Monday, August 31, 2015

Getting out of the Jackson Hole

by Michael Roberts

After the market turmoil last week, global stock markets have quietened down for now, although by most measures of stock price against corporate profits or earnings, stock markets are still ‘overvalued’.  Take one of the most perceptive measures, the ratio of the stock market value of the major companies in the US (S&P-500) versus previously booked profits (‘trailing earnings’ reported), i.e. the price to earnings ratio.  If we adjust that ratio for inflation and average it on a ten-year rolling basis, then the ratio is around 23, or some 25-30% above the historic average (see graph below).
US PE
So the stock market crash may have another leg yet.  That would be especially likely if the US Federal Reserve finally carries through its plan to hike its basic interest rate for the first time since the Great Recession began back in early 2008.  This basic rate is virtually zero and the Fed has added to zero rates and series of quantitative easing (QE) programmes over the past few years (printing money and buying government and mortgage bonds) to try and boost the economy and restore the banking system.  QE did the latter but failed to do the former.  Stephen Williamson,vice-president of the Federal Reserve Bank of St Louis, just issued a study in which he concludes : “There is no work, to my knowledge, that establishes a link from QE to the ultimate goals of the Fed – inflation and real economic activity. Indeed casual evidence suggests that QE has been ineffective.”

But until the stock market crash and the China slowdown, the Fed had been becoming confident that the US economy was recovering with GDP growth up and unemployment down.  It was getting ready to hike its interest rate.  The basic rate sets the rates for all others, like mortgages and loans to corporations.

The US second quarter real GDP figures were revised up last week. Now the stats say US real GDP rose 0.9% in Q2 instead of just 0.6% over Q1. That means the US economy was now 2.7% larger in 2015 so far than in 2014 at the same time.  That’s not bad compared to growth in the other major capitalist economies, although it is still below the long-term average for the US of 3.3% a year and well below rates of growth usually achieved in the ‘recovery’ period from a recession.
The Fed sees reasonably strong growth in the US, but weak growth everywhere else.  So the monetary policy committee of the Fed, which meets on 17 September, is in a dilemma.  Should it start to raise rates in order to ‘curb’ any possible future inflation as labour markets get too ‘tight’ and also restore control of credit markets; or should it wait until the rest of the world catches up or stops sliding back?

Every year at the end of August, central bankers of the world meet in Jackson Hole, Wyoming for a series of seminars on the state of the world economy, the latest economic theory and monetary policy (in the afternoons the bankers take hikes up the mountains of the Grand Tetons for philosophical meditation).  At Jackson Hole, eminent mainstream economists present papers to the bankers for discussion.  Last weekend, the subject of the seminars was Inflation dynamics and monetary policy.
This time, the head of the Fed, Janet Yellen, was not present and neither was the ECB chief, Mario Draghi.  So the keynote speech was delivered by Fed deputy chair, Stanley Fischer (Fed Official Fischer Leaves Door Open for September Rate Increase).

Fischer was all over the place.  On the one hand, he said that the Fed was preparing to raise interest rates soon because of the “impressive” growth of the domestic economy.  On the other hand, he suggested that the recent volatility of global financial markets could cause the Fed to hesitate, but only if it persisted. “We haven’t made a decision yet, and I don’t think we should,….We’ve got time to wait and see” (well, only two weeks!).  Some amount of uncertainty is inevitable. “When the case is overwhelming, if you wait that long,” he said, “then you’ve waited too long.”(!).  “The change in the circumstances which began with the Chinese devaluation is relatively new and we’re still watching how it unfolds, so I wouldn’t want to go ahead and decide right now what the case is — more compelling, less compelling etc,”  So Fischer sums up: “”The economy is returning to normal. We’re not certain we are there yet.”

Make that of what you will.  The Fed seems to have no idea what to do.  The UK’s Bank of England has been even worse than the Fed in forecasting what would happen to the UK economy.  And on whether to hike rates, it is even more confused.  The UK economy has also been growing faster than most other major economies (although whether that is sustainable is doubtful).  Inflation is near zero (although there is some underlying pick-up coming).  But the UK is much smaller economy than the US and more subject to the weakness of growth in the Eurozone and China than America.  So that should weigh on any decision to hike in the UK.

But Mark Carney, the useless (and very expensive) BoE governor seems to have no idea what to do.  “Realisation of some of a downside risk previously identified by the MPC, if it persists, has to be weighed against ongoing domestic strength, underpinned by credible policy regimes and an increasingly robust financial system,” Carney argued.  As usual with Britain, the BoE will wait to see what America does.

And there is no doubt that,outside the US and possibly the UK, there is little sign of economic recovery.  On the contrary, things are getting worse.  According to the OECD, economic growth in the 34 major advanced capitalist economies grew by only 0.4% in the second quarter of 2015 from the first quarter – a deceleration from the 0.5 per cent quarter-on-quarter growth achieved in the first three months of this year. Of the world’s seven major economies, the UK was the fastest growing in the second quarter, achieving 0.7 per cent expansion. The US took second place with 0.6 per cent. Other developed economies did not do so well in Q2, with a 0.4 per cent economic contraction in Japan, a 0.2 per cent contraction in Italy and flat-lining growth in France. Year-on-year GDP growth for the OECD area remained unchanged at 2 per cent in the second quarter of 2015.

Last week, the US credit rating firm Moody’s cut its 2016 global economic growth forecast just ten days after its last forecast.  It put average growth in the top G20 world economies at 2.8 percent on average, versus the 3 percent it had forecast previously. It even revised down the US for next year: “We have revised our U.S. 2016 forecast down slightly as the negative impact of the stronger dollar seems more pronounced than we assumed previously,” it said cutting it to 2.6 percent from 2.8 percent.

