Louis Proyect: The Unrepentant Marxist

July 8, 2014

Questions about socialism and value theory

Filed under: economics,socialism — louisproyect @ 8:42 pm

Recently a correspondent posed some questions to me that I would like to respond to publicly since others might get something out of my response.

Q: “How would a socialist system account for jobs that don’t occur on property? Or small businesses that adhere to the service industry where minuscule amounts of profit comes from labor time as opposed to capital investment? i.e., I get paid $22 per hour / 89.50 labor rate. 60 otherwise goes overhead. And I sell the parts my boss invests in with his capital.”

I’ve been faced with this question and I’m unsure how to respond; what is a fairly short explanation of how a social system based on workplace democracy would replace this? What’s the socialist solution to this problem?

A: In general, I shy away from questions about how a future socialist system will work but in the Russian revolution the original intent was to only expropriate the big capitalists. In the immediate period, however, a policy of War Communism led to the expropriation of all privately owned firms, large and small. This was a function more of the need to disempower a middle class that was hostile to the revolution rather than comply with any socialist blueprint—which of course Marx never intended to begin with.

Once the civil war ended, War Communism was abandoned. From that point on, large enterprises remained collectivized but small to medium sized peasants were given a lot of leeway—similar to the experiment taking place in Cuba today. Cuba adopted something similar to War Communism in its early years but this was a function more of the prevailing understanding of what “socialism” was about in 1960 than anything else. It really made no sense to expropriate small hotels, restaurants, retail shops and the like.

I am not exactly sure I get the drift of you math but in a way it is beside the point. If the American working class ever seizes control of Exxon, IBM, Chase, GM, Pfizer, Monsanto et al, it will be absolutely unnecessary to take over small enterprises. The important thing to understand is that unlike a pizza parlor or a nail-polishing shoppe, Exxon and Monsanto have enormous social and economic power. Negligence by Exxon destroyed wildlife in Alaska for a generation. Monsanto’s drive to make GM hegemonic will lead to huge risks for the ecosphere. These are our big concerns not whether a bike shop or a frozen yogurt shop adheres to the labor theory of value.

Q: Hello, I’m getting ready for a debate on Marxism and my opponent has in the past pointed out that value is in fact subjective. I may value a pot at $100 yet he may value it at $50. If it is true that Labor determines the value of this pot, how do I argue against the Subjective Theory of Value?

I myself do not possess too much of an understanding of the Labor Theory, and most attempts at reading long articles do little to advance my knowledge. If I’m understanding the Labor Theory wrong, can you give me a simple explanation of it devoid of confusing rhetoric and such?

Thanks a lot.

A: This is a variation I have heard on arguments against the labor theory of value that involve art, which in a way a pot can be seen as. For example, how does a painting by a well-established abstract artist command prices of a million dollars when it was executed in a day while a landscape by a mediocre artist that took a year to paint is valued at $1000?

Marx was far more concerned to explain the pricing of more mundane items like a yard of cotton textiles, which do not involve taste or training. Capitalist production does not involve esthetics. Steel production, mining, manufacturing, rail transportation, etc. all revolve around basic commodities and services that can be produced anywhere. That is why offshoring has become such a powerful weapon in the hands of the bourgeoisie.  There was a book review recently in the NY Times (http://www.nytimes.com/2014/07/06/business/a-game-of-chairs-and-globalization.html) that takes a close look at what takes place with the Bassett furniture company:

There are superb scenes in which Mr. Bassett’s son, and then Mr. Bassett himself, go in search of the Louis Philippe, finally finding it being made in a grim plant in a remote corner of northeast China near the North Korean border. Their quest climaxes when Mr. Bassett meets face to face with the owner, who is planning a mammoth factory complex that threatens to eradicate what remains of the American industry. Mr. Bassett is coldly informed that the only way Vaughan-Bassett can survive is to shut its factories and sell Chinese furniture.

The furniture company managed to resist offshoring but the overall prospects for that kind of manufacturing is grim.

Another book that I would strongly recommend is “Capital Moves: RCA’s Seventy-year Quest for Cheap Labor” by Jefferson Cowie that I read when it came out in 1999. Much of it can be read online:

http://books.google.com/books?id=Pyggeea2yj0C

I should add that the labor theory of value is best understood as a way of understanding  the class relationships between worker and boss rather than as a way of pricing commodities—although a couple of British economists have written extensively about how computers would make such a thing possible under socialism: http://users.wfu.edu/cottrell/eea97.pdf. It is very technical, I’m afraid.

I think James Devine, a California economist, wrote one of the best things: http://myweb.lmu.edu/jdevine/notes/Law-of-Value.html

Here is an excerpt:

In an e-mail discussion, Brad deLong of U.C.-Berkeley economics wrote that: “The LTV [labor theory of value] is not true: average market prices are not labor values, and the deviations of the average prices of particular commodities from their labor values are not simple redistributions of ‘surplus value’ from boss to boss…. “

It’s hard to say that Marx’s “labor theory of value” is “not true” if one doesn’t understand it, just as it’s hard to say that it’s “true” if one doesn’t understand it. In fact, there are a lot of questions about what “it” is. In fact, it’s unclear what to call “it.” Below, I present one interpretation of the “LTV” which I hope will make these questions clear, allowing us to move on to other issues.

Finally, there’s a very good piece by Brian McKenna on CounterPunch titled “If Marx’s Math is Fundamental, Why Do So Few Teach It?” that is very good. It is drawn from his personal experience:

I’ve had several fast food jobs. I’ll never forget my first. I was 19 and I flipped burgers at Gino’s (a competitor of McDonald’s) in 1975 in the suburbs of Philadelphia. I was earning money for college. Ginos advertised “flexible hours” to cater to college student’s busy needs. I signed on at $1.90 an hour, plus one free hamburger per shift.

One day I was called in at the last minute for an evening shift of four hours. Not owning a car, I took public transportation to the place, about 4 miles away, for the 4:00 shift. It started to rain. When I arrived, soaking wet at 4:00, I was told, ‘we don’t need you anymore tonight, Brian.

“But it took an hour to get here and I want to work. Please let me do something.”

“Can’t you see?” the manager pointed out the window, “it’s raining out, hard, and no one is coming into Ginos. We don’t need you. Can you work a shift on Saturday at 11:00 to 2:00?”

“Can I at least have my hamburger?”

“But you didn’t work!” he said.

Needless to say, those bastards at McDonald’s and Ginos will be on the expropriation block the day after the workers seize power.

April 19, 2014

What does state ownership have to do with socialism?

Filed under: economics,socialism,state capitalism — louisproyect @ 5:07 pm

The other day I received an inquiry by email:

Hello, I am a young Marxist, and I have a question regarding production. In a Socialism, Utopian and Scientific, Engels stated:

“The modern state, no matter what its form, is essentially a capitalist machine, the state of the capitalists, the ideal personification of the total national capital. The more it proceeds to the taking over of the productive forces, the more does it actually become the national capitalist, the more citizens does it exploit. The workers remain wage workers – proletarians. The capitalist relationship is not done away with. It is rather brought to a head. But, brought to a head, it topples over. State ownership of productive forces is not the solution of the conflict, but concealed within it are the technical conditions that form the elements of that solution.” –Engels.

From what I take from this, State Ownership was only advocated to further develop productive forces to make way for socialism. But in the Manifesto, it called for Nationalization of productive forces. However, this is now redundant because production is already built up.

So my question is this: if state ownership of industry is not socialist; what is? Would it be a decentralized planned economy run by the workers through worker councils? If so; how would this operate and how would planning go about? Without planning, we slip back into the chaotic production of capitalism; only this time it’s worker owned. Would the state own land and workers exercise workplace democracy on it?

As for communism (which obviously has no state to direct planning), can you also describe the economic system it would operate on?

I am very confused about this subject, and I’d like to understand it better.

Since many other people might have the same kinds of questions, I am going to reply publicly.

Essentially Engels is writing about trusts, joint-stock companies—the monopoly capitalism that Lenin wrote about in his “latest stage” pamphlet, prompted by the outbreak of WWI. One can imagine that it was possible to see only the plus side of monopolies in 1880, when Engels wrote Socialism, Utopian and Scientific. They were “transitional forms” that would lend themselves to socialist planning. In fact you can see the same kinds of enthusiasm in Edward Bellamy’s “Looking Backward”, written in 1889 and inspired by the early development of large-scale department stores and technological breakthroughs made possible by monopoly production. He even writes of “the nation” being “the sole employer and capitalist”.

I am not quite sure what exactly is the nature of the “state ownership” that Engels is referring to, however. To my knowledge, most of the big trusts were privately owned—such as Standard Oil or Carnegie steel works. There is a good chance that Engels was referring to developments in the future.

Later on the term “state capitalism” became more familiar in the lexicon of the Russian Communist Party. In Bukharin and Preobrazhensky’s The ABC of Communism, the term does not mean that the state has taken ownership of production but that the monopoly capitalists have taken over ownership of the government. They write:

Thus in the end we arrive at the following picture. The industry of the whole country is united into syndicates, trusts, and combined enterprises. All these are united by banks. At the head of the whole economic life there is a small group of great bankers who administer industry in its entirety. The governmental authority simply fulfils the will of these bankers and trust magnates.

In other words, John D. Rockefeller, Andrew Carnegie and J.P. Morgan never lost ownership of their empires. Instead they took over ownership of the state.

You also find a reference to state capitalism in Lenin’s writings on the NEP, where the Soviet government allowed a certain amount of market relations to help revive a war-ravaged economy. In 1922 you can find a section of an article on the NEP titled

State Capitalism In The Proletarian State And The Trade Unions that states:

The proletarian state may, without changing its own nature, permit freedom to trade and the development of capitalism only within certain bounds, and only on the condition that the state regulates (supervises, controls, determines the forms and methods of, etc.) private trade and private capitalism. The success of such regulation will depend not only on the state authorities but also, and to a larger extent, on the degree of maturity of the proletariat and of the masses of the working people generally, on their cultural level, etc. But even if this regulation is completely successful, the antagonism of class interests between labour and capital will certainly remain.

