Sunday, May 29, 2011

Who Are the "Job Creators"?

The upshot of my last post was that an enterprise cannot grow or generate profits without affecting everything around it in complicated ways, including the very foundations of its own success.  Nothing occurs in a vacuum, yet too often, when talking about the economy, that is how we think.

This applies particularly to the concept of "job creation."  In the U.S. that is the number one topic of conversation, and almost all of those conversations are deeply irritating to me.  People talk as if jobs are "created" primarily through the wise decisions of businessmen.  Successful businesses breed more jobs.  In fact, the word "job creator" is currently used as a euphemism for "capitalist" or "CEO."

I saw a video production from Glenn Beck that pretty well summarizes this point of view.   ...And, I cannot seem to find it online.  Since I do not want to waste my entire evening looking for it, I will describe.  Essentially, it is a children's school film, designed to counter a film or a series of films that Beck claims are shown regularly in public schools in order to brainwash children.  He proposes his film be shown instead.  The essence:  allow wealthy business men to prosper, and they will create lots of new jobs.  Okay, I don't remember any of the details, except that there were stick figure drawings, so maybe it wasn't worth even bringing it up.  However, after showing the film, Beck also commented that, because Bill Gates had the incentive to make lots of money, he built a successful company that created all sorts of new jobs in the computer and tech industries.

Job creation does not occur in a vacuum.

Bill Gates may have created some new jobs.  But what about all the jobs lost in the industries that were made obsolete by his computer technology?  What about all the potential jobs that were lost because of his monopolization of the market?  What about the jobs lost as a result of computers doing work that people used to do?

Even the simple act of creating new jobs or starting a new enterprise has all sorts of complicated effects, including job loss and the destruction of other enterprises.

Doesn't it seem just too easy that simply giving businesses tax breaks, or other such incentives, will magically create jobs and grow the economy?  It is.  That is an incredibly myopic view of economics.  When you are dealing with something as complex as the economy, nothing is that easy.

Thursday, May 26, 2011

The Crisis of Overproduction

One of Marx's most fundamental propositions is that capitalism is based on a number of contradictions that limit its potential for unfettered growth, and ultimately destabilize the entire system.

1.  One of the primary ways by which capitalists profit is by keeping wages low. However, lowering wages also reduces demand for the goods that are produced. Thus, the tendency to try to minimize wages and to maximize demand are contradictory.

2.  Investment in new productive technology, while increasng the efficiency of the production process and initially raising profits, actually lowers the rate of profit. This is because profit is the realization of surplus value, and surplus value derives from the ability to obtain human labor in excess of what one is paying for the labor through wages. Thus, surplus value and profit are directly dependent on human labor. Introducing new technology into the production process reduces the proportion of human labor embedded in the price and cost of each object produced. This means that it is more difficult to accumulate surplus labor at the same rate. The reduction in the rate of profit can be forestalled through the creation of monopolies (for example, through copyrights), which allows one to keep prices high despite lowered production costs. However, monopolies can only be sustained for so long.

These contradictions that are particular to capitalism derive from principles pertinant to the accumulation of wealth in general (capitalist or non-capitalist). Recall the primary principle that continued investment in profitable enterprises decreases their profitability. Essentially (though this is a slight over-simplication) when one expands an enterprise (by re-investing accumulated surplus capital), then one risks undermining advantages on both the input and output end of the production process:

-Increasing the supply of goods that one is providing drives down prices
-Increasing the demand for inputs drives up the cost of the inputs

Thus, material expansion endangers profitability from both ends. When one accumulates more capital than one can profitably re-invest (i.e. when such a re-investment would enlarge the enterprise beyond the point of profitability) the result is a crisis of overaccumulation. One has two options. Either one can find other outlets for investment (other enterprises, financial speculation, public works and philanthropy - the latter also working as a means to cultivate political power), or one can actually continue to invest the accumulated capital and expand the enterprise. If the latter course is chosen, then a crisis of overaccumulation will become a crisis of overproduction. In a crisis of overproduction, the investment of excess capital in material expansion beyond the point of profitability results in a surfeit of goods produced in relation to demand.