My own latest estimate of global PMI, an average of the monthly business activity indexes for national economies, shows that, in August, emerging economies have entered contraction territory, dragging world business activity down to a two-year low. World business is still growing overall (index above 50), but a significant slowdown has appeared in the summer (of the northern hemisphere).
Global PMI August
Most worrying of all is the state of world trade.  The World Trade Monitor reports that world trade suffered its biggest fall in the six years since the financial crisis in the first half of this year.  Much of this year’s slowdown in global trade has been due to a halting recovery in Europe as well as a slowing economy in China.  The graph below compares world trade growth with industrial output growth.  Usually world trade grows much faster than industrial output so that national economies can gain from exporting if their domestic economy is weak.  But for the first time in 15 years, for several quarters in 2014, trade has grown more slowly than industrial output globally.  And the gap in trade growth and industrial growth has narrowed sharply since the Great Recession.
World trade and IP growth
Mainstream economics is divided about whether it is a good idea for the Fed and the BoE to start to raise rates or not.  The Keynesians like Larry Summers and Paul Krugman reckon it would seriously damage consumer spending and investment and cause another credit crunch.  They would prefer to keep the credit bubble going with cheap money forever, along with some more government spending on infrastructure etc, to avoid ‘secular stagnation’.  Summers wrote that “a reasonable assessment of current conditions suggest that raising rates in the near future would be a serious error”.

On the other hand, the Austrian school of economics as represented by the Bank for International Settlements (BIS), reckon that to keep fuelling the credit bubble with cheap money and QE is presaging yet another financial crash down the road as debt in all the major economies is still too high.  Credit bubbles lead to ‘malinvestment’ and low productivity.  It is better to keep government spending curbed and to hike rates so that money is not spend on useless projects and the credit bubble is ‘pricked’.

In its annual report and raised fears that unending printing of money and credit injections was creating financial and property asset ‘bubbles’ that would eventually burst and renew the financial crash of 2008.  Jaime Caruana, head of the BIS, said the international system “is in many ways more fragile than it was in the build-up to the Lehman crisis”. 

Both sides are probably right and wrong.  The Keynesians are probably right that tightening monetary policy when inflation is low and global growth is weak could well trigger another stock market crash.  But they are wrong to ignore the dangers of ‘permanent’ credit bubbles and high debt in causing crashes too (after all, what about the global financial crash of 2007).  The Austerians (Austrians) are right that permanent credit bubbles are ‘unproductive’ and risk financial crashes, but they are wrong to think that cutting government spending and making borrowing costs higher when investment and growth is so low would not also risk a new recession.

What both sides never consider is why economic growth, investment and prices are so low.  They ignore the role of profitability in capitalist economies  – although it is self-evident really that capitalism wont ‘recover’ unless profitability does.  Globally, that has not happened in the major economies, with the exception possibly of the US.  And even there, profitability is still below the peak of the late 1990s.  In 2014, US profitability hardly moved and now growth in the mass of US profits (not the rate) is slowing to a trickle.  Last week along with the revised GDP figures, the date for corporate profits in Q2 2015 were released. Profits were up slightly on the quarter but are nearly 2% down on this time last year.
US corporate profits August
The slowdown in profits in the US is mirrored in China too, where industrial profits are now contracting.
Chinese profits
And if we look at global corporate profits (five major economies as compiled by me), there is little growth at all.
Global corporate profits August
When profit growth slows, investment slows.  When profits fall, investment follows (I recently estimated that for the US,  the correlation between changes in the rate of profit and investment was 64%; second, the correlation between the mass of profit and investment was 76%; and third, the correlation between the rate of profit (lagged one year) and the mass of profit was also 76%.) The Great Recession saw a significant fall in investment, much more than consumption.  Since the end of the Great Recession and in the ‘recovery’ investment growth has remained well behind trend in the major economies.
Real investment lag
At the same time, the overall debt burden for the major economies has increased.
Advanced economy debt
And most important, corporate debt is still on the rise (partly because of cheap money and low rates for borrowing).  If profits start to fall that will put an extra burden on debt servicing for companies.
US NFC debt

So if the Fed hikes rates in September or later, it is likely to increase the risk of a new stock market slide and more important a new slump, something that I have warned about before. Getting out of the Jackson Hole won’t be easy.

Sunday, August 30, 2015

Aggressive US foreign policy in Europe is losing fans.


Feb 2015. US/NATO military presence at the Estonia/Russia border
By Richard Mellor
Afscme Local 444, retired

I have said many times that the first victims of US capitalism is the US working class, and I don’t just mean from various sections of the capitalist class though exploitation in the workplace, or by the moneylender and the landlord.  I am referring to the highly effective control this class has over the means of communication, the media, television, newsprint and of course Hollywood. Religion is another powerful means by which people’s political views and understanding of world events are shaped.

Coupled with that is the huge size of the American economy and landmass, a continent really. One only has to drive through California’s Central valley to get an idea of the incredible level of agricultural production of just one state. Historically the rest of the world didn’t matter, but capitalist globalization has meant that even large nation states cannot escape that they exist within the framework of a world economy.

Still, the number of Americans with passports is low by many standards and buying in to the propaganda that the rest of the world hates us doesn’t encourage foreign travel. Since the US government’s “War on Terror” and penchant for pre-emptive bombing campaigns, which means that any country even thinking about opposing US imperialism’s interests in the region can be attacked, the list of countries Americans feel comfortable visiting is getting smaller.  The folks in Congress and at the Pentagon have no problem with these developments as a scared population is a pliable one.

But the aggressive imperial foreign policy, including the arming and financing of some of the world’s most ruthless regimes is causing the traditional respect and welcoming of a US military presence to wear a little thin, even among old allies.

When I was in Australia a couple of years ago, I talked to a number of people in Northern Queensland about the US government’s desire to build more military installations in their community.  Many North Queenslanders were not amused.  It’s not that they hated Americans, just the opposite.  But many of them felt that it would increase the likelihood of Australia being dragged in to Washington’s insane War on Terror and suffer the consequences for it.  Others told me that that the US government’s motive was all about containing China. And although Australia is a country dominated and ruled by European immigrants, it is also a South East Asian nation. It has deep ties with Asia economically, and when I was there, the mining boom was due greatly to Chinese demand.

