Louis Proyect: The Unrepentant Marxist

December 8, 2020

Bob Dylan’s $300 million dollar bash

Filed under: beatniks,capitalism,commercialism,fashion,music — louisproyect @ 8:38 pm

Well, I looked at my watch
I looked at my wrist
Punched myself in the face
With my fist
I took my potatoes
Down to be mashed
Then I made it over
To that million dollar bash
Ooh, baby, ooh-ee
Ooh, baby, ooh-ee
It’s that million dollar bash

–Bob Dylan, “The Million Dollar Bash”

Yesterday the NY Times reported on the blockbuster deal between Bob Dylan and the Universal Music Publishing Group. They acquire ownership of his entire songwriting catalog for $300 million. It was clear that the deal would pay off for both parties. Universal would benefit from the royalties paid by other artists covering his songs and from corporations using his songs to accompany their commercials. Perhaps Universal began to salivate seeing the new Volvo ad that has Pete Seeger’s “Hard Time in the Mill” playing in the background. It depicts a young couple trying to manage the job of caring for twin boy infants, changing diapers, etc. I doubt that anybody in the market for a $40,000 car will identify much with the lyrics but, then again, I am no expert on marketing.

Every morning just at five
Gotta get up, dead or alive
It’s hard times in the mill my love
Hard times in the mill

The FolkSongIndex website provides some background on the song:

The [textile] industry’s growth was based on a vastly expanding number of women and children in the mills. In the four textile states in 1890, men formed only 35 percent of the work force, women made up 40 percent, and children between the ages of ten and fifteen made up 25 percent. A seventy-hour workweek earned about $2.50 in 1885 and slightly less in 1895. At the same time profits were phenomenal. According to historian Broadus Mitchell, “It was not unusual . . . in these years to make 30 to 70 percent profit.”

I have no idea how or why Pete Seeger’s estate would have allowed his performance to be associated with a company like Volvo that would build a factory in a right-to-work state like South Carolina. As it happens, Volvo is owned by the Zhejiang Geely Holding Group Co. in China. Given the Chinese preference for a tame workforce, it is doubtful that a union will ever prevail at Volvo, no matter the willingness to exploit Seeger’s pro-working class song.

As for Dylan, he is not a virgin when it comes to selling out. The Times article mentioned his promiscuous past:

In 1994, Dylan let the accounting firm Coopers & Lybrand — predecessor of the current giant PricewaterhouseCoopers — use Richie Havens’s rendition of his 1964 protest anthem “The Times They Are A-Changin’” in a TV spot. Fans, media commentators and even other artists reacted in horror; Time magazine wrote about the controversy with the headline “Just in Case You Hadn’t Heard — The ’60s Are Over.”

The Coopers & Lybrand spot was far from Dylan’s last commercial license: He did a prominent deal for a Victoria’s Secret TV spot in 2004, and later worked with Apple, Cadillac, Pepsi and IBM. Two years ago, he launched a high-end whiskey brand, Heaven’s Door.

Like most rich people, Dylan will undoubtedly (and his estate after he dies) make substantial contributions to the charities he favors like Amnesty International and the End Hunger Network. But what troubles people is the way that corporations exploit his reputation as a rebel in order to sell crap. Take the Victoria Secret’s ad:

Victoria’s Secret is a terrible company, allowing Jeffrey Epstein to use its credibility to carry out his crimes.

Perhaps we’ve reached the point where “cred” is only established by relying on the music of icons like Bob Dylan and Peter Seeger. Dylan, after all, will always convey rebelliousness just as Jack Kerouac still does for many undergraduates today. Even the ultimate bad boy William S. Burroughs figured out that there was money to be made from one’s reputation:

I should mention that Jack Kerouac got into the act himself:

Madison Avenue pays attention to anti-corporate iconography because it helps them market goods to the 18-30 year old consumer group. After all, unless you are an evangelical Trump voter in that sector, you too want to buy things that make you feel bold and special.

Was there any culture that was more hostile to the corporate world than the punk music scene? Take the Pogues, for example. This great Irish punk band was not only on the left politically but featured a singer named Shane MacGowan who abused alcohol and drugs. None of that got in the way with them doing a Cadillac commercial:

In 1988, Thomas Frank started a magazine called Baffler that sought to explain how capitalism was capable of co-opting the rebel. It stopped publishing in 1995, perhaps because it had become commonplace about the interaction. Frank relaunched it in 2011 as a general leftwing magazine that I subscribe to.

