179 Comments

1. Lisa:

   Michael Hudson is now Kucinich’s senior economic advisor. Good summary of a recent interview at:

   http://www.itulip.com/forums/showthread.php?p=14554

   25 August 2007, 2:06 pm

2. Lisa:

   Hudson’s book can be found at:

   http://www.michael-hudson.com/books/superimperialism.pdf

   Peter Gowan’s book, “The Globalization Gamble,” can be found as a pdf file at:

   http://marxsite.com/Gowan_DollarWallstreetRegime.pdf

   It can be found as a Word document (rtf) at:

   http://www.iwgvt.org/files/9-gowan.rtf

   25 August 2007, 2:52 pm

3. Lisa:

   Two interesting and insightful articles by Nigel Maund can be found at:

   http://www.safehaven.com/article-3134.htm

   http://www.safehaven.com/article-2693.htm

   25 August 2007, 2:56 pm

4. Stan:

   The really scary thing about this is that (1) allowing the economy to completely “correct” would bring the Great Chicken home to roost in such a way that it would almost instantly destabilize the economy in ways which inevitably lead to political destabilization. We keep re-inflating the bubble to stave off this crisis, guaranteeing that the next will be worse; and (2) that this invokes the “too big to fail” principle. These so-called mortgage companies are merely part of huge derivatives portfolios that have now insinuated themselves into every aspect of the global economy.

   http://www.washingtonpost.com/wp-dyn/content/article/2007/08/20/AR2007082001539.html

   http://online.wsj.com/article/SB118714343807498116.html?mod=googlenews_wsj

   http://www.turkishpress.com/news.asp?id=190727&s=&i=&t=Rescue_of_big_US_mortgage_firm_eases,_does_not_end_concerns

   We’ll be paying for this, just as we — to this day — work many hours each year to pay for the Savings and Loan debacle.

   25 August 2007, 5:35 pm

5. peggy:

   For a viable if imperfect alternative to the speculation-based financial system, see Islamic banking.

   25 August 2007, 7:21 pm

6. Lisa:

   Two more interesting articles by Maund:

   http://www.gold-eagle.com/editorials_05/nmaund112906.html
   http://www.gold-eagle.com/editorials_05/nmaund060106.html

   25 August 2007, 9:49 pm

7. Dirk:

   Islamic Banking? - Sorry Peggy, but reading this thread, I thought it would be about a more intelligent critique of capitalism than Adolf Hitler and Ford delivered. The same old story: the only thing wrong with capitalism is financial capital, is the collection and payment of interest, also commonly called riba in Islamic discourse. Just as Adolf Hitler and Ford said. There’s good capitalism, productive capitalism on the one hand - and bad capitalism, financial capitalism on the other hand. Those evil bankers and jews. Without them we would just be happily ever after…

   sarcasm off.

   I hope people here are really into “unraveling the language of finance”. And maybe they should just start with a lecture about vulgar “anticapitalism” is…

   Hello from Germany,
   Dirk

   STAN REPLIES: How does a reference to the Sharia usury-prohibition leap into finance vs productive, then take another velociraptor jump to Ford and Hitler? Sounds like an orthodoxy-bound left intervention to me… leap to conclusions based on a term, excise the scratch (some perceived deviation from the schema) lest it turn to gangrene. Bait the offender with suggestions she is racist or anti-Semitic (which I don’t believe for a moment). Maybe we should start with a lecture about vulgar argumentative fallacies and jumping to conclusions. Or even minding your manners.

   Dirk, its hard enough to have a forum where men and women have principled decent conversations together. The reason for that is that men — unaware of their socialization, if we are being generous — adopt these magnified-aggression personae online; and women — out of their own long and tedious experience with this dominator-style in real life — decide they have better things to do than put up with more boyshit. So they leave (as some have done even here where we are trying to balance between openness and the maintenance of a safe space). Then the boyz can posture away with each other, strutting and shadow-boxing here in our virtual locker room, and occasionally stop and ask, why aren’t there any women here?

   Get it together, or it will be goodbye in Germany.

   As to your “vulgar anticapitalism,” I hope you will read Gowan’s book. He is an editor at the New Left Review, hardly a Buchananite publication. There really is a difference between the financial and productive poles of capital, and within the financial pole there is a speculative pole. The behaviors of these financial actors are at the very center of the meltdown we are seeing right now. The repressive measures against the financial pole, implemented as part of the overall Keynesian reconstruction after the Great Depression, have been systematically broken down. Gowan (schooled in marxian econ-analysis), Goldner (a Luxemburgian Marxist), Liu (a partisan of the old CCP), and Hudson — among others — have described these breakdowns, and the consolidation of power by the financial pole… Hudson and Gowan making a clear and well-supported claim that the US State has used this consolidation as a weapon of imperial-state power. While the orthodox left has decried the collapse of the trade unions’ power as a loss rooted in outsourcing and-or failure to aggressivley enough prosecute the ideological struggle in the working class; the reality is that the patterns and forms of bourgeois ownership have changed. The center of gravity has shifted into those vast oceans (… derivatives, hedge funds) composed of smaller speculative instruments. The working class no longer has an efficacious target for its struggles (even in those places where this class is aware of itself as-a-class). When a large holding company, which makes no distinction between return-on-investment (ROI) from capital market investiments (hot money) and profit of the surplus-value variety (productive capital?), has a problem with Company X experiencing “labor difficulties,” they don’t even have to look at the specifics. It’s merely part of the overall portfolio. If the numbers say it is becoming a drag on (speculative) ROI, then they sell sell sell, sending the share-prices tumbling, and ruining the enterprise without a how-do-you-do. What the above authors have done is allowed themselves to question the old, mechanical formulae of orthodox marxism in the study of today’s epoch, and revised their theoretical assumptions based on new evidence instead of religious dicta. Imperialism is not operating the way Lenin and Hobson and Hilferding said. Not even close. This site is not one where we hyper-valorize productive capital. In fact, we are on record again and again saying that productive capital is “producing” a lot of stuff that is useless or malignant, and wrecking the biosphere in the process… and that productivism on the left is a historical anachronism (rooted in patriarchal dualism). But the world we live in, the very one where people muddle through, raise their kids, and try to figure out from day to day how to get by, is one that is being shaped by the dynamic relationships between these meta-economic forces… including (and now especially) the interplay between the productive and financial poles of capital. These two poles were separated and one repressed in the past, because there was a recongition that the hot-money tempo of finance capital, particularly when it was dominated by speculative activity, was so frenetic that it outstripped the cool-money tempo of productive investment, and created an unpredictability that is anathema to productive investment. As the US saw its power eroding with the rise of Germany and Japan and the debacle of Vietnam, it began a shift away from finacial-pole repression, then turned on the printing presses… and used this financial tempo and this surfeit of currency as weapons to preserve its dominance (along with using the Department of Defense as its main export-market surrogate). Deep in the background, like the monster under the bed, of course, there was The Bomb. I hope others will try and decipher Henry’s piece here. One does not have to be familiar. Familiarize yourself by studying it, finding the definitions and linking, and going through this the same way one eats an elephant… one bite at a time.

   And Peggy’s allusion to interest-prohibition has merit, especially when one considers that aside from mortgages, the debt-slavery of the US population right now is based on usurious credit-card rates.

   26 August 2007, 2:54 am

8. Y.K.:

   Stan,

   I’ve been reading these pieces over the last few months and I’d appreciate some of your intellectual energy, seeing that you’ve read this material in some depth and have generously offered your interpretations. I’ll admit that I’ve only had the chance to skim over Gowan and Hudson’s books, but I intend to read them in detail at some point soon.

   1. What exactly is the Federal Reserve and how does it differ from other central banks? (please provide links or article / book titles also). I’m especially interested in the relationship between the Federal Reserve and the state as such, not least the Treasury.

   2. I’ve been trying to make sense of Say’s Law and fit it into the relationship between production and finance. I haven’t read Say nor do I understand all the debates about his “law”, but there is clearly a lot of ideology involved in all the major positions. I want to understand the Marxist and socialist perspectives on Say’s Law in particular.

   Basically, I’m stopped at the claim that the employer is actually a producer who pays employees to consume. I tend to think of the employer as the owner, the worker as the producer. So this would seem to undermine the agents of the “law” and complicate the logical transition to the financial sphere, although I acknowledge some kind of circularity between production and consumption. Hudson’s articles on the “New Road to Serfdom” and “Saving, Asset-Price Inflation, and Debt Induced Deflation” are my main points of reference.

   3. I’m also looking at pre-capitalist or non-capitalist economies with currencies of gold, silver, and precious stones, with some use of credit in the form of bills of exchange. Any recommendations to make better sense of these largely non-fiat monies? I’m also interested in anthropological or sociological viewpoints (i.e. cultural and social as well as economic dimensions).

   Thanks again for your stimulating and brave efforts.

   Y.K.

   STAN: I am not an expert in any of this, and certainly can’t speak for one position “within Marxism” (not only because there is debate in that tradition, but because I am kind of a post-marxist).

   IfI understand Say’s Law correctly, it denies that there is such a thing as overproduction… kind of an “if you build it, they will buy” POV. Obviously, I don’t believe that; and I agree that workers are producers, in the same sense that the old man did.

   What Marxism does not account for well, and what has grown in importance, imho, since WWII, is demand-production. This has much to do with the come-lately role of the US in the macro-global-economy as consumer of last instance… about which Maria Mies says much with regard to gender. Many marxists want to dismiss the preoccupation with “consumerism” as a somehow under-developed theory, or partial consciousness… a kind of liberal moralism. But as practice and ideology, and in its criticality to completing the valorization circuits of global capital, I’d argue that metropolitan consumerism is extremely important to understand.

   Hornborg’s essay on money (Money, Reflexivity, and the Semiotics of Modernity) in his book The Power of the Machine, is a fascinating — if arcane — anthropological account of money, and one by which I have been pretty strongly influenced.

   Hudson’s “New Road” is brilliant and accessible pamphlet; and we’ve linked it at Insurgent American. Strongly recommended.