Such is the situation the world now finds itself in. The post-WW2 era was a period of rapid economic acceleration and expansion. The widespread incorporation of mechanized production and assembly line production techniques, in addition to the rise of the transnational corporation, afforded rapid economic growth and productivity increases to the world's industrial powers, most notably the U.S., Western Europe, and Japan. By the end of the 1960s, however, this economic expansion was already becoming a crisis of overproduction.

One response to the overproduction crisis has been the use of Keynesian deficit-spending tactics. This has been most prominent in the United States, even in the 1980s when Reagan ratched up military spending. However, many countries in the world are now saddled with massive amounts of debt, so it is certainly not a strategy confined to the U.S.

Another approach has been to divert investment away from production and toward financial speculation. This began toward the end of the 1970s and particularly with the advent of Reagan-Thatcherism. Results of this strategy have included: Third World economic collapse and debt crises, bubbles, bubbles, and burst bubbles. The events of the past few years have, I think, made it very clear that financial speculation is not a path to sustainable prosperity.

History suggests that a crisis of overproduction of the scale now plaguing the world economy cannot necessarily be "overcome." Instead, a certain level of systemic collapse and reorganization is necessary. And this takes a long, long time. We might have to deal with global economic depression for the rest of our lifetime. Enjoy the ride!

Wednesday, May 25, 2011

Book Review: The Boom and The Bubble

I realized that I have repeatedly referred to the global crisis of overproduction, yet I do not think I have ever discussed the concept of overproduction in any detail.  To start, I recommend the book The Boom and The Bubble:  The U.S. in the World Economy by Robert Brenner.  Brenner traces the history of the current crisis of overproduction and describes the way in which it has proceeded throughout the past few decades.  I find that it is a very useful resource for understanding recent economic history.  However, Brenner neglects any consideration of overproduction from a theoretical standpoint.  That is what I plan to accomplish in my next post.

Just in brief, though, I will summarize a couple of Brenner's main points.  First, he argues that the position of the U.S. in the world economy is such that its patterns of deficit spending and high levels of internal consumption have been the lynchpin of global economy.  Enervated by overproduction, the economy has come to depend on U.S.-manufactured demand to prop up the demand side of the supply-demand equation.  Second, Brenner contends that the global economy, as a whole, has been stagnant since the late 1960s.  Apparent economic growth in any given country has only come in the form of bubbles, and directly at the expense of other countries, via manipulations of currency value, exchange rates, interest rates, etc.  In essence, there has been no real economic growth for four decades.

Saturday, May 21, 2011

The Rise of China

I am not the only person who argues that U.S. hegemony has been steadily eroding for the past few decades. The question I posed at the end of my last post (what comes next?) is one that is frequently considered and debated by others. This usually occurs in the context of discussions about China. For China is seen as the most likely heir to the U.S. in its role as world superpower (whether this is viewed as a potential threat or an inevitability).

I do not believe that China, or even some East Asian regional block, will be the next hegemonic power. There are two primary reasons for my doubt:

1. China's economic development is based solely on strategic participation in the world market and manufacturing.

Strategic participation: Decades ago, when China was still considered a Third World country, it allied with the Soviet sphere of hegemony rather than that of the U.S. However, China also managed to maintain some distance and independence from the Soviet Union, so that it was never truly a member of the Soviet empire. As a result, China could protect itself against the types of neocolonial exploitation that ravaged other Third World nations (particularly those in the "free world.") When the growth of the world economy came to a screetching halt, China was perfectly poised to take advantage of the situation. Its ability to employ protectionist policies to limit imports and keep the exchange value of its currency low, among other things, has allowed China to develop its manufacturing sector and dominate foreign markets, despite a global crisis of overproduction. However, China succeeds in this regard only to the extent that everyone else fails. In the end, because China is dependent on foreign demand for its products and foreign investment, decrease in global demand and foreign debt crises threaten to undermine the stability of China's economic development.

Manufacturing: The profitability of Chinese manufacturing results from the cheap production costs enabled by protectionist policies and the persistent level of global demand for manufactured products (purposefully cultivated in an effort to ignite demand-driven economic growth). However, once again, this is short-term. In the long run, manufacturing, as it is currently organized socially, politically, logistically, and geographically, will never be able to overcome the crisis of overproduction that has been suffocating its ability to generate adequate rates of profit for decades. Thus, Chinese manufacturing will only be profitable for so long. It cannot overcome the crisis of overproduction.