What Lenin was describing might be compared to the experiments that Cuba has been making with foreign-owned hotels, privately owned restaurants, etc. They can best be described as pockets of production for profit in a society that has broken with profit as the ruling principle of the economy. On the other hand, it has little to do with China where capitalism is so widespread that even the state-owned enterprises operate on the same basis as the factories owned by Apple, et al. For profit and only for profit.

Perhaps the best example of state-owned enterprises in the more recent past in the capitalist world are those that flourished under fascism. For example, Volkswagen was formed in 1937 by the Nazi trade union. You also have state ownership in a capitalist country when it is critical to the capitalist economy as a whole. Airlines and other transportations systems fall within this rubric. Finally, you see plenty of it in third world countries that have just liberated themselves from imperialism but have not had a chance to develop a native bourgeoisie. My Turkish professor at Columbia University once quipped that the state owned more companies under Mustafa Kemal than were owned in Stalin’s Russia. He was exaggerating but not by much.

You referred to the call for nationalization in the Communist Manifesto. I am not exactly sure what that is a reference to. By and large, Marx tended not to lay down rules for how socialism would be built. In chapter two of the CM, there are demands put forward, including one that calls for “Extension of factories and instruments of production owned by the State; the bringing into cultivation of waste-lands, and the improvement of the soil generally in accordance with a common plan.” That’s really about it. Keeping in mind that the CM was written in 1848, the main political concerns of Marx and Engels was how to rid Europe of the feudal restraints on production and to create the conditions for the emergence of working class power in a democratic framework—in other words, pretty much the same goals as Lenin in 1905 or so.

This leads me to the big questions you raise:

So my question is this: if state ownership of industry is not socialist; what is? Would it be a decentralized planned economy run by the workers through worker councils? If so; how would this operate and how would planning go about? Without planning, we slip back into the chaotic production of capitalism; only this time it’s worker owned. Would the state own land and workers exercise workplace democracy on it?

As for communism (which obviously has no state to direct planning), can you also describe the economic system it would operate on?

To get to the last question first, I don’t see any difference between socialism and communism. In fact, Marx and Engels used the terms interchangeably. Years later, and especially under the influence of Stalin, socialism became an intermediate stage between capitalism and communism but there is no basis for that in Marx’s writings.

As to how socialism would operate, I confess that I have not written much about that over the years. My emphasis is on how given post-capitalist societies function, with a particular emphasis on Cuba. I recommend this piece in particular: http://www.columbia.edu/~lnp3/mydocs/state_and_revolution/cuba.htm. It was written primarily to answer a member of the British SWP, a group that believes that the USSR was “state capitalist” but not even in the sense of what Lenin wrote above. It saw no particular connection between the Soviet economy and the Marxist project despite the lack of a profit motive in production.

I do strongly recommend that you look at the writings of Michael Lebowitz, an economist living in Venezuela, who has written many articles and a number of books on exactly the questions you posed. It was he, in fact, who convinced me that the distinction between socialism and communism was a bogus one. I have reviewed a couple of his books that you might find useful. Here’s an excerpt from my review of his “The Socialist Alternative”:

Although The Socialist Alternative is very much about conceiving how a future socialist system might function, it wisely avoids the neo-utopian parecon of Michael Albert and Robin Hahnel. As Marx said in an 1873 afterword to volume one of Capital, he was not interested in writing recipes for the cookbooks of the future. Given the catastrophic tendencies of global capitalism, however, a socialist alternative is clearly on the agenda.

For Lebowitz, the goal is what he has dubbed the “socialist triangle,” consisting of:

1. Social ownership of the means of production. It is, of course, not the same thing as state ownership since that has led to a kind of class differentiation exploited by bureaucrats in the Soviet model.

2. Social production organized by workers. This is an attempt to eradicate the distinction between intellectual and manual labor in the plants and offices of the capitalist system, a social relationship that tends to breed apathy and resentment.

3. Satisfaction of communal needs. This breaks with the paradigm of the individualist consumer and stresses the need for a collective definition of social needs. Without democracy, of course, this would be impossible.

In breaking with Leninist orthodoxy, Lebowitz rejects the distinction between socialism and communism. Lenin conceived of socialism as the first stage of communism, but Lebowitz finds no support for this in Marx. He also makes what I think is an essential point:

The term communism communicated something different when Marx wrote in the nineteenth century. Communism was the name Marx used to describe the society of free and associated producers — “an association of free men, working with the means of production held in common, and expending their many different forms of labour-power in full self-awareness as one single social labour force.” But very few people think of communism that way now. In fact, people hardly think of communism as an economic system, as a way in which producers organize to produce for the needs of all! Rather, as the result of the understanding of the experiences of the last century, communism is now viewed as a political system — in particular, as a state that stands over and above society and oppresses working people.

Finally, I recommend googling “Michael Lebowitz” and “socialism”. This will give you plenty of food for thought, including those gathered at the Monthly Review website: https://monthlyreview.org/author/michaelalebowitz. Here’s an excerpt from a 2011 interview titled “The Unifying Element in All Struggles Against Capital Is the Right of Everyone to Full Human Development”.

First of all, Capital is written from the perspective of an alternative society, the inverse situation in which the products of society serve what Marx called “the worker’s own need for development.” I think the struggle for human needs, for the satisfaction of needs is not simply giving people gifts, but it is a whole process of people having the power to work together in the communities to produce for communal needs and communal purposes. That is the revolutionary demand and struggle. For those people who say “well, that’s communism (a utopian society), but socialism has a different principle—to each according to their contribution,” I say that’s a distortion of Marx. Marx didn’t have two stages: socialism and communism. Marx had one society which comes on to the scene defective initially because it inherits all these defects from the old society. But developing that new society cannot be carried on by building on those defects. That argument goes back to Lenin, who argued that until people are highly developed, we have to have the state control where they work, how much they get, and the “socialist principle” is to each according to his contribution. But the tendency to want an equivalent for everything you do is the defect inherited from the old world. That’s what you have to struggle against, not build upon. And it obviously can’t happen overnight. Because people culturally don’t immediately accept it. But you have to say “this is the goal.” How will we proceed to build that goal? And you can’t put off this ideological and practical struggle until a distant stage. We have to build socialist human beings while developing new productive forces—a point that Che made so eloquently.

They didn’t do that in the Soviet Union. They had a focus there on self-interest (bonuses in that case), and the same was true in Yugoslavia. Unfortunately, the same pattern is emerging in Cuba—a growing emphasis on how “we can’t have distribution of subsidized food, we can’t have cheap electricity, we can’t have all this inefficiency, it’s waste, etc.” These are things that have been part of the revolution which are now being rejected. The perspective reflects in general the idea that these are things for a higher stage (and it is not the only thing put off to a later stage—e.g., there’s worker management). I think that is a very unfortunate tendency which is going along with a re-emphasis upon distribution according to contribution. However, the whole concept of a separate stage of socialism and a separate stage of communism has been the way in which a principle alien to Marxism was introduced. Building on selfishness which is what distribution in accordance with contribution is (“I will give you this only if you give me that”) is not building anything except building the basis of return to capitalism.

 

April 15, 2014

In response to Timothy Shenk

Filed under: economics,socialism — louisproyect @ 5:42 pm

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On The Nation magazine website there’s a 9500 word article by Timothy Shenk titled Thomas Piketty and Millennial Marxists on the Scourge of Inequality  that will require far fewer words to dismantle. As Shakespeare said, brevity is the soul of wit and all the more so when it comes to Marxist polemics.

Shenk’s article is a survey of Jacobin Magazine and three books. One is Piketty’s “Capital in the 21st Century”, ordered from Amazon two weeks ago. Apparently it is back-ordered, a propitious sign given its sweeping indictment of the capitalist system. I know vanishingly little about Piketty’s analysis except that he does not care much for Marx, according to Doug Henwood whose word on such matters I trust implicitly. The other two books are written by N+1 editors, Nikil Saval’s “A Secret History of the Workplace”, a work that examines cubicles and the like, and Benjamin Kunkel’s “Utopia or Bust”.

Shenk is a doctoral student at Columbia University who somehow managed to write a biography of Maurice Dobb in his spare time, no mean feat. For those of you unfamiliar with Dobb, a word or two should suffice. He was a British CP’er who wrote a book on the history of capitalism titled “Studies in the Development of Capitalism” that I highly recommend. Dobb took part in a debate with Paul Sweezy in the 1950s defending a somewhat Anglocentric analysis that put the emphasis on primitive accumulation in the countryside as opposed to the expansion of global trade—Sweezy’s perspective. But unlike Robert Brenner, who took up the cudgel against Sweezy later on, Dobb stated that colonization and slavery was also essential.

It is rather unusual for The Nation to publish such a long article so focused on Marxist theory. The standard fare there is something about the nefarious Koch brothers or the need to hold Obama to his promises, etc. In the back of my mind I wondered if The Nation ever got over Jacobin editor’s Bhaskar Sunkara’s Letter to ‘The Nation’ From a Young Radical, a piece that can best be described as biting the hand that feeds it.

Shenk starts off with an observation that probably looms more importantly in his own mind than in the general left public, namely that Karl Marx preferred to use the term “capitalist mode of production” rather than capitalism. This distinction strikes me as more semantic than theoretical but if it is important to the author, why quibble?

Much more serious is our author’s contention that ”All…socialists needed to seal their victory was a revolution, which capitalism’s contradictions would deliver to them.” In reality, Marx and Engels thought that the tasks were far more challenging. In Critique of the Gotha Programme, Marx writes: “What we have to deal with here is a communist society, not as it has developed on its own foundations, but, on the contrary, just as it emerges from capitalist society; which is thus in every respect, economically, morally, and intellectually, still stamped with the birthmarks of the old society from whose womb it emerges.” Doesn’t that sound like the conditions that have prevailed in every post-revolutionary society over the past 100 years or so? If Marx was referring to a heavily industrialized country like England, where he expected the revolution to occur, what could he possibly have thought about Cuba’s prospects? Shenk talks about capitalist contradictions delivering a revolution like Pizza Hut, when in fact it is after the triumph of the people that the hard work really begins. I say that as someone who was deeply involved with providing technical aid to Nicaragua in the late 80s.

After another thousand words or so on the history of the use of the term capitalism, a word that had lost its sting in the prosperous 50s and 60s except among the hard-core Marxist left, Shenk zeroes in on the ostensible purpose of his review, which is to evaluate the magazines and books under consideration.