For the US ruling class, fear and instability is a plus, up to a point.  It’s not enough for the domestic US population to be engulfed with a fear of foreigners, terrorists, immigrants marauding swarms of African bees, but the more fear and division among nations of the world the better it is for business, especially the arms business and the US is the guy with the big stick when it comes to possession and use of weapons of mass destruction.

But like the Australians, the Europeans are beginning to tire of US imperialism’s provocative foreign policy approach including the pressure it places on governments to follow the same economic policies and political reform, the gutting of worker protections, deregulation and other so-called reforms giving capital a stronger command over labor.

The placing of US military equipment and/or troops in the Baltics near the Russian border, its support for Ukrainian fascists, creates a climate of instability and fear more Europeans are worried about. I am no fan of the ex KGB thug Putin. But we should not forget that the major aggressive incursions in Europe in the modern era went from west to east not the other way round. Napoleon put 800,000 men in Russia and the German army raped pillaged and plundered its way to Moscow destroying everything in sight.  And that was just the Second World War, a war that cost some 15 million Russian lives.

It is not just workers and ordinary folks that are concerned that US capitalism’s presence could ignite conflict in Europe. German capitalism also has links with Russia and the east and is concerned about its interests. One German businessman told the Wall Street Journal, "When America defends its interests, it is merciless," comparing Russia's intervention in Ukraine to U.S. actions in other countries. "Lives don't count."

A recent study confirms Germans have a more negative view of NATO’s presence disrupting equilibrium in the region.  The study found that the actions of NATO including the increasing of tensions with Russia are being criticized by 68% of the population versus 32% in support.  “NATO would have nothing here in Europe to oppose Russia. The United States knows it, too. Europe will be catapulted into a war, while Uncle Sam would watch it all with relish on CNN,” one German wrote.  The motives of NATO, driven by US policymakers is becoming more suspect, “[…] Because the Americans want to use us as cannon fodder against Russia; what is the Bundeswehr searching for in the civil war in Ukraine, what does NATO want there?” another German asks. *

Unfortunately, as long as the vast majority of Americans feel there is little they can do to change the domestic or foreign policy that the millionaires and billionaires in Washington put in place, the dirty stain that the US capitalist class leave in their global wake will continue to get darker.  Scott Walker, the right wing governor of Wisconsin is even suggesting that building a wall between Canada and the US is not out of the question.  I’m sure the Canadians won’t mind that, curbing the migration of folks from the south who abuse the Canadian health care system including getting access to cheaper life saving drugs. It will work, especially if the US taxpayer will foot the bill.  I don’t think walker recognizes that Canada is actually a different country with a different mass consciousness and culture.

* The source is Sputnik News Agency which is owned by the Russian government. But the survey was a carried out by a German Agency.

Saturday, August 29, 2015

Robots and AI: utopia or dystopia? – part two

by Michael Roberts

In my first post on Robots and AI, I dealt with the impact of these new technologies on future employment and productivity.  I raised the contradiction that develops within the capitalist mode of production between increased productivity achieved through new technology and falling profitability

In this second part, I want to consider the impact of robots and AI seen through the prism of Marx’s law of value under capitalism.  There are two key assumptions that Marx makes in order to explain the laws of motion under capitalism: 1) that only human labour creates value and 2) over time, investment by capitalists in technology and means of production will outstrip investment in human labour power – to use Marx’s terminology, there will be a rise in the organic composition of capital over time.

There is no space here to provide the empirical evidence for the latter.  But you can find it here (crisis and the law for BOOK1-1).  Marx explained in detail in Capital that a rising organic composition of capital is one of the key features in capitalist accumulation. Investment under capitalism takes place for profit only, not to raise output or productivity as such.  If profit cannot be sufficiently raised through more labour hours (i.e. more workers and longer hours) or by intensifying efforts (speed and efficiency – time and motion), then the productivity of labour (more value per labour hour) can only be increased by better technology.  So, in Marxist terms, the organic composition of capital (the amount of machinery and plant relative to the number of workers) will rise secularly.  Workers can fight to keep as much of the new value that they have created as part of their ‘compensation’ but capitalism will only invest for growth if that wage share does not rise so much that it causes profitability to decline.  So capitalist accumulation implies a falling share to labour over time, or what Marx would call a rising rate of exploitation (or surplus value).

The ‘capital-bias’ of technology is something continually ignored by mainstream economics.  But as Branco Milanovic has pointed out, even mainstream economic theory could encompass this secular process under capitalist accumulation. 

As Milanovic puts it:  “In Marx, the assumption is that more capital intensive processes are always more productive. So capitalists just tend to pile more and more capital and replace labor….. This in Marxist framework means that there are fewer and fewer workers who obviously produce less (absolute) surplus value and this smaller surplus value over an increased mass of capital means that the rate of profit goes down. …..
“The result is identical if we set this Marxist process in a  neoclassical framework and assume that the elasticity of substitution is less than 1. Then, simply, r shoots down in every successive round of capital-intensive investments until it practically reaches zero. As Marx writes, every individual capitalist has an interest to invest in more capital-intensive processes in order to undersell other capitalists, but when they all do that, the rate of profits decreases for all. They thus work ultimately to drive themselves “out of business” (more exactly they drive themselves to a zero rate of profit).
Milanovic then considers the robot technology: “Net income, in Marxist equilibrium, will be low because only labor produces “new value” and since very few workers will be employed, “new value” will be low (regardless of how high capitalists try to drive the rate of surplus value). To visualize Marxist equilibrium, imagine thousands of robots working in a big factory with only one worker checking them out, and with the useful life of robots being one year so that you keep on replacing robots continuously and thus run enormous depreciation and reinvestment costs every year.  The composition of GDP would be very interesting. If total GDP is 100, we could have consumption=5, net investment=5 and depreciation=90. You would live in a country with GDP per capita of $500,000 but $450,000 of that would be depreciation.”

This poses the key contradiction of capitalist production: rising productivity leads to falling profitability, which periodically stops production and productivity growth.  But what does this all mean if we enter the extreme (science fiction?) future where robotic technology and AI leads to robots making robots AND robots extracting raw materials and making everything AND carrying out all personal and public services so that human labour is no longer required for ANY task of production at all?

