The Real Movement

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Even 80 years later the Left has learned nothing: A reply to Rschard1

I received a very welcome and interesting comment on my blog post, “Deficit reduction is not austerity; it kills capitalism”, from Rschard1. The commenter argues that my own argument is technically correct but ignores the messiness of historical contingency. I am, the commenter states,

“glossing over the uncomfortable truth that recessions caused by voluntary deflation have, without any exception I know of, led to horrid consequences for the working class.”

“Der Kampf gegen die Arbeitslosigkeit”

As support for his/her view, the commenter presents the classical case of fascist full employment policies of the German Nazi party. While the German Marxists followed what the commenter argues is essentially my solution for the Great Depression, the fascist introduced a series of measures to create jobs by rearming Germany and preparing it for World War II. These policies rapidly brought Germany to full employment, just as Keynes predicted they could and aided the fascist rise to power. Austerity, as the commenter argues, is great for the more advanced countries, but terrible for countries like Greece.

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Deficit reduction is not austerity; it kills capitalism

According to the chart below, each attempt to reduce the federal deficit in the last 30 years or so appears to undermine capital itself:

CFssDqUWgAA8CKj.jpg large

The correlation suggests that if the Left is committed to a society beyond capitalism, ending all fascist state deficits can be a path to realizing this end. The correlation is explained by the fact that capital at this point is producing more surplus value than can be reinvested profitably in productive employment. The absence of sufficient outlets for newly formed capital is not simply a problem for capitalists like the owners of the largest American corporations who must sit on the uninvested profits: unless the fascist state deficits constantly increase, overproduction of surplus value eventually forces a general devaluation of capital as the mode of production for profit grinds to a halt.

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Why can’t communists be more “business friendly”?

This tweet came across my Twitter feed this week and grabbed my attention:

Buenaventura Parsons @Iron__Hammer: Joe Anderson determined to make Liverpool “the most business-friendly” urban environment in the country.  You know what that means.

The tweet itself is not all that unusual, but it struck me as interesting because it jarringly raises an uncomfortable question for communist strategy: Why is a business friendly politician politically LAF226.lgappealing to what are mostly working class voters in the middle of a crisis? What is the appeal in the term “business friendly”? How can a politician walk among the workers of a town like Liverpool and tell them he is going to make the town “business friendly”? Most of all, what does Joe Anderson know about how the workers of Liverpool think about economic issues that communists do not?

This is the most glaring example of a disconnect between how radicals think the world operates and how it actually operates. Although radicals explicitly or implicitly assume the working class is radicalized by crises, this bourgeois politician has no problem at all saying he aims to make Liverpool the friendliest place for exploiters in all of the UK; and he doesn’t get lynched for this, he gets elected.

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MMT and the heresy of the self-financing fascist state

At Nathan Becker’s (twitter: @netbacker) suggestion, I have been reading this piece by Billy Mitchell on modern money theory, Deficit spending 101 – Part 3. If you have any background in the assumptions of mainstream economic theory, you will notice that the piece makes a number of surprising claims:

The idea that a currency-issuing government is financially constrained is a myth. The funds that government spends do not come from anywhere and taxes collected do not go anywhere. Taxes do not finance anything and government spending is independent of borrowing. The government deficit determines the cumulative stock of financial assets in the private sector. Moreover, when government runs a surplus, purchasing power is destroyed forever. Finally, government expenditures do not crowd out private expenditures.

That is a lot of heresy in one short (by Billy Mitchell standards) article. People hearing the MMT argument for the first time must have the same reaction I had the first time I heard Warren Mosler pedro-meyer_06explain it in simple language: “That guy is insane.” Over time, I gradually began to realize what Mosler was saying: modern money (as they call the floating dollar/gold standard) was the practical result of the US withdrawing from Bretton Woods in 1971. When the US went off the gold standard, the fascist state no longer was financially constrained in its spending, i.e., it was no longer constrained by the requirement is exchange it worthless currency for gold. The implications of Moser’s talk was that the fascist state’s capacity to absorb excess surplus value is limited only by the quantity of excess surplus value produced in the entire world market. Previously, a given fascist state could appropriate (i.e., borrow or tax) the surplus value produced by private capitals within their territories (including colonies). Since 1971, however, the United States has been able to do this to the entire planet, because it alone controls the world’s reserve currency.

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The Myth of Secular Stagnation, Part One

What is behind the concern over secular stagnation? Is it possible to understand this concern within the context of the labor theory of value? I ask that because almost all discussion of secular stagnation takes place in the context of neoclassical/Keynesian theory. To answer the question, I will look at several papers and article on the subject summers-blanchard-bernankewritten from within neoclassical/Keynesian theory that attempt to make sense of the problem.