The original Baffler had the slogan “Commodify Your Dissent” that became the title of a collection Frank published in 1997. Have a look at an excerpt from the first chapter to get an idea of how they got to the heart of this most peculiar relationship:

Why Johnny Can’t Dissent

The public be damned! I work for my stockholders.
–William H. Vanderbilt, 1879

Break the rules. Stand apart. Keep your head. Go with your heart.
–TV commercial for Vanderbilt perfume, 1994

Capitalism is changing, obviously and drastically. From the moneyed pages of the Wall Street Journal to TV commercials for airlines and photocopiers we hear every day about the new order’s globe-spanning, cyber-accumulating ways. But our notion about what’s wrong with American life and how the figures responsible are to be confronted haven’t changed much in thirty years. Call it, for convenience, the “countercultural idea.” It holds that the paramount ailment of our society is conformity, a malady that has variously been described as over-organization, bureaucracy, homogeneity, hierarchy, logocentrism, technocracy, the Combine, the Apollonian. We all know what it is and what it does. It transforms humanity into “organization man,” into “the man in the gray flannel suit.” It is “Moloch whose mind is pure machinery,” the “incomprehensible prison” that consumes “brains and imagination.” It is artifice, starched shirts, tailfins, carefully mowed lawns, and always, always, the consciousness of impending nuclear destruction. It is a stiff, militaristic order that seeks to suppress instinct, to forbid sex and pleasure, to deny basic human impulses and individuality, to enforce through a rigid uniformity a meaningless plastic consumerism.

As this half of the countercultural idea originated during the 1950s, it is appropriate that the evils of conformity are most conveniently summarized with images of 1950s suburban correctness. You know, that land of sedate music, sexual repression, deference to authority, Red Scares, and smiling white people standing politely in line to go to church. Constantly appearing as a symbol of arch-backwardness in advertising and movies, it is an image we find easy to evoke.

The ways in which this system are to be resisted are equally well understood and agreed-upon. The Establishment demands homogeneity; we revolt by embracing diverse, individual lifestyles. It demands self-denial and rigid adherence to convention; we revolt through immediate gratification, instinct uninhibited, and liberation of the libido and the appetites. Few have put it more bluntly than Jerry Rubin did in 1970: “Amerika says: Don’t! The yippies say: Do It!” The countercultural idea is hostile to any law and every establishment. “Whenever we see a rule, we must break it,” Rubin continued. “Only by breaking rules do we discover who we are.” Above all rebellion consists of a sort of Nietzschean antinomianism, an automatic questioning of rules, a rejection of whatever social prescriptions we’ve happened to inherit. Just Do It is the whole of the law.

The patron saints of the countercultural idea are, of course, the Beats, whose frenzied style and merry alienation still maintain a powerful grip on the American imagination. Even forty years after the publication of On the Road, the works of Kerouac, Ginsberg, and Burroughs remain the sine qua non of dissidence, the model for aspiring poets, rock stars, or indeed anyone who feels vaguely artistic or alienated. That frenzied sensibility of pure experience, life on the edge, immediate gratification, and total freedom from moral restraint, which the Beats first propounded back in those heady days when suddenly everyone could have their own TV and powerful V-8, has stuck with us through all the intervening years and become something of a permanent American style. Go to any poetry reading and you can see a string of junior Kerouacs go through the routine, upsetting cultural hierarchies by pushing themselves to the limit, straining for that gorgeous moment of original vice when Allen Ginsberg first read “Howl” in 1955 and the patriarchs of our fantasies recoiled in shock. The Gap may have since claimed Ginsberg and USA Today may run feature stories about the brilliance of the beloved Kerouac, but the rebel race continues today regardless, with ever-heightening shit-references calculated to scare Jesse Helms, talk about sex and smack that is supposed to bring the electricity of real life, and ever-more determined defiance of the repressive rules and mores of the American 1950s–rules and mores that by now we know only from movies.

