The current global crisis is a manifestation of a fundamental problem in the process of the accumulation of capital. The problem is the lack of surplus value production. This contradiction has been concealed by decades of accumulating debt. Burgeoning financialisation involving bull runs since the 1980s have helped disguise the long-term weakening of the advanced capitalist economies. Economic performance in the United States, Western Europe and Japan has deteriorated since about 1973. The years since the start of the current cycle, which originated in 2001, have been worst of all.
The declining economic dynamism of the advanced capitalist world is rooted in a major sustained fall in profitability, caused primarily by the secular over-accumulation of capital. This problem goes back to the early 1970s. By 2000 in the United States, Japan and Germany, the rate of profit of private industrial capital had yet to make a comeback, rising no higher than that of the 1970s. With reduced profitability, capitalists had smaller surplus value to add to their labour processes. The perpetuation of reduced profitability since the 1970s has led to a steady falloff in accelerated capital accumulation across the advanced capitalist economies. The economic interventionism of the capitalist state have obstructed the realisation of the conditions for the necessary radical devalorisation of capital. Consequently economic downturn has not been precipitous enough to bring about a full recovery involving a restoration of profitability. The outcome is sustained stagnation.
To counter this persistent stagnation states, led by the United States, have been forced to underwrite ever greater volumes of debt through ever more varied and exotic financial forms. Initially, during the 1970s and 1980s, states were obliged to incur ever larger public deficits to sustain growth. But while provisionally keeping the economy relatively stable these deficits also rendered it increasingly stagnant. They thereby promoted the continued stagnation of capital by preventing capital proceeding through its “natural” cycle involving sharp downturns. This interventionism obstructed the return of accelerated capital accumulation. The state is now securing progressively less growth for any given increase in borrowing.
States, in the early 1990s, sought to overcome the problem by a budget balancing policy. Deficit reductions brought about by budget balancing resulted in a significant fall in aggregate demand. Consequently during the first half of the 1990s both Europe and Japan experienced devastating recessions that turned out to be the worst of the post-war period. The U.S. economy, itself, experienced the so-called jobless recovery.
Since the middle 1990s, the United States has been obliged to resort to more powerful and risky forms of stimulus to counter the tendency to stagnation. This is why public deficits were replaced with private deficits and asset inflation. In the great stock market run-up of the 1990s wealth on paper, fictitious capital, massively expanded. This development entailed a record-breaking borrowing increases. Consequently a powerful expansion of financial capital and consumption was sustained.
Government financial policy together with the general neo-liberal agenda of the bourgeoisie led to the historic equity price bubble of the years 1995-2000. Equity prices rose as a response to the law of the tendency of the general rate of profit to fall. New investment, free from significant technical composition of capital increases, exacerbated the prevailing over-accumulation of industrial capital. This was followed by the stock market crash and recession of 2000-2001.This development depressed profitability in the non-financial sector to its lowest level since 1980.
Greenspan countered the new cyclical downturn with another round in the inflation of asset prices. By reducing real short-term interest rates to zero for three years, he facilitated an historically unprecedented explosion of household borrowing. This contributed to and fed on rocketing house prices and household wealth. The world housing bubble between 2000 and 2005 was one of the biggest of all time. It made possible a steady rise in consumer spending and residential investment which together drove the expansion. Bush’s budget deficits together with record household deficits succeeded in obscuring the weakness of the underlying economic recovery by creating the appearance of sustained economic prosperity. The rise in debt-fuelled consumer demand as well as super-cheap credit superficially and provisionally revived the American economy. It also led to a new surge in imports and the increase of the balance of payments deficit to record levels.
Simultaneously, instead of increasing investment, productiveness and employment to increase surplus value, individual capitals sought to exploit the hyper-low cost of borrowing to improve their own and their shareholders’ position by way of financial manipulation — paying off their debts, paying out dividends, and buying their own stocks to drive up their value. This financialisation created a fictitious prosperity The same sort of things had been happening throughout the world economy — in Europe and Japan. In the United States and across the advanced capitalist world since 2000, the contradiction has been as follows: The slowest growth in the “real economy” since the 1970s and the greatest expansion of the fictitious economy in U.S. history.