   Liu’s series on “Banking Bunkum” gives a very good history of the Fed and compares it to other central banks.

   On “pre-capitalist or non-capitalist economies”, I hope others will give some help here, because (aside from Hornborg) its an essentially blank file in my drawer. I’d be as interested as you are.

   And thank YOU.

   26 August 2007, 7:18 pm

9. Lisa:

   Good charts illustrating the way the FIRE economy is “wrapped” around the productive one are at:

   http://www.michael-hudson.com/articles/debt/0406SavingInflationDeflation.html

   The same charts are nice enlarged at:

   http://www.itulip.com/forums/showthread.php?t=891

   26 August 2007, 11:31 pm

10. Stan:

    Thanks Lisa. Very helpful. Re-iterating here, at least for myself, there are some assumptions about productive capital that I cannot share with (gold-bug or Keynesian) capitalists: that full employment is - in itself - a good thing, when we don’t ask the question what is being produced; that growth in the productive sector is good, when - paraphrasing Boulding - belief in ceaseless growth in a finite world is economic madness. There is also an assumption I cannot share with the productivist left: that industrialism will continue to be the way we ensure the greater good after we have political power.

    But Hudson is showing with some pretty accessible graphics how the hot-money/cool-money time-fractal builds a general contradiction, ie:

    …new tangible investment and employment decline as investors find it easier to obtain price gains in stocks, bonds and real estate than to make profits by investing in factories and other tangible means of production.

    This is the dynamic that underwrote the fraudulent bookkeeping at Enron, et al. Everyone was in a race to the bottom to show that their company looked better in a hot-money portfolio. What tricked everything up was that real estate — a tangible — was being bid up (in a bubble) in a speculative frenzy created by the gaseous fictional value of the US printing press.

    They can’t just devalue the dollar now (tho there has been some of that) in a way that takes the rich along with the poor on the crash landing. They have to shift this dramatic devaluation onto the backs of the small debtors… while they bail out the holding companies whose portfolios were stuffed with giant mortgage-lenders.

    It’s class warfare from above.

    27 August 2007, 6:06 am

11. Stan:

    Time Fractal:

    Industry and agriculture, transport and power, and similar production and consumption expenditures account for less than 0.1 percent of the economy’s flow of payments. The vast majority of transactions passing through the New York Clearing House and Fedwire are for stocks, bonds, packaged bank loans, options, derivatives and foreign-currency transactions. The entire stock-market value of many high-flying companies now changes hands in a single day, and the average holding time for currency trades has shrunk to just a few minutes.

    The usurious economy (and the basis of those credit card offers in your mailbox every day):

    …over time a rising proportion of this inflow of interest, dividends and rent is plowed back into new loans rather than invested in tangible capital formation.

    Perhaps this is a better document to begin with than Henry’s. What say you all?

    27 August 2007, 6:15 am

12. Stan:

    Okay, now I see why the earlier question from YK on Say’s Law. I am studying Lisa’s link.

    Hudson is not quibbling - as we might - about the definition of producer, but taking Say’s at its face-value, and reading it in the context of capitalist theorists (Keynes, eg). His reference makes no attempt to step outside capitalist logics, but to explain the thought processes contained within them; and the aspect of Say’s that he is emphasizing here is “circularity.”

    I wrote back and forth with MH for a while when we were both on the same discussion list (A-List); and he decried the left (of which he is a very quiet and cunning member, I’ll venture) for its inability to speak the language of finance, that - like the language of medicine - is arcane, yes, but also descriptive of things that are no one else’s preoccupation… but which are incredibly formative of our current epoch. He said that we haven’t had our hardware upgrade; and so we are using an obsolete computer (left orthodoxy).

    I see this self-education project the same way the CIA used to see the training of linguists and development of area studies. If we are to be effective intelligence analysts in this strange land, then we have to speak the language and understand the cultural thought process. Because this strange land now occupies us.

    footnote: The same applies to having men involved in the struggle against gendered power, eg. We can most effectively serve the cause as agents (interpreters and guides) in the realm of the occupier.

    27 August 2007, 6:35 am

13. Y.K.:

    Stan,

    Thanks for the links to the Liu articles on central banks. I hadn’t seen them before and it will take me some time to read them.

    1. Again, I haven’t read Say and I only occasionally look at early modern European history, but doubtlessly he has to be historicized for his “productive” bias. He writes in the late 18th - early 19th century, when most of French wealth centered on agriculture. The industrialization of France hadn’t really happened yet, while British industrialism had just begun. This site from the New School has many good links and essays, including this page on Say: http://cepa.newschool.edu/het/profiles/say.htm

    2. I don’t know much about “demand production”. I do know that the US had to create markets, i.e. consumers, both internal and external, for its excess production after WW II. So at first glance, I’d say that “demand production” is just the active creation of markets for excess supply, with all of the propagandized subjectivity required to make people buy a lot of garbage. You mention Maria Mies… any links or other suggestions for consumerism? How does consumerism “complete the valorization circuits of global capital”?

    3. It’s funny that you say “old man” and I presume you mean “the bearded one”. We tend to call him “grandfather”, and like a good grandfather he’s not right about everything, but right enough to deserve plenty of respect. I tend to think that the analysis of money had problems because of the incomplete volume III. There is an excellent and interesting discussion of money in a book about Chinese history in Van Glahn, Fountain of Fortune, which I’m currently reading. Highly recommended.

    At the same time, money in general would seem to belong to the sphere of wealth transfer (“finance”) instead of wealth creation (“production”); furthermore, finance would seem to always depend on production for its value, although finance can disrupt production.
    I agree that there needs to be less useless production, but given grandfather’s concern with the exploitation of labor, it would make sense for him to begin with living labor and the creation of capital from production, such capital being “dead labor”, in his terms.

    So I tend to support the idea that finance became prominent in the last four decades or so due to problems of decreasing profits in production. In perhaps simplistic terms: Money needs commodities but not visa versa. It doesn’t matter whether those commodities are stolen like oil (raw materials) or created like a tank (manufacture).

    Money can’t facilitate any exchange or preserve any value without some commodity to exchange or value. Money has its own laws, but in the larger scheme and in the longer term, money can’t exist without production. Barter economies would seem to demonstrate this because money is not relevant in them, but exchange exists, value exists. This might set me against Hudson to some degree.

    The collapse of the credit bubble is due to the squeezing of production / consumption for the sake of financial speculation because all these speculations are based on the poor working(wo)man at the bottom making monthly payments. S(he) requires a job, food, and shelter at a minimum, which obviously diminishes rentier profits. But no job or worker means no profit for the money men.

    So that brings me to the monopoly capital school. I’m thinking in particular of recent essays about “Monopoly-Finance Capital”: http://www.monthlyreview.org/1206jbf.htm and “The Financialization of Capitalism”: http://www.monthlyreview.org/0407jbf.htm .

    I should say that I find it a general failing of economists and social scientists to emphasize prediction. Prediction is a comforting illusion borrowed from the natural sciences that ultimately denies human freedom. So the fact that Sweezy couldn’t “predict” financial power doesn’t mean much to me. I’ve usually seen it as a mark of maturity in a thinker when he / she discards mechanistic prediction. Samir Amin, for instance, doesn’t emphasize prediction as much these days as he seemed to do in his earlier writings. I’m slowly reading his geopolitical analysis in “Beyond US Hegemony: Assessing the Prospect for a Multipolar World”. There are other ways to think about future possibilities.

    So, perhaps I can summarize these thoughts with a question: what kind of causal relationship exists between finance and production?

    4. Question for everyone: What kind of US political program can be organized around debt? It seems clear to me that many have fallen into debt in the US because prices are inflated due to the increase in the money supply and the greed to create derivatives. The current common options for the peons consist of military / industrial complex servitude, escape from the country or general economy, or incoherent and short-lived revolt … the latter which is scarcely to be found, but surely cooking beneath the surface. The US also has the most extensive system of debt control anywhere in the form of the ubiquitous “social security number” and “credit report”, which have become an extremely effective means of labor discipline. How can people undermine the “New Serfdom”?

    -Y.K.

    27 August 2007, 12:38 pm

14. Y.K.:

    I’m listening to lectures by Greg Albo. They are clear, dense, and very helpful.

    “Turbulence: Financial Capital and the Credit Crisis”

    http://www.socialistproject.ca/theory/

    27 August 2007, 4:57 pm

15. Lisa:

    Good article on investment banking shenanigans:

    “Investment Landfill: How professionals dump their toxic waste on you”

    http://www.safehaven.com/article-7893.htm

    27 August 2007, 6:15 pm

16. Lisa:

    Some helpful articles can be found at:

    http://www.globalresearch.ca/index.php?context=listByAuthor&authorFirst=Richard%20C.&authorName=Cook

    27 August 2007, 6:18 pm

17. Lisa:

    Concerning assumption about the purely positive view of productive capital, there is Stan’s article, which comments on Hudson’s work and also critiques it from this perspective:

    http://www.insurgentamerican.net/download/StanGoff/FoodandFinance.pdf

    27 August 2007, 6:31 pm

18. Lisa:

    See the following Wikipedia article for certain possibilities of coping with a de-industrializing future and a large population:

    http://en.wikipedia.org/wiki/Appropriate_technology

    27 August 2007, 6:35 pm

19. Lisa:

    Another good exposition of the sub-prime crisis:

    “Liars’ loans”

    http://www.bbc.co.uk/blogs/thereporters/robertpeston/

    27 August 2007, 11:43 pm

20. Stan:

    Your move, Mr Bernanke
    By Walter T Molano

    There is a consensus in the northern latitudes of the Western Hemisphere that the US Federal Reserve under chairman Ben Bernanke will magically solve the markets’ woes. Asset prices rallied last week, as television commentators debated whether the US central bank would cut interest rates by 25 or 50 basis points. Politicians from both sides of the aisle called for a reduction in rates and an increase in liquidity FULL

    By Daniel Daianu for Southeast European Times in Bucharest – 27/08/07
    photo

    Financial turbulence has the potential to trigger a global economic recession or slowdown, delivering severe shocks to business, industry and services in numerous countries. [Getty Images]

    More than a few voices are saying all is not well in financial markets. Even some leading central bankers have expressed worry. Financial turbulence has the potential to trigger a global economic recession or slowdown, delivering severe shocks to business, industry and services in numerous countries. A crisis could erupt in the financial markets themselves, or it could be triggered indirectly by a major shock – such as the dramatic rise in the price of oil several decades ago. FULL

    And Gowan

    28 August 2007, 6:23 am

21. Timothy R. Anderson:

    Petruno. A columnist who writes about Business for the Los Angeles Times newspaper and their website, too !