February 2, 2020

The Fairway bankruptcy and the role of private equity

Filed under: capitalism,food — louisproyect @ 11:25 pm

Although Fairway is a chain of 15 grocery stores in and around the metropolitan NY area, its imminent Chapter 11 bankruptcy reflects broader trends in the American economy that define not only the Trump presidency but the predatory character of American capitalism of the past 25 years at least.

I may have more interest in the Fairway story than other leftists for several reasons. To start with, there’s a good chance that the store near my high-rise will be closing and thus leaving me with no alternative except to shop at Whole Foods. In New York, there are two tiers of grocery stores with Whole Foods, Fairway and Trader Joe’s constituting the high end and Gristedes and similar stores the low-end. Owned by billionaire John Catsimatidis, who once compared raising taxes on the wealthy to how “Hitler punished the Jews,” Gristedes store notorious for its price-gouging and the general unavailability of fish except for farm-raised salmon.

I also tend to be more interested in the nuts and bolts of the fruit and vegetable business since my father owned one, just like the Glickberg family that started Fairway in 1935. In a New Yorker article written by Adam Gopnik, a Fairway shopper himself, he captures what is essential about the store:

Born in the early nineteen-thirties as a fruit-and-vegetable stand on the Upper West Side, Fairway was originally the multi-generation property and obsession of the Glickberg family, starting as a more down-market variant of Zabar’s, which is still in business up the street. Fairway’s magic, as one of its former partners, Steven Jenkins, wrote in a lively and lovely memoir of his years there, “The Food Life,” lay in the juxtaposition of grungy, discount-minded practicality with genuinely inspired and discriminating product choices.

Like Gopnik and most New Yorkers, I will mourn the passing of a NY icon that was as identified with the city as Strand’s bookstore or the Sabrett’s hot-dog stands, but I will also understand it as the logical outcome of a world in which cash is king:

This produces something like a paradox of possessiveness, a contradiction of consumption. We know that a transaction of money for goods is simply that, but at the same time we feel the passing of the place where the transaction occurred as something far more than a material loss. It is no accident, to use a locution favored by the Marxists, that John Updike, in detailing the last days of his echt-American character Harry (Rabbit) Angstrom, made one of his final epiphanies the realization that the Christmas displays in the Kroll’s department store, in his mangy but beloved home town of Brewer, were merely commercial come-ons, to be discarded as soon as they stopped paying profits to the store’s owner—that what, in Harry’s boyhood, had been “those otherworldly displays of circling trains and nodding dolls and twinkling stars in the corner windows as if God Himself put them there” were not that at all.

My perspective on the Fairway story owes a lot to a friend who has worked in private equity for decades and who is very familiar with how the store became the latest victim of Wall Street greed. If you’ve seen Oliver Stone’s “Wall Street,” you’ll be familiar with Gordon Gekko, the character played by Michael Douglas based on the corporate raiders of the 1980s such as Bard College graduate Asher Edelman, Ivan Boesky, Carl Icahn, and Michael Milken. All of these financiers made fortunes out of leverage buyouts of the kind Gekko was counting on to dissolve an airline he had just bought, selling off its assets in order to cash in on the pension plan, and leaving the employees to their own devices.

You don’t hear the term LBO much nowadays but private equity firms operate on the same basis but supposedly with less of the mercenary ambitions of men like Asher Edelman and company. Edelman became notorious when after agreeing to teach a class on corporate raiding at Columbia University’s business school, he offered $100,000 to any student who came up a recommendation for a company to take over.

You can get an idea of the continuity between the bad old days and the current-day reformed private equity industry from the company that ranks number 2 in terms of assets. That is KKR, the initials that stand for Kohlberg Kravis Roberts. Kravis is Henry Kravis, who was one of the LBO’ers featured in the book “Barbarians at the Gate”. Co-written by Bryan Burrough and John Helyar, it described the battle vulture firms fought for ownership of RJR Nabisco, an unlikely merger of a tobacco company and one that made cookies. Warren Buffett, one of the players, made an observation that really displayed the mindset of buyout specialists: “I’ll tell you why I like the cigarette business. It costs a penny to make. Sell it for a dollar. It’s addictive. And there’s fantastic brand loyalty.”