Let’s imagine a totally automated process where no human existed in the production. Surely, value has been added by the conversion of raw materials into goods without humans? Surely, that refutes Marx’s claim that only human labour can create value?
Robot man
But this confuses the dual nature of value under capitalism: use value and exchange value.  There is use value (things and services that people need); and exchange value (the value measured in labour time and appropriated from human labour by the owners of capital and realised by sale on the market).  In every commodity under the capitalist mode of production, there is both use value and exchange value.  You can’t have one without the other under capitalism.  But the latter rules the capitalist investment and production process, not the former.

Value (as defined) is specific to capitalism.  Sure, living labour can create things and do services (use values).  But value is the substance of the capitalist mode of producing things.  Capital (the owners) controls the means of production created by labour and will only put them to use in order to appropriate value created by labour.  Capital does not create value itself.

But in our hypothetical all-encompassing robot/AI world, productivity (of use values) would tend to infinity while profitability (surplus value to capital value) would tend to zero.  Human labour would no longer be employed and exploited by Capital (owners).  Instead, robots would do all.  This is no longer capitalism.  I think the analogy is more with a slave economy as in ancient Rome.

In ancient Rome, over hundreds of years, the formerly predominantly small-holding peasant economy was replaced by slaves in mining, farming and all sorts of other tasks.  This happened because the booty of the successful wars that the Roman republic and empire conducted included a mass supply of slave labour.  The cost to the slave owners of these slaves was incredibly cheap (to begin with) compared with employing free labour.  The slave owners drove the farmers off their land through of a combination of debt demands, requisition in wars and sheer violence.  The former peasants and their families were forced into slavery themselves or into the cities, where they scraped a living with menial tasks and skills or begged.  The class struggle did not end.  The struggle was between the slave-owning aristocrats and the slaves and between the aristocrats and the atomised plebs in the cities.
Roman slaves
A modern science fiction can be found the recent Elysium movie.  In this movie, the owners of the robots and modern technology have built themselves a complete space planet separate from the earth.  There they live a life of luxury off the things and services provided by robots and defend their separated lives with their robot armies.  The rest of the human race lives on earth in a dire state of poverty, disease and misery – an immiseration of the working class who no longer work for a living.
Elysium
In the Elysium world, the question would remain: who owns the means of production? In the completely automated planet, how would the goods and services produced by the robots be distributed in order to be consumed? That would depend on who owns the robots, the means of production. Suppose there are 100 lucky guys on the robot-run planet. One of them may own the best robots and so appropriate the whole product. Why should he share it with the other 99? They will be sent back to the Earth. Or they might not like it and will fight for the appropriation of some of the robots.  And so, as Marx put it once, the whole shit begins again, but with a difference.  All will depend on how humanity would get to a completely automated society. On the basis of a socialist revolution and common ownership, the distribution of the output produced by the robots can be controlled and distributed to each according to his/her needs. If society operates on the basis of a continuation of the private ownership of the robots, then the class struggle for the control of the surplus continues.

The question often posed at this point is: who are the owners of the robots and their products and services going to sell to make a profit?  If workers are not working and receiving no income, then surely there is massive overproduction and underconsumption?  So, in the last analysis, it is the underconsumption of the masses that brings capitalism down?
Robot takeover
Again, I think this is a misunderstanding.  Such a robot economy is not capitalist any more; it is more like a slave economy.  The owners of the means of production (robots) now have a super-abundant economy of things and services at zero cost (robots making robots making robots).  The owners can just consume.  They don’t need to make ‘a profit’, just as the aristocrat slave owners in Rome just consumed and did not run businesses to make a profit.  This does not deliver an overproduction crisis in the capitalist sense (relative to profit) nor ‘underconsumption’ (lack of purchasing power or effective demand for goods on a market), except in the physical sense of poverty.

Mainstream economics continues to see the rise of the robots under capitalism as creating a crisis of underconsumption.  As Jeffrey Sachs put it: Where I see the problem on a generalised level for society as a whole is if humans are made redundant on an industrial scale (47% quoted in US) then where’s the market for the goods?”  Or as Martin Ford puts it: “there is no way to envision how the private sector can solve this problem.  There is simply no real alternative except for the government to provide some type of income mechanism for consumers” .Ford does not propose socialism, of course, but merely a mechanism to redirect lost wages back to ‘consumers’, but such a scheme would threaten private property and profit.

A robotic economy could mean a super-abundant world for all (post-capitalism as Paul Mason suggests); or it could mean Elysium. FT columnist, Martin Wolf put it this way: “The rise of intelligent machines is a moment in history. It will change many things, including our economy. But their potential is clear: they will make it possible for human beings to live far better lives. Whether they end up doing so depends on how the gains are produced and distributed. It is possible that the ultimate result will be a tiny minority of huge winners and a vast number of losers. But such an outcome would be a choice not a destiny. A form of techno-feudalism is unnecessary. Above all, technology itself does not dictate the outcomes. Economic and political institutions do. If the ones we have do not give the results we want, we must change them”.  It’s a social ‘choice’ or more accurately, it depends of the outcome of the class struggle under capitalism.