For Shenk, the new generation of Marxists such as the Jacobin and N+1 editors made the transition from college to the revolutionary cause rather seamlessly, aided by social media:

Many had just left college, carrying with them fresh memories of an academic world that doubles as Marxism’s heartiest stronghold…The commitment was lighter, but easier to share, maybe with a post on Facebook.

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Yes, I quite understand. Most of my Marxist FB friends will regale me with a singing dog Youtube clip one day and a status post the next about a David Harvey lecture the next. This is not exactly the sort of thing that will get you an FBI file but neither will this, I suppose.

After some more excursions (was The Nation paying him by the word?), Shenk finally gets down to brass tacks:

Cloaked in the moral authority of Occupy and connected by networks stitched together during those hectic days in 2011, a contingent of young journalists speaking through venues both new and old, all of them based in New York City—Jacobin, n+1, Dissent and occasionally this magazine, among others—have begun to make careers as Marxist intellectuals.

When Shenk had earlier referred to Marx as a descendant of rabbis who never fancied himself the leader of a religion, the subtle implication was that this was exactly had transpired—socialism as a secular religion. Given that line of thought, it of course logically leads to the conclusion that “cloaked in moral authority” is a jab at the people under consideration who Shenk wants to cut down to size as bible-thumpers–the holy book being Capital:

Combine all this with some fondness for navel gazing and with the fortunes of geography—politics aside, New York writers are New York writers, and they like to talk about each other—and the pieces are in place for the articles declaring the rebirth of Marxism that have become a minor genre in the last year. Like a puffer fish temporarily ballooning to vastly larger sizes, the Marxist revival can seem more imposing than it is. For a certain type of reader, however, it’s easy to forget the illusion when there are so many withering tweets to skim.

As an example of the puffer fish inflating itself, Shenk refers to a Jacobin editorial in 2011 that blasted the Obama administration for seeking to roll back the New Deal and Great Society, a claim he felt was “clear to almost nobody anywhere.” Hmm. Now I am beginning to understand why The Nation would put down the red carpet for him. Melissa Harris-Perry could not have been more scornful of such puffer fish impudence.

Turning to the books under review, Shenk dismisses Saval’s work as breaking little new intellectual ground. Since I only know Saval’s analysis from an excerpt in “Harpers”, I will defer commenting on whether it does or doesn’t.

Shenk is more generous to Kunkel’s “Utopia or Bust”, a book that he describes as “playful and unfailingly lucid”. When one hand giveth, the other taketh away, however:

Precisely because of its clarity, however, Utopia or Bust reveals some of the more peculiar aspects of a group that can seem more inclined to recite Marx than to rethink Marxism, or move beyond it.

Shenk regards Kunkel’s reference to a “near unchallenged global capitalism” as a “fixation”, something I suppose that’s akin to a neurotic obsession. Since Shenk regards “investments gushing in from China today” as an exception to global capitalism, I suppose I’ll have to count myself among the neurotically obsessed.

As I stated earlier, I have not yet read Piketty’s book so I am no position to weigh his Shenk’s critique. That being said, I do have to wonder about his characterization:

Though not a Marxist, Piketty is firmly of the left. A supporter of France’s Socialist Party, he has said that he “dream[s] of a rational and peaceful overcoming of capitalism.”

I am not sure what I am going to make of Piketty’s book but the notion that France’s SP will play any role in the “peaceful overcoming of capitalism” strikes me as absurd, and almost equally absurd is Shenk’s taking this claim seriously. Hadn’t he read the NY Times article dated April 11th on the party’s new leader?

On Tuesday, Mr. Valls offered the most detailed summary yet of how the government intends to meet its promise to enact $69 billion in spending cuts by 2017. He called for $26 billion in cuts to the central government bureaucracy, $13.8 billion to the national health care system and $13.8 billion to local governments — an element at which many legislators on the right booed loudly, having just won control of a number of local governments. He did not specify how the remaining $15.4 billion in cuts would be made.

One hopes that there was an equivalent of Jacobin in France raising hell about the country’s version of Obama no matter Shenk’s credulous take on the Socialist Party.

Finally, after a tsunami of words, Shenk gets to his real point in the concluding sentences:

Reflexive grasping at the language of the past, vividly displayed in the Marxist resurgence, brings a sense of order to what would seem like chaos. But a more promising alternative might be on the way. Marxism is one kind of socialism, but history suggests a much richer set of possibilities, along with some grounds for hope. So does a work like Capital in the Twenty-First Century—a sign that another lost tradition, the postcapitalist visions in abeyance since the 1970s, could be poised for a return; or, even better, that we might put aside old pieties and chart our own path.

Call me grasping reflexively at the language of the past, but history does not suggest a much richer set of possibilities to me. Instead I see a deepening of class conflict with the eventual renaissance of Marxism and the revolutionary socialist movement. I have been committed to that project for 47 years now and see nothing to change my mind at this point. With a nod to Piketty’s book, one that rejects socialism in favor of neo-Keynesian half-measures (I don’t have to read it to know that this is his outlook), Shenk makes clear why he is so fed up with those who live in the past. In my view, you have to live in the past to some degree if you want to live in the future. Capitalism, or whatever word you want to use, is destroying the planet no matter what The Nation and its hired guns would have you believe.

April 11, 2014

Reading Richard Seymour in the Age of Austerity

Filed under: economics,financial crisis — louisproyect @ 11:48 am
Strategies of Resistance

Reading Richard Seymour in the Age of Austerity

by LOUIS PROYECT

Dating back to the overthrow of Salvador Allende, financial austerity has been the watchword of the capitalist class. Frederick Hayek supplanted John Maynard Keynes in the ideological driver’s seat, as the free market became sacrosanct. Adding to the neoliberal momentum, the collapse of the Soviet Union caused Karl Marx to lose his official status for a third of mankind. Despite the hiccup of interest in Karl Marx following the 2007 financial meltdown and rueful reflections by Francis Fukuyama that it might not be the end of history after all, the mantra of balanced budgets and eliminating “waste” was taken up by politicians and pundits alike. To paraphrase W.H. Auden, we seem to be living through an Age of Austerity.

As perhaps the first study to take these issues head-on, Richard Seymour’s “Against Austerity” is a must-read primer for old hands in the class struggle and newcomers alike. Leaving aside the merits of his arguments—and they are plentiful—Seymour would be worth reading if for no other reason than his elegant and witty style. At the risk of inflating the young man’s ego, I regard him as the most compelling prose stylist on the left since Alexander Cockburn in his heyday and Christopher Hitchens before he turned into Mr. Hyde. Also, unlike most people who write for leftwing publishing houses, Seymour has a brash but self-effacing manner that is as refreshing as a cold beer on a sweltering summer night. From the book’s preface:

There is also a certain familiar use of esoteric political theory and rococo ornamentation that some readers will find off-putting. I hope so anyway. Those readers would be far better off reading something else. (Or, alternatively, stay and have your middlebrow sensibilities challenged.) This book comes with swearing and unapologetic intellectual swagger.

I imagine you’re scanning this page while still in the bookshop calculating whether you’d be willing to be seen reading this book on the train. If the above appeals to you, you’re probably a bit ‘wrong’ in some way, but I welcome you. If it doesn’t, then make your way the holy apotheosis of bookshops that is the ’3 for 2′ section. And buy yet more inconsequential shit with which to line your shelf of good intentions.

Read full article

March 14, 2014

Poverty reduction in Venezuela

Filed under: economics,journalism,Venezuela — louisproyect @ 12:17 am

As many of you are aware, Salon.com has been a source of vicious anti-Chavista propaganda for quite some time now. An article by Simeon Tegel titled “5 myths about the Venezuela crisis” is a prime example. What caught my eye particularly was this:

If Maduro and Chavez have a single claim to justify their combined 15 years in power, it’s that they have significantly benefited Venezuela’s poor majority. No one seriously questions that the percentage of Venezuelans classed as poor has dropped from around 50 percent to 30 percent over that period. The problem is that many other countries in Latin America, including staunchly free-market economies Chile and Peru, have registered similar progress over the same period. Just take a look at this graph by Argentine economist Lucas Llach.

Another liberal publication that has it in for Venezuela is the Independent newspaper that gave journalist James Bloodworth the opportunity to make exactly the same point as Tegel, even citing the same graph (since Bloodworth’s article appeared first, it was obvious that Tegel was up to a little plagiarism.)

Between 2007 and 2011 there was a reduction in extreme poverty in Venezuela by some 38 per cent. Impressive no doubt. But the percentage of people who escaped extreme poverty in Brazil during the same period was 44 per cent, in Peru 41 per cent and in Uruguay 63 per cent.

The graph both journalists referred to was actually produced by the United Nations Economic Commission for Latin America and the Caribbean (ECLAC). One of the things I have learned about statistics is that they are insufficient for telling the whole story, especially when it comes to questions of wealth and poverty—and Venezuela in particular. The problem with the graph is that it cuts off before 2012. After 2012, poverty reduction slows down in all of the cited countries except for the two that are demonized so frequently in places like Salon.com: Venezuela and Ecuador. (I suppose that I don’t have to remind you that Ecuador is another country that gets bashed by liberals like Tegel and Bloodworth at every opportunity.)

The latest report from ECLAC makes exactly such a case:

Six of the 11 countries with information available in 2012 recorded falling poverty levels (see table 1). The largest drop was in the Bolivarian Republic of Venezuela, where poverty fell by 5.6 percentage points (from 29.5% to 23.9%) and extreme poverty by 2.0 percentage points (from 11.7% to 9.7%). In Ecuador, poverty was down by 3.1 percentage points (from 35.3% to 32.2%) and indigence by 0.9 percentage points (from 13.8% to 12.9%).

Another statistic that does not enter Tegel and Bloodworth’s calculations is the GINI coefficient, a measure of income inequality. Bloodworth would probably have not mentioned Brazil if his editor had given him instructions to deal with GINI statistics. At  .546 it is close to Guatemala and Honduras in terms of inequality (a GINI of 1 would be perfectly unequal; zero would be perfectly equal.) At .447, Venezuela is the most economically equal country in Latin America. (http://www.quandl.com/demography/gini-index-all-countries)

I noticed Bloodworth’s favorable reference to Peru, proof supposedly that “Boring social democracy may be less romantic, but it has been far more successful at tackling poverty than the Chavez/Maduro model.” Did Bloodworth think that his readers would not bother to check who is the head of state in Peru? I know that my readers would.