Another private equity firm in the top ranks is Bain Capital, Mitt Romney’s firm, which in partnership with KKR and a real estate investment firm called Vornado, bought Toys R Us in a leveraged buyout. Leveraging meant that private equity firms put up a relatively small amount of cash out of their own wallet and allow the target firm to put up most of the money by borrowing from the banks. In most cases, under new ownership, the firm is expected to use the capital to expand rapidly and show a handsome profit. If everything goes according to plan, it will be sold to new investors within five years or so. If you’ve seen the show “Flipping Out” on cable TV, you’ll get an idea of how all this works. Jeff Lewis, the star of the show, would buy a run-down house, make improvements, and then put it on the market. There’s always a risk that the house will not attract a buyer. Unlike Jeff Lewis, the private equity firm will not bear that much of a loss since the debt belongs to the target company and the one that victimized it.

In 2007, the Glickberg family decided that they would retire from the grocery business. One family member, Howie Glickberg, the founder’s grandson, decided to keep it going through a deal with Sterling Capital Investors, a Connecticut private equity firm that loaded it with debt and, with Glickberg’s agreement, embarked on an aggressive expansion plan. Within a few years, the chain would include 15 stores, including the one near me. Before long, Glickberg was eased out of the new company. Undoubtedly, his aversion to rapid expansion antagonized the Sterling partners who now ran the company and who enjoyed massive salaries, which were one of the causes of Fairway’s red ink.

In addition to the financial drain from the extravagant fees paid to the Sterling crew, there were other problems that dragged Fairway down. To start with, the suburban stores did not have the same cachet that the NY stores had. In Manhattan and Brooklyn, Fairway was an icon. In New Jersey or Connecticut, not so much. On top of that, it had to contend with Whole Food that was able to cut costs. Unlike Fairway, which was a union shop with good benefits, Whole Foods was not. Founded by libertarian John Mackey in 1981, it is the second-largest non-union grocery store behind Walmart. New employees would get a pamphlet titled “Beyond Unions.”

Going from the frying pan into the fire, Whole Foods employees began reporting to a new owner in 2017, Amazon’s Jeff Bezos. Instead of getting a pamphlet, new employees are expected to sit through a 45-minute anti-union video. Ideally, Bezos would prefer a store without human labor and is well on his way to making that happen. He is now using a robotic barista from Briggo in some of his stores and more might be on the way.

There is every possibility that Bezos will convert Whole Foods into a new entity called Amazon Go that will be cashierless. The technology would use AI-powered visual recognition and sensors to track items and tie them back to the shopper purchasing it. Shoppers then would scan their Amazon mobile app upon entering the store to get started.

It was not only Whole Foods that cut into Fairway’s profits. They also had to deal with FreshDirect. Unlike Whole Foods or Fairway, FreshDirect (based in the NY metropolitan area, like Fairway) has no stores. You order from a website and then get your order delivered to your door. Ironically, FreshDirect was started by a former Fairway executive but the funding came from Peter Ackerman, a leverage buyout specialist who made millions working with the dirtbag criminal Michael Milken at Drexel-Burnham. With the money he made out of crooked deals on Wall Street, Ackerman started something called the International Center on Nonviolent Conflict that has a lot in common with Gene Sharp’s operations. He was also the past president of Freedom House, an old-line anti-Communist think-tank.

As to Fairway’s future, there’s a good chance that the five Manhattan stores will be bought by ShopRite, a grocery chain that has been around since 1946. A retailers’ cooperative that uses economy of scale, including bulk purchases to lower prices, this would be a much better fit for Fairway than another private equity vulture. While it is by no means a workers cooperative, this type of business would likely be a return to the good old days for Fairway.

Speaking of retailers’ cooperatives, I should also put in a good word for Key Foods, which is one of my favorites. Although it is not as upscale as Fairway, if not downright funky, its bulk purchases as a co-op undoubtedly explains the eye-opening discounts. For example, a bottle of Tropicana orange juice routinely goes for $5.50 at Gristedes while the price at Key Foods, just two blocks from my high-rise, is only $3.99. I also appreciate that around half the cashiers are hijab-wearing Muslims. I can also report that Key Food is a union shop, even though UCFW has had its issues with management over the years.