2. Before the next world order emerges, substantial transformations of current political-economic structures will have to occur. This includes the geopolitical framework of the system of nation-states.  As the social/spatial/mechanical organization of production undergoes radical changes, so too will human geography and institutions such as states and transnational organizations (e.g. the UN).  The map may soon look drastically different.  Indeed, the chaos of multipolarity, which I discussed in my previous post, seems to prefigure such a change.  Thus, it does not make sense to look for the next superpower among the current collection of nation-states.  The answer to the the "What will come next?" question is something that does not yet exist.

China might be having a bit of a hey-day (though nothing that compares to its past splendor), but more in the form of a vulture feasting on a rotting carcass.

Wednesday, May 18, 2011

The End of American Empire

There are multiple signs that the American Empire is crumbling.

In Latin America: Throughout the past decade, U.S.-friendly puppet dictators have been replaced with democratically-elected, leftist regimes that are standing up to U.S. They are consorting more with Cuba these days than the U.S.

The allies of U.S. hegemony - Western Europe and Japan: are also standing up to the U.S. and refusing to comply with its every wish. In fact, U.S. involvement in Libya occured more at the behest of Western European members of the UN security council than vice versa. Western Europe has been strengthening its ties with Russia, while the U.S. is trying to court the former Soviet states who still feel some vulnerability.

The Middle East: Resistance to U.S. domination has been visible for quite some time. However, the declining relations with Pakistan, and one can only assume with Egypt once the dust settles, and possibly at some point even Israel (who is also watching its regional hegemony fall to pieces), in addition to tension with supposedly U.S.-friendly leaders in Iraq and Afghanistan, point to the unraveling of U.S. power.

Asia: U.S. relations with Southeast Asia were forged primarily through mutually beneficial economic arrangements. However, with the "rise" of China, and the collapse of the global economy, there will surely be a realignment of allegiances in this region.

U.S. economic and military power have been weakening precipitously (particularly since the invasions of Iraq and Afghanistan). The U.S. is no longer able to strong-arm other countries like it used to. Instead, everyone seems to be acting in defiance of U.S. aims these days.

Obviously, the global economy has reached a turning point as well. Interestingly, there is some connection between economic patterns and geo-political developments. For example, historically, a decline in a hegemonic power has typically been accompanied, first, by a shift in focus from production/material expansion to financial speculation as a source of profit (started in 1979), and then, a full-scale collapse of the economy, partially driven by the financial speculation (that can be crossed off the list too). This does not bode well for the U.S. as an empire.

Why should this pattern hold? Because, as I have previously argued, the state is merely a tool for enforcing the regional constraints to competition that are necessary for the accumulation of wealth. Thus, the existence of a hegemonic power merely represents a system of restraints necessary to uphold a particular spatial organization of production (both in terms of the social division of labor and the logistics of the production process itself), which itself undergirds a certain form of accumulation of wealth.

Thus, as a particular organization of production reaches the limits of its capacity for profitability, the system is thrown into chaos, and the basis for the regional restrains and spatial organization upheld by the hegemon no longer serve the same purpose. Geopolitical organization is necessarily thrown into chaos as well and hegemonic power dissolves.

Or, in other words, inability to limit competition in the economic sphere (a result of declining profitability, as it both weakens the power of the monopolies and diminishes the ratio of potential profits to competitors) necessarily translates as an inability to limit competition in the political realm, since political institutions derive from economic relations.

So now we find ourselves in a multi-polar world. What will come next?

Tuesday, May 17, 2011

The American Empire

My busyness lately has prevented me from posting too frequently.  However, I thought I would share an excerpt from an email I wrote to someone in response to the claim that the U.S. was traditionally "isolationist" (or, in the words of Pat Buchanan, "a republic, not an empire"):

I would have to say, the reason that America was more "isolationist" in the beginning was because it was essentially a dependent satellite of the British empire, benefitting from British imperialism and trans-Atlantic trade, with no real need for imperial actions of its own.  However, things started to change with the Great Depression of the late 19th century, which began to erode British economic hegemony and simultaneously create a need for cheaper raw materials (procured through colonization of the rest of the world), and thus opened the way for an emerging U.S. imperialism that was inaugurated by the Spanish-American War.  U.S. imperialism really took off, though, after WW2, when European hegemony was dealt a fatal blow and the colonized world gradually became independent... or maybe a better word than "independent" is available for re-colonization and exploitation by the U.S. and Soviet empire.  The U.S., of course, has been more subtle in the form of colonization it has employed... but even if control is exerted through transnational organizations and covert support of coups/destabilization of governments, it is control nonetheless!

