Michael Roberts: Keynes and the left

by Michael Roberts

“The theories of John Maynard Keynes provide the sound intellectual framework for the views which trade unionists had always instinctively held and known to be right” (TUC, 1968, p. 85)  

The ideas and theories of John Maynard Keynes still dominate the economic views and policy proposals of the leaders of the labour movement in the major capitalist economies.  Keynes is seen as offering a ‘third way’ between the pro-capitalist ‘free market’ economics that dominates the universities (and among the strategic advisers of government) and the opposite of dangerously revolutionary Marxian economics.  Keynes argued that, with a judicious range of policy measures, capitalism can be made to work better and can be managed so that it meets the needs of the many, without disrupting the social structure of society.

On this blog and elsewhere, I have developed a long and detailed critique of Keynesian economics.  But suffice it to say now that free market economics claims that prosperity will be achieved as long as capitalists are free of any regulations (environmental, safety, health etc) and of too much taxation, while markets are kept ‘competitive’ and free of monopolies, particularly in the ‘labour market’ ie. trade unions.  Then capitalists can compete freely to maximise profits and in doing so will invest in new technology to boost the productivity of labour and employ more workers, whose wages will then rise.  Everybody wins. 

The Keynesians retort that free market capitalism (‘laisser-faire economics’, Keynes called it) does not work because the market economy has faultlines that generate a chronic lack of ‘effective demand’.  Holding down wages to boost profits means capitalists cannot sell all their production and are periodically forced into laying off workers and unemployment ensues.  It is necessary for governments to intervene and raise wage levels and/or increase government spending to fill the gap in aggregate demand.  Then this will create enough demand for capitalists to sell their goods and make a profit.  So a judicious macro management of the market economy can work for all. 

The Marxist view is that it is not question of the lack of demand or low wages or inequality in the distribution of incomes, but a problem in the profit system of production itself.  The contradiction of capitalism is that, despite the efforts of capitalists, average profitability will fall over time. This causes recurrent and regular crises of production that cannot be resolved by the ‘free markets’ or Keynesian macro-economic management. 

This Marxist view carries little traction among economists and leaders of the labour movement. The dominance of the Keynesian thought among the ‘left’ and in the labour movement was expressed most clearly in the UK only last week in a report by the British Trade Union Congress (TUC) on the state of the UK economy and what to do about it. 

The report was authored and presented by Geoff Tily, a senior TUC economist.  Tily is a long standing and enthusiastic follower of Keynes, whose work he considers as being radical and pertinent to solving the problems of the 21^st century capitalism.  His book ‘Keynes Betrayed’ is regarded as one of the most prominent in arguing that Keynes was a radical reformer of market economics and economies.

The TUC report offers a powerful account (with facts and figures) of the shocking failure of British capital.  The British economy is now not only regarded as ‘the sick man of Europe’ but of the G7 and indeed of the top 30 economies in the world , at least according to the IMF, which reckons it will be the only major economy to enter a slump this year.

The TUC report describes the UK economy as in a ‘doom loop’, a term used by the current Labour spokeperson on economics, Rachel Reeves: “This government has forced our economy into a doom loop – where low growth leads to higher taxes, lower investment, squeezed wages, and the running down of public services. All of which hit growth again”, Rachel Reeves, response to Autumn Statement, 17 Nov. 2022. According to the ‘doom loop’ argument, the vast erosion of around a third of the UK economy and the arrested standard of life for workers is a consequence of the fiscal ‘austerity’ policies in place since 2010.  The TUC report refers to former Marxist (now Keynesian)  Paul Mason who explains the loop: “supply is deficient, but the immediate cause of this deficiency is aggregate demand. This means that policymakers over 2022 and into 2023 are intensifying contractionary policy in the face of deficient aggregate demand.“

So the failure of British capital is down to the austerity policies since 2010 of cutting government spending creating a lack of demand.  What happened to British capital before 2010 is ignored.  The policy answer is to reverse austerity, raise government spending and wages and then aggregate demand will rise through what is called the Keynesian multiplier and so restore economic growth. “With these mechanisms identified, the lost prosperity can be restored.”  

The TUC report criticises those on the left who reckon the current crisis is due to supply constraints.  Instead, “what is wrong is that existing capacity and resources are being underused and not that we just need to invest for more capacity.”  The TUC report refers here to a piece by another former Marxist turned Keynesian,  James Meadway, who argues that it is not a zero-sum game between expanding capacity (supply) and raising demand for existing capacity.  Keynesian theory “reinforces the empirical judgement that there is vast underutilised potential that can be deployed through current as well as capital expenditures…. So the core of a left strategy today – including its programme for the environment – is redistribution.”  (Meadway). I interpret this to mean that it is not necessary to replace the capitalism mode of production but just make the redistribution of income and wealth fairer and the economy will jump forwards.