Finally, it is worth mentioning that Elizabeth Warren has targeted the private equity vultures that have resulted in 10 of the largest 14 retail bankruptcies since 2012. In an article she posted on Medium titled “End Wall Street’s Stranglehold On Our Economy,” Warren took aim at private equity:

My plan would transform the private equity industry and end this looting with a comprehensive set of legal changes, including:

    • Putting private equity firms on the hook for the debts of companies they buy, making them responsible for the downside of their investments so that they only make money if the companies they control flourish.
    • Holding private equity firms responsible for certain pension obligations of the companies they buy, so that workers have a better shot of getting the retirement funds they earned.
    • Eliminating the ability of private equity firms to pay themselves huge monitoring fees and limiting their ability to pay out dividends to line their own pockets.
    • Changing the tax rules so that private equity firms don’t get sweetheart tax rates on all the debt they put on the companies they buy.
    • Modifying bankruptcy rules so that when companies go bust, workers have a better shot at getting pay and benefits and executives can’t pocket special bonuses.
    • Preventing lenders and investment managers from making reckless loans to private equity-owned companies already swimming in debt and then passing along the danger to the market by requiring them to retain some of the risk.
    • Empowering investors like pension funds with better information about the performance and effects of private equity investments and preventing private equity funds from requiring investors to waive their fiduciary obligations.
    • Closing the carried interest loophole that lets firm managers pay ultra-low tax rates on the money they loot.

I don’t plan to vote for her if she is the DP candidate, needless to say, but good for her.

December 21, 2019

Pete Buttigieg and the $900 bottles of wine: what they tell us about capitalist politics

Filed under: capitalism,two-party system,water — louisproyect @ 8:27 pm

Last Thursday, during the Democratic Party presidential candidate debate, Elizabeth Warren took a dig at Pete Buttegieg, the gay, neoliberal Mayor of South Bend, Indiana:

So, the mayor just recently had a fund-raiser that was held in a wine cave, full of crystals and served $900-a-bottle wine. Think about who comes to that. He had promised that every fund-raiser he would do would be open-door, but this one was closed-door. We made the decision many years ago that rich people in smoke-filled rooms would not pick the next president of the United States. Billionaires in wine caves should not pick the next president of the United States.

Buttegieg defended himself by pointing out that she too has taken donations from rich people and that he, unlike her and the other people on stage with them, was no millionaire. Clearly anticipating some static over his unabashed sucking up to billionaires, he told her:

Senator, your presidential campaign right now as we speak is funded in part by money you transferred, having raised it at those exact same big-ticket fund-raisers you now denounce. Did it corrupt you, Senator? Of course not. So to denounce the same kind of fund-raising guidelines that President Obama went by, that Speaker Pelosi goes by, that you yourself went by until not long ago, to build the Democratic Party and build a campaign ready for the fight of our lives, these purity tests shrink the stakes of the most important election. We’d like to bring everyone in.

Warren, trying to triangulate between Bernie Sanders’s grass-roots fundraising and the sort of feeding at the trough that routinely goes on in Democratic Party campaigns for President and Congress, had no answer for this. She is clearly a stealth candidate who, if elected, would probably cave in to corporate interests willingly. In the unlikely event that Sanders was elected, the caving would be unwillingly.

With much of the controversy revolving around the ostentation of the fund-raiser, much more has to be said about Craig Hall who was upset over being in the spotlight. Hall, a real estate and winery baron who has donated more than $2.4 million to Democratic Party candidates over the years, felt like they were picking on the wrong guy: “These people don’t know who they’re talking about when they throw me in the class that they did. As much as it’s frustrating, it’s more disappointing to me that Democrats are fighting with each other when we have a common goal, which is to get back to the White House.”

Like most billionaires, Hall is involved in philanthropy, which means that for every $100 he gets in tax cuts, he gives “worthy causes” $10 off the top—and tax-deductible, if you please. Unlike his fellow real estate magnate, the grubby Donald Trump, Hall runs what practically sounds like it was based on Murry Bookchin’s writings: “[W]e strive to do business responsibly. This includes developing environmentally sustainable buildings, encouraging employee volunteerism through paid time off‑, and operating our business with unwavering integrity, morality and a commitment to truth. We believe in doing what is right over what is easy.”

In the mid-80s, Hall was implicated in a crooked deal to avoid bankruptcy with Jim Wright, a member of the House of Representatives from Texas who was as powerful as Nancy Pelosi in his day. Like the 2007 subprime mortgage crisis, the 1980s Savings and Loan crisis was all about gambling on real estate. Craig Hall was Texas’s biggest real estate mogul, who had financed his empire with high-interest loans from S&L’s that were never supposed to get into that kind of business, just as banks 30 years later were not supposed to get involved with mortgage-based securities.