The U.S. may not have become an empire until a century into its existence, but it became an empire precisely when there was room for it to become an empire. (Besides, does taking land from the Native Americans and Mexico not count as imperialism??) The fact of the matter is, for better or worse, U.S. growth has always been fueled by imperialism, whether of its own undertaking or that of its economic allies.

Monday, May 16, 2011

The IMF is for Losers

I can't help but get a little bit of pleasure out of the news that the head of the IMF, Dominique Strauss-Kahn, is being charged for sexual assault.  Don't get me wrong, I feel sorry for the maid, and sexual assault is not something to take lightly.  But part of me delights in any sort of bad press for the IMF.

The fact that Strauss-Kahn was both the head of the IMF (one of the most powerful instruments of global capitalism) and such a key figure within the French socialist party further proves that socialism is just another form of capitalism.

Tuesday, May 10, 2011

Food Inc.

After receiving a couple of enthusiastic recommendations for the film, Food Inc., I had to see it. I heartily recommend it myself, and I think it illustrates several points I have been trying to make regarding the inherent nature of capitalism:

The result of production directed toward profit rather than actual human need.   Food Inc. details how government subsidies of corn and soy have yielded a surfeit of these crops, which are not necessarily the most nutritious sources of calories.  Rather than shifting production toward other, more nutrient dense crops, we instead devise ways to manipulate the chemical components of corn and soy and recombine them so that they serve as the basis of most of our food products.

The hallmark of capitalism.   Limitations to compeititon are necessary for accumulation of wealth. Capitalism takes these limits to a new level.  Over the past decades, fewer and fewer corporations have gained control over an ever expanding share of the world market.  Food Inc. reveals how a handful of corporations have come to control the food industry, despite the increasing variety in actual food products.   For example, a single corporation is aiming to control 100% of meat production in the U.S., and they are not too far off.

Related to monopolies is the concept of intellectual property, a topic which I will revisit in much greater detail sometime later.   For now, I will simply point out that the purpose of "intellectual property" is not to protect or encourage innovation; it has always been a means of creating monopolies.  Food Inc. demonstrates this to great effect with the example of the patenting of genetic material in seeds.

Food Inc. provides a good counterpoint to the hegemonic image of "progress." As I have argued before, technological innovation and industrial efficiency are a double-edged sword. In the case of agriculture and food, Food Inc. reveals how mechanization and industrialization are responsible for deteroriating diets, contaminated food, exposure to new pathogens, antibiotic resistance, and environmental degredation.

Conquering disease?
I argued in my first (yes, there will be another) series on health that the perception that we are conquering death and disease is patently false.  Food Inc. shows how epidemics, diseases, and other health threats have been created by the forces of modernity.

Curtailment of Liberties
I have also argued that there is no such thing as a "free" society. At least, not among the modern system of nation-states and colonies. Capitalist interests not only limit the freedom of the market, but other freedoms as well. That is why "democracy" is an illusion. Two cases in point, as shown by Food Inc.

Number one, Food Inc. provides an example within the area of agriculture and food safety of the way in which the governmental functions of the state and supposedly "private" capitalist interests are actually intertwined. The idea that there is a separation between "business" and "government" is pure ideology.

Number two, Food Inc., with its discussion of "veggie libel" and lawsuits pursued by the meat industry, also shows how the protection of personal liberties is constrained by capitalist interests. We have freedom of speech... unless it threatens corporations.

My one critique of the film is that the producers are quick to jump on the "organic" bandwagon, giving such enterprises very one-sided support and abandoning the critical lens employed throughout the rest of the film.  If the organic enterprises are owned by the same corporations responsible for all the horrors described in the rest of the film, then why would their profit-driven practices not affect the organic industry as well?

All in all, though, very worthwhile and eye-opening.

Sunday, May 8, 2011

Is Pakistan Guilty?

So it seems that much of the discussion regarding Osama bin Laden's death has come to revolve around the question of whether or not Pakistan knew where he was and willfully harbored him, even while receiving U.S. aid and pledging to assist in the War on Terror.