It is none other than Ollanta Humala, a figure who has come in for as much redbaiting as Hugo Chavez over the years. The gold standard for redbaiting—Fox News—just about equated the two politicians in a 2011 article titled “Ollanta Humala of Peru –Hugo Chavez’s Secret Candidate”. After Humala’s election, The Australian rendered its verdict on the direction that Peru would take, a far cry from “boring social democracy”:

A FORMER lieutenant-colonel moulded in the image of the Marxist Venezuelan firebrand Hugo Chavez was elected President of Peru yesterday, adding to the trend of the leftward political drift across Latin America.

Ollanta Humala, 48, narrowly defeated the daughter of an imprisoned former leader in an election campaign that laid bare the rift between the millions of chronically poor and the middle class. The affluent fear punitive taxes, in the style of Mr Humala’s Venezuelan mentor, and a reverse of economic reforms that made Peru one of the most successful economies in Latin America.

January 12, 2014

Different (or identical?) views on the welfare state

Filed under: economics — louisproyect @ 3:05 pm

The welfare state is therefore frequently understood as an “achievement” of the labor movement, a concession to the working class (in order to pacify it). It is in fact the case that the lives of wage-laborers are considerably easier and more secure with state social welfare measures than without them. However, it is not the case that such measures are one-sided benefits for the forces of labor that—as is occasionally asserted—already constitute the first step in transcending capitalism. Rather, they safeguard the existence of workers in a manner consistent with capitalism, namely as wage-laborers. On the one hand, it is in the interest of capital that those workers whose labor cannot be profitably used for a temporary period of time—as the result of illness, accident, or the lack of demand—are still maintained in an “orderly” condition amenable to capital. On the other hand, state social welfare measures are usually contingent upon the sale of labor-power (or the willingness to sell one’s labor-power): benefits such as unemployment insurance or old-age pensions depend upon the previous wage, a correlation that already functions as a means of disciplining workers.

Michael Heinrich (http://www.thenorthstar.info/?p=11830)

According to the official USA.gov website, there are 510 federal departments and agencies, 50 of which were created over the past 15 years. Among those with the largest number of civilian employees: 718,000 at the Department of Defense; 302,000 at the Department of Veteran Affairs; 240,000 at the Department of Homeland Security; 114,000 at the Department of Justice; 100,000 at the Department of Treasury; and 98,000 Internal Revenue Service agents.

Another aspect of the capitalists’ administrative state is the increasing numbers of federal regulations and bigger staffs to enforce them. From 1949 to 2005 the listings of federal regulations grew by 600 percent to 134,000 pages, six years later it was nearly 170,000. While expanding under the George W. Bush administration, they’ve shot up further under the Obama administration. The 144 new major regulations pending in the second half of 2011 is double the figure from the same period in 2006.

The propertied ruling families in the U.S. and other imperialist countries exercise their state power — the dictatorship of capital — not only through a centralized military and police apparatus but also a large and growing state bureaucracy, with a myriad of agencies, institutions, departments, regulatory boards and enforcement corps, propped up by a second tier of so-called Non-Governmental Organizations and non-profit foundations.

The seeds of what is often termed the modern “administrative state” were planted in Europe and America with the rise of imperialism in the early 1900s and grew at an accelerated pace following the end of World War II.

Contrary to popular misconception, the revolutionary communist movement is not for “big government,” whether it’s a government representing the state power of the capitalist exploiters or a revolutionary government of workers and farmers.

Brian Williams (http://www.themilitant.com/2014/7802/780250.html)

With the current challenge of reducing the runaway government spending and an entitlement mentality by citizens, it is quite possible to trim $4 trillion by reining in just our federal bureaucracy. Thomas Sowell suggested that to do so, we must further examine and challenge the giant economic leviathan of our government bureaucracy. The Office of Management and Budget revealed that the executive branch of our federal government grew by 23 percent since President Obama took office. The Wall Street Journal (2012) opined that the president has “presided over the largest expansion of government since LBJ — health care, financial regulation,” and in so doing has spent 24 percent of our nation’s GDP.

Ludwig von Mises Institute (http://mises.org/daily/5955/the-seven-rules-of-bureaucracy)

October 29, 2013

The decline and fall of Levi-Strauss

Filed under: economics,fashion — louisproyect @ 3:26 pm

No, I am not talking about the French anthropologist who applied structuralism to indigenous societies. Rather it is the blue jean company that has fallen upon hard times, much to my dismay. I imagine that after posting this and the one on Barneys yesterday, this will be the last I have to say on the rag trade for some time to come.

After going from a 34 waist to a 31, I have had to replace my trousers some of which were over 10 years old including a pair of Levi’s 501 blue jeans. I have had a pair of such jeans going back to 1961 in my freshman year at Bard College when upperclassmen advised me that they were “cool”. They have a button fly and shrink a size or two after the first washing. The material was like stiff and heavy canvas when it first came off the shelf but softened and faded most pleasingly after about a dozen cycles through the washing machine.

Unfortunately the 501 jeans Levi-Strauss sells today have nothing in common with my original pair except the name. The material is thinner and cheap looking. They are also prewashed. The upside is that you don’t have to worry about shrinkage. The downside is that they look like crap.

If you go to Amazon.com, you will find the “most helpful critical review” of the Levi’s 501 jeans:

Real 501’s are made of 14 oz canvas-like material. These “Iconic Rigid” jeans are made of some sleazy, much lighter material that takes on a carefully contrived set of wrinkles to make them look like they’d been worn to bed soaking wet and dried out overnight. If you want real 501’s stay away from these. I sent mine back right away.

Exactly.

Before revealing how this state of affairs came to be, a look at the roots of this garment manufacturer would be useful.

Levi Strauss (the first name is generally a last name in Jewry, it means a member of a priestly caste) was a German Jew who launched his blue jean company in 1853 out of San Francisco. The jeans were actually pioneered by a Latvian Jewish tailor named Jacob Davis who purchased denim from Levi Strauss. When the miners and other hardscrabble men who bought pants from Davis kept coming back to have them patched, he came up with the idea of reinforcing them with copper rivets at the points of maximum stress like the pockets corners. As is often the case in design, functionality and beauty are joined at the hip.

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Although they started out as work clothes like the Carhartt brand, they became a fashion statement in the 30s and 40s with the growing popularity of dude ranches. The look became popular in Hollywood films, with James Dean in “Giant” being representative.

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As well as Marlin Brando in “The Wild One”.

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By the time I got to Bard College, Levi jeans had become popular among the early 60s hipsters—most of whom were strongly influenced stylistically by the beat generation. Bob Dylan wore Levi’s.

Screen shot 2013-10-29 at 10.49.54 AMRapidly approaching my 69th birthday, I suppose I seem a bit foolish trying to dress in the same style I had adopted in 1961 but then again I remain attached inexplicably to the habits of my youth, including Marxism. It looks like I will be wed to Marxism for as long as I live but unfortunately the Levi 501 jeans will go by the wayside.

So what happened? This article puts it altogether:

The Guardian, Sunday 3 June 2007
Story of the blues
By Hadley Freeman

Levi’s was the original denim brand. In 1873, Jacob Davis, a tailor, hooked up with Levi Strauss to create a special pair of trousers for a woodcutter that were strong enough to hold in his bloated stomach. But things have come a long way since then and many industry observers say Levi’s has failed to keep pace.

Since 1996, the company’s sales have been dropping fast. It has lost billions of dollars in sales, closed dozens of factories and laid off nearly half of its workforce because, competitors say, it failed to take advantage of the change in the denim market when jeans shifted from being seen as a work garment to a style statement. Jonny Sorensen, the chief executive of Von Dutch, one of the denim brands Levi’s is suing, told the New York Times: “[Levi's] missed the boat. Now they want to make a lot of noise and scare people away.”

Calvin Klein introduced the concept of designer denim back in 1978, and Helmut Lang upped the ante two decades later by giving his jeans designer prices. But it wasn’t until the late 90s, with the emergence of Earl jeans from California, that the denim craze truly took hold. This label shifted people’s perceptions of jeans: no longer were they chunky workman wear but a sexy item that showed off a woman’s figure. In Earl’s first year, it had a turnover of $600,000. In its second, sales rose to $10m. In 2001 the company was sold for roughly $86m. “A woman now needs a different pair for every occasion, just like shoes: some days you want a sexy pair, other days you want to be more relaxed and slouchy,” says Suzanne Pendlebury, womenswear buyer for Harvey Nichols.

But the emphasis here is on “new”: jeans are not what they once were – baggy, frumpy, clumpy – and the mid-priced classic brands, such as Levi’s, Lee and Wrangler, have struggled in the new marketplace. They have been squeezed out between, on the one hand, the flashier designer brands and, on the other, the cheap ranges offered in supermarkets and on the high street. Topshop’s Baxter jeans, for example, sell 18,000 pairs a week. Both the top and the bottom ends of the market have focused on denim’s new fashion-based image. Lee and Wrangler, on the other hand, have struggled with stagnating sales. Last year, Levi’s ended an eight-year fall in sales but it is still trying to recoup its losses from its period of what Onda describes as “steep decline” in the late 1990s.

Full: http://www.theguardian.com/lifeandstyle/2007/jun/04/fashion.retail

Levi-Strauss’s collapse raises all sorts of interesting questions about the commodity. Here is a product that underwent no significant changes since its birth around 150 years ago. It began to die in the marketplace as soon as people like Calvin Klein began to market blue jeans as a fashion item rather than a workaday garment (even though it did have its own esthetic.)

To what extent are there real benefits in style changes? Also, what was the role of such a “proletarian”, no-frills garment in destabilizing societies that were based on the rejection of commodity fetishism? The Levi-Strauss website recounts the role of their product in the Cold War:

Back (Then) in the U.S.S.R.

Russia – part of the former Soviet Union – is a fairly new market for Levi’s® jeans, but the company and the brand actually visited that country more than fifty years ago.