    Anyway, he’s saying, today 8-28-07 , that the stock market mood swings might not be over. Heck, without the support of the Federal Reserve ….. pumping in loads of FLUID into the corpse ……. the mood swing would’ve swung so far off the rails
    that the entire Dow Jones Industrial Average
    would’ve sunk to shoe-sizes-numbers !

    I ain’t an expert but I ‘ m guessing that this year will end Dec. 31, 2007 with the Dow Jones Industrial Average below 11, 111 . 00

    What do I base that on ?

    My own will to shoot my mouth off in forums such
    as these !

    Tim
    http://www.latimes.com ( if you wanna know the Petruno
    take on the situation )

    28 August 2007, 1:29 pm

22. Timothy R. Anderson:

    The following is from my local newspaper’s
    Business section, Friday, August 10, 2007 :

    ” The Federal Reserve added a
    larger-than-normal $ 24 billion in temporary
    reserves to the U.S. banking system . ”

    Comment by a person who has far less than
    $ 24 billion ! That’d be me !

    What if it hadn’t added that money ?

    Yikes ! Scary, scary !

    29 August 2007, 12:08 pm

23. peggy:

    Well, I am way far out of my depth here, but there seems to be little discussion of what has been called “the service economy.” Many people, like me, are not involved in the production of things at all, but in the provision of services - teaching, nursing, writing software and all the rest. Such services are essential, and we get paid for performing them, but they do not contribute to capital growth in any direct way that I can see. In principle, therefore, it would be quite possible to have full employment, with everybody or nearly everybody performing some necessary service for a living, and not have capital growth. As much as my employer tries to “market” my service as contributing to capital growth by producing “human capital” (= people who are capable of performing specialized and expensive services) really I am doing no such thing. It is true that there is a more-and-better ethos involved in all this: a demand supposedly exists for more and better medical care, more and better software, and whatever else. But there is a limit to how much medical care a given population can absorb, and to the extent that it becomes capitalized, medical care becomes a polarized service, concentrated on serving the rich, while ignoring the poor. And even the rich do not necessarily benefit from lots of expensive medical care, or teaching, or software for that matter.

    Would it not be true to say that finance capitalism is a giant overgrown parasite on the smaller system of producer consumer, which can take the form of people in a community providing needed services to each other in exchange for money which just goes round and round in the community? If the whole finance capital system collapsed, would it not be possible for the smaller system to continue intact, more or less? Is the smaller system so hugely dependent on the larger system? Or are we not just being led to believe this, so that we will be scared into helping to maintain the larger system by saving and investing? I mean, Stan, earlier you said that I should save and not spend. But now it seems that my savings are precisely my contribution to the larger system of finance capital, which is a great evil.

    Sorry for rambling - just thinking out loud, I guess.

    29 August 2007, 11:26 pm

24. peggy:

    p.s. Stan writes:
    “Class again. Inflation is bad for investors and lenders, who want the purchasing power of collected interest, etc, maximized.”

    Then I’ve really got it all wrong. Up until now, I thought inflation was most likely to hurt ordinary joes and janes, who saw the price of a loaf of bread skyrocket, while their wages and earnings did not. Like was has happened in Zimbabwe.

    And I thought inflation was caused, in large part, by speculative finance: buy low, sell high, where what you are selling high is exactly the same thing as you bought low a day ago. Does anybody talk anymore about rising wages being inflationary?

    30 August 2007, 12:08 am

25. Y.K.:

    Dear Peggy,

    As I see it, our question is basically the same about production vs. finance. You’ve emphasized the practical and I’ve emphasized the theoretical, but we both tend to side with production (“Would it not be true to say that finance capitalism is a giant overgrown parasite on the smaller system of producer consumer… If the whole finance capital system collapsed, would it not be possible for the smaller system to continue intact, more or less?”- peggy).

    That’s why I suggest that we think about pre-capitalist and non-capitalist political economies, such as gift, barter, feudalism, etc. History doesn’t just tell us about the past, it also points to future possibilities.

    I have a few responses.

    1.) Scale and causation: Even though the nominal monetary value of the financial sector is bigger, “real” production of value seems more important socially. How? Derivatives are a kind of fictional capital dependent on someone working off their debt through production of “real” capital. In that respect, production is causally “bigger” than finance, even if finance has bigger numerical “size”.

    If you consider the use-value of a commodity, production is the major system socially and economically. You can use a chair or a bicycle, but you can’t use a derivative, not even to keep you warm because it exists electronically. Credit money, which assumes that someone will work to pay it off, is basically trading on rights over labor and the products of labor, it is a sheer exchange-value. In short, production is the socioeconomic basis of value, but not the political cultural basis because global society is politically dominated by capitalists.

    So logically it seems that if you eliminate the producer, the system falls, but if you eliminate the financier, life can continue. This is your point, and I think it is important to stress this fact because it’s important for people to know, even if only to know, that they can be independent of capital and still live. US Americans, mostly involved in wage labor and with hardly any peasantry / farmers, experience their dependence on capital as nearly total, which ultimately sets the stage for fascism. What this means in practice: a general strike can still bring down the financial system.

    Given the nature of industrial society, however, we still need money however to effect all kinds of economic activities. So it isn’t as easy as simply eliminating money, but rather the ultimate goal is to gain political control over money for its equitable use and distribution. I presuppose the need for widespread deindustrialization. I’m just pointing out dependency and the development of value, I’m not suggesting the total irrelevance of money.

    2.) I would also like to see some more links / articles/ books / discussion about “service”. Often, people discuss a service-goods continuum ( http://en.wikipedia.org/wiki/Service ). Often there is a mixture of goods and services in a single economic act, the usual example being a restaurant: you pay for the good of the food and the service of the waiters / cooks. I would like to see a fuller response to your question: “services are essential, and we get paid for performing them, but they do not contribute to capital growth in any direct way that I can see”.

    I would add however, and I’m sure Stan would agree, the most important service for the US is military labor. No soldiers, no empire. The “financial imperialism” of the US depends on military power. Hudson himself has said this in an interview. The basis of the military is the soldiers, not the machines. No gun without a shooter. Take away the military services, and the financial imperialism goes too.

    In part to solve the problem of military labor, the US builds missiles and robots, in the hopes that they can reduce the need for soldiers to the point at which Dick / Rummy, etc. can invade a country all by themselves. No need for propaganda or politics.

    So it would seem that the “production of service” can play a role in capital formation. I’m not sure how this applies to all forms of service, such as your work.

    4.) Hudson discusses “forced savings” and the creation of savings as a counterpart to producing debt. I’m not completely certain about this point and perhaps someone else can address this important question. But Goff’s advice is probably sound on the individual and smaller scale: if you save and minimize your debt, you will suffer much less than someone with a lot of debt. No one can make additional claim your income. So saving and reducing debt looks like a sound defense, especially if you live in the post-bubble US.

    5.) I share your skepticism about “human capital”. I’ve always thought that the distinction should refer to labor: skilled or unskilled labor. “Human capital” sounds as though capital does all the hard work!

    6.) As for the important inflation question, perhaps someone can recommend a good article on “exporting inflation”?

    Y.K.

    30 August 2007, 7:35 am

26. Craig:

    peggy:

    “Then I’ve really got it all wrong. Up until now, I thought inflation was most likely to hurt ordinary joes and janes, who saw the price of a loaf of bread skyrocket, while their wages and earnings did not (emphasis mine).”

    What you described is a way average people get hurt by inflation, and it is accurate. In fact, since the early 1970’s, the average American’s income has been stagnant or declining when adjusted for inflation. On the other hand, inflation is awful for lenders. If you loan at 8% interest and inflation is 2%, you’re happy, but if you loan out at 8% and inflation is 8%, you’re not actually making any money, and if inflation is above 8%, you’re actually losing money on the loan. When the Fed lowers interest rates, it becomes easier to lend and to borrow, which favors lenders, leveraged businesses, and people taking out mortgages.

    “And I thought inflation was caused, in large part, by speculative finance: buy low, sell high, where what you are selling high is exactly the same thing as you bought low a day ago.”

    Inflation comes in part from the government borrowing money through Treasury bills. Investors always have the “risk-free” option of buying a T-Bill to earn a return, which means the money supply will always increase. It also comes from banks loaning money out to investors, such as when banks loan money to hedge funds to buy securities, which the hedge funds then use as collateral for more borrowing. It doesn’t come from speculative finance as you described, because the buying and selling of securities is a zero-sum game; there has to be a buyer and a seller on each transaction, and the counterparties take any losses from buying low and selling high.

    30 August 2007, 8:38 am

27. Legume Sam:

    Inflation would reduce the value of my approx. $30,000 student loan debt… this is doubtless one reason why the Powers That Be are afraid of it…

    30 August 2007, 2:00 pm

28. Stan:

    Precisely.

    The fact is, Bernanke and Greenspan still cleave to the old wages-make-inflation formula quite religiously.

    That inflation hurts the average Jane-Joe is irrelevant (so does the unemployment that is seen as the “cure” for inflation). It hurts those who “make money” as rentiers. Please read the Gowan piece linked in the comment above. This distinction of “rentier” is crucial to understanding.

    Expansion of the money supply relative to aggregate total commodities is supposed to result in inflation. If the non-existent pure market existed. 5 commodity units = 5 currency units. Increase to 10 currency units, and the price will float to 2 currency units to each commodity unit.