The Guardian newspaper editorial described, in its paeon of praise, that the TUC report “draws heavily on the recent ‘New macroeconomics’ literature, that in turn recalls the historic contributions of J. A. Hobson (1858-1940) and J. M. Keynes (1883-1946). These emphasise the relation between a too high return to wealth and too low return to work, and theories of over-production and underconsumption. Rather than deficient supply, the underlying problem of the world economy is excessive supply in the context of deficient demand.”  Really – excessive supply! 

As the TUC report puts it, the problem is that the “excessive imbalance towards wealth from labour distorts economic activity through a dislocation between aggregate production and aggregate purchasing power. On the one hand, too low wages put goods and services out of the reach of workers. On the other hand, the massive resources of the wealthy do not compensate because they are relatively less interested in goods and services …. Consumption therefore falls short and overproduction is the result.”

Thus Tily presents us with an unvarnished theory of crises based on underconsumption.  As he says, the logic of his argument “leads to the vital conclusion that underconsumption and overproduction are relative conceptions: production is only excessive relative to deficient purchasing power and pay. It therefore follows that a better balance between labour and capital will permit higher production in an absolute sense. The analysis has always appealed to the left, above all motivating the 1945 Labour Manifesto:  over-production is not the cause of depression and unemployment; it is under-consumption that is responsible (my emphasis)”.

This crude underconsumption theory of crises was refuted by Marx 160 years ago and has been proven wrong empirically over time.  It is not even strictly Keynes’ theory.  But it is apparently the bedrock of the current TUC analysis. What is the cause of this chronic underconsumption?  According to Tily, it is that investment cannot expand capacity if interest rates, the cost of borrowing, are too high.  Keynes showed that it is high interest rates set by finance capital that weakens productive capital, not the underlying profitability of productive capital.  As Tily puts it: “The focal point of his analysis and much of his practical work was securing a permanent reduction in the long-term rate of interest.”  Indeed, ending the rule of finance capital altogether, “the euthanasia of the rentier” as Keynes called it. 

How this was to be achieved given the expanding role of finance capital in modern economies is not made clear.  Reforming the finance sector through ‘regulation’ is apparently the policy measure.  Good luck with that!  The TUC and Tily never advocate the public ownership of the big banks and the closure of speculative hedge funds and investment banks.  Such policies are taboo.

Moreover, how do we explain why the very low interest rates that Britain has enjoyed in the last 20 years have not led to faster investment and growth in the productive sector?  Tily’s answer is that “a distinction should be made between Keynes’s low interest rate polices and the manner of monetary policy over the past decade. Keynes sought low interest rates above all to strengthen fixed capital investment, and he envisaged domestic action in the context of capital control on the international domain.  Low interest rate policies today are in the context of an utterly deregulated global regime. Rather than foster domestic production, low rates have been recycled to earn high reward on more speculative terrain.”

Maybe so, but that still begs the question : why this time has cheap credit been ploughed by banks and big business into financial speculation and not into productive investment (as, according to Tily, it was in the Golden Age)?  The reason surely is that now it is more profitable to do the former than to do the latter.  In the golden age after WW2, profitability was high in the productive sectors and the financial sector was not dominant.  It is the fall in profitability that has led to the switch to financial speculation. 

Interestingly, Tily slightly retreats from his view that it is Keynes’ theory on interest rates rather than profitability that provides the explanation of crises, when he admits that “on theoretical grounds the (supply-side) idea of a falling rate of profit may still be persuasive and regarded as vindicated by productivity outcomes on a long horizon.” 

And Tily goes on to admit that Keynes was no radical reformer as he claims, being strongly opposed to Marxian economics.  “Keynes was on the record making stupid remarks, for example in his (1925) ‘A short view of Russia’: “How can I adopt a creed which, preferring the mud to the fish, exalts the boorish proletariat above the bourgeois and intelligentsia who, with whatever faults, are the quality in life and surely carry the seeds of all human advancement?” (CW IX, p. 258)   Indeed, Keynes refused to support the Labour party in the 1930s, siding with the Liberals because Labour was “a class party and the class is not my class. The class war will find me on the side of the educated bourgeoisie.”

As for supporting wage increases to solve crises, Keynes was not so keen on boosting wages as a solution to a slump.  “in general, an increase in employment can only occur to the accompaniment of a decline in the rate of real wages. Thus, I am not disputing this vital fact which the classical economists have (rightly) asserted as indefeasible.” Indeed, Keynes in his later years increasingly emphasised the correctness of ‘free market economics, what he called ‘classical economy’.  “I do not suppose that the (neo) classical medicine will work by itself or that we can depend on it. We need quicker and less painful aids. But in the long run, these expedients will work better and we shall need them less, if the classical medicine is also at work. And if we reject the medicine from our systems altogether, we may just drift on from expedient to expedient and never get really fit again.” Keynes 1940.