In 1958, the United States and the Soviet Union signed an agreement to increase cultural contact between the two countries in order to ease tensions between the Cold War rivals.  The agreement stated that exhibits are “an effective means of developing mutual understanding,” and both nations agreed to host exhibitions from the other country. In 1959 the United States Information Agency coordinated the American National Exhibition which was sent to Moscow. Vice President Richard Nixon opened the Exhibition on July 25. (Remember the Kitchen Debate?)

Included in the displays of American culture, science, and technology was a good- sized booth created by Levi Strauss & Co., filled with displays of 501® jeans and Western-themed advertising. Staffers wore jeans and cowboy shirts, and 501® jeans were also worn by entertainers hired to treat the crowds to some down home American music.

Although jeans were frowned upon by Soviet officials as symbols of decadence and western imperialism, the products on display had to be replaced almost daily. Why? As explained then by the international press service R&F Features, “Eager Soviet visitors handled – and occasionally helped themselves to – display samples of the all-American denim pants.”

Levi’s® jeans were a coveted, but forbidden capitalist item in the Soviet Union for the next thirty years. Then, when the Berlin Wall came down in 1989, Russian citizens could buy “real” (not black market) Levi’s® jeans for the very first time.

The LS&CO. Archives has a letter from one such happy customer, a woman named Larisa Popik, who wrote us in August of 1991:

A man hasn’t very much happy minutes in his life, but every happy moment remains in his memory for a long time. I’m not the fanatic of clothes, but the buying of Levi’s jeans (501) is one of such moments in  my life.  I’m 24, but while wearing your jeans I feel myself like a 15-years-school-girl, I feel myself like a graceful, slender and beautiful girl. 

Thank you very much for such comfortable, soft, light and nice jeans. Good luck to your kind and necessary business!

So, Levi 501 jeans—a vanguard fighter for capitalist restoration—now falls victim to the very process it seemed contrary to.

Maybe there’s hope for Levi’s in filling a niche for those wealthy enough to purchase jeans that perhaps allude to their birth in a place totally the opposite of where they are sold now: Barneys.

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October 28, 2013

Barneys bigotry

Filed under: economics,fashion — louisproyect @ 5:12 pm

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Published by billionaire Mort Zuckerman, a diehard member of the Israel lobby, the New York Daily News has been evolving into a fairly hard-hitting “anti-racist” publication, to use the term that has come under close scrutiny in the recent past by people such as Adolph Reed. If you go to their website, you will see for example an item on the disgusting Trayvon Martin “costume” worn at a Florida Halloween party. Juan Gonzalez, Amy Goodman’s co-host at Democracy Now, has been writing a column at the News for years now. So, in general, this is a paper that is more liberal in some ways than the NY Times that has not had an African-American op-ed columnist since Bob Herbert left some years ago. Charles Blow does have a column that appears on Saturday but it is fairly narrowly focused on polling and demographics.

The News broke the story on a young Black man being racially profiled by Barneys, the upscale clothing store that I used to patronize in the 1980s when I worked on Wall Street.

The clothing store Barneys purports to cater to a certain class of person, one so chic and so monied as to be eager to spend $280 on a pair of jeans or $2,850 on a skimpy woman’s “bicolor jacket.”

Apparently, in Barneys’ view, this class of person did not extend to a young, black New York City male who took a flier on buying a $300 Ferragamo belt. Trayon Christian says store security had him busted by the NYPD.

Christian is a 19-year-old New York College of Technology engineering student who lives in Queens. He has a work-study job that deposits his pay directly into a Chase bank account.

After picking out the belt, he offered his Chase debit card for payment. This was a transaction of a kind that happens thousands of times a day at Barneys’ Madison Ave. flagship emporium.

Without incident, the trendy from neighborhoods like the upper East Side make their picks and flash their cards as if this is where they belong . But not Christian, who has filed suit charging that Barneys concluded, based on skin color, that his money was stolen.

Christian says that, after presenting his debit card, he complied with a request for identification, completed the purchase and walked out, only to be stopped by plainclothes NYPD cops, who said that Barneys had called, accusing him of using a fake card.

In Christian’s telling, he was handcuffed and spent two hours in the 19th Precinct stationhouse while cops verified that he was who he said he was and that the money was his to spend.

The incident has had ramifications in a city polarized around the question of racial profiling. Bill de Blasio, certain to be the next mayor, has called for the abolition of “stop and frisk”, a practice that targets Blacks and Latinos disproportionately.

It has put Jay Z, the rapper businessman, on the spot:

Jay-Z — under increasing pressure to back out of a collaboration with the luxury store Barneys New York after it was accused of racially profiling two black customers — said Saturday he’s being unfairly “demonized” for just waiting to hear all of the facts.

The rap mogul made his first statement about the controversy in a posting on his website. He has come under fire for remaining silent as news surfaced this week that two young black people said they were profiled by Barneys after they purchased expensive items from their Manhattan store.

My last big-ticket purchase at Barneys was a 700-dollar Armani suit that I bought just a few months before losing my job at Goldman Sachs in 1988. It, along with my Paul Stuart suits, went to a thrift shop about a year after I began working at Columbia University. Don’t ask me why I wasted my money on such commodities. Temporary insanity, I guess.

The story of Barneys’s transformation over the years is one that is very much connected to those taking place in New York City generally, as it has become much more of a FIRE (finance, insurance, and real estate) center as well as a haven first for Eurotrash and more recently for the offspring of Russian oligarchs and oil sheikhs.

The store is named after Barney Pressman, a Jew who launched it in 1923 at 7th avenue and 17th street with the $500 he got from hocking his wife’s engagement ring. He got started in what New Yorkers call the rag trade working in his father’s clothing store, pressing trousers 3 cents a pair.

Early on, Barneys catered to less than wealthy men who wanted to buy a prestigious brand like Hickey-Freeman or Oxxford that were bought wholesale at odd lots and auctions. Often the customer would ask for the Barneys label to be removed so as to leave open where the suit was purchased. At the time Saks 5th Avenue had a lot more clout than Barneys.

In the 1960s the store was transformed into a snooty boutique under the stewardship of Fred Pressman, the owner’s son. As prosperity became generalized in the long postwar expansion, New Yorkers had more money to burn. Barneys’s original location expanded to five floors and a new store was launched on 61st and Madison, both catering to women as well as men. After Fred Pressman retired, his sons Gene and Robert took over and targeted the rich and the infamous even more. If you’ve seen Michael Douglas as Gordon Gekko in Oliver Stone’s “Wall Street”, you’ll get a good idea of what the typical Barneys wardrobe looked like.

On August 29, 1993, the NY Times Sunday Magazine had a 5000 word article on the store’s ambitions. Like cocaine, Studio 54, and Madonna, it was an icon of the period as reporter Steve Lohr indicated:

Much of retailing, it is said, boils down to understanding life styles and spotting trends. Over the years, Gene Pressman has certainly done plenty of field research. He is by nature a participant, trying what was hip and trendy ever since Woodstock in 1969. “I got so wasted,” he recalled fondly. “And wasn’t the music great?” Later, he sampled Manhattan night life, knew the Andy Warhol crowd, took in the scene of Studio 54 and the like.

He lives in Bugsy Siegel’s former house, a Tudor mansion in Westchester County, overlooking Long Island Sound, which he redid to accommodate a 14,000-bottle wine cellar and a garage with vintage cars. Guests, also clearly a carefully edited selection, get tours past the ’62 Aston Martin in the garage and the expensive wines in the cellar. Gene is married these days with two children. He drives fast, but the rest of his fast-lane life may simply be a fond memory.

Though he’s wealthy and surrounds himself with expensive toys, he clings to his version of 60’s counterculture values. He pulls his white shirt away from his neck to show that it is monogrammed, but on the inside. “How about that for reverse snobbery?” he says.

In order to build their empire in New York as well as stores in other countries enjoying a booming economy, the Pressman’s partnered with Isetan, a Japanese department store also catering to the rich.

Like the Japanese economy, Barneys expanded too fast and too much on a mountain of debt, thus leading to bankruptcy in 1996. In 1999 a book by Joshua Levine titled “The Rise and Fall of the House of Barneys: A Family Tale of Chutzpah, Glory and Greed “ was published by William Morrow. If the title evokes Edgar Allen Poe’s “The Fall of the House of Usher”, this review in the New York Observer will explain why:

Some years ago, a friend took her 14-year-old son to the 17th Street Barneys to buy a birthday gift for his style-conscious grandfather. Dressed in full New York private school uniform (frayed baggy jeans, ripped T-shirt), my friend’s son seemed to have come from a different fashion planet; here the aliens were buying and selling silk socks that, judging by their price, must have been produced by worms specially selected and properly compensated for outspinning their grubbier brothers. For a while, the boy was mystified, and put off. But eventually he succumbed to the lure of the buttery loafers, the ties arrayed in bright rainbows, like elegant wearable candy; he fell for the seductive chemistry of luxury, snobbery and taste. As they left, he turned around, and promised the expensive, attractive things, “I’ll be back!” When I asked my friend how this made her feel, she said, “As if I’d personally introduced him to the Devil.”

The most entertaining and upsetting sections document the sheer wastefulness, misguidedness and mismanagement that went into the construction of the catastrophically expensive–$267 million–Madison Avenue Barneys, the Pressmans’ monument to themselves: “‘The Pressmans kept saying they wanted this to be the most beautiful store in the world,’ says one of the top architects on the project … ‘We did a whole boutique [lined] with goatskin … I was arguing that you could do this in a faux finish, and you might spend an eighth of the price. The response was, like, why use faux goatskin when you could use real goatskin?’”

Why? Presumably, so all that expensive fabulousness could be osmotically absorbed by the sales staff, who would then feel righteously entitled to give Barneys’ customers the maximum amount of attitude. The arrogance and oily-hip demeanor of the salespeople eventually became a liability for the store, as shoppers began to wonder why they were sneered at so contemptuously when they handed over their credit card to pay for, say, the Rei Kawakubo bump dress that for a small fortune could make a woman look like she had tumors growing on her ass.