Hall used his massive donations to the Democratic Party to influence Jim Wright’s intervention on his behalf. Overseeing the efforts to keep the failing S&L’s afloat was a government agency called the Federal Home Loan Bank Board. In a strong-arm effort reminiscent of Trump’s phone call with Zelensky, Wright told the regulators to look the other way when it came to Craig Hall, who was having trouble making payments on more than $1 billion in mortgages to some 20 S&Ls. If he couldn’t pay, the S&L’s would come tumbling down like dominos, which were under the supervision of the Federal Savings and Loan Insurance Corp. (FSLIC).

Like Hall, the FSLIC was on thin ice. When the S&L crisis was just beginning in 1986, the FSLIC asked Congress for permission to sell $15 billion in bonds to recapitalize their insurance fund. The “FSLIC recap bill” was approved by the House and headed for a vote.

In late September of 1986, Wright called the Federal Home Loan Bank Board Chairman Edwin Gray and asked him to lay off Craig Hall using the same kind of indirection mafia bosses and Donald Trump use. Gray told House Ethics Committee investigators that Wright did not ask for anything specific, but “anybody who has worked in government for very long knows that when the soon-to-be speaker of the House of Representatives is asking you to look into it, its not just anybody.”

On September 26, Wright put a hold on the bill to recapitalize the FSLIC. As Hall himself put it, “Congressman Wright has in some manner held up the bill and … it appeared it somehow related to us.” Like the cut-off of military aid to Ukraine, Wright’s pressure had the desired effect. Hall got new loans at tax-payer expense and dodged bankruptcy.

One of the other types of pressure that Wright used was to get regulators fired if they were too uppity. Edwin Gray told ethics investigator about one instance:

And so I received a call and it basically was another call about the treatment of Texas S&L; institutions. And then (Wright) said that he understood that (names a federal bank regulator in Texas)) was a homosexual. And he understood from people that he believed and trusted (that the regulator) had established a ring of homosexual lawyers in Texas at various law firms, and that in order for people to deal with the Federal Home Loan Bank supervision people, they would have to deal with this ring of homosexual lawyers.

Wright’s ham-fisted interference eventually led to the end of his career, which unfortunately doesn’t seem in the cards for Trump. He resigned as House Speaker on May 31, 1989, the first on account of a scandal.

Like all financial crises, the S&L crisis petered out and Hall began making out like a bandit again. He wrote a book in 1990 titled “News of My Death Was Greatly Exaggerated: How I Survived the Texas Depression: My Financial Strategies for the ’90s.” Somehow I doubt that it gets too deeply in Jim Wright’s role in keeping him alive.

Once the cash started flowing again, Hall began using it to buy protection if disaster fell again. He got added to Vice President Al Gore’s rolodex and attended a White House coffee gathering. President Clinton nominated his wife Kathryn to serve as ambassador to Austria, undoubtedly because the Halls contributed more than $240,000 to the Democrats during the 1996 election cycle and not because of her expertise in Middle European diplomacy. The Center for Public Integrity’s Charles Lewis said, “The fact that a sitting Vice President would call someone whose failed S&L cost the taxpayers hundreds of millions of dollars — that’s a metaphor for the whole campaign fundraising scandal itself. … This person Hall should be a pariah that politicians would run away from.” The Fort Worth Star-Telegram reported that more than $100,000 of the Hall’s contributions to the DNC came after the Halls received a call from Gore’s office in April 1996.

Showing the same inclination to feed at the billionaire’s trough, Hillary Clinton made a pilgrimage to the Halls’ winery in 2015. The invitation-only event, with tickets reportedly ranging from $250 to $50,000, targeted the same rich bastards that showed up last Thursday to greet Buttegieg.

As for the winery, the Halls run the same jive that they run on their real estate business: “Responsibility is one of our core values. This translates to developing LEED certified buildings, sustainable farming and operating our business with unwavering integrity. We are constantly innovating to turn our words into actions.”

