers, and possibly a contingent of soldiers. In the immediate area around the district, the district officer could exercise a lot of coercion. The graduates of this cotton school were forced to settle near their home districts, where they were forced to continue to grow cotton.

The colonial state also exercised a great deal of control over the regional markets where cotton and cotton seed were sold and distributed. This is how they could control the cotton-growing even of people who weren’t cotton school graduates, people who weren’t growing cotton under supervision, because they could control the periodic markets where cotton seed and raw cotton were sold and distributed.

Then finally a fourth area where the colonial state could exercise power was over the agricultural fields. District officials could inspect the fields even once a month and still exercise coercion that way, because people can’t hide their fields – they’re immobile. These were the sites of coercion and the means of coercion – incredible violence but also very localized violence.

And there were a number of ways the Togolese could resist. The most obvious way and the most common way was through simply escaping. The Germans couldn’t control the entire region, so it was possible to escape either within Togo, simply to go into hiding, or to escape across the border to the Gold Coast, which is today Ghana. Based on my analysis of the number of people entering the cotton school and the number of people who ended up being forced to grow cotton under the supervision of individual district officials, I think about 50 percent of the cotton school actually escaped, which is an enormous number, but it’s still an enormous number that ended up coerced that way.

The Germans also forced people who weren’t cotton school graduates to grow cotton for the export market, both by forcing people to take cotton seeds in the periodic markets and then supervising the fields. One of the ways people resisted this kind of forced cotton growing was simply to let the cotton die, they would explain accidentally – they didn’t mean to let the cotton die but it did. Because the Togolese planted multiple crops in the same fields, if the cotton died off other crops, like corn, which was more profitable than cotton and also could be consumed by the Togolese themselves, would grow to take over the fields. And the district officials would constantly explain how these incompetent Togolese farmers were letting their cotton die off, and in fact what makes sense to me is that they weren’t incompetent at all; they were quite competent, but they recognized that cotton was a bad deal and letting it die was a wise agricultural decision and one many made. This also subjected them to punishment. Even though they were seen as doing it out of incompetence and laziness, rather than out of maliciousness, they were still punished, and this could include even being physically beaten. Nonetheless it was a strategic decision that people made.

There were at least two limits to this kind of resistance. One thing we have to acknowledge is how heroic this was, and how people really took a lot of risks – the risk of being killed or being lashed – to do these kinds of resistance. But this kind of resistance could only be individual resistance, and oftentimes this kind of resistance was used by the state to bring about further coercion, so in a sense a little bit of resistance allows for the state to ratchet up the coercion. That’s just a factor that people had to deal with, because they couldn't see any other way out of it. But since the resistance was individual mostly rather than collective, there really wasn’t an organized means for the Togolese cotton farmers or the Togolese systematically to resist the colonial state.

One interesting beginning of this resistance was in neighboring Gold Coast, present-day Ghana. They did have a relatively free, African-run press, and sometimes Togolese would escape from German Togo, flee to the Gold Coast, and then publish in English (because the Gold Coast press was an English-language press) exposés of German abuses in Togo and in this way at least expose to the world – to all of West Africa who could read the press and also to the world abroad who would also see this press, what the Germans were doing, and, if not organize collective resistance, at least organize some international condemnation of what was happening. But the resistance was limited, really, by the impossibility of organizing collectively inside of Togo.

PA: Colonial governments, especially in Europe, often fought over their colonies, killing millions and millions of Europeans in the process. So you have these bloody conflicts. But, as you describe, there is a kind of unifying principle around white supremacy. Why this contradiction?

ANDREW ZIMMERMAN: That’s a good question. Both European imperialism abroad and imperialism inside of Europe – these kinds of colonial rivalries, as well as other rivalries, led to what at that time was the bloodiest war in history, in which, as you say, millions and millions died. That was an exception, though. In a sense, you could say that that kind of colonial violence came home in the First World War, but before 1914, while there was certainly inter-colonial rivalry, it was very much different from the warfare that Europeans carried out against the people they were colonizing. Racism was absolutely central to the European treatment of the people they colonized.

The other side of the oppression of people of color is that whites treat each other better than people of color, and there is a kind of, white solidarity you could call it, here. One of the things that illustrates to me so clearly the nature of this white solidarity among white imperialists against people of color is that there were conventions in the late 19th century that were signed about rules of war, and these rules of war applied only to war among European powers but not to colonial warfare, warfare by colonial powers against uprisings by their colonial subjects. Even the kinds of bullets! When white people had wars with each other, they used different bullets than the ones they used when when they had wars with their colonial subjects. White people in the European powers outlawed dum-dum bullets, that is, expanding bullets, bullets that produced much more horrible injuries in the people they struck, when they fought wars against each other, but when they fought wars in the colonies, they used these hollow-point bullets, these dum-dum bullets, against their colonial subjects. In fact, the bullets were called dum-dum bullets because they were made in an arsenal near Calcutta in British India called the Dum Dum Arsenal. That’s why they are called dum-dum bullets; they're colonial bullets.

So, while white people did fight against each other – the European powers, and sometimes over colonies, there was a basic white solidarity against people of color in Africa, the Pacific, and South Asia and East Asia, in which they fought more viciously against the people of color they sought to colonize than they did against each other. In the First World War that changes, and it becomes the most bloody war in history at that time, but that’s something that was new at that time.