Like other wonders of the world (the Pyramids, for example), the building took its toll not only in money but in human life. One worker fell off a scaffolding, the other tumbled down an empty elevator shaft–a death that, Mr. Levine suggests, may have been connected to a dispute over the profitable disposition of the scrap metal that the construction site was generating. But unlike the slave laborers who built the Pyramids, these workers expected to get paid, a modest expectation often at odds with the Pressmans’ increasingly precarious financial situation. Creditors resorted to scrawling nasty graffiti on the unfinished building and (as they grew more impatient) making death threats against their employers, tactics the Pressmans countered by beefing up store security.

Reading The Rise and Fall of Barneys means wading through the details of the bad business decisions that brought the Pressmans low; some people love this sort of thing, which I find about as exciting as watching a stranger balance his checkbook. And at times I couldn’t help wishing that Mr. Levine had gained access to the family. To know what makes the Pressmans tick might be like channeling the Pharaohs, or Louis XIV. Nonetheless, Joshua Levine has done a serviceable and entertaining job of explaining why, when my friend’s son makes his long-promised return to the pretty ties and shoes of the Chelsea Barneys, the store he remembers will be long gone–and he’ll find himself in Loehmann’s.

October 10, 2013

When the puppet talks back to the puppeteer

Filed under: conservatism,economics,financial crisis — louisproyect @ 8:26 pm

The puppet becomes the master in a classic Twilight Zone episode

Today’s NY Times raises some interesting questions about the connections or lack thereof between the big bourgeoisie (pardon me for a little Marxist jargon) and the Tea Party faction of the House of Representatives that has thrown the government into a crisis. Despite the reputation of the Tea Party for being free market fundamentalists, the masters of the marketplace find them rather inconvenient:

As the government shutdown grinds toward a potential debt default, some of the country’s most influential business executives have come to a conclusion all but unthinkable a few years ago: Their voices are carrying little weight with the House majority that their millions of dollars in campaign contributions helped build and sustain.

Their frustration has grown so intense in recent days that several trade association officials warned in interviews on Wednesday that they were considering helping wage primary campaigns against Republican lawmakers who had worked to engineer the political standoff in Washington.

Such an effort would thrust Washington’s traditionally cautious and pragmatic business lobby into open warfare with the Tea Party faction, which has grown in influence since the 2010 election and won a series of skirmishes with the Republican establishment in the last two years.

“We are looking at ways to counter the rise of an ideological brand of conservatism that, for lack of a better word, is more anti-establishment than it has been in the past,” said David French, the top lobbyist at the National Retail Federation. “We have come to the conclusion that sitting on the sidelines is not good enough.”

I probably listen to a lot more AM rightwing talk radio shows than the average socialist. Recently I discovered that there’s now a Fox radio station in NY at 970 on the dial that competes with WABC, the home of Sean Hannity and Rush Limbaugh. At 10pm there’s a Christian fundamentalist named Steve Deace who broadcasts for Fox radio out of Des Moines, Iowa. His motto is “Fear God. Tell the Truth. Make Money.” I can barely listen to him (or any of these characters) for more than 10 minutes but it helps me take the pulse of the ultraright.

Deace is fond of using the word “ruling class”, a term that he obviously knows was coined by the revolutionary movement. He uses it primarily to refer to the Republican Party establishment such as in this Politico article:

Not since Reagan has a nonestablishment presidential candidate had the comprehensive worldview and charisma capable of coalescing enough of the conservative/libertarian base to defeat the Republican ruling class in a national primary.

For Deace, the views of Hannity and Limbaugh are within “ruling class” parameters. On Town Hall, he blasted Bill O’Reilly as well:

From reporting inaccuracies on gun control, to no longer defending marriage, O’Reilly is now scoring goals for the other team. Similar sellouts and flip-flops aren’t news when they come from politicians. But given how O’Reilly has branded himself as the man with the moral high ground inside the “no spin zone,” it definitely has the potential to damage him much more. Nobody, right or left, likes a hypocrite. O’Reilly is now “evolving” so fast it would even give presidential candidates from Massachusetts ideological whiplash.

Clearly, the Tea Party right is on some kind of collision path with the establishment Right even though they share a common agenda against the left, working people, gays, and anybody who does not believe that Adam and Eve commingled with the Brontosaurus.

Before presenting my own views on what is going on here, I’d like to refer you to some noteworthy attempts by the left to explain the roots and dynamics of the Tea Party.

Doug Henwood was interviewed by Salon.com’s Josh Eidelson who asked: “You’ll hear some conservatives argue that the Tea Party represents a different politics, less “pro-business” than the GOP we knew – instead, consistently committed to “limited government” in ways that can be counter to business interests. To what extent is that just spin, or a real divide?” Doug replied:

It’s a kind of regional and inter-class battle. I think, to use the Marxist language, [the Tea Partyers] represent an enraged provincial petit bourgeois that feel that they are seeing society change in ways that they don’t like. They look at things like Obamacare and see that as a way of subsidizing a minority electoral bloc that will push the government in ways that they don’t like. These are the small-town worthies, like the local car dealers — people who are millionaires, but not billionaires. They are big wheels in their local communities, but not on a national level. And then you have ideological right-wingers like the Koch brothers who use these folks very effectively.

I would also refer you to Tim Horras, a founder of the Philly Socialists, who wrote a piece titled “Slouching Towards Shutdown: Left Reflections on the Tea Party, Then & Now” for the North Star website. Like Doug, Tim views the Tea Party as autonomous from what Deace calls “the ruling class”:

[T]he Tea Party was not an astroturf operation, but rather a legitimate social movement with a large mass base of support, 2) the mainstream Republican Party agenda was actually very different from the Tea Party agenda, 3) the capitalist class wouldn’t necessarily be in control of the Tea Party, like the sorcerer conjuring up forces they are incapable of controlling, 4) economic recovery was not going to happen, therefore extremism would continue to rise, and, (not mentioned in the passage quoted above), 5) key political conflicts would be centered around debt and default.

While some analysts like Michael Lind regard the Tea Party movement as an expression of Southern White racism, there are signs that it has powerful roots in the North as well. For example, Wisconsin governor Scott Walker went on the offensive against organized labor with backing from the Koch brothers and Ohio is the site of some of the most stringent anti-abortion laws in the country. Thirty years ago both Wisconsin and Ohio were considered strongholds of liberal Democratic power. What has happened?

I strongly agree with Doug’s assessment of it being the expression of an enraged petty-bourgeoisie but would differ on whether it is “provincial” (Doug cites Michael Lind favorably in the interview.) The big question, however, is what would make them so enraged? Does a millionaire car dealer in Mississippi really feel that Obamacare is an existential threat? I am not raising this question in a polemical fashion but only to demonstrate that I am not really sure.

The one thing I am relatively sure about is that the Tea Party flourishes in an environment where the Democratic Party lacks any kind of populist zeal. Obama is the perfect symbol of the kind of Eastern elitism that becomes a red flag in the face of the typical Tea Party activist. His connections to Wall Street, his Ivy League law degree, and primarily his condescending attitude to dwellers in “small towns in Pennsylvania and… small towns in the Midwest” who bitterly cling to guns or religion because of job loss, make him an easy target. Basically, Obama has generated the kind of blind hatred found in George Wallace’s 1968 campaign. Wallace ran as the candidate of the American Independent Party, a forerunner of the Tea Party in many ways. Wallace went around saying, “There’s not a dime’s worth of difference between the Democrat and Republican parties,” a virtual echo of Steve Deace’s complaint.

Middle class fury erupts on a fairly regular basis like Old Faithful in Yellowstone National Park but most of all in periods of economic crisis. Perhaps the first examination of this phenomenon was Karl Marx’s “18th Brumaire” that tried to explain how Louis Bonaparte, Napoleon’s nephew, could rule on behalf of the big bourgeoisie while assaulting it both verbally and through actions inimical to its interests. Marx wrote:

As the executive authority which has made itself independent, Bonaparte feels it to be his task to safeguard “bourgeois order.” But the strength of this bourgeois order lies in the middle class. He poses, therefore, as the representative of the middle class and issues decrees in this sense. Nevertheless, he is somebody solely because he has broken the power of that middle class, and keeps on breaking it daily.

You will, of course, note how Marx is focused on the contradictions of Bonaparte’s rule. A government committed to the “bourgeois order” carries out policies that violate the wishes of the very class on whose behalf it rules, drawing upon the power of a middle-class that has become alienated by the very order that makes it insecure. This is the same pattern that existed in fascist Italy, Germany and Spain but to a degree never seen before.

Throughout its existence as a class, the bourgeoisie has often relied on the middle class to impose its will even if there are appearances that a “new order” has prevailed. Marx’s article was the origin of the term Bonapartism, a useful way of looking at political figures who appear to rule above and beyond the major social classes while cultivating the impression that it rests on the will of the “people”. Juan Peron was an example of left-Bonapartism while DeGaulle was an example of right-Bonapartism.

While France never became fascist in the 1930s, the threat certainly existed. Trotsky was determined to warn the left about such a possibility in “Whither France”, a work that I hold in the highest regard. I might not be a Trotskyist in terms of the party-building methodology but his analysis of the class struggle will remain valuable as long as there are classes. Trotsky described the ruling Radical Party in 1934 as temporizing in the face of capitalist crisis. Despite the party’s name, it had more in common with the Democratic Party in the USA. Its refusal to act decisively led the middle-class to lean toward the fascists who at least gave the impression that they meant business. Trotsky wrote:

The petty bourgeoisie, the ruined masses of city and country, begins to lose patience. It assumes an attitude more and more hostile towards its own upper stratum. It becomes convinced of the bankruptcy and the perfidy of its political leadership. The poor peasant, the artisan, the petty merchant become convinced that an abyss separates them from all these mayors, all these lawyers and political businessmen of the type of Herriot, Daladier, Chautemps and Co., [Radical Party leaders] who by their mode of life and their conceptions are big bourgeois. It is precisely this disillusionment of the petty bourgeoisie, its impatience, its despair, that Fascism exploits. Its agitators stigmatize and execrate the parliamentary democracy which supports careerists and grafters but gives nothing to the toilers. These demagogues shake their fists at the bankers, the big merchants and the capitalists.