This is what Keynes said in his last years: “If our central controls succeed in establishing an aggregate volume of output corresponding to full employment as nearly as is practicable, the classical theory comes into its own again from this point onwards.” So once full employment is achieved, we can dispense with planning and ‘socialised investment’ and return to free markets and mainstream neoclassical economics and policy: “the result of filling in the gaps in the classical theory is not to dispose of the ‘Manchester System’ (‘free’ markets – MR), but to indicate the nature of the environment which the free play of economic forces requires if it is to realise the full potentialities of production.”

When arch free marketeer Friedrich Hayek published his book, The Road to Serfdom, which preached that state control would end ‘democracy’ and the freedom of the market economy, Keynes wrote to Hayek: “morally and philosophically I find myself in agreement with virtually the whole of it; and not only in agreement with it, but in a deeply moved agreement.”!

As he concluded: “For the most part, I think that Capitalism, wisely managed, can probably be made more efficient for attaining economic ends than any alternative system yet in sight, but that in itself it is in many ways extremely objectionable. Our problem is to work out a social organisation which shall be as efficient as possible without offending our notions of a satisfactory way of life.” The profit motive must remain: “The loss of profit may be due to all sorts of causes, but short of going over to communism there is no possibility of curing unemployment except by restoring to employers a proper margin of profit.” As Keynes argued that “Economic prosperity is…dependent on a political and social atmosphere which is congenial to the average businessman.”   These are hardly comments of a radical reformer.

Tily and the batch of Keynesian economists who spoke at the presentation of the TUC report always refer back to the golden days of the 1960s when supposedly Keynesian policies were working and a prosperous economy was being achieved through management of the economy. But this is a myth.  The 1970s saw rising unemployment and inflation, alongside falling profitability of capital.  How was that possible if Keynesian policies were so successful?

In contrast to Keynes, Marx said that the key to understanding the capitalist mode of production lay in the nature of production to sell commodities on a market for profit. Profit was the key. Now capitalists have to use some of that profit to pay interest on loans or rent on property and, if these ‘rentiers’ (bankers and landowners) squeezed the profit-holding capitalist too far, sure, they could cause a crisis in investment.  But even if interest rates are low or zero and even if rents are low or zero, there would still be crises, slumps and depressions. Why? Because rent and interest and profit come from surplus value, not the other way round.

Keynes and Tily say the crisis comes about through a lack of ‘effective demand’, namely an unaccountable fall in investment and consumption and this causes profits and wages to fall. Marx says: let’s start with profits. If profits fall, then capitalists would stop investing, lay off workers and wages would drop and consumption would fall. Then there would be a lack of effective demand, as Keynesians like to put it, but this would not be due to a drop in ‘animal spirits’, or ‘confidence’ (we often hear that phrase from economists, ‘a lack of confidence’), or even due to ‘too high’ interest rates, but because profits are down. The problem lies in the nature of capitalist production, not in the finance sector alone.

Policies designed to reduce interest rates, or even get some government spending going, namely Keynesian policies, would not avoid these slumps or even get recovery going. Indeed, more spending on welfare and unemployment benefits could drive up taxes and extra borrowing could drive up interest rates. And more government investment that replaced or encroached on private sector investment could be damaging to the profitability of capital. So Keynesian policies could even delay economic recovery.

Indeed, the austerity policies of most governments are not as insane as Keynesians think. Austerity policies are perfectly rational: they follow from the need to drive down costs, particularly wage costs, but also taxation and interest costs, and the need to weaken the labour movement so that profits can be raised. It is a perfectly rational policy from the point of view of capital, which is why Keynesian policies were never introduced to any degree in the 1930s.

Marx’s analysis shows that the capitalist system is not just suffering from a ‘technical malfunction’ in its financial sector (due to high interest rates), but has inherent contradictions in the production sector, namely the barrier to growth caused by capital itself. What flows from this is that the capitalist system cannot be reformed or corrected in order to achieve sustained economic growth without booms and slumps – it must be replaced. That is the ultimate policy action for the left.

Ukraine: Western Escalation Creates a Zero Sum Game. Mearsheimer

Richard Mellor

Once again I find myself in complete agreement with John Mearsheimer with his view on the Russian invasion of Ukraine, the events that led up to it and the role of the US which is what we are talking about here. It is a proxy war between two imperialist powers being fought on Ukrainian soil and at a great human cost to the Ukranian people.

I do not have to be a supporter of Putin or the invasion to believe this.