One thing I would also add, though, to make it more complicated, is that it’s not all white people against all people of color. There is also very important political resistance inside of Europe against colonialism. Some of the kinds of anti-colonialism that people often point to inside of Europe isn’t really anti-colonialism. There were liberal opponents of colonialism like E.D. Morel, who was the founder of the Congo Reform Association and denounced abuses by the Belgians in the Congo, which was perhaps the most brutal colonialism at that time, and there were often Christian missionaries who criticized colonial abuses.

But what these groups typically did was to call for an improved, more humane colonialism. For example, they would say that the Belgians were terrible and brutal, but it was often also said at the time that the Germans in Togo were better because they were working with the Tuskegee educators and they were improving people. There were often criticisms of abuse, but this was typically a criticism of colonial abuse and a call for a better, more humane colonialism. The basic assumption of a European civilizing mission, a European right, or even, they way they saw it, a European obligation to rule Africa and elsewhere around the world, they didn’t criticize. In fact, they supported it; they just wanted it to be better.

But there was very strong resistance to colonialism by social democratic parties in Europe, both the German Social Democratic Party and other social democratic parties throughout Europe. Some individuals in the social democratic parties did call for this kind of better, improved colonialism, a kind of socialist colonialism, but the majority of the Social Democratic International, the Second International, rejected the idea of an improved colonialism and said there was no such thing as a socialist colonialism or a benign colonialism. Karl Kautsky wrote a wonderful analysis of colonialism called Socialism and Colonial Policy in 1907, in which he said that colonialism and socialism are a contradiction, and that no socialist can support any kind of colonialism, or even think of a benign colonialism, without also supporting the oppression of workers inside Europe. So it wasn’t simply all white people against all people of color. It was the European imperialists, from people who were self-critical imperialists to people who were gung-ho imperialists, but they were resisted especially by the social democratic parties in Europe.

PA: Your book winds up with the internal debates in the Communist International in the 1920s about global agricultural issues and colonialism and national liberation. How does the story get to that point?

ANDREW ZIMMERMAN: As I was writing the book, I didn't want it to be only a story about gloom and horror, because I don’t believe that history is ultimately about gloom and horror and inevitable oppression. I think it is ultimately a story about striving for freedom and about resistance to gloom and horror and oppression. But the period I was writing about, the period before 1914, was a period in which people in Togo and African American farmers and many others in the American South really resisted heroically, but didn’t have a lot of success in resisting and didn’t have a strongly organized resistance.

But I wanted to end on a more hopeful note, on a time when people really began to resist and think about how to resist, so I end the story on the period right after the October Revolution when people began to think about how they could organize anti-colonial resistance and connect it with struggles against capitalism inside of Europe. This very much continues the position of Karl Kautsky and others inside the Social Democratic in Germany, but it is much more powerful and much bigger, and much better linked up with anti-colonial resistance inside of Africa and resistance to racism inside the United States.

I think that what the Comintern was able to do was to take the kind of critiques of colonialism that Karl Kautsky and other social democrats were beginning to make and really begin to intensify them and develop them further. One thing that people like Kautsky did was to reject racism, without recognizing how important racism was in the reproduction of forms of agricultural capitalism in the United States and colonialism in Africa. They recognized it as racist, but they thought it was only about capitalism. It was focused on capitalism. But I think that the Third International, the Comintern, by working with African Americans and people from the colonies, began to develop a more comprehensive critique, not just of capitalism, but of capitalism, imperialism and racism as interlinked.

Imperialists and white elites in the United States had long recognized how useful race was as a way of controlling and oppressing workers in the US, in Africa, and elsewhere around the world, and in a sense the Comintern recognized this too and then turned it around. The Comintern, and also African Americans in the Comintern, began to develop a kind of a counter to the Tuskegee ideology, in a sense a theory of racial uplift in the South and around the world that wasn’t uplift through industrial education in the way Booker T. Washington liked to put it, starting at the bottom and working hard for white bosses in order to kind of get ahead slowly, but to really challenge the whole system of racial oppression and capitalism in the South and around the world.

Harry Haywood in his book Black Bolshevik writes about how his father had been a strong proponent of Booker T. Washington – they even had a picture of Washington in their house, but I think a lot of African Americans in the South saw Tuskegee really as the only option for improving their lot in life. Haywood rejected that and said, no, we have to have something much more revolutionary, much less accommodationist.

The most famous person who made this transition from working with Tuskegee to criticizing Tuskegee, to using Marxist concepts, to finally joining the Communist Party, was W.E.B Du Bois, who really, throughout his long life, kind of goes through the entire story and ultimately takes on a revolutionary anti-colonialist position, when in the 1890s he was, somewhat reluctantly perhaps, but nonetheless working with Tuskegee.

So we really see a radical transformation by working with the Comintern. A lot of people who were never in the Party nonetheless used the concepts not just of Marxism, but the kinds of anti-imperialist and anti-racist analysis that people in the Third International, in the Comintern, developed, to develop critiques of racism in the US and elsewhere that were also very powerful criticisms, even they weren’t directly connected to the Party. Originally, I didn’t stop there, I stopped just before there, but I wanted to make this a story not about just gloom and horror, which it is, but not only a story about gloom and horror; it's also about resistance and about a struggle for freedom.

In fact, the project I’m working on now doesn’t go forward in time, it goes back in time. I am writing an internationalist history of the American Civil War and looking at links between Black freedom struggles in the US and in the Caribbean, and elsewhere in the African diaspora against slavery, and the connection of that with socialist and communist exiles from the European revolutions of 1848, to try to tell a story of the Civil War that is also a story about the interlinked struggles of freedom of labor, both slave labor and wage labor, and struggles against racism in an internationalist context.