Just as the stock market bubble of the 1990s eventually burst, the housing bubble eventually deflated. As a consequence, the house-driven expansion during the cyclical upturn moved into reverse. Just as the positive wealth effect of the housing bubble drove the economy forward, the negative effect of the housing crash drove it backward. With the value of their household residences declining and household borrowing collapsing households were forced to consume less. The sub-prime crisis arose as a direct extension of the housing bubble. Because of the ensuing enormity of the banks’ losses credit froze up at the very moment of the slide into recession.
It is clear from the above argument that it does not necessarily follow, as held by much of the Irish Left, that stimulus provided by the capitalist state to the domestic economy is not a prescription for providing a way out of recession. Indeed the argument above teaches the lesson that “artificial stimulus” can constitute a factor that sustains or encourages recession. Most of the Irish Left, including the less passive trade union UNITE, focus its efforts on campaigning for a solution within the framework of capitalism through the medium of the capitalist state which they misidentify as an eternal nanny state. They thereby sustain the illusion that capitalism is potentially a system that can serve the interests of the working class. If this utopianism of the Left were true then there would be no need for communist society.
The Euro crisis is a general a product of the conditions that contributed to the Great Recession. After the crash of 2008 the contradictions of the Euro grew increasingly visible. Consequently the market increasingly discovered its shortcomings. This manifested itself in the growing economic and financial problems of the so called peripheral states within the Euro zone. States such as Greece, Portugal and Ireland. These economies were running growing budget deficits. This meant that they were compelled to increasingly borrow on the financial markets. But because of the worsening economic conditions under which they were forced to do this, together with other factors, the interest rates at which borrowing was possible for them became increasingly usurious. No longer were they really in a position to borrow on the bond market. This meant they were left with merely two options: a bailout from the EU or default. In this way the economic crisis for these states became a growing problem for the EU itself culminating in a collapse of the Euro and its banking system.
One thing needs to be made clear. The Irish economy did not collapse because of irresponsibility regulation, banking and unscrupulous bankers. Pinning the blame on the aforementioned is a form of populism that distracts the attention of the working class from the real problem –the contradictory limits of capitalism. It is because the generation of surplus value within the reproduction process was the central problem facing the Irish economy that the bubble was created involving vast amounts of debt. To compensate for the absence of economic growth based on profitable industrial production bubble conditions were created that inevitable burst.
The banks of the core Euro zone were bloated and sitting on mountains of toxic debt collected from its periphery and elsewhere (the United States included). Consequently the core was vulnerable to collapse too. Because the core members were not prepared to let their banks collapse they imposed draconian conditions on the states that received financial help from them. This forms part of an attempt to protect its banks by rescuing funds from the periphery that was owed to the core of the European banking system. But the real aim of the markets was not merely to force the peripheral states into default. The underlying aim was to collapse of the Euro itself thereby bringing about the reconfiguration of the European capitalist system.
Ultimately the source of the Euro crisis is not, as some argue, its flawed architecture, rampant financialisation nor the Great Recession itself. Nor was the Euro crisis itself due to reckless spending by both the public and private sectors of Greece, Portugal and Ireland.
These latter factors and the Euro crisis are the result of the failure of the valorisation process to produce surplus value on a scale sufficient to provide accelerated accumulation of capital. Because of this failure capitalism has been compelled to conduct itself in a way that has led to massive financialisation involving copious credit culminating in financial crisis, crash and economic recession. Debt is not indefinitely sustainable when there obtains abject failure by the system to produce surplus value (profit) on a sufficiently large scale. As I have indicated before, the failure of capitalism to bring about an adequate restoration of profit during the 1974/75 crisis marked a turning point that resulted in the sustained stagnation of capital. The 74/75 dip was not sufficiently deep to overcome the crisis of capitalism. Consequently even if the ECB was to currently dish out mountains of Euro the problem would only partially sort itself out in the short term. In the long term it would lead to a much more acute problem.
Public nor private debt is not the problem. Public/private debt is a product of the problem of profitability. Because of the lack of profitability debt has ballooned thereby reinforcing the problem. For capitalism to economically recover a very deep depression involving massive reductions in the value of wages and social welfare spending is a necessity. The only other (authentic) option is communist revolution.