I should make it clear, however, that the Tea Party is not a fascist threat. Fortunately (or unfortunately in another sense) there is no threat because there is no working class radicalism to speak of. Unlike the 1930s, the “Great Recession” has produced no mass leftwing movement in the USA. There are a number of reasons for this but suffice it to say that the existence of various safety nets make survival easier, even though those protections might be hollowed out or abolished in a period of even deeper crisis.

Tim Horras got it right. In his article he urged the need for militant mass action:

If the Left can successfully organize a genuine pole of attraction in the coming years, I remain convinced that poor and working class Americans will have the wherewithal to beat back the “rough beast” of reaction, press on towards social democracy, and finally arrive at a more fair and just society: the cooperative commonwealth.

We should never forget that during the Occupy Wall Street movement, there was hardly a peep about the Tea Party. When the left is on the offensive, the right tends to back down. For that matter, there is not much in the way of rallies by the Tea Party today. As a movement, it is manifested more by press conferences by politicians like Ted Cruz than those menacing gatherings that saw men toting semiautomatic weapons.

The conditions that created Occupy will be with us for the foreseeable future. There’s a tendency for some to view the current phase as one of post-crisis since reports about an uptick in employment and home sales occur daily in the newspapers, radio and television. At least one bourgeois economist warns about expecting prosperity around the corner, however. In an op-ed piece in the NY Times titled “When Wealth Disappears”, Stephen King warns about the horrors that await us. Unlike the novelist, this King’s fears are centered on economic stagnation rather than vampires or werewolves.

NY Times Op-Ed October 6, 2013
When Wealth Disappears
By STEPHEN D. KING

LONDON — AS bad as things in Washington are — the federal government shutdown since Tuesday, the slim but real potential for a debt default, a political system that seems increasingly ungovernable — they are going to get much worse, for the United States and other advanced economies, in the years ahead.

From the end of World War II to the brief interlude of prosperity after the cold war, politicians could console themselves with the thought that rapid economic growth would eventually rescue them from short-term fiscal transgressions. The miracle of rising living standards encouraged rich countries increasingly to live beyond their means, happy in the belief that healthy returns on their real estate and investment portfolios would let them pay off debts, educate their children and pay for their medical care and retirement. This was, it seemed, the postwar generations’ collective destiny.

But the numbers no longer add up. Even before the Great Recession, rich countries were seeing their tax revenues weaken, social expenditures rise, government debts accumulate and creditors fret thanks to lower economic growth rates.

We are reaching end times for Western affluence. Between 2000 and 2007, ahead of the Great Recession, the United States economy grew at a meager average of about 2.4 percent a year — a full percentage point below the 3.4 percent average of the 1980s and 1990s. From 2007 to 2012, annual growth amounted to just 0.8 percent. In Europe, as is well known, the situation is even worse. Both sides of the North Atlantic have already succumbed to a Japan-style “lost decade.”

Surely this is only an extended cyclical dip, some policy makers say. Champions of stimulus assert that another huge round of public spending or monetary easing — maybe even a commitment to higher inflation and government borrowing — will jump-start the engine. Proponents of austerity argue that only indiscriminate deficit reduction, accompanied by reforming entitlement programs and slashing regulations, will unleash the “animal spirits” necessary for a private-sector renaissance.

Both sides are wrong. It’s now abundantly clear that forecasters have been too optimistic, boldly projecting rates of growth that have failed to transpire.

The White House and Congress, unable to reach agreement in the face of a fiscal black hole, have turned over the economic repair job to the Federal Reserve, which has bought trillions of dollars in securities to keep interest rates low. That has propped up the stock market but left many working Americans no better off. Growth remains lackluster.

The end of the golden age cannot be explained by some technological reversal. From iPad apps to shale gas, technology continues to advance. The underlying reason for the stagnation is that a half-century of remarkable one-off developments in the industrialized world will not be repeated.

First was the unleashing of global trade, after a period of protectionism and isolationism between the world wars, enabling manufacturing to take off across Western Europe, North America and East Asia. A boom that great is unlikely to be repeated in advanced economies.

Second, financial innovations that first appeared in the 1920s, notably consumer credit, spread in the postwar decades. Post-crisis, the pace of such borrowing is muted, and likely to stay that way.

Third, social safety nets became widespread, reducing the need for households to save for unforeseen emergencies. Those nets are fraying now, meaning that consumers will have to save more for ever longer periods of retirement.

Fourth, reduced discrimination flooded the labor market with the pent-up human capital of women. Women now make up a majority of the American labor force; that proportion can rise only a little bit more, if at all.

Finally, the quality of education improved: in 1950, only 15 percent of American men and 4 percent of American women between ages 20 and 24 were enrolled in college. The proportions for both sexes are now over 30 percent, but with graduates no longer guaranteed substantial wage increases, the costs of education may come to outweigh the benefits.

These five factors induced, if not complacency, an assumption that economies could expand forever.

Adam Smith discerned this back in 1776 in his “Wealth of Nations”: “It is in the progressive state, while the society is advancing to the further acquisition, rather than when it has acquired its full complement of riches, that the condition of the labouring poor, of the great body of the people, seems to be the happiest and the most comfortable. It is hard in the stationary, and miserable in the declining state.”

The decades before the French Revolution saw an extraordinary increase in living standards (alongside a huge increase in government debt). But in the late 1780s, bad weather led to failed harvests and much higher food prices. Rising expectations could no longer be met. We all know what happened next.

When the money runs out, a rising state, which Smith described as “cheerful,” gives way to a declining, “melancholy” one: promises can no longer be met, mistrust spreads and markets malfunction. Today, that’s particularly true for societies where income inequality is high and where the current generation has, in effect, borrowed from future ones.

In the face of stagnation, reform is essential. The euro zone is unlikely to survive without the creation of a legitimate fiscal and banking union to match the growing political union. But even if that happens, Southern Europe’s sky-high debts will be largely indigestible. Will Angela Merkel’s Germany accept a one-off debt restructuring that would impose losses on Northern European creditors and taxpayers but preserve the euro zone? The alternatives — disorderly defaults, higher inflation, a breakup of the common currency, the dismantling of the postwar political project — seem worse.

In the United States, which ostensibly has the right institutions (if not the political will) to deal with its economic problems, a potentially explosive fiscal situation could be resolved through scurrilous means, but only by threatening global financial and economic instability. Interest rates can be held lower than the inflation rate, as the Fed has done. Or the government could devalue the dollar, thereby hitting Asian and Arab creditors. Such “default by stealth,” however, might threaten a crisis of confidence in the dollar, wiping away the purchasing-power benefits Americans get from the dollar’s status as the world’s reserve currency.

Not knowing who, ultimately, will lose as a consequence of our past excesses helps explain America’s current strife. This is not an argument for immediate and painful austerity, which isn’t working in Europe. It is, instead, a plea for economic honesty, to recognize that promises made during good times can no longer be easily kept.

That means a higher retirement age, more immigration to increase the working-age population, less borrowing from abroad, less reliance on monetary policy that creates unsustainable financial bubbles, a new social compact that doesn’t cannibalize the young to feed the boomers, a tougher stance toward banks, a further opening of world trade and, over the medium term, a commitment to sustained deficit reduction.

In his “Future of an Illusion,” Sigmund Freud argued that the faithful clung to God’s existence in the absence of evidence because the alternative — an empty void — was so much worse. Modern beliefs about economic prospects are not so different. Policy makers simply pray for a strong recovery. They opt for the illusion because the reality is too bleak to bear. But as the current fiscal crisis demonstrates, facing the pain will not be easy. And the waking up from our collective illusions has barely begun.

Stephen D. King, chief economist at HSBC, is the author of “When the Money Runs Out: The End of Western Affluence.”

July 30, 2013

Obama doublespeak on the economy

Filed under: economics,financial crisis,Obama,workers — louisproyect @ 7:05 pm

Last week Obama gave a speech at Knox College in Illinois on the economic situation that like his remarks on Trayvon Martin a few days earlier was filled with the number of bromides calculated to give his MSNBC posse just enough to rally around. To give you a sense of the shallowness of it all, he uses the term “folks” 26 times. One supposes that with people like Al Sharpton and Ed Schultz, the only thing that would cause a breach with the President is a Swiftian modest proposal that hungry folks eat their children.

Early on in the speech he says:

See, I had just spent a year traveling the state and listening to your stories — of proud Maytag workers losing their jobs when the plant moved down to Mexico. (Applause.) A lot of folks here remember that. Of teachers whose salaries weren’t keeping up with the rising cost of groceries. (Applause.) Of young people who had the drive and the energy, but not the money to afford a college education. (Applause.)

The hypocrisy in this paragraph reaches achieves Olympian proportions. In 2008, when Obama was first making these demagogic appeals about the fate of Maytag workers, the Chicago Tribune reported that the main union at the plant urged a vote for Hillary Clinton. Leaving aside the logic of that advice, the union was correct to point out that Lester Crown, one of Maytag’s directors, raised tens of thousands of dollars for Obama’s campaigns since 2003. Crown’s son James was Obama’s 2008 campaign’s financial director for that matter. After Lester Crown revealed that Obama never brought up the plant closing with him, Obama’s alibi was that he was unaware that the Crowns had anything to do with Maytag. Oh, sure. To give you an idea of the incestuous relationship between big capital and the Democratic Party, as if you needed any reminder, here’s what warisacrime.org had to say:

Lester Crown first met Obama when he was a 27-year-old intern at the Sidley Austin law firm in Chicago in the summer of 1989. One of Obama’s law professors at Harvard, Martha Minow, had recommended Obama to her father, Newton Minow, who was a partner at the firm. Minow took Obama under his wing and introduced him to his friend Lester Crown. Crown recalls that Minow called him and “said we have in our office a young man who I think is really going places and I’d like you to meet him.” Crown says he has been a supporter ever since.

For people who applauded Obama’s plaint over the Maytag runaway plant, my advice is that outfits like SeaWorld get rid of their trained seals and replace them with these clapping fools.