    But the rules do not apply to the US. The international currency market will not sell the dollar down because they have bought so much US debt (like China and Japan with T-Bills), and because they have to hold US dollars as central bank reserve currency to defend their own currencies from speculative attacks (like what happened in Asia eight years ago).

    The little bite-sized devaluations are strategic in nature, well-planned, and designed to write off some of the US debt’s purchasing power without sending the $$$ into freefall.

    No one is going to create the stampede that wipes out their own central bank’s reserve currency, or their own (never-to-be-repaid) US debt (because it is a dominant-currency asset in the main consumer markets of China and Japan).

    It’s a game of chicken. Sell us short, and we’ll tear the whole edifice down.

    In order to finance this profligacy, they run the printing press like they just got into Dad’s whiskey cabinet. China and Japan are financing the Iraq war, not us… yet.

    But this printing of money that never falls to its true commodity-parity creates a reservoir of fictional exchange-value. That fictional value is represented in real money, and money does not like to sit in the mattress. It gets invested in faddish speculation schemes that result in a gazillion miles of useless fiber optics or in tulip-frenzy real estate prices.

    That’s the bubble. Herd behavior runs the capital markets sky high (buy, buy, buy!!!), until something sobers everyone up.

    The trick if you’re a rentier capitalist is to make sure when the party is over, the chicken goes to someone else’s roost. (Sorry for the mixed metaphor.)

    And all the stuff about the Euro challenge is a non-stater. No one has the home market of the US that can absorb a challenging currency. The Euro is a satellite currency to the US dollar.

    Rubles may end up being a different story. We’ll see. The scope of potential Russian energy production over the next decade, (and that of the SCO when it comes to fruition) given the reality of peak oil, is a helluva sponge… and its in something tangible and in demand, oil and gas.

    30 August 2007, 5:28 pm

29. Richard:

    This stuff is all very helpful. Thank you all for the many links–I esp. look forward to reading Gowan and Hudson. (And Stan your Homeland Security series at Insurgent American has been great.)

    I just finished reading Empire of Capital by Ellen Meiksins Wood. A very illuminating book on the ways in which the US, as the enforcer of global capital, must increasingly resort to military action–actions perhaps without specific or attainable goals–because of its long declining economic power. Similarly, the new (since WWII) capitalist imperialism, while demanding free movement for capital, rather than resulting in the obsolescence of the nation-state (as some have claims) actually results in the proliferation of such states–and in fact relies on the existence of states for the day-to-day order it needs to function (who else can “agree” to structural re-adjustment dictums?). Anyway, I highly recommend her book (as well as her excellent book, The Origin of Capitalism).

    31 August 2007, 8:33 am

30. Lisa:

    Two interesting posts from the Gang of 8:

    http://finance.groups.yahoo.com/group/gang8/message/11999

    This extension of the financial crisis to Germany as reported in the piece below is grave, but far from unexpected. We have had similar reports from other economies and more and more broadly similar reports can be expected from pretty much all around the world, intensifying in the weeks ahead.
    It is wholly in accord with what I predicted in “America’s Suicidal Statecraft”.
    There still is a tendency, in the report below and elsewhere, to ascribe the difficulties to the “subprime crisis.”
    There is no doubt that there is a crisis deriving from subprime mortgages, especially but not only in the United States.
    However, that is only one manifestation of a crisis which extends to virtually the whole current financial “system” - hedge funds, private equity, the carry trade, wholesale indebtedness extending to households, corporations, international trade and public financing, and all the rest.
    It was and is a “system” based not only on high risk but on the certainty that it must - inherently - collapse, only the timing of that collapse being rationally a subject for substantive debate.
    Indeed, our financial “system” has been and is a sort of massive, global Ponzi scheme. Wikipedia says that “A Ponzi scheme usually offers abnormally high short-term returns in order to entice new investors. The high returns that a Ponzi scheme advertises (and pays) require an ever-increasing flow of money from investors in order to keep the scheme going. The system is doomed to collapse because there are little or no underlying earnings from the money received by the promoter. ”
    We seem to be getting closer now to a moment of widespread collapse. As more “incidents” like that in Germany are brought to public notice, disquiet will inevitably spread and it is hard to imagine that elements of widespread panic will not emerge and rapidly intensify.
    Governments and regulatory authorities have failed to control developments which have brought us to this point. To a large extent they have indulged in neglect and denial and, even now, seem to believe - or is it only hope? - that they can control the plunge into financial disaster by “rescuing” individual financial enterprises.
    While it is understandable that such efforts at “rescue” will be made and, up to a certain point, must be made, they cannot resolve what has now become a “systemic” problem of gigantic proportions. We must see it in those proportions and in that perspective.
    It would now seem not to be a matter of rescuing a financial “system” which was inherently unsustainable but in finding a course or courses towards new, more rational, more responsible financial arrangements - nationally and globally - to replace the “system” which is convulsing in its death throes while, for the moment at least, all we seem able to do is look on.

    James Cumes

    ————————————————

    http://finance.groups.yahoo.com/group/gang8/message/12102

    Big banks move back to centre stage
    By John Authers, Investment Editor

    Published: August 24 2007 17:41 | Last updated: August 24 2007 17:41

    “If I mistake not, the distress of the year 1857 was produced by an enemy more formidable than hostile armies; by a pestilence more deadly than fever or plague; by a visitation more destructive than the frosts of Spring or the blights of Summer. I believe that it was caused by a mountain load of DEBT.”

    There is nothing new under the sun. The quote is from Edward Everett’s Mount Vernon Papers, cited in T.E. Burton’s Crises and Depressions of 1917. Everett added that “the whole country”, “individuals and communities, trading houses, corporations, towns, cities, states” were labouring under a weight that caused business relations to be “arrested” and “the great instrument usually employed for carrying them on, CREDIT, broken down”.

    I am grateful to the reader who sent me this quotation. It aptly describes the financial “distress” the world has suffered in the past weeks. Good economic times begat greed, excessively easy credit and then a collapse when the cycle began to turn.

    We appear to be teetering on the side of avoiding a crisis, but only after money markets suffered their worst panic in a quarter of a century. The credit crunch of 2007 cannot yet be consigned to history.

    We can, however, begin to discern how it will change the future shape of markets. We may well see a turning back of the clock, although perhaps not as far as 1857.

    For decades, the trend has been towards “disintermediation” – the replacement of banks by markets as the engine room of the financial system.

    The securitisation of mortgages – taking packages of mortgages, converting them into a bond and trading on the markets – was one example. Mutual funds now hold more assets than banks, and money market funds are bigger than deposit accounts.

    Hedge funds dominate trading in equity markets and are setting up as lenders, becoming in effect alternative banks, who just happen to be largely beyond the reach of regulators.

    These innovations are not going to go away. But judging by the way the crisis has been handled so far, big banks and their balance sheets are moving back to centre stage.

    The greatest jolts to confidence in recent days have come from mortgage securities – where complex instruments have left “bad” subprime loans inextricably mixed with higher quality mortgages – and from money market funds.

    BNP Paribas helped trigger the panic by closing a money market fund to redemptions. Like other money funds, an attempt to improve yields a little had left them contaminated by possible subprime losses. That in turn led money market funds to fly to the quality of government bonds, abandoning asset-backed commercial paper and intensifying the plight for mortgage lenders as they did so.

    When the Federal Reserve moved to soothe the money markets, it did so by lowering its “discount rate” – at which it makes loans to banks but not to other financial intermediaries such as hedge funds.

    The idea was that the big banks would borrow from the Fed, and dispense the funds to clients who were starved for liquidity (like mortgage financiers and hedge funds). The Fed was in effect delegating any bailout to the big banks.

    The discount rate, despite its name, is at a premium to the Fed Funds rate, which covers the rate at which banks lend to each other. So the banks had to pay for the privilege.

    But several did so, in a symbolic gesture. More meaningfully, Bank of America, with the largest deposit base of any US bank, put $2bn into Countrywide, the biggest US mortgage lender, whose reliance on commercial paper led some to fear for its survival.

    BofA has an advantage: the cheap funds that it derives from its depositors. They lend to it at much cheaper rates than capital markets operation can get.

    So the crisis has seen the power of traditional banks reassert itself. Regulators rely on them for dirty work.

    This was not unfair to the big banks. Another financial constant, around since long before 1857, is “moral hazard”: the notion that the existence of a safety net will encourage excessive risk-taking.

    After the 1929 Wall Street crash and the Great Depression, regulators overreacted and mandated a fragmented banking system. That structure was blown away amid the merger mania of the late 1990s.

    That has left many banks, in Europe, the US and Asia, who are “too big to fail”. This creates moral hazard. There will be a bailout for them if they take bad risks.

    Henry Kaufman, a Wall Street legend known as “Dr Doom” for his pessimistic forecasts in the 1970s, said in 1998 that the vast new banks would have to become quasi-public utilities and accept public regulation that would make them “too good to fail”.

    This was prophetic. Along with the return of the banks, we will see a retreat from complexity, more reliance on human judgment and tighter credit.

    Will we ever again see a cycle of over-optimism and easy credit, followed by a crash? Of course. That cycle has been repeating itself since at least 1857.

    STAN: Wow, thanks again. Here is a link to the Gang of 8 message board, where one can lurk and read. Hudson and Liu are on this list (derived out of the financial discussions of the old Crashlist, then A-List of Mark Jones and Michael Keaney). Liu seems to think that the impending crash might well turn the 2008 elections into a contest of competing populism. Which is pretty double-edged, given the nation’s current xenophobia.

    31 August 2007, 10:40 pm

31. peggy:

    Thanks Y.K., Craig, Legume Sam, and Stan. The game of chicken is explained again, more simply, at http://www.motherjones.com/news/feature/2007/08/great-american-mortgage-crisis.html?src=email&hed_20070831_ts2_The%20Great%20American%20Mortgage%20Crisis

    But also, I recall reading somewhere a while ago that the US and China were engaged in a similar game of chicken (with China holding so many dollars that the US could not afford to cross China economically, and similarly China could not afford to let the dollar collapse). It’s kind of a policy of economic M.A.D., like nuclear M.A.D. during the Cold War and the arms race. It is still not entirely clear to me whether the parties involved got into this game by accident or on purpose.