John Lanchester
is much more to the point:  It’s also worth noting what isn’t being said about this robotified future. The scenario we’re given – the one being made to feel inevitable – is of a hyper-capitalist dystopia. There’s capital, doing better than ever; the robots, doing all the work; and the great mass of humanity, doing not much, but having fun playing with its gadgets…There is a possible alternative, however, in which ownership and control of robots is disconnected from capital in its current form. The robots liberate most of humanity from work, and everybody benefits from the proceeds: we don’t have to work in factories or go down mines or clean toilets or drive long-distance lorries, but we can choreograph and weave and garden and tell stories and invent things and set about creating a new universe of wants. This would be the world of unlimited wants described by economics, but with a distinction between the wants satisfied by humans and the work done by our machines. It seems to me that the only way that world would work is with alternative forms of ownership. The reason, the only reason, for thinking this better world is possible is that the dystopian future of capitalism-plus-robots may prove just too grim to be politically viable. This alternative future would be the kind of world dreamed of by William Morris, full of humans engaged in meaningful and sanely remunerated labour. Except with added robots. It says a lot about the current moment that as we stand facing a future which might resemble either a hyper-capitalist dystopia or a socialist paradise, the second option doesn’t get a mention.”
Robots dystopia or utopia

But let’s come back to the here and now.  If the whole world of technology, consumer products and services could reproduce itself without living labour going to work and could do so through robots, then things and services would be produced, but the creation of value (in particular, profit or surplus value) would not.  As Martin Ford puts it: the more machines begin to run themselves, the value that the average worker adds begins to decline.” So accumulation under capitalism would cease well before robots took over fully, because profitability would disappear under the weight of ‘capital-bias’.

The most important law of motion under capitalism, as Marx called it, would be in operation, namely the tendency for the rate of profit to fall.  As ‘capital-biased’ technology increases, the organic composition of capital would also rise and thus labour would eventually create insufficient value to sustain profitability (i.e. surplus value relative to all costs of capital).  We would never get to a robotic society; we would never get to a workless society – not under capitalism.  Crises and social explosions would intervene well before that.

And that is the key point. Not so fast on the robot economy.  In the next and final post on the issue, I shall consider the reality of the robot/AI future under capitalism.

Friday, August 28, 2015

The myth of US foreign aid


by Richard Mellor
Afscme Local 444, retired

I remember when I was young and somewhat naïve I used to spout certain views on subjects that I really knew nothing about; communism/Stalinism, the Vietnam War, Britain’s role in the world and particularly its colonial history for example. Despite being a Catholic of Irish background I had no clue why they were fighting each other over there. I would have mistakenly attributed it to religion, a mistake, but I knew nothing about the history.

I remember as a boy, hearing news reports about the Mau Mau uprising and through no fault of my own drew the conclusion that these people hated us and simply did not want British help in making their country a prosperous one or they just didn't like white people.  That was the conclusion I was supposed to draw. We gave all this aid to people around the world and they just didn’t appreciate it. My mother would simply blame global poverty on humanity in general and my dad’s views, as an ex army man, would be influenced to a great degree by that experience.

Although I had a certain class-consciousness, I felt I was a worker and never really had a desire to leave this class of people, but I wasn’t overtly political until I started traveling. Meeting some Americans in Europe helped me a lot as they were politicized by the Vietnam War and I am sure the Civil Rights movement, women’s movement and the general turmoil of that decade. The African colonies were driving British capitalism out and that's what the Mau Mau uprising was.

In a discussion on Facebook the other day, a former co-worker of mine was defending the ideas of Donald Trump and in the course of the discussion made all the nationalist type claims that the US is doing good all over the world and defending us all against despots and that other nations never refuse all the military help and billions in aid we give them. He was joined by a fellow traveler in this venture. A number of us disagreed of course but it reminded me of myself 45 years ago. I at least had an open enough mind to find out the reality of the situation before I was 50.

So here is a little detail about US foreign aid. I think it’s 2009 figures from the OECD:

How much aid does the U.S. give to the world’s poor?
$30 billion goes to programs that assist the world’s needy.

How does that compare to other foreign policy priorities?
$663 billion goes toward military spending.  Dept.of Defense

Also from the OECD

"The Major Players in Global Do-Gooding

In 1970, the world’s richest countries agreed to give 0.7% of their gross national income as official international development aid. Most rich countries have failed to reach this reasonable goal, but five countries have exceeded the target: Denmark, Luxembourg, the Netherlands, Norway and Sweden. The U.S. is ranked toward the bottom at 0.2%."

I am sure that readers of this blog are aware that myself and others that write for it explain that the cause of the poverty, low life expectancy and death of millions of children every year in the former colonial world, has nothing to do with the inability of human society to cure certain diseases or build social infrastructure or deliver water or heath care to people.  It is obvious to anyone who takes the time to look for it that the reason for this crisis, and it is one of catastrophic proportions, is not a lack of resources but a lack of will. The owners of capital, which, along with human labor power is the crucial ingredient in the production of human needs, refuse to provide the capital necessary to eliminate these problems.

They refuse to allocate capital because it is not profitable to do so.  The crisis in these countries is one of capital allocation.  The same applies here in the US, the economically and militarily most powerful of the advanced capitalist economies. We are told the money is not there to provide health care for all or education for all or decent housing and livable wages. There’s never the money we are told, but that lie can be exposed with the click of a mouse. The problem in the US is also not one of no money but of how the wealth workers create is spent.

Here Bill Nye makes a much better argument than me.

Mr. Nye shows how easily we could solve the problem of poverty for example, the resources are there. Maybe a difference I would have with Mr. Nye is that capitalism cannot solve it. In the capitalist mode of production and the political superstructure that arises from it, it is not only legal to extract surplus value labor power of the worker without paying for it, it is the right of the owner of capital to do with it what they please.

There is a certain arrogance that develops among some workers in the major imperialist country. The crass arrogance of the US ruling class finds expression among some workers as they adopt this selfish arrogant view of the world.  They become little Donald Trumps.

The problem for them is they don’t have his money and sometimes they hit bottom before they realize how the world really works.

US mass killings, global refugees: Capitalism in crisis

The murderer films his act
By Richard Mellor
Afscme Local 444, retired

As is normally the case, the mass shootings that occur in the US at a rate unprecedented for a country not at war, not technically anyway, are explained away as psychological problems. Psychological problems they may be. But what causes them?

The latest occurred Wednesday in Roanoke Virginia as a man shot a news reporter and her cameraman as she was conducting an interview. The person she was interviewing was also shot but has survived.  He then posted a video of the event on Facebook and Twitter.