My perspective, however, will be unique in relation to the writers, because I will argue that stagnation is not a symptom of capitalist crisis per se, but a symptom of increasingly ineffective fascist state management of national capitals. In my perspective, capital has already suffered the breakdown of production on the basis of exchange value. This occurred in the Great Depression and was irreversible. However, after that breakdown, the fascist state stepped in and assumed management of the production of surplus value. The subject of the discussion of secular stagnation is the increasingly ineffective system of state management of capitalist production, not the operation of national capitals, per se.

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Greece: Graveyard of the radical Left critique

Vasnetsov_Grave_diggerThis item appeared on Yves Smith’s blog, Naked Capitalism: Greece Talks With Eurogroup Hit “Complete Breakdown”. According to Smith, things look very dark for SYRIZA to avoid exiting the euro:

“It is hard to see how Greece squeaks through and makes its two early May debt payments to the IMF. A default may be imminent. … Greece has engaged in a game of brinksmanship for months, but it looks as if the wheels are about to come off. It’s too easy to second-guess outcomes, but cooler heads had suggested that if a Grexit looked to be inevitable, the Eurozone could take measures to ameliorate the pain. The relations between the two sides are so sour that this sort of conscience-assuaging sop seems inconceivable, unless Merkel insists on it as a statesman-like gesture.

Very pessimistic of SYRIZA’s and Greece’s future, Smith adds these sympathetic words:

“Greece was almost certain to continue to face harsh times, but the likely outcome looks to be particularly difficult. I wish the long-suffering Greek people the best of luck. They need it.”

Isn’t it great when, on April 25, a respected blog informs us of something we already knew on January 25.

According to Smith, “it looks as if the wheels are about to come off.” An odd comment indeed, since SYRIZA winning the election meant, if nothing else, that the wheels had already come off.

In Smith’s case, “the wheels coming off”, means SYRIZA will now be forced to leave the euro and begin issuing drachmas. Not coincidentally, the folks around Smith’s blog have long advocated Greece exit the euro, because the IMF austerity program has always lacked one critical policy tool: currency devaluation to more effectively crush the wages of the working class through a forcible devaluation of the drachma. To be clear: The folks around the modern money school and Smith’s blog are not against austerity, they think it can only be effective if wages are devalued.

Which raises an harsh question for the radical Left: Since, clearly, SYRIZA doesn’t get it about hours of labor reduction — as almost no Leftist does — what is its best course from here? Given the choice between completely conceding to all of the troika’s demands and Grexit, which should SYRIZA do? Almost every radical opponent of SYRIZA from the first predicted SYRIZA would concede to all of the troika’s demands and back flip on austerity.


Because they assumed SYRIZA would not move to take Greece out of the euro. From the Left, this was attributed to SYRIZA’s reformist political bent. The ‘radical’ position, said the Left, was for SYRIZA to defend ‘national sovereignty’ and pull Greece out of the euro. This laughably fascistic argument is being advanced by many people who claim to be radicals, even revolutionaries.

Basically, the Left argues, SYRIZA is too reformist to reach across the aisle and join hands with Marine LePen in France and Nigel Farage in Britain, to defend national sovereignty against the ‘European project’. The radical program of the Left is best summed up by Lapavitsas, who promises us that Greece wages only need to fall another 20%. Once currency devaluation has forcibly reduced wages by this much more, says Lapavitsas, small businesses will again step in and hire labor power.

Let me be completely frank: Against this regressive vision for Greece, it would be better if SYRIZA did just completely bow to all of the troika’s demands. No matter the defects of the troika program, the poignant death-wish on the part of the Left to return to the 20th century will never succeed. Whether you like it or not, you will be forced to make your place in a world market where national borders are meaningless and the state power is revealed to be impotent.

If you cannot create a world where the fascist state has been abolished, the finance capitalists of the EU will create it for you. You fucking Leftists need to grow up; you cannot go back to the past. Capitalism has already wiped out the primitive national autarky that is the premise of national sovereignty.

Now you can spend another 30 years telling yourselves there is an alternative to be found in an earlier stage of capitalist development or you can figure out how to live in a world where the state you thought was omnipotent can be isolated and crushed simply by strangling its banking system.

SYRIZA came to power with a very common Leftist delusion: Having gained political power it could now reconfigure capitalism to make the working class comfortable with wage slavery. It is the same delusion that infects the entire Left, but how realistic is this when the state power itself can be made to bow to the demands of finance capital? It turns out that, in the end, Holloway was more right than he imagined: There is no real state power for the Left to take.

Neoliberalism didn’t just set out to dismantle the social welfare state, it is a crisis of the social welfare state itself. The development of the productive forces bound up with the world market are digging a grave for the capitalist state. If the Left will not help in this “project”, it should just get the fuck out of the way and let capital finish the job it has already begun.

Is there a material limit on the lifespan of capitalism?