Obama claims that he is also troubled by the fact that there were “teachers whose salaries weren’t keeping up with the rising cost of groceries.” Really? If Obama really cared about teachers, he would take a stand against the union-busting initiatives of his ex-Chief of Staff Rahm Emanuel or the charter school agenda of his Secretary of Education Arne Duncan. Using the excuse that teacher productivity must be raised, administrations across the country are firing teachers left and right. In 2010 the school board of Central Falls fired all 93 teachers, a move that Obama described: “If a school continues to fail year after year after year and doesn’t show sign of improvements then there has got to be a sense of accountability. That happened in Rhode Island last week.” This led Zeph Capo, a teachers union official in Houston, to state:

I ripped the Obama sticker off of my truck. We worked hard for this man, we talked to our neighbors and our fellow teachers about why we should support him, and we’re having to dig the knife out of our back.

One imagines that Capo fell into line when the 2012 election season started. After all, Obama was better than Romney. Romney would have not only fired the teachers but tied them to the roof of his car on a vacation trip to Canada. We can’t have that, can we?

Continuing along in the education vein, Obama added that the number of “young people who had the drive and the energy, but not the money to afford a college education” distressed him. This statement above all brought to mind the character that Jon Lovitz played on Saturday Night Live, the Pathological Liar.

I didn’t always lie. No, when I was a kid, I told the truth. But then one day, I got caught stealing money out of my mother’s purse. I lied. I told her it was homework – that my teacher told me to do it. And she got fired! Yeah, that’s what happened!

Just days after Obama’s speech, Congress passed a bill that tied student loan interest rates to financial markets. This proposal was not the typical Republican plan “forced” on Obama but was his own profit-making scheme inspired by a paper written by Jason Delisle at the New American Foundation, whose president Anne-Marie Slaughter (appropriately named) was Hillary Clinton’s Director of Policy Planning at the State Department. As a member of the Peterson-Pew Commission on Budget Reform and the Committee for a Responsible Federal Budget, Delisle had just the right credentials to draft a policy paper that would stick it to the students. The Huffington Post reported that a record $51 billion profit could be expected from the student loan shark racket cooked up by Obama. That’s greater than the earnings of America’s most profitable companies and roughly equal to the combined net income of the four largest U.S. banks by assets.

Arguably the only Democratic Senator with a shred of integrity, Elizabeth Warren stated: “I can’t support a proposal that squeezes even more profits out of our kids. In fact, I think this whole system stinks.’’

After listing these items that fell in the doom-and-gloom category, Obama raised his hand over his eyebrows like the captain of a leaking vessel and saw the sun breaking through the dark clouds. Good-god-almighty, jobs were on the horizon: “So you add it all up, and over the past 40 months, our businesses have created 7.2 million new jobs. This year, we’re off to our strongest private sector job growth since 1999.”

An honest appraisal of the job market, however, would be based on the payroll-to-population ratio, something that reflects the real health of the economy. If, for example the population of a country was one million and the number of employed doubled from 100 to 200, who would cheer about that?

On June 6th Zero Hedge reported that the payroll-to-population was worse than a year ago and that “the unemployment rate is also rising with under-employment – at 18.0% – near 15 month highs.”

There is one sector that appears booming, however. The number of minimum wage waiters and bartenders hit an all-time high of 10,339,800 workers, increasing by a 51,700 in just one month. But mixing drinks like Tom Cruise in “Cocktail” must be a lot more fun than working in some boring factory with a health plan, so it is not that troubling to learn from Zero Hedge that manufacturing jobs have dropped four months in a row, now numbering 11.964 million jobs. Pretty soon the number of bartenders, waiters, and busboys will exceed the number of factory workers. I wonder what Marxist value theorists will make of that?

Obama was also pumped up over the fact that Ford is now hiring workers for its Kansas City plant. Glory be, America is coming back! Well, one can certainly understand why Ford would want to increase the number of workers in Kansas City since it cut a deal with the UAW that entry-level workers will be paid $16 per hour, just about the same amount that fast food workers in New York are struggling to win. Not only that, it will take a lot longer to get a raise. That’s about $31,000 per year, good enough for a mobile home and a night out once a week at the local Burger King. No wonder the UAW bureaucrats got out the vote for Obama in 2012. They, Obama, and the Ford bosses see eye to eye.

Obama made sure to get everybody on board the fracking bus. “We produce more natural gas than any country on Earth. We’re about to produce more of our own oil than we buy from abroad for the first time in nearly 20 years.” That’s great. With shale oil produced by fracking, we’ll be able to take advantage of all those new bartenders to get a pint of beer rather than put up with water catching fire as it flows from your faucet at home.

To make sure that Rachel Maddow will continue to coo over him, Obama made sure to throw in some cheap demagogy:

Even though our businesses are creating new jobs and have broken record profits, nearly all the income gains of the past 10 years have continued to flow to the top 1 percent. The average CEO has gotten a raise of nearly 40 percent since 2009. The average American earns less than he or she did in 1999. And companies continue to hold back on hiring those who’ve been out of work for some time.

Oooh, agitating against the top 1 percent. The Kenyan Marxist is at it again.

One understands why Obama would have to throw in a few words like these. Not only do they come cheap, at least those still laboring under the illusion that the capitalist system is redeemable can con themselves into believing that the President really cares.

Those illusions might finally be breaking down. Who cannot be cheered by the sight of fast food workers calling a one-day strike in New York? As the one host on MSNBC with a smidgen of liberalism left, Chris Hayes had on three people involved with the action last night, as well as my own Congressperson Carolyn Maloney who was on the picket line. Theirs is the voice of a new labor movement. It is a sign of its strength that it can draw upon Maloney for support:

HAYES: We`re talking about the fast food strike under way across the country tonight. Still with me at the table, Tsedeye Gebreselassie from the National Employment Law Project, McDonalds worker, Kareem Starks who is striking and Gregory Reynoso from Fast Food Forward, and joining us is Congresswoman Carolyn Maloney, Democrat from New York. Great to have you here, Congresswoman.

REPRESENTATIVE CAROLYN MALONEY (D), NEW YORK: Great to be here.

HAYES: Gentlemen, I want to get your reaction to the bite I played. If people are feeling they`re not being paid adequately, they have to go find a job someplace elsewhere paid higher wages. What`s your response to that? Just go get a higher wage job.

STARKS: You know, I work for McDonald`s for, like, five months. Before that, I worked for the Parks Department, climbing trees. I made $10.25 more than what I`m making now. So I`ve had a better job, and I was never in poverty like I am now. But whoever is, like, against it, obviously isn`t ever made $7.25 and never tried to budget paying for two kids and an apartment and bills and food all for $7.25.

HAYES: My sense, Gregory, if there were jobs available that paid higher wages, you would be happy to take them.

REYNOSO: Yes, I would be happy. The point is, it`s not these types of opportunities for everybody. There are not a lot of people what can really go out and find these types of jobs. That`s why people have to live on $7.25.

HAYES: Congresswoman, it`s fairly unusual to find members of Congress walking the picket line. There were a number. Why were you out there?

MALONEY: Well, I was looking for you, Chris.

HAYES: I was prepping this segment.

MALONEY: We were out there to show solidarity, the fight we have before Congress. We have a bill before Congress, HR-1010. We have 142 co- sponsors, 30 in the Senate and it would raise the minimum wage to $10.10, over 3 years, 95 cents a year. The president even in 2009 was calling for minimum wage increase in his state of the union and, of course, last week in Illinois. It`s a priority of his. It`s a priority of ours. We`re working hard to pass it.

HAYES: In the past, raising the minimum wage, you`ve been able to get some Republicans to vote for it. There was a minimum wage raised under George W. Bush that happened. There were a number of Republican votes. Is the Republican Party, do you think you can find people on the other side of the aisle who would vote for this bill?

MALONEY: I believe it merits bipartisan support and we`ll certainly be working to secure it. You`re not going to secure it if you don`t try.

HAYES: That doesn`t occur to me very much.

MALONEY: We`re going to try. We`re going it try because it`s too important and talking to Greg and Kareem, you see the importance of it. I believe you`re working two jobs.

REYNOSO: Yes.

MALONEY: He doesn`t have time to sleep. He`s working two jobs and it`s hard.

STARKS: I actually work the overnight shift last night and I`m here now.

HAYES: Thank you for coming in.

STARKS: I just, like, want to thank everybody for the support.

HAYES: Tsedeye, when I was talking to Kareem and Gregory about this idea that if you want a better job then go get a job that pays a higher wage what is happening right now in this economy, I don`t think this is underappreciated. The jobs are being created at the bottom of the wage scale. That is a trajectory that many Americans are experiencing.

GEBRESELASSIE: Kareem`s story is the story of our economy and how our labor markets have shifted so we`ve like hemorrhaged these decent paying jobs. What`s taking its place jobs that pay low wages like fast food and retail. Not only are those the jobs that are being created. They`re also jobs where real wages are actually declining, you know, since –

MALONEY: Out of the 3.2 million low-income jobs, 2/3 of them are women. Women are disproportionately in these low-income jobs.

GEBRESELASSIE: They`re also adults. That`s the other thing.

MALONEY: They always say they`re teenagers. They`re not. Most of them are –

HAYES: Were your co-workers, your co-workers, the image is, like, these are teens on summer jobs. Your co-workers were supporting families.

REYNOSO: Yes.

STARKS: There`s a few co-workers I know that has kids and supporting families and paying bills and stuff like that. I mean, it`s probably — McDonald`s and fast food chains usually target younger kids or whatever, but at the end of the day, there are still older people that have these jobs. There`s, like, a 60-year-old lady in my store.

GEBRESELASSIE: The median age for a fast food worker in this country is 29 years old.

HAYES: Wow.

GEBRESELASSIE: That is an adult. The other thing the industry says these are stepping stone jobs.

HAYES: You could rise up in the ranks.

GEBRESELASSIE: That`s just not the case. There`s limited opportunities for advancement.

REYNOSO: People from 50 years old, they`ll be working in these companies. Imagine those people supporting families.

HAYES: Will you quickly show that mobility graphic? It`s 2.2 percent jobs in the fast food industry are managerial, professional and technical occupations.

GEBRESELASSIE: The vast majority, 90 percent are frontline occupations. The median wage is $8.94 an hour.

HAYES: Compared to all industries, 31 percent –

MALONEY: It hasn`t gone up in four years.

HAYES: And it hasn`t gone up in four years. Tsedeye Gebreselassi from the National Employment Law Project, McDonalds worker, Kareem Starks, Gregory Reynoso from Fast Food Forward, and Congresswoman Caroline Maloney from New York, thank you all.

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