The perpetrator, who took his own life, is being described in the mass media as “deranged” a “mad gunman” as “angry”, and yet another person suffering from mental illness. The publishing of his “angry” history is already in full swing, plus, he was a religious nut and god told him to do it. In a statement the killer faxed to the news station he said it was a revenge killing for the black people killed in the church in Charleston in June.  “What sent me over the top…” he wrote, “was the church shooting. And my hollow point bullets have the victims’ initials on them.” 

Now the investigation in to this individual’s mental statebegins. “At some point in his life, it would appear things were spiraling out of control. But we’re still looking in to that.”, says the county’s sheriff.  In the video in the link above we are told the man was a "Malcontent" and that despite knowing about his troubled past they never realized "How deep the darkness ran".

The perpetrator was black, and gay.  Regardless of whether or not his claims of racial discrimination in this particular incident are valid, there’s no doubt he has experience it most of his life as a black, gay man.  It is not so much a personal issue that makes racism so destructive, it’s that it woven in to the fabric of US society, it is institutionalized.  How can the US 1% allow a serious discussion about that?  It heads down very slippery slope. 

And let’s not forget, much of this stuff is simply passed off as “gun violence”.  If we didn't have guns this wouldn't happen. Well if we didn't have racism it wouldn't happen and eliminating capitalism will begin to eliminate the madness and social alienation that is a result of it. "You can't have capitalism without racism",  Malcolm X warned.

Gun ownership has to be addressed. No serious person would object to background checks for firearm purchases or oppose checks that prevented the mentally ill or kids getting a hold of them.  But as I have mentioned before, we must not allow the issue of gun control to cloud the real cause of occurrences like these mass killings. Millions of people own guns in this country and kill no one.

What we are witnessing on a daily basis is not occurring because people have guns.  These killings are the end result of an economic system in crisis. Capitalism destroys our humanity, our future, it destroys human personal relations in the family no matter which family set up we are in. It does not nurture us; it destroys us. Racism, sexism, religious sectarianism, insecurity and perpetual warfare under the guise of fighting terrorism, is endemic to capitalism.

But the economic system, the objective world around us, work, society, and the insecurity of the so-called free market is never discussed. In short, our problems are all personal in nature; it’s a crisis of the individual.  What is a crisis of capitalist society is painted as a failure of the individual.

Let’s look at another capitalist crisis, the mass migration of people.  I commented earlier on the crisis that Macedonia faced as thousands of migrants swamped the Greek/Macedonian border, families with children, people sleeping in a field desperate to get to northern Europe and the prospect of a stable life. Just yesterday a truck full of decomposing bodies was discovered in Austria.  At this time of writing the death toll stands at 71, including young children.  The authorities say the victims suffocated. Apparently, there have been arrests.
Syrian migrants trying to enter Hungary from Serbia

Just a day before, Wednesday, the Swedish coast guard in a migrant rescue operation in the Mediterranean found 50 dead bodies in the hold of a “migrants’ boat” off the Libyan coast. It appears human traffickers have a tiered fee system where those with more money buy safer seats on deck. In early August another 40 died locked in the hull of a wooden migrants’ boat.  They, “died in a pool of water, fuel and human excrement,” according to the Italian navy.

In the wake of this crisis, right wing nationalist and fascist groups are waging a war against immigrants just like they are here in the US against those coming north through our southern borders.  Donald Trump, the racist and xenophobe is fueling this hatred. In Germany, neo Nazi violence is on the rise and last weekend there were three days of rioting by right wing ant-immigrant forces.  “There is no tolerance toward those who question the dignity of other people,” Angela Merkel tells Germans “The more people make this clear…the stronger we will be.”

“It’s shameful and repulsive what we had to witness,” Merkel said of the riots. But despite the appeals for morality, tolerance and calls to oppose xenophobia and anti-Muslim violence what is missing is any mention of why the migrants risk life and limb to leave their homeland.  Why the vast majority of them are Muslims give us a clue.

The images of thousands of Syrian migrants scrambling through barbed wire mesh on the Hungarian Serbian border this week are the lucky ones to have gotten that far. (image above).
That they're Syrians is also a clue as to why these people are risking their lives, the lives of their children and are willing to face abusive racial and religious hatred from racists and nationalists.

The cause of this mass migration to northern Europe is the result of polices drafted in the US. Look at the graph here and the nationalities applying for asylum. Are we to suppose that these people hate their home countries? It is the result of US capitalism’s imperialistic wars in the Middle East and Africa.  It is the result of centuries of direct colonial and now Imperialist intervention. Iraq is hardly recognizable as a state any more. US capitalism invaded Iraq without provocation. Iraq had done nothing to warrant it from a workers’ point of view.  Using 911 as an excuse, the handful of people behind the US invasion of Iraq are responsible for the deaths of millions of people and the destruction of a country. The so-called War on Terror is used as an excuse for the austerity measures we face at home. Blame the foreigners. Why are there so many Irish people in the US? They didn't want to leave their homelands either, they were driven out by British capitalism and its manufactured famine.

The Syrian crisis has the same roots as does the rise of Islamic fascism in the form of ISIS.  The US has been bombing this part of the world for the last 20 years. Prior to that it financed and armed the most despotic regimes the region and continues to do so in Saudi Arabia and Israel.

The people behind US foreign policy are responsible for the recent migrant crisis in Europe. Along with them are the likes of former British PM Blair and the regimes that cling to US capitalism’s coattails. These social crises, from the daily mass killings in the US to the mass migration of human beings and the trafficking that accompanies it are directly related to capitalism and so-called free market.  But the mass media, owned by the same forces that are responsible for these crises, does not want us to think of these issues as the product of a social system, their social system.

I watched a film the other night, Who is Dayani Cristal?  The film is about the lifeless body of a Central American migrant found in the Arizona desert and the authorities' efforts to find out who he is and where he came from.  Economic migrants from Mexico and other parts of Central America face the same risks as the migrants fleeing the Middle East, rape, robbery and murder. They die of thirst and hunger or cold in the deserts or streets of the US. They are also killed by vigilantes on the US side.  This film is a decent film that follows the trail left by this Honduran man trying to feed his family but it too avoids the fundamental issue, that this global migration and refugee crisis, the existence of permanent tent cities housing millions of people cannot be solved within the framework of capitalism.  Consequently the viewer feels like there's nothing we can do.