It is a stupid question.  A really, really stupid question.  Pakistani regimes of the past couple decades or so have been in a very tenuous position.  They have essentially had to find ways to appease the jihadist elements of the country to avoid an uprising, without simultaneously alienating the more "secular" movements.  If Pakistan had been more aggressive in their anti-terror efforts, and more faithful to their alliance with the U.S., the regime could very well have been toppled.

The U.S. should never, EVER try to do anything to provoke instability in Pakistan because they have nuclear weapons!!  So, if the Pakistani government had taken actions that basically amounted to political suicide, then Osama bin Laden and his crew would essentially have nuclear weapons at their disposal.  Would THAT have been good??

There really wasn't anything Pakistan could have done.  Shut up everyone.

Tuesday, May 3, 2011

The Death of Osama Bin Laden

It is clear what significance the death of Osama Bin Laden has for the vast majority of the American public, liberal or conservative. The kind of reaction that is occurring is not the least bit surprising.

But what does the death of Osama Bin Laden really mean? The answer to this question boils down to whether one views the problem of terrorism in terms of individuals or systems. If the former, then one is likely to see acts of terrorism (most notoriously 9/11) as the expression of individual defects: psychological disturbance, moral depravity, an essence of pure evil, personal feelings of anger and resentment. Possibly religion plays a role, but only in so far as religion is characterized as a set of beliefs that may populate and shape an individual's consciousness. The antedote to a "bad" religion, then, is the spread of either a better religion, or of Western humanistic rational thought (or both).

Religion, culture, ethnicity, and images of "evil" human beings, in fact, have all been used to great success as a smokescreen to obscure the real nature of violence, terrorism, and warfare. If the general populous feels (or are made to feel - often through the creation of dubious internal and external "threats") a strong attachment to a particular religion, ethnicity, nation-state, or if they desire to "fight bad guys," then these rationales work as a great motivating force to support endeavours which would be totally unpalatable otherwise.

However, from an anthropological standpoint the following can be argued: violence is not just "human nature"; blind passions and hatreds may stir masses of people to action, but they do not ever cause coordinated, strategic acts of violence. Violence is systemic. In terms of the lived experience of the general population, religion, ethnicity, ideology, etc. do fuel war, but only as part of an overarching strategy that has nothing to do with any of those things.

Thus, I would argue that terrorism must be understood in terms of systems, and not individuals. Our entire global political-legal-economic complex is sustained by, legitimizes, and naturalizes violence. The political/legal system that constitutes the nation-state, as well as the "community of nations," is fundamentally premised on the concept of "legitimate violence." The state is, in the last instance, an apparatus of coercion and a means of "legitimate" violence. Other state functions are not indigenous to the state apparatus and extend beyond the state itself. Even our legal system and concepts of "justice" work to uphold the legitimacy of state violence.

Moreover, relationships that enable large-scale accumulation of wealth, and in particular, those pertaining to modern capitalism, employ violence in a very systematic way to maintain structures of exploitation and unequal exchange. The development of capitalism and industrial society would not have been possible without the violence of colonial conquest and slavery. Capitalist aims continue to be pursued through the support of coups and brutal regimes, political assinations, and full-scale invasions of other countries. This is in addition to the violence of extreme poverty and malnutrition, abuse suffered in the workplace, etc. etc. Add to this the forms of violence that sustain the social division of labor: the violence of patriarchy, racism, and xenophobia.

In essence, violence is a characteristic of a type of relationship: more specifically, a relationship of inequality. It is the very fabric of our current social structure. However, violence is not the only characteristic of relationships of inequality, and it is by no means a necessity of human existence. It is a historically determined phenomenon.

Therefore, when terrorists employ violence to challenge neo-colonial domination, they are simply utilizing what is immediately at their disposal - the methods (and, often, the knowledge, tools, and resources) of the system in which they are enveloped - as a means of resistance. Perhaps this demonstrates the difficulty of acting (even thinking) completely outside of the structures one is challenging.

So what does this say about the death of Osama Bin Laden? A man was killed. The system was not. In fact, as Bin Laden's death entailed further state-sponsored violence (including, it now appears, the inhumane interrogation techniques at Guantanamo Bay), it stands as a victory not for the families of 9/11 victims or first responders or ordinary Americans, but as a victory for systemic violence. The system will persist, and so will violence of all kind.