    1 September 2007, 12:07 am

32. Y.K.:

    Highly recommended recent interview by Michael Hudson:

    “From Cold War to Class War”:

    http://www.kpfa.org/archives/index.php?arch=21767

    Around minute 42 or so he explains what I’m sure most people know: The high price of housing, created through a credit bubble designed to serve the rentier / financial class, has broken the will and ability to strike. Most are two or three paychecks away from defaults so they cannot afford even a short term interruption of income.

    While the financial economy has “wrapped around” the productive economy like a python, so too has credit-based capital sociopolitically “encircled” labor.

    In the US, people can easily pay 50% of their income for housing. In Germany, people pay about 20%, still too high. The highly inflated price of housing occurs through the expansion of credit money. Inflation has been concentrated in housing, but not very much in goods and services comparatively. The rentiers, the “real owners” in Carlin’s terms, receive income either through interest, when a borrower effectively pays to “rent” capital in the form of a house mortgage, or through the common meaning of rent, meaning a payment to use land, in most cases an apartment space.

    Missed payments can have terrible consequences, unlike in any other society to the same degree. The powerful credit report can prevent people from acquiring housing, work, school, and new credit, often needed to match the rising prices. Anyone can check the report to make sure that you are “worthy”. The absence of a credit card can make it nearly impossible to get a car to buy bread or to travel long distances by plane in a country lacking a public bus and train transportation system. Hmmm… no house, no food, no work, no education, no movement without “good” credit? This keeps everyone very disciplined and breaks resistance.

    Wonder not why there is no anti imperialist or anti capitalist movement of substance! The material conditions greatly encourage a survivalist quietism and pitiless authoritarianism, along with a pro-genocide legion of fascist ass-kissers.

    Conclusion after listening to this report: All the talk about socialist societies not working is bullshit, especially if the US “won” the Cold War with a military paid by others. Most of the critique of socialism is wrong, and I’m not talking reasonable opposition to industrialism or to Stalinism. The socialist bloc fell in large part because they lacked “unlimited” credit, secured by petrodollars at the point of a gun.

    Carlin’s “Education and the Owners of America”:

    http://www.youtube.com/watch?v=ccYoVnBc_fk

    3 September 2007, 7:38 pm

33. Bernie Maopolski:

    For more reading on money see JW Smith’s work at http://www.ied.info.

    Money is a social tool but is monopolized by the powerful similar to land and other resources

    3 September 2007, 8:46 pm

34. Lisa:

    Two interesting articles:

    Trinkets and treasure: China tames the US

    http://atimes.com/atimes/China/IH31Ad02.html

    ————————————-
    The Predicted Financial Storm Has Arrived

    By Gabriel Kolko

    http://www.zmag.org/sustainers/content/2007-08/29kolko.cfm

    —————————————————-

    Y.K. Thank you for the Hudson interview!

    Lisa

    3 September 2007, 10:57 pm

35. peggy:

    Not to seem individualistic, but individuals can avoid this system, if they try a bit. Case: at the age of 38, a woman becomes divorced. She has no credit and no credit card, and she wants to buy a car. She goes to the bank, and one of the people there explains that she needs to build up a credit record in order to get a loan for the car. Fortunately for her, she has a more or less steady job and no outstanding debts. She goes to the local credit union (that employees of her employer can join), takes out a loan for the car, gets the car, and pays off the loan on time. Later, again fortunately for her, she gets a much better job. She finds a house she likes, goes to the bank, uses all her savings as a down payment, gets a bank loan at a reasonable interest rate, and pays off the mortgage in six years. Meanwhile, her kids are so smart and she is so poor that the kids procure full scholarships at good universities, so they end up with no debt at all. This woman could quite well afford to go on strike, and she would do so if necessary, but so far the union to which she belongs has not called for a strike.

    Now, granted, this woman has enjoyed more good fortune than many, but still she is baffled by how so many people, who are in a position to avoid the debt trap, do not do so. Very intelligent, highly educated young people. What gives?

    4 September 2007, 12:43 am

36. peggy:

    Lisa - Thanks for all the good links. I especially like the LATimes one about China.

    4 September 2007, 7:10 am

37. Y.K.:

    Dear Peggy,

    This is a very sunny universe that you’ve imagined and I’m sure that people can provide a thousand anecdotes as counterfactuals. At each point, your examples presuppose that someone can use credit and pay it off. You also assume a variety of rational and benevolent authorities, as well as legal unionized labor, stable savings, good health, and a lot of luck. That is not the situation for the majority in the US.

    Your view also has a strong illusion of meritocracy: “if you just keep your nose to the grindstone” everything will turn out ok for you and your family. It’s just not realistic and it doesn’t address the situation of most people.

    Peggy, often in class war the system actively hunts for you. If you are an Afghan / Iraqi / Yugoslav refugee, you can’t just get in your van and put the hotel charges on a credit card. What if you are native American and the white man wants your forest, gold, oil, desert for nuclear weapons experiments? Even in the US, “avoiding the system” isn’t possible if you are weak and a target, like a young urban black male ripe for prison time.

    In our day, authorities are insanely irrational, violently incompetent, and insatiably greedy. Their predations will destroy your job, take your money, crush your health, steal your children for war or servitude. You aren’t a citizen-subject in their eyes. You are a kind of animal, available for fleecing, bloodsucking, and devouring.

    Your view is consistently looking from the bottom up and from the inside out. You need to practice looking from the top down and outside in to understand *how the powerful see you*.

    For an example of a “top down” view, look at the elite so-called “ivy league” universities, where the students are often the parents of former students, such as Bush I and Bush II at Yale. There is a “legacy” system and the smart children in your example have to make room for them. In fact, for every visible Bush, there are literally 100s upon 100s like him at those places at various stages of pampering and privilege. Part of Cheney’s inferiority complex, and in some ways, his subordination to the other cynical power brokers, is his lack of educational pedigree. Rumsfeld graduated from Princeton, Gates from William and Mary, Baker from Princeton, Bush from Yale and Harvard, but Cheney flunked Yale and went to Wyoming. Rice and Powell are marginal not just because they are black, a major irreparable defect, but also because Rice got her degree in Denver and Powell from public schools. There is a strict hierarchy among the people who run the US, which is why the last election had two precisely similar candidates, Bush and Kerry, who attended the same exclusive fraternity, Skull and Bones, in the same exclusive male-only apartheid-era school, Yale. This is the reality for today’s top power brokers. Anyone else is outside at the bottom.

    From the “outside in”, you might imagine yourself as completely devoid of debt, owning private armies with millions of dollars of property, plenty of land, and the latest weapons at your disposal. Imagine that you, like Cheney, can meet all your needs in your self-sufficient military bases run by mercenaries. You look down on the toiling masses of society. Do you care at all about the needs of a little mother to get a job, raise children, go to school? If you wanted their capital or labor, why would you negotiate if they are disorganized and unaware of your power?

    You need to look at the Carlin video: “they don’t give a shit about you, at all, AT ALL!”

    .

    4 September 2007, 7:33 am

38. Y.K.:

    Dear Peggy,

    I know it’s scary. But it isn’t possible for most people to wiggle through the system, especially as the economy worsens. It’s important not to fall into the trap of survivalism. That’s precisely what Stan is criticizing at the Insurgent American site.

    The problem with individualism is that there is a deliberate strategy by the powerful to atomize society as a way to prevent resistance. Financialization and automobilization are faces of this strategy. So excessive individualism actually works to their advantage because it is part of a “divide and conquer” plan.

    You have to survive, but only to live and fight another day. It isn’t viable to just focus on a microscale personal universe and hope for the best.

    .

    4 September 2007, 8:09 am

39. skol:

    If it is possible to wiggle out of the system through your personal universe…well, yeah, go for it. Your personal universe and the system are normally mutual, but not then. Or so I’m told; I still don’t understand how keeping yourself out of debt affects the system as a whole.

    STAN: It frees you to fight.

    4 September 2007, 4:16 pm

40. peggy:

    After I wrote and sent that post, I realized that it would be perceived as it was by Y.K. and skol, and I apologize for seeming to blame the victims of a merciless economic system over which they have no control - those who really and truly cannot escape debt. I will not try to defend myself here by pulling out my street creds (which are not plastic cards) and ripping you guys to bits with them, much as I feel like doing that at this moment.

    Everybody who posts on FS has the ability to get out of debt and stay out. Don’t whine and make excuses. You damn well can do it. So are you doing what you have to do, or are you just talking? On Insurgent American, Stan has given much valuable information about how to get off the grid, if not entirely, then enough not to be a slave to it. You can’t free anyone else until you free yourself, after all. The young people I talked about at the end of my last post, those who have the opportunity to free themselves, who *can* free themselves but choose not to, because they *want* to be part of the system they see all around them, those ones I have sympathy for, because they don’t realize what they’re getting into. But you who say, oh it’s such a big system we can’t possibly get out of it, and meanwhile you enjoy its benefits and write elegant critiques of that system that those who are really its victims have no use for at all, don’t you dare get uppity with me.

    Y.K., I really have enjoyed your posts a lot, and I hope you keep posting. Just don’t make unwarranted assumptions about people, please.

    4 September 2007, 7:24 pm

41. Craig:

    peggy:
    Not to seem individualistic, but individuals can avoid this system, if they try a bit.

    You can only avoid the system completely if your actions are not monetized. The loans you take out finance the banking system. The property taxes you pay on the home help finance the municipal bonds your town took out, probably at an excessive rate. Your savings really amount to a cheap loan back to the banks. If you buy anything, you’re subsidizing layers of borrowing you’ll never see.

    The modern American arc is towards more control, not less. Social Security is really an obligation in addition to a benefit, only to the nation’s economic system as a whole. Pensions become an obligation to the company, and 401(k)’s become an obligation to the equity markets. Housing is a form of obligation, too. When you buy a home, you’re buying into the lie that it is an investment, because otherwise you’re just spending way more than you ever would in rent. Taking this further, as Henry Liu points out, dollar hegemony means a surplus in dollars is also an obligation to nations like Japan and China. This is why there is so much fear regarding the housing and stock markets. The retirement nest-eggs people thought they had are evaporating, and not because they were screw-ups, either, but because the system itself is failing.