Hey America! Freedom is just around the corner…behind you
The Internet Clampdown
One saving grace of alternative media in this age of unfettered corporate conglomeration has been the internet. While the masses are spoon-fed predigested news on TV and in mainstream print publications, the truth-seeking individual still has access to a broad array of investigative reporting and political opinion via the world-wide web. Of course, it was only a matter of time before the government moved to patch up this crack in the sky. Attempts to regulate and filter internet content are intensifying lately, coming both from telecommunications corporations (who are gearing up to pass legislation transferring ownership and regulation of the internet to themselves), and the Pentagon (which issued an “Information Operations Roadmap” in 2003, signed by Donald Rumsfeld, which outlines tactics such as network attacks and acknowledges, without suggesting a remedy, that US propaganda planted in other countries has easily found its way to Americans via the internet). One obvious tactic clearing the way for stifling regulation of internet content is the growing media frenzy over child pornography and “internet predators,” which will surely lead to legislation that by far exceeds in its purview what is needed to fight such threats.
“The Long War”
This little piece of clumsy marketing died off quickly, but it gave away what many already suspected: the War on Terror will never end, nor is it meant to end. It is designed to be perpetual. As with the War on Drugs, it outlines a goal that can never be fully attained—as long as there are pissed off people and explosives. The Long War will eternally justify what are ostensibly temporary measures: suspension of civil liberties, military expansion, domestic spying, massive deficit spending and the like. This short-lived moniker told us all, “get used to it. Things aren’t going to change any time soon.”
The USA PATRIOT Act
Did anyone really think this was going to be temporary? Yes, this disgusting power grab gives the government the right to sneak into your house, look through all your stuff and not tell you about it for weeks on a rubber stamp warrant. Yes, they can look at your medical records and library selections. Yes, they can pass along any information they find without probable cause for purposes of prosecution. No, they’re not going to take it back, ever.
This last January the Army Corps of Engineers gave Halliburton subsidiary Kellogg Brown & Root nearly $400 million to build detention centers in the United States, for the purpose of unspecified “new programs.” Of course, the obvious first guess would be that these new programs might involve rounding up Muslims or political dissenters—I mean, obviously detention facilities are there to hold somebody. I wish I had more to tell you about this, but it’s, you know…secret.
Touchscreen Voting Machines
Despite clear, copious evidence that these nefarious contraptions are built to be tampered with, they continue to spread and dominate the voting landscape, thanks to Bush’s “Help America Vote Act,” the exploitation of corrupt elections officials, and the general public’s enduring cluelessness.
In Utah, Emery County Elections Director Bruce Funk witnessed security testing by an outside firm on Diebold voting machines which showed them to be a security risk. But his warnings fell on deaf ears. Instead Diebold attorneys were flown to Emery County on the governor’s airplane to squelch the story. Funk was fired. In Florida, Leon County Supervisor of Elections Ion Sancho discovered an alarming security flaw in their Diebold system at the end of last year. Rather than fix the flaw, Diebold refused to fulfill its contract. Both of the other two touchscreen voting machine vendors, Sequoia and ES&S, now refuse to do business with Sancho, who is required by HAVA to implement a touchscreen system and will be sued by his own state if he doesn’t. Diebold is said to be pressuring for Sancho’s ouster before it will resume servicing the county.
Stories like these and much worse abound, and yet TV news outlets have done less coverage of the new era of elections fraud than even 9/11 conspiracy theories. This is possibly the most important story of this century, but nobody seems to give a damn. As long as this issue is ignored, real American democracy will remain an illusion. The midterm elections will be an interesting test of the public’s continuing gullibility about voting integrity, especially if the Democrats don’t win substantial gains, as they almost surely will if everything is kosher.
Bush just suggested that his brother Jeb would make a good president. We really need to fix this problem soon.
Bush has famously never vetoed a bill. This is because he prefers to simply nullify laws he doesn’t like with “signing statements.” Bush has issued over 700 such statements, twice as many as all previous presidents combined. A few examples of recently passed laws and their corresponding dismissals, courtesy of the Boston Globe:
Dec. 30, 2005: US interrogators cannot torture prisoners or otherwise subject them to cruel, inhuman, and degrading treatment.
Bush’s signing statement: The president, as commander in chief, can waive the torture ban if he decides that harsh interrogation techniques will assist in preventing terrorist attacks.