I have been reading this article by Alan Nasser: “The Alternative To Long-Term Austerity: Less Work, Higher Wages, No Mere Utopian Dream”. Nasser appears to be an advocate of labor hours reduction; which he calls “the only practical alternative to […] secular stagnation”. To make his argument, Nasser enlists the writings of both Marx and Keynes to arrive at his own synthesis — a sort of Keynesian-Marxism.

Now, a lot of people have their own pet reading of Marx’s Capital and there are controversies about how it should be properly interpreted. For instance, some writers. like Cleaver, approach Capital spam-bad-2politically, rather than as an economic work. Others approach Capital as if it is an economics textbook: “This is how capital works.” Still others approach Capital as a critique of political-economy, a radical criticism of the premises of bourgeois economic science.

There is some truth in all of these approaches in my opinion, but hardly enough to sustain any long-term genuine interest in the book. In my opinion, to really understand Capital, you have to realize that capital, the social relation, is a transitional mode of production.

In my opinion, nothing about Capital, the book, makes sense unless you understand capital, the social relation, is a transitional, historically limited, mode of production.

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Mass hysteria in Greece: Compliments of the European Central Bank

At what point will SYRIZA tell the Eurogroup and ECB to go fuck themselves?

This was the thought that occurred to me after reading Yves Smith’s latest post, “Greece: Default or Grexit?. Smith explains there is an impasse between Greece and its creditors where the options facing SYRIZA are default or Grexit.

Impasse? What sort of impasse?

Everybody knows Greece is broke. Everybody knows Greece cannot squeeze more out of its population to pay the debt. If this were not true, SYRIZA would not be in power. The impasse on vampire-desktop-hd-wallppers-fulldisplay is that Greece is broke and has already defaulted, but no one wants to admit to it. There is no real impasse here; only people who don’t want to recognize losses that are already on the books.

Smith argues, “the best of Greece’s bad options is a default while staying within the Eurozone”. She states this option depends on what the European Central Bank (ECB) decides to do; only, it turns out, the ECB can pretty much do whatever it wants. This is not unlike the case in Michigan, where Washington arbitrarily decided to bail out GM and let Detroit go bankrupt.

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What happens ‘when something has to give”, but nothing likely will?

There is an interesting and much retweeted article today from Paul Mason, “Greece: why something has to give”. According to Mason, pressure is growing for a split in SYRIZA:

“So there is pressure growing, from within and without, to force a split in Syriza, with the Left Platform leaving the parliamentary group, and Tsipras now forced to rely on centre-left and Karamanlis-wing conservative votes to get any deal through the Hellenic parliament.”

Singularity-Brain-2Mind you, this is all over a debt that everyone knows cannot be repaid, no matter who is in power. It is not just that the EU is using the debt to beat SYRIZA down, SYRIZA seems intent on using the debt against itself.

Of course, a split in SYRIZA cannot fix Greece’s debt problem, as bondholders and anyone with an ounce of common sense knows:

“Let’s start by considering the raw numbers. Greece can’t borrow big money on the global markets, because its €320bn debt is – rightly, I think – seen as unpayable. No level of austerity bearable by Greek society could pay down the debt.”

The previous government lied about the state’s finances, capital is fleeing, the ECB is waging economic warfare against SYRIZA; and the ECB and Eurogroup have no desire to come to an agreement with SYRIZA. As the EU adds pressure from the outside, Mason argues, the Left Platform is organizing for a split from the inside.

This can’t go on, explains Mason. At some point, something somewhere has to give.

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Why reduction of labor hours cannot work as a ‘policy tool’

I have been rereading the paper by Kallis, Kalush, O’Flynn, Rossiter and Ashford, “Friday off”: Reducing Working Hours in Europe. I first learned of the paper when it was tweeted by Alex Tsipras on the night SYRIZA was elected to lead No_Known_Restrictions_A_little_spinner_in_Globe_Cotton_Mill._Augusta,_Ga.,_by_Lewis_W._Hine,_1909_(LOC)the government of Greece. I found it remarkable that this paper, which calls for a reduction of labor time, was being distributed by the head of that radical party on the eve of its victory. Did it signal his intention to pursue a new, radical, approach to the crisis in the European Union?

After that initial reaction, I’m now beginning to understand how the argument of Kallis, et al. was limited by a flawed approach to labor hours reduction in which labor hours reduction is essentially treated as just another tool of fascist state management of the economy. Many of the flaws relate to their poor (perhaps, non-existent) grasp of the basics of labor theory and reliance on neoclassical theory to make their argument. Those flaws can be broken down into three questions:

  1. Is labor hours reduction a policy tool?
  2. Can reducing hours of labor fix social ills created by capitalism?
  3. Is a reduction of hours of labor compatible with capitalism?

The following is my take on their approach.

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