    Here’s my anecdote. I found out that my dad, who is a year from retiring, might lose his job. His employer, a large bank, will probably fire about 10,000 people out of its 60,000 US employees, and it’s doing this because the bank is up to its eyeballs in subprime loans. I work in finance, and I’d love to quit and do something useful like work full-time to end the war, but what if he gets fired? I’d have to help support him and pay his taxes on the home he can no longer sell. Even if he keeps his job, the dip in the stock market means a drop in the income he hoped to earn from his 401(k), which means more belt-tightening during retirement.

    The only other thing I could do to fight the system is pull all of my money out of that bank. In fact, if you want to fight the system, do what you can to lower the GMP, or Gross Me Product. Don’t buy crap, don’t get a new car, or even an old one, don’t take out a loan, avoid buying food, earn and save less money, or, if you must save, get the highest interest rate you can. I can tell you that Wall Street doesn’t want your home, they just want a cut, and there’s really no way to avoid it if your actions involve money, so you may as well shrink the pie and move towards economic activity that isn’t monetized. Be the liquidity crunch.

    4 September 2007, 11:34 pm

42. peggy:

    Here’s something

    http://www.newyorker.com/online/2007/09/03/070903on_onlineonly_surowiecki

    that hints that maybe, just maybe, popping of the Wall Street bubble will not spell the end of the world for the rest of us. And maybe, just maybe, the Fed will let it go ahead and pop.

    Anybody wanna take bets on this one?

    4 September 2007, 11:51 pm

43. Stan:

    I am definitely far from getting off the grid. Like anyone else who is not (1) single, (2) childless, and (3) financially independent, I am still a wage slave, and my obligations to others holds me in the grid.

    One of the mistakes we make in thinking through our response to this is we unconsciously adopt the Economic Man model of classical liberalism. Each person a little, decision-making island with the abstract ability to say yes or no to anything.

    Getting off the grid (and the basis of this is independence from the monetized economy) is not an individual effort for most. For it to happen in a mass way will require community effort, mutual-support, careful construction of alternatives (growing food, establishing local clinics, eg)… and politics.

    The basis of independence is land. Land is taxed, even after you have the title. Taxes ere paid in legal tender, a political phenom, and enforced politically. Unpack it from there.

    Dependence is not a choice; it is structural. Going off the grid might be a personal choice for those who have the means, but it means jackshit to the VAST majority of people living, eg, in the US. IA is pushing experimentation in getting off the grid as a learning curve, the training of future leaders, and the de-bugging of design, as part of a different strategic orientation.

    Just as the commies of old salted the sweatshops by becoming assembly line workers themselves… not out of personal choice, but as a matter of political strategy to be where the action is… we have to see relocalization and permaculture as the movements and spaces where we can learn what we have to learn, and where we can begin to detach political cadres from the grid who can exercise their independence to do independent political struggle.

    The majority of people will be pushed into using the tekniks of reloc/permacult not by choice, but be the grimmest necessity, as the house of cards begins to topple. We have to put these skills into the hands of conscious political actors now. And continue to stay engaged in topical political campaigns (antiwar, eg) as well as select the mass movements that have structural grievances combined with visible targets, and the potential for the deepest structural changes, eg, feminism and environmental justice.

    The left’s selection of the trade union movements in the past were based on (1) a marxist conviction that class was the main social contradiction, (2) the belief that the most organized sectors of that class (unions) represented the greatest potential for shifting issue-struggles into struggles of a class-for-itself, (3) the belief that what was stopping this class-for-itself recognition was false consciousness (ruling class ideological hegemony), and that (4) one could not convincingly make a case against that hegemony without participating in the day-to-day struggles of the workers. The idea — correct in my view — was that people learn in struggle.

    But if we study the past and unpack the present and look to the future, there are some important points to make, as correctives.

    (1) Calling economic class the “main contradiction” is arbitrary; and a fearless examination of the evidence suggests that gender is a deeper structural contradiction, and the experience of racial-national oppression engenders (no pun intended) a broader, more effective form of resistance at this conjuncture than class… which is frequently developed within the class-itself in racial, patriarchal, and nationalist terms. This has become the subject of various histories of “whiteness” in the US.

    (2) Actual social revolutions in the 20th C may have been led by Communists — who were effectively organized to take advantage of civil war — but the popular impetus has always come from the tillers of land… NOT proletarians (urban wage workers) Mao recognized this directly, and took intentional advantage of this off-the-grid status to develop his People’s War doctrine for China. Build the resistance patiently in the countryside, then gradually encroach on the encircled metropolis (which depends on the countryside, and exploits it).

    (3) The trade union movement in the US is not only not representative of the majority of the US wc, it is thoroughly compromised and locked tightly in the political embrace of a bourgeois party (Democrats). Moreover, the wc itself has been deprived of effective targets by the financialization of the economy. Listen the the Hudson interview linked above. Capital has won this round… even as it also represents the beginning of a very tough end. Resistance requires social movements that have grievances, targets, and broad conscious support.

    (4) We cannot continue to conveniently ignore that any struggle waged for control of the “means of production” has to be critical of specifically what it is that we are producing. This applies to industries that are ecocidal, and it applies to the production of war materiel. It also applies to the vast conglomeration of useless shit being marketed through demand production (advertising) in the US to keep open the circuits of capital between Shanghai, Wal-Mart, and Meadowlark Lane. The US working class (including the technical-petit bourgeoisie employed as cubicle-slaves) will not have the time or inclination to fight the system upon which they depend, and that system is entering a period of terminal crisis. Organizing them primarily AS-workers is a strategic error. We need to begin now developing the emergency-learning centers that they will inevitably turn to in the future.

    (5) People experience themselves as more than workers. Oddly enough, Marx was first concerned with the source of alienation… even if subsequent schemas invoked in his name became unifocal and mechanical. A revolutionary project has to connect with its future agents on a psychological level, including dealing with their fears.

    (6) The organizational forms of past left organizing were grounded in a 19th Century male notion of mechanical rationalism; and the strategic theory that this form represents is as obsolete as the warfighting doctrine of Napoleon. The state is still a target, one that cannot move as it were, but the question is, How do we effectively confront that target? What we don’t do is try to match our mass against its mass in a single, unified blow. I suggest that we re-work the Maoist thesis of surrounding the city from the countryside, even if it means constructing the “countryside” in the abandoned interstices of the failing system.

    These are only a few of the caffeinated thoughts that occur to me in the context of this discussion.

    5 September 2007, 6:31 am

44. Linda c:

    I have been implementing suggestions from IA into my life, and have been slowly persuading certain friends and family members to do the same. I, am still a “wage slave” and have “obligations to others” that holds me to the grid, also.

    Like many everyday “Joes” and “Janes” we can only do our best. We have little knowledge of how Wall Street or other financial instutions work. The extent of our knowledge is Bank/Car loans. I am learning - that’s what it’s all about for “us” - knowledge.

    I have land, on which we hope to start a small co-op type farm, next growing season. I, also, have paid my bills down to only one payment - excluding utilities (which will come with time) and have started back to school in an emergency medical field. If, as a single mom, I can take search and rescue classes on the weekends, learn to use a compass, grid maps, and still encourage others to “make a change”, then everyone can. It takes a dedication to making a difference and hopefully starting to rebuild the future for our children and grandchildren.

    We, hopefully, one day will be able to “get off the grid” and take others along with us. As Stan and many have pointed out time and time again - it is not an individual thing, it is a community commitment. I have selected my community and with them we are making a commitment to SLOWLY making it “off the grid”. In doing this I have no doubt that we will grow stronger and be able to “exercise our independence to do independent political struggle” after all “people learn in struggle”.

    The key is “commitment of community”.

    Again, I have to say thanks to everyone that posts here. I have learned and will continue to learn. Knowledge in an empowering thing.

    And Peggy - you go “girl” - stay strong - you are right, after all it “starts at home”.

    5 September 2007, 10:44 am

45. DeAnander:

    because otherwise you’re just spending way more than you ever would in rent.

    not true in my town — for the last 15 years at least my mortgage payments have been significantly lower than the rent I would have paid for the same property. I think this will vary wildly from one state/county/city to another, it is hard to generalise.

    5 September 2007, 11:14 am

46. Lisa:

    Interesting article from Sanders Research, which also comprises a critique of the Austrian position.

    To Bail or Not to Bail

    http://www.sandersresearch.com/index.php?option=com_content&task=view&id=1314

    5 September 2007, 11:49 am

47. Craig:

    not true in my town — for the last 15 years at least my mortgage payments have been significantly lower than the rent I would have paid for the same property. I think this will vary wildly from one state/county/city to another, it is hard to generalise.

    In individual locales, this may be true. Overall, however, home prices in the U.S. have grown at a rate far outstripping both inflation (core inflation - Henry Liu makes a good argument that inflation is really much higher) and median incomes, especially between 2002 and 2006. If home prices were such that mortgage payments were close to the traditional percent of yearly income, home prices in the U.S. would drop by something like 20-30%. Needless to say, if that actually happened, the world financial system would implode. The system sustains itself through cant regarding home ownership as an investment, perpetuated by propaganda like the TV show “Flip This House”.

    5 September 2007, 11:54 am

48. Y.K.:

    Peggy,

    You’re beginning to sound like a supporter / apologist for the banking system. I don’t feel a need to pull out my “street creds” either and I avoided listing a myriad of cases that falsify your “hypothetical”. You aren’t really blaming other people; actually, I don’t see you thinking about other people much at all. Mostly, you appear convinced that you can escape.

    You are thinking too much about your microuniverse so you misperceive reality. The world doesn’t consist of a series of microuniverses, it is also a whole. If you are in the US, you can’t escape even if you wanted; at best, as Craig noted, you could avoid the system “if your actions are not monetized”, but your example is totally monetized at every step.