The reality contradicts this bullshit as Wine Business reported last year:

A Napa County Superior Court on Tuesday tentatively ruled against the opponents of a vineyard slated to be developed above the Napa Valley floor.

Judge Thomas Warriner’s tentative ruling in favor of Napa County is not final as lawyers representing environmental groups and a residential water district continue to argue their case in court.

Attorneys for Living Rivers Council, the Center for Biological Diversity, the Sierra Club and Circle Oaks County Water District seek to overturn Napa County’s 2016 decision to approve Kathryn and Craig Hall’s plans to develop Walt Ranch on Atlas Peak. The attorney for the Center for Biological Diversity also represents the Sierra Club.

Walt Ranch is the 200-acre vineyard development long proposed by Craig and Kathryn Hall of HALL Wines.

Like Stewart and Linda Resnick, the pistachio and pomegranate juice billionaires, the Halls have little interest in how their wine-making impacts working people. They proposed removing nearly 23,000 trees to develop 271 acres of vineyards on the 2,300-acre Walt Ranch, which occupies a sensitive watershed. Geoff Ellsworth, a member of Wine and Water Watch, told the Food and Environment Reporting Network: “We’re in the middle of a business war. This big corporation is competing against that big corporation, and the collateral damage are the citizens and the flora and fauna.” The worries are the same as when farmworkers living near the Resnick plantations discovered that they often lacked enough water pressure to take a shower or flush a toilet:

While the Napa Valley conjures images of idyllic winery estates and luxurious lifestyles, all is not well in wine country. A growing number of residents decry the region’s proliferation of upscale hotels, the wineries that double as event centers and the strain on Napa Valley’s water resources. In the wake of California’s unprecedented drought, the city of Calistoga—like others—has been under mandatory water rationing. “We’re told not to flush our toilets,” says Christina Aranguren, a vocal critic of the proposed resort, whose guests will be under no such restrictions. “I want to know where the water will come from.”

Yeah, where will the water come from? Who cares, as long as the wine keeps flowing.

 

November 10, 2019

Capital in the 21st Century

Filed under: capitalism,Film,Keynesianism — louisproyect @ 8:21 pm

This minute, the documentary “Capital in the Twenty-First Century” is playing at the SVA Theater as part of the DOC NYC film festival. Obviously, this review is behind the curve but you will still be able to see it in theaters in April 2020. It is based on Thomas Piketty’s 816-page book of the same name, with Piketty reprising the same arguments found there. Since I doubt that many of my readers, including me, have read Piketty’s book, the film is must-viewing if for no other reason that it will familiarize you with the post-Keynesian foundation upon which the book rests. Besides Piketty, you will hear from other economists and social scientists who are trying to figure out a way to combat neoliberalism without going the whole hog and becoming—god forbid—Marxists. This includes among others Joseph Stiglitz, Gillian Tett of the Financial Times, and Suresh Naidu, a youngish Columbia University professor who organized a conference there celebrating the work of Samuel Bowles and Herbert Gintis. Bowles and Gintis are famous (or infamous) for their criticisms of “orthodox Marxism”, i.e., Marxism. I have a strong suspicion that post-Keynesianism or post-Marxism (about the same thing really) will give you a leg up in a tight job market in the academy.

The film begins with Piketty reminiscing about a trip he took to Eastern Europe and Russia just after Communism collapsed. This weighed heavily on his mind since it dramatized the vulnerability of society when its economic foundations begin to be eaten away, as if by termites. The lessons he drew were a major inspiration for his book that essentially warned about capitalism’s vulnerability as its elites develop the same kind of indifference to the pain as that of the bureaucracy toward those on the bottom of the “Communist” world. To help him drive home these points, he includes another expert not ordinarily associated with post-Keynesian thought, namely Francis Fukuyama whose reputation was based on the idea that liberal capitalist democracies would soar above the wreckage of the USSR and other post-capitalist societies. In an interview with the New Statesman in October 2018, Fukuyama echoed the main idea found in Piketty’s writings, as well as Stiglitz, Krugman, et al. Asked how he viewed the resurgence of socialism in the USA, he replied:

It all depends on what you mean by socialism. Ownership of the means of production – except in areas where it’s clearly called for, like public utilities – I don’t think that’s going to work.

If you mean redistributive programmes that try to redress this big imbalance in both incomes and wealth that has emerged then, yes, I think not only can it come back, it ought to come back.