The many statistics that boggle the mind of people outside the US, the murder rate, rape rate, mass killings and violence, the incarceration rate and the lack of compassion for those who have hit hard times, "It's their own damn fault". These statistics are not the product of some genetic trait peculiar to individuals living on this continent. It is because capital is very powerful here.  The working class has no party, never has has a national party.  The power of dead capital over living, of money over human beings is greater here.

US capitalism is in a serious political, economic and social crisis. It cannot continue.  Global capitalism is in crisis, the breaking up of nation states, the rise of Islamic fanaticism in the Middle East and Africa, the refugee problem and perhaps most of all the looming environmental catastrophe, these are all products of a social system in decay not of human character flaws. Hunger and poverty are not caused by too many babies being borne in India.

It is the crisis of the system of production we know as capitalism that we have to discuss. Only then can we come up with answers that will work.

Katrina. Its no wonder.......

US capitalism's Katrina catastrophe.
Sean O'Torain.

Its no wonder the US has one of the lowest turnout of voters in the world. It is no wonder Americans are amongst the most cynical of any other peoples in the world. All you have to do is look at some of the responses to Katrina's tenth anniversary. See our article yesterday. But look further.

Remember the idiot Bush was "in charge." The horse trainer he had put as the head of FEMA was a complete catastrophe. 1,800 people died. Tens of thousands of peoples homes were washed away. And on and on. The rest of the world watched in amazement as US capitalism showed its lack of compassion and its indifference to the people of New Orleans. We even had the big mouth mother of the idiot Bush saying that the thousands of people who had to go into the sports stadium with insufficient, toilets, bathrooms, food supplies etc. probably were living better than they had been in their own homes.

Now we have Obama and a bunch of wimp Democrats heading down to New Orleans. Are they there to condemn Bush as he should be condemned? Not a bit of it. One of the top Democrats even said he had done a good job. And Obama. Now I am inclined to call him a wimp. He refuses to stand up to the racism in society and the police killings of young black men. But he is not a wimp. He is an extremely conscious leading member of the US capitalist class. Above all they live by the following rule. Do not rock the capitalist boat. Yes take the odd snide poke at each other, but when it comes to the big issues do not rock the boat. And also when it comes to Democrats versus Republicans do not do anything that will make it impossible for the other to rule.

So Obama does not condemn Bush for Katrina. Bush is an absolute disgrace. A cruel and arrogant creature. He even has the effrontery to visit New Orleans tomorrow. But Obama is not much better. To go to New Orleans and not condemn Bush is also an absolute disgrace. But then as a conscious bourgeois politician and ex big shot in the Harvard Law Review he knows the score. Do not rock the capitalist boat.

Tuesday, August 25, 2015

Katrina: Ten Years On. Lets not forget.

warnings on the doors
 On this anniversary I dedicate this to all the working people who suffered and are still suffering the affects of Katrina. I also dedicate it to the African American people who fought the Black revolt and changed the world. And to the world's music and culture. Even though it was written ten years ago it still stands. 

 I went to Katrina to fight evictions after the hurricane hit. I was active in a renter’s rights campaign and another activist had gone down there to build links with other activists and also to fight the evictions which were taking place at the rate of 1000 a week at one point.

People, mostly poor black people, were staying in motels as close as Houston and as far away as here in the Bay Area. Meanwhile, landlords were throwing their belongings out in to the streets in New Orleans in their absence. I stayed in a FEMA camp in Algiers along with the two friends I went down there with. I also met there some Muslim women from fresh from Indonesia who had experienced that terrible tsunami and were in New Orleans to help American victims.

This was a far greater disaster than the attacks on 911 but it was the result of domestic failures not foreigners so they would like us to forget it. The Army Corps of Engineers admitted that it was the failed levees that caused much of the death and destruction and although the weaknesses of these structures was known, the money or will to do something was absent. After all, we are talking about poor people here. If my memory serves me right there was not one city bus that took one person out of New Orleans.

Sometime after I met a Katrina refugee up here in the Bay Area who was stuck in the football stadium for nine days, we organized some meetings and fundraisers for the victims here. And we should also remember that entire fishing communities were destroyed in that tragedy and a couple hundred thousand homes along the Gulf coast were uninhabitable or washed away. (I'm not sure of this number without researching it but I know there were a lot of people displaced along the coast. I regret not having the time to write something anew but I am including a piece I wrote when I was there, in 2005. I also took some pictures and some of them are included in this posting.
Public sector housing

The Attack On Our People In New Orleans


Richard Mellor
AFSCME Local 444, Retired
Sept. 2005

I couldn't help thinking about something today that we should all remind, ourselves of. But first; an introduction of sorts.

I came to the U.S. in 1973, to New York City.  I wasn't outwardly political although I was moving in that direction. One thing I was involved in was music.  I loved the blues.  Like a whole section of English kids we were raised listening to the blues and its offspring, Rock and Roll.

Howling Wolf, Big Bill Broonzy (one of the first names I remember), Willie Dixon, Bo Diddley, Muddy Waters, Big Mama Thornton and of course, Chuck Berry, who, influenced Rock and Roll so much. There was also Nina Simone, one of the greatest. These were the people that made such beautiful rhythm.  It was music that working class folks could relate to. These older black folks influenced the likes of Lonnie Donegan and later on for me, the great blues bands of the sixties.

Rod Price who went on to greater fame in Foghat was in a band called Black Cat Bones. They made one album, Barbed Wire Sandwich; I still have it.  I loved it.  On that album was a song Nina Simone sang, Four women.  It's a song about women of different shades of skin color in the states, black, brown, yellow.  Here were four white rockers singing this song.  When one wants to understand the difference between racism in Britain and in the U.S. one only has to imagine four white rock and rollers singing this song in the U.S.; I don't think it happened.  Bob Dylan made some great political music but a band of this nature? I can't imagine it, but I'm not a music historian and could be wrong.  It also shows how the civil rights movement influenced Britain and the world and that it was brought to some of us through music.