    If you understood inflation alone, you would realize that living without debt on an individual level doesn’t matter when the entire US economy is in debt. What about the example of Craig’s father, who might lose his job because of his bosses’ debt speculation? What about his father’s payments on pensions, which could vanish when the bubble completely unwinds? What about the US government, which has indebted each US man, woman, and child over a 100,000 dollars? What about the declining value of the US dollar against other currencies, which will raise the prices on everything and cause large scale unemployment? How will you wiggle out of that? Debt is social, it isn’t individual.

    Guys like Stan, others, write “elegant critiques”, but I suggest that years of government service have brought him dubious benefits, to say the least. Often the best criticism and activism emerges from those who have survived to fight.

    Individualism is the ideological equivalent of scattering before an invasion. Rest assured that the rich don’t think individually, they focus on their class. Cheney wants to attack Iran because he thinks that it will be the best for his class and he doesn’t want them to blame him for failure, so that member of the US gentry is not thinking like an individual at all. That’s why only solidarity can resist the onslaught of the rich.

    5 September 2007, 2:11 pm

49. Y.K.:

    I’m having some posting trouble, so please excuse any repeated information.

    …
    Roubini is not a leftist, but an informed skeptical economist. He is quite upset about the impending disaster: “there is very little that we can do”:

    Video: http://www.cnbc.com/id/15840232?video=477902343&play=1

    Blog: http://www.rgemonitor.com/blog/roubini/

    5 September 2007, 2:15 pm

50. Linda c:

    Y.K.

    You are right - the entire US economy is in debt and Craig’s father might lose his job because of his bosses’ debt speculation. “Debt is social, it isn’t individual”.

    If we as a society don’t take responsibility for our own personal debts - why bother to try to be a functioning part of that society. You stated it very well - “That’s why only solidarty can resist the onslaught of the rich” and I will always believe the key is the “commitment of community”. The commitment to your community is to take responsibility for your own personal debts - not to throw you hands in the air and proclaim “there is very little that we can do”.

    But, then again, the average Joe and Jane can’t grasp these kinds of things.

    [moderator intervenes momentarily: is it that the “average” person, whoever that is, cannot grasp these things or that they have been systematically taught not to grasp, or even perceive, these things?]

    5 September 2007, 4:41 pm

51. skol:

    If debt is social, how do we help others through it?

    5 September 2007, 6:00 pm

52. peggy:

    Y.K., in your earlier response to me, you represented the world as though it were divided into multibillionaire ruling class Cheney-types, and hunted and tortured people of color, such as inner city young black men. But most of us are neither, and the stereotype of the inner city black you present would anger many African Americans.

    The world is not as simple as you would have it. Even the US is not as simple as you would have it. In fact, you have left out all the people who live outside the US: like for instance factory workers in eastern China, disenfranchised rural non-Chinese in western China, farmers in India, Australian aboriginals, people from the Pacific Islands to the Arctic circle who are seeing their homes destroyed by warming and rising oceans (warming and rising oceans caused by who?), the countless babies who die every day for lack of clean water (underground aquifers tapped and dried by who?), and people in other countries from Bolivia to Sri Lanka who actually are engaged in armed struggle against wealthy ruling classes. And then you accuse me of not thinking about other people!

    The collapse of money lending institutions in the US is a tiny blip on the global radar, but some of us are acting as though this blip (because it happens in the US) is going to effect everybody in the world, so obviously we have to pay attention to this first.

    Which brings us around to the omnipresent gender hierarchy, which has been discussed so often before on FS. Many here would not tolerate your condescension, your assumption that you know better than others (most of all women) about just about everything, the way you belittled me for bringing in personal experience, as though you are above personal experience, as though personal experience were not important, as though I am incapable of abstract thinking.

    I absolutely agree that people cannot act in isolation, they cannot change anything by just dropping out, by just taking care of themselves. But it is necessary to start somewhere, do some little thing like grow a tomato plant, or better yet, BE a peasant, BE a factory worker, BE a plain old middle class woman, KNOW what it’s like, KNOW how to fight for yourself, as well as for others like you. Think concretely for a change. Think about real people with lives and names and imperfections, and BE WITH them, get to know them, instead of living out on some effing cloud that you imagine is the real world. If you pay attention to who they are and what they say, THEN they will pay attention to what you say, and THEN you will have the beginnings of collective action.

    End of rant.

    5 September 2007, 7:48 pm

53. peggy:

    p.s. Stan, when Linda wrote “But, then again, the average Joe and Jane can’t grasp these kinds of things,” I think she was being ironic.

    5 September 2007, 8:14 pm

54. Y.K.:

    There will be pension crisis due to mortgage backed derivatives. If the main business invested speculatively, as in Craig’s example, then they probably put pensions into those “investments” as well. So it is possible to lose a job, a pension, and maybe a house too. The first article is by Liu, the last is an interview with Hudson.

    I’m still having posting trouble so please excuse repeats or fragmented posts.

    …

    “The bursting of the housing bubble will act as detonator for a massive pension crisis.”

    http://www.atimes.com/atimes/Global_Economy/IC17Dj01.html

    …

    “Without changes to the 30-year-old pension protection system, he said, the PBGC could itself become insolvent”

    http://www.washingtonpost.com/wp-dyn/content/article/2005/06/12/AR2005061201367.html

    …

    “Corporate America played has used what is effectively workers’ money to finance mergers and acquisitions, and a lavish lifestyle for executives. The cruelest irony? When the PBGC collapses, requiring a huge government bailout, it will be taxpayers who will foot the bill. So, some of the same people who already gave up income for a promised pension will indirectly pay a second time to rescue their own [reduced] pension.”

    http://www.tompaine.com/articles/2005/05/31/the_disappearing_pension.php

    …

    “As for the bubble economy, pensions and Social Security will go first. The US can’t afford to bail them out and still plan the giveaways to the wealthiest 10 percent of the population who are the net creditors to the bottom 90 percent. Pension obligations were expected to absorb only 5 or 10 percent of production costs, but now they are absorbing nearly all the reported profits, and threaten to eat into the money available to repay the banks and bondholders. The big investors want to be paid, and this means taking money that was earmarked for employees.”

    http://www.counterpunch.org/shaefer04232003.html

    6 September 2007, 6:25 am

55. skol:

    wikipedia: Debt-based monetary systems. Good summary and start point, and hasn’t been bogged down yet by status-quo NPOVing.

    6 September 2007, 7:33 am

56. Y.K.:

    Peggy, I didn’t write to insult you. But if you look at your comments again you will see how you focused on an individual and rather fantastic solution, which presupposed the justice of the existing power structure, and then berated others for “whining” and “making excuses”. Your sympathies were also with people who “want to be part of the system” rather than those who “critique” it. My objections were to these sentiments. If those aren’t your views or if your views have changed, then please clarify.

    As for “debt is social” and “commitment of community”, I can only say that *US debt has to become political*, in the same way that Third World debt became political to some degree over the last two decades. Debt is a political relationship and a social relationship, not simply an economic relationship. Debt is a political right to appropriate wealth.

    Focusing on “personal debt” can help free someone to fight, but the core problem is collective debt, imposed from above. The US government has indebted every man, woman, and child in the US over $100,000. The printing of dollars has increased housing costs and will cause widespread inflation, eroding any savings and dramatically increasing the cost of living. Debt will cause job and pension loss, perhaps governmental shutdown. These have been common historical realities for other parts of the world, and there is no God-given reason that they shouldn’t happen in the US too. These are economic, not individual forces. This is my interpretation of Stan’s comments: “Dependence is not a choice; it is structural”.

    Look at this article about differences between the USSR and the US to get a sense of the possible scenarios over the next several years: http://energybulletin.net/23259.html

    The relative gap in time between the turbulence in the financial markets and the coming problems in the general economy is basically the difference between pushing a piano off a rooftop and waiting for it to smash. In this sense, “Capital has won this round” but most of us don’t know it yet. I greatly support a re-worked Maoist thesis, not least because of the emphasis on the periphery and on rural life.

    And I think that there is very little time to put the pieces into place, in both theory and practice. So let me finish my post with an excerpt from communication with a friend. The key elements are the economics of debt, the politics of military defeat, and the development of an authoritarian society.

    ”Actually, I’m not so concerned about the 2008 election. It doesn’t matter so much anyway because the problems are too deep for the state to do much at this point and the collapse will still be taking place through 2009.

    The bigger problem is the 2012 election, even if the US government doesn’t attack Iran. The troops will trickle back defeated and there will be a lot of angry, damaged, battle-hardened soldiers. A sizeable proportion of Americans aren’t anti-war, they’re just anti-defeat. The economy will be much worse and there will be time for more social problems to develop, especially in terms of violence and repression. Inevitably, there will more populism / nationalism, which sets the stage for a real upward moving fascist politics to fill in the authoritarian state that has been built. It’s still a real possibility.

    There is a general consensus among historians that debt payments from WWI, which impoverished the Germans to the point of starvation and caused a general drop in the entire country’s class level, set the stage for fascism. The US played a sordid and indirect role in this affair by insisting on regular payments on war loans from the French and British “victors”, who in turn squeezed Germans for reparation payments after the Axis had failed to build its own empire like the British, French, and Americans.

    Basically, the economic and eventually social problems facilitated radical right politics, which the German state supported over more progressive and equitable solutions, fearing loss of power over capitalist industrial profit most of all. Only when the lower class popular fascist movement, often consisting of ex-WWI soldiers, organized and terrorized the falling middle class and made common cause with the increasingly delegitimized upper class state elites, did we see the full development of German fascism in the early 1930s.

    The early fascists talked a lot about anti-capitalism, but stopped talking about it completely when they gained state power through alliance with the rich elite. Thus the lower class political right and the upper class economic right joined. Then they purged their genuine populists, in the so-called “Night of the Long Knives” of 1934, and continued by violently disciplining the rest of German society. They increased industrial production of weapons as a means to gain cheap raw materials, such as oil and grain, as well as slave labor, from their east. They were checked primarily by the Red Army, which lost tens of millions of people, compared to the US, which lost about 100,000, or one-third of its total casualties, in Europe.