For the first half of the film (roughly 60 minutes), we get a history of capitalism from the 18th century to the current day. It is very informative and of great use even to people like me, who believe that New Deal economics is never coming back.

The chief worry of Piketty is that we are returning to the 18th century when the common folk lived in terrible conditions. Economist Kate Williams claims that the average life expectancy was 17 years at the time (it was probably more like 40, which of course is also a horrible sign of inequality). It was also nearly impossible for a commoner to become middle-class or wealthy, a function of fortunes being handed down from generation to generation. A large part of Piketty’s critique of capitalism is its susceptibility to dynasty-building of the kind that existed under feudalism. Drawing upon a rich trove of stock footage and old movies, we see a snippet of a scene from “A Tale of Two Cities” that shows Basil Rathbone as a French aristocrat sneering at the idea that ordinary people should get a fair share of society’s wealth. To reinforce this point, we see excerpts from “Les Miserables”, a very good film based on the Victor Hugo novel.

Finally, relief came in the form of new societies created in virgin territories in the British colonies like North America, New Zealand (where the film was produced) and Australia where the class system did not have the chance to consolidate, or at least not to the extent of Europe. Unfortunately, the film does not refer to the fate of the indigenous peoples but frankly there’s not much attention paid to them in Marx either.

As capitalism matured in the 19th century, its growth slowed down because of rivalries between various empires, England and France the foremost. Eventually, the competition became so extreme that the solution took the form of intermittent warfare and, finally, the Great War that led to millions dying and capital going up in smoke. Piketty argues that one good thing came out of it: the dissolution of feudal privilege that had persisted under capitalism, particularly with the Junkers ruling class in Germany.

The Great Depression and WWII had the same contradictory effect. On one hand, it caused death and suffering. On the other, it led to social democratic reforms that allowed working people to be entitled to health, education and housing benefits that never would have existed in the 18th or 19th century. Once again, the film brackets out an important factor that would help make this understandable, namely the existence of the USSR as an alternative to the capitalist system. Would the New Deal, England under Labour, Sweden, et al have existed without the communist alternative putting pressure on the ruling classes? I would argue not. Suresh Naidu, the most impressive of the post-Keynesians heard from in the film, is also honest enough to say that the prosperity that made such programs possible owed a lot to WWII that put people back to work and fostered economic growth, a function of military Keynesianism, the only fruitful application of Keynes’s theories.

The second half of the film examines the worrisome tendency of capitalist economies to revert to the 19th century and earlier as all of the gains of the welfare state are eradicated. A good part of this is devoted to a searing critique of the Reagan and Thatcher regimes that set in place the neoliberal model that has led to the gross inequalities of today, including under New Labour and Clinton-type presidencies. Piketty maintains that the model was built on a lie. Workers were told that even if the gap between their income and the capitalist class would grow as a result of trickle-down economics, they would still be better off because the pie would also grow exponentially. The workers slice might decrease from 25 percent to 20 percent but if the pie doubled, they’d still be better off. Piketty, Stiglitz, et al supply the statistical evidence that shows most workers living only slightly better than decades ago, with the poorest among them even having a loss of real income.

The film ends with an appeal for political action that might reverse the by now 50-year decline of working class security and income. In April of this year, Stiglitz sat down with the dreadful Andrew Ross Sorkin of the NY Times to discuss the renewal of interest in socialism. Stiglitz reassured Sorkin that Sanders’s agenda is not focused on “ownership of the means of production” or a statist system. Instead, “He’s really concerned about the social contract of health, education.” As for Stiglitz, he also supports a return to the good old days of liberal democracy but under private ownership as indicated by the title of his new book “People, Power and Profits: Progressive Capitalism for an Age of Discontent.”

What Piketty, Stiglitz, et al don’t seem to grasp (or grasping it, disavow it) is the structural barriers to liberal democracy or even social democracy that Stiglitz correctly described as having little to do with socialism. The film pointed out that the pie has not been growing, a function no doubt of the tendency of the rate of profit to decline. In areas where it has been growing, it has been at the expense of democracy such as in China. As Suresh Naidu pointed out in the film, it was WWII that broke the back of the Great Depression, not New Deal measures.

WWIII anybody? No thanks.

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