Dec. 30: When requested, scientific information ”prepared by government researchers and scientists shall be transmitted [to Congress] uncensored and without delay.”
Bush’s signing statement: The president can tell researchers to withhold any information from Congress if he decides its disclosure could impair foreign relations, national security, or the workings of the executive branch.
Dec. 23, 2004: Forbids US troops in Colombia from participating in any combat against rebels, except in cases of self-defense. Caps the number of US troops allowed in Colombia at 800.
Bush’s signing statement: Only the president, as commander in chief, can place restrictions on the use of US armed forces, so the executive branch will construe the law ”as advisory in nature.”
Essentially, this administration is bypassing the judiciary and deciding for itself whether laws are constitutional or not. Somehow, I don’t see the new Supreme Court lineup having much of a problem with that, though. So no matter what laws congress passes, Bush will simply choose to ignore the ones he doesn’t care for. It’s much quieter than a veto, and can’t be overridden by a two-thirds majority. It’s also totally absurd.
Amazingly, the GOP sees this issue as a plus for them. How can this be? What are you, stupid? You find out the government is listening to the phone calls of US citizens, without even the weakest of judicial oversight and you think that’s okay? Come on—if you know anything about history, you know that no government can be trusted to handle something like this responsibly. One day they’re listening for Osama, and the next they’re listening in on Howard Dean.
Think about it: this administration hates unauthorized leaks. With no judicial oversight, why on earth wouldn’t they eavesdrop on, say, Seymour Hersh, to figure out who’s spilling the beans? It’s a no-brainer. Speaking of which, it bears repeating: terrorists already knew we would try to spy on them. They don’t care if we have a warrant or not. But you should.
“Free Speech Zones”
I know it’s old news, but…come on, are they fucking serious?
Army Generals. Top-level CIA officials. NSA operatives. White House cabinet members. These are the kind of people that Republicans fantasize about being, and whose judgment they usually respect. But for some reason, when these people resign in protest and criticize the Bush administration en masse, they are cast as traitorous, anti-American publicity hounds. Ridiculous. The fact is, when people who kill, spy and deceive for a living tell you that the White House has gone too far, you had damn well better pay attention. We all know most of these people are staunch Republicans. If the entire military except for the two guys the Pentagon put in front of the press wants Rumsfeld out, why on earth wouldn’t you listen?
The CIA Shakeup
Was Porter Goss fired because he was resisting the efforts of Rumsfeld or Negroponte? No. These appointments all come from the same guys, and they wouldn’t be nominated if they weren’t on board all the way. Goss was probably canned so abruptly due to a scandal involving a crooked defense contractor, his hand-picked third-in-command, the Watergate hotel and some (no doubt spectacular) hookers.
If Bush’s nominee for CIA chief, Air Force General Michael Hayden, is confirmed, that will put every spy program in Washington under military control. Hayden, who oversaw the NSA warrantless wiretapping program and is clearly down with the program. That program? To weaken and dismantle or at least neuter the CIA. Despite its best efforts to blame the CIA for “intelligence errors” leading to the Iraq war, the picture has clearly emerged—through extensive CIA leaks—that the White House’s analysis of Saddam’s destructive capacity was not shared by the Agency. This has proved to be a real pain in the ass for Bush and the gang.
Who’d have thought that career spooks would have moral qualms about deceiving the American people? And what is a president to do about it? Simple: make the critical agents leave, and fill their slots with Bush/Cheney loyalists. Then again, why not simply replace the entire organization? That is essentially what both Rumsfeld at the DoD and newly minted Director of National Intelligence John are doing—they want to move intelligence analysis into the hands of people that they can control, so the next time they lie about an “imminent threat” nobody’s going to tell. And the press is applauding the move as a “necessary reform.”
Remember the good old days, when the CIA were the bad guys?
Read from Looking Glass News
How to tell if you are in a tyrannical police state
Police State Technology: Implanting a GPS-microchip in the body of a human being, using a high powered sniper rifle
Drifting towards a Police State
America’s Secret Police?
Framework for a police state
American Police State: The Frog Has Cooked
Body Politics: Evolving Police State in America
NSA Snoop Program: Greasing the Skids of the Police State