    In the US, we are often told to focus too much on “race” instead of “class”. But that is a US problem. It’s not viewed that same way in Europe. Yes, the Nazis were racists but they spent most of their time agitating against reparation debts, so economics over politics. The German term “Herrenvolk” means “People of Lords”, which is somewhat closer to the idea of a dominant nation than “master race”, as it is typically translated. All this means is that the class problem is more fundamental than the race problem to understand fascism, even though both go hand in hand.

    The US right (Democrat or Republican) retains positions of authority. They just lack leadership at the top. But that situation can change quickly. I hope not, but I’m being realistic and historical about these matters.

    I’m not predicting anything about the future. I’m just pointing out past events and conditions with some analogies to the present. History doesn’t simply repeat itself, despite the oft-quoted cliche.

    But anyone informed about the situation knows that there is a realistic chance that politics might get worse and go further to the right because there doesn’t seem to be a substantial socially progressive resistance movement.”

    6 September 2007, 7:51 am

57. Linda c:

    Yes, I was being ironic.

    But, the moderator put another spin on things that has given me something to think about.

    6 September 2007, 7:55 am

58. Stan:

    Here is a nice little video that describes a theory of money.

    6 September 2007, 8:02 pm

59. Linda c:

    Thanks, Stan - Will pass it on.

    And Y.K,

    After reading your last post I think we are are in the “same book” but just on WAY different “pages”. Ie I will never be (or really even want to be) on your page. But, it’s good because I have learned some things from what you are saying.

    7 September 2007, 3:31 pm

60. YK:

    Dear Linda,

    Each of us always has their own page, just as long as we are in the “same book” it doesn’t really matter. There are plenty of people in the world who live in entirely different (and well-fortified) libraries!

    I very much believe in “commitment to community” as part of building a new community on the local and global scale. My main point is that we will make a strategic error if we approach debt from an individualistic perspective. It seems clear that Stan wants to discuss “the language of finance” because he recognizes that finance is a political problem. I tried to stress that social and economic forces take hold during debt that negate solely personal solutions, so that even good people can easily get swept up negative change. I think we all recognize that debt isn’t just economic, but very much collective, social, and political.

    Insurgent American outlines a variety of ways to build community as the crisis deepens, so that people can survive and thrive.

    8 September 2007, 5:14 am

61. Billy Kelly:

    FINANCIAL MELTDOWN:
    THE END OF A 300 YEAR PONZI SCHEME

    Ellen Hodgson Brown

    September 3, 2007

    Panic struck on Wall Street, as the Dow Jones Industrial Average plunged a thousand points between July and August, and commentators warned of a 1929-style crash. To prevent that dire result, the U.S. Federal Reserve, along with the central banks of Europe, Canada, Australia and Japan, extended a 315 billion dollar lifeline to troubled banks and investment firms. The hemorrhage stopped, the markets turned around, and investors breathed a sigh of relief. All was well again in Stepfordville. Or was it? And if it was, at what cost? Three hundred billion dollars is about a third of the total paid by U.S. taxpayers in personal income taxes annually. A mere $188 billion would have been enough to repair all of the 74,000 U.S. bridges known to be defective, preventing another disaster like that in Minneapolis in July. But the central banks’ $300 billion was poured instead into the black hole of rescuing the very banks and hedge funds blamed for the “liquidity” crisis (the dried up well of investment money), encouraging loan sharks and speculators in their profligate ways.

    [… more …]

    [Moderator’s note to original commenter: please don’t paste in entire articles. It is far more eye-friendly to post an excerpt and a link, which I is what I turned this long pasted-article comment into.]

    8 September 2007, 11:47 am

62. Lisa:

    Article by Mike Whitney:

    Are The Banks In Trouble?

    http://www.informationclearinghouse.info/article18335.htm

    8 September 2007, 12:58 pm

63. Barb:

    C’mon, people, Max and Stacey at http://karmabanqueradio.com have been laying out this crisis and why it’s happening for over three years now, explaining very concretely the financial terms and the connections between the financial markets and the debt in everyone’s lives, and further still how it’s affecting the environment, financing the war, ending up in the pockets of hedge fund and deriviative managers.

    It’s a simple confidence trick: loans have been sold on as though they were assets, with the lowest interest rates for those with the most money and the highest interest rates for those with the least. The scramble on Wall Street the last year or so has been to sell all this bad paper to pension and savings funds (based on people’s last real economy assets) before it all blew up. It’s now blowing up.

    Some people here will probably hate the way Max in particular expresses himself, if not also his somewhat confused personal libertarian/with-regulation-capitalism-isn’t-really-that-bad/Americans are all fat, gas-guzzling sheeple politics, but the info has always proven sound and referenced. And the explanations of financial terms and products are extremely down to earth!

    Their advice, which is to get out of the US, is not something most people can take, nor will most people have the cash to hedge their pensions with enough gold bars, or in the Gulag Wealth Fund (private prisons, Blackwater, weapons etc) . But Karmabanque have also created a useful tool with Karmabanque Index (www.karmabanque.com), to see where to most effectively to withdraw what dollars you have. Wouldn’t it be fun to at least bring down Coca-Cola?

    I’ve been interested to note that one thing the angry millionaires (to say nothing of the Left) have been quiet about is the notion of local currencies. (en.wikipedia.org/wiki/Local_currencies) Along with all the recommendations in IA it would be another one to find about and start organising as a local hedge against hyperinflation. It may not be so much about getting ‘off-grid’ but creating our own grids. Here’s the Wiki US list: en.wikipedia.org/wiki/List_of_community_currencies_in_the_United_States

    Another thing Americans can certainly do is refuse to buy newly-manufactured products made by slave/child/bonded labour anywhere. One thing that always stikes me on return visits is how much stuff there is!

    An end to the fetishisation of individual home-ownership might be too great a leap, but if your local elected council doesn’t own it the Chinese or some bank will. Bush’s ‘Ownership Economy’ means ‘We own you’.

    Most of the rest of the world thinks the US government has gone stark raving mad, and a lot of the Left in the US, from Dems to Sparts and beyond, still refuse to recognise that Bush, Cheney, Goldman and Co. are not involved with playing the game, they’re ‘turning over the chessboard’ (as a friend told me Joan Didion put it - sorry can’t find the quote online) - economically as well as politically. Warren Buffett has already called Americans ‘a nation of sharecropers’ - it looks like the plan is to leave Americans in the capable hands of the Chinese.

    I’m sorry for the people who are suffering and who will suffer during this economic meltdown - I am one of them though over here in the UK! - but I also can’t help thinking it’s about the only chance humanity in general has of surviving beyond the next few generations.

    9 September 2007, 5:20 am

64. Stan:

    Hi Billy.

    Introductions from Stan: Billy Kelly is a member of Veterans for Peace, and a Vietnam vet who spends a substantial amount of his time now in Vietnam doing the right things.

    We took a couple of cold showers together on the Gulf March.

    9 September 2007, 11:26 am

65. Dirk:

    Hello,
    Maybe my reaction was “boyish”, but although I did regret reacting in this way, Peggy’s proposal simply shocked me.

    Stan wrote:
    >>The repressive measures against the financial pole, implemented as part of the overall Keynesian reconstruction after the Great Depression, have been systematically broken down. Gowan (schooled in marxian econ-analysis), Goldner (a Luxemburgian Marxist), Liu (a partisan of the old CCP), and Hudson — among others — have described these breakdowns, and the consolidation of power by the financial pole… ] This form of thought, then, is not to be understood as anachronistic, as the expression of historical nonsynchronism (Ungleichzeitigkeit), any more than the rise of racial theories in the late nineteenth century should be thought of as atavistic. They are historically new forms of thought and in no way represent the reemergence of an older form. It is because of the emphasis on biological nature that they appear to be atavistic or anachronistic. However, this emphasis itself is rooted in the capital fetish.

    The turn to biology and the desire for a return to “natural origins,” combined with an affirmation of technology, which appear in many forms in the early twentieth century, should be understood as expressions of the antinomic fetish that gives rise to the notion that the concrete is “natural,” and which increasingly presents the socially “natural” in such a way that it is perceived in biological terms. The hypostatization of the concrete and the identification of capital with the manifest abstract underlie a form of “anticapitalism” that seeks to overcome the existing social order from a standpoint which actually remains immanent to that order. Inasmuch as that standpoint is the concrete dimension, this ideology tends to point toward a more concrete and organized form of overt capitalist social synthesis. This form of “anticapitalism,” then, only appears to be looking backward with yearning. As an expression of the capital fetish its real thrust is forward. It emerges in the transition from liberal to bureaucratic capitalism and becomes virulent in a situation of structural crisis.

    This form of “anticapitalism,” then, is based on a one-sided attack on the abstract. The abstract and concrete are not seen as constituting an antinomy where the real overcoming of the abstract—of the value dimension—involves the historical overcoming of the antinomy itself as well as each of its terms. Instead there is the one-sided attack on abstract reason, abstract law, or, at another level, money and finance capital. In this sense it is antinomically complementary to liberal thought, where the domination of the abstract remains unquestioned and the distinction between positive and critical reason is not made.

    The “anticapitalist” attack, however, did not remain limited to the attack against abstraction. On the level of the capital fetish, it is not only the concrete side of the antinomy which can be naturalized and biologized. The manifest abstract dimension was also biologized—as the Jews. The fetishized opposition of the concrete material and the abstract, of the “natural” and the “artificial,” became translated as the world-historically significant racial opposition of the Aryans and the Jews. Modern anti-Semitism involves a biologization of capitalism—which itself is only understood in terms of its manifest abstract dimension—as International Jewry.”

    http://resourcepage.wordpress.com/2007/03/01/postoneasns/

    Dirk

    16 September 2007, 11:26 pm

66. Stan:

    Dirk,

    I’m glad you fleshed this out, and did so without personalizing the debate. I’ve been meaning to write something about this very issue in one of the upcomin