The contribution of Black America to world culture is beyond description in its greatness.  The old blues guys sung about love and poverty and drinking and fighting and racism.  The blues is not unlike its cousin, country music in that sense, and all working class music, which expresses our life.  Naturally, the Blues included racism in a way that country music couldn't have, or should I say did, but from a prejudiced perspective, reflecting the ideology of the racist white bosses expressed through white working class music.

But these old Blues men and women brought the racism of American life to the world.  Nina Simone was particularly vicious in her condemnation of American society.  Less overtly political perhaps Big Bill Broonzy with his Black White and Brown gave us a glimpse of life for Blacks in the U.S.

All the British names escape me now.  I remember Alexis Korner and Long John Baldry who just died.  I used to go to concerts to listen to Joanne Kelly, the British Bessie Smith and her brother Dave Kelly who was with Tony T.S. Mcphee in the Groundhogs.

So when I came to the U.S. in 1973 I went to work in this factory in Manhattan, Spring Street was the location.  I have heard that is has become all yuppiefied now. It was grueling work, as anyone that works or has worked in a factory knows.  You're timed by that damn belt.  Nothing ever ends.  Nothing is really completed in a way.  At least when I dug holes and worked in ditches putting something or another in the ground, I got a sense of completion when the water ran through that pipe, or the sewage.  With the assembly line, packing boxes, it never ended, was there in just the same way the next morning.  Adding to this was the fact that the day I quit it was 113 degrees in the place; they had salt tablets by the fountain.

But at first I was so excited.  The place was full of black guys.  I was the only white guy in the place that I recall except for the boss and two boss's kids working there during their summer vacation. The excitement had another source; so many of them played music, wrote music, performed music.  Boy, was I lucky.  Here I was in the midst of the people who transformed British music, who freed us from the dismal constraints of whatever there was before, I can't remember too well. I know my mum liked Bing Crosby and Slim Whitman, but country music just didn't rouse me like the Blues.

But I got a surprise.  Most of these folks were younger guys; they weren't in to the blues.  In fact, when I mentioned Big Bill Broonzy, no one had ever heard of him.  They were in to soul and R&B and Jazz.  In the worst-case scenario one young guy seemed to think the blues was sort of uncle tomish. It was an interesting lesson for me. And I have learned much more in the last 30 years in America.

So, back to my opening sentence.  The scenes in New Orleans of black folks, poor working class folks, my comrades, sisters and brothers being treated like dogs by this corrupt, rotten system.  It's not surprising or new.  All workers lives are expendable white black or otherwise but as I looked at the faces of the older black folks in particular I couldn't help thinking about the civil rights movement.  This is the south.  It was one of the most vicious regimes that ever existed.  It was sheer terror for a whole section of its population.  It was state terror too; let's not forget that.  There weren't roving bands of marauders that would be brought to justice by the state for their crimes.  They were the local businessmen and sheriffs and local politicians who were all in on it; it was hell.

As I was sharing this with my wife who is Chinese American I couldn't help thinking that many of these older folks being pissed on in New Orleans by the government and slandered by the racist capitalist media, must have participated in the civil rights movement.  I say this not to undermine the struggle of white workers or any other specially oppressed minorities or women but the fact that my wife went to college, as did other Asian Americans of that period.  The fact some of my Latino friends had the same opportunity.  The inclusion of the ethnic studies departments in the universities, the creation of jobs in the public sector like where I worked, the advances white women have made as a minority group; we owe this to the heroic struggle of working class black youth who faced dogs and guns and water cannons and the state in the struggle to end the vicious apartheid system that existed in one fifth or so of the United States.

They led that movement which benefited us all, and many of them are floating in the squalid

cesspools of New Orleans you can bet on that.  They are being portrayed as looters and helpless by the rich man's media yet they are some of the brothers and sisters who challenged the mighty U.S. capitalist class and forced them to retreat.  This lesson is also forgotten by the black middle class who, like any of the middle class who convince themselves that they have advanced through their own individual efforts alone.

The images that the racist media brings to us subtly and not so subtly are no different to any other tactic the capitalist class uses to divide and weaken the working class. They are filth, these people.  The news media, the tennis stars I saw yesterday with their Nike symbols all over them are nothing but the paid and sold out whores of capitalism. The bosses might have gone a little too far here.  I don't know much about him but that rapper who accused Bush and the U.S. of not caring about black people and the poor in general is a good start.

I am grateful to those who helped educate me and save me from what could have been the narrow confines of working class life, the black folks of the U.S. played a very prominent role in that for me before I ever met them.  Seeing the black working class of New Orleans suffer in this way has jolted my memory.  It's made me think again of the past.  Not in a sad, sorrowful guilt ridden way like the white liberals do, but with feelings of solidarity, at what is being done to my people in New Orleans.

Much healthier than guilt is the increased anger I feel toward the system and wanting to rid us of it.  Some say that often-good things come from tragedy.  This is true; sometimes it takes the bosses whip to wake people up. 

Important areas get relief first
I always remind my co-workers or friends whenever we are talking about the need to defend what we have that someone fought for me to have what I have and it wasn't Ted Kennedy. Many of them probably couldn't read too well, weren't well spoken, and many of them died.  But by understanding this I have an obligation to play the same role for the future, to not take what they gave me and then deny it to our children by not fighting to keep and expand upon it. And, in the last analysis to transform society, for me, as a socialist, this means to take the ownership of the means of production, exchange and distribution of the necessities of life that we create out of private hands and in to the collective hands of the masses.

It is the same with the slaughter in New Orleans.  There is no doubt in my mind that it is an attack on a huge section of our brothers and sisters who were in the forefront of the struggle for a better life for us all even if theirs improved only minimally. This was not a natural disaster or an "Act of god" which is the usual excuse. It was market driven. It was just another capitalist crisis

We have solidarity with its victims, we are angry at it, and we will get our revenge.


National Guard at the FEMA camp