His comment early in the video about Japan and Pearl Harbor is important. My father was a prisoner of the Japanese the entire war. I grew up in a family where this was always present. I read books he told me to read, The Jungle is Neutral, A Town Like Alice, Behind Bamboo etc. I understood the attack on Pearl Harbor as an aggressive surprise attack by the Japanese militarized society on the United States. It wasn't until I was in my mid 30's that I learned the US had, as it is trying to do with China as I write, throttled Japan economically, cutting it off from vital imports, energy in the form of oil, Iron ore and others as he says. 

In other words, in the struggle between Japanese Imperialism and US Imperialism for dominance in the Asian markets (European Colonial power was done) and the profits that would bring, there was already a trade war. I knew nothing about this politics, imperialism or the cause of conflict in capitalist society. I just knew that the US were the good guys.

This puts Pearl Harbor in a totally different light.

I think we have to understand this with regards to the situation we have now in Eastern Europe. It is not the first European war since WW2 as western politicians and media claim.  NATO (the US) bombed Serbia in the nineties. We can’t simply start from the position that Putin is a bad guy and he shouldn’t have invaded. Of course he shouldn’t and he is a bad guy as far as all workers are concerned. So is Biden, Rumsfeld, Bush, Obama, Kissinger Trump all of them.

Mearsheimer says that there was another way, but the US “doubled Down” the other person in the video, a Norwegian apparently still has that position. The tanks are a further doubling down, every step from the US and its European junior partners is doubling down.

I agree that there was another way if we look at it from the point of view of the average person trying to get on with their lives. The problem is, wars are not the product of squabbles between individuals, religion or other such things. Capitalism is a system of war. The US, Vatican Inc, the European states all wanted the collapse of the old totalitarian regime in Russia and in China to move to so-called free market economies, but not capitalist states that would threaten their dominance, but capitalist states like South Korea, the Phillipines and others that would be dependent on them, would provide cheap labor, raw materials, a source of growth and profits. This is the cause of the increased tensions with China which is an existential threat to US dominance. Chinese workers, European workers, US workers, have nothing to fear from each other.

So while, in theory there was clearly a way of avoiding this conflict, objectively it was inevitable as are further conflicts and even at some point a nuclear war if environmental collapse doesn’t get us first. When backs are against the wall is when animals are at their most agressive and will take steps that could otherwise be seen as suicidal.

Mearsheimer has no solution. And it’s clear he does not even consider the working class as a force at all. Why would he?  He is a bourgeois strategist but in my opinion one of the more astute ones.

Central banks: boom or slump?

by Michael Roberts

Three of the major central banks met and raised their policy interest rates yet again in the so-called ‘fight against inflation’.  Interest-rate levels are now at 15-year highs.  But the financial markets took the comments of the central bankers as signalling that their policies were working and inflation was falling.  And it would fall sufficiently for the central banks to stop raising rates soon and so avoid an economic slump.

This is wishful thinking.  The bank chiefs made much of the apparently less worse levels of economic activity in recent real GDP data.  But this again is wishful thinking or white-washing. 

The IMF is now predicting no slump this year and raised its growth forecasts (slightly).  It now reckons global growth in 2023 will be 2.9% from a previous forecast of 2.7%, but that’s still well below the 3.4% the IMF estimated for 2022.  And the new forecast for 2023 is really based on a pick-up in growth in China and India, with two countries providing more than 50% of global expansion this year.  The major capitalist economies are not expected to manage more than 1% or so. 

Nevertheless, the IMF chief economist pushed out the boat of optimism. Pierre-Olivier Gourinchas, IMF chief economist, said 2023 “could well represent a turning point”, with economic conditions improving in subsequent years. “We are well away from any [sign of] global recession,” Gourinchas said, striking a sharp contrast with remarks by managing director Kristalina Georgieva last month that recession would hit more than a third of the global economy.

The US reported an annualised growth rate of 2.9% in Q4 2022 and and that led to a chorus of economists firmly dismissing a slump this year.  But this annualised measure is misleading. In Q4 2022 US GDP was up only 1% compared to Q4 2021.   More significant, inventories (ie stockpiling goods) contributed over half that 2.9% annual rate in Q4.  Sales to Americans (consumers and producers) were virtually flat, while business investment rose at under a 2% rate. Real spending by consumers was relatively strong at 2.1% but that depended on previous fiscal handouts from government in the last year being spent.  US real GDP growth has slowed from 5.4% yoy in Q4 2021 to just 1.0% yoy in Q4 2022.  The US economy is moving towards a recession.

US real GDP growth has finally returned to its pre-pandemic trend rate but only after three years of recession and below trend growth. And now it could turn down again.

It’s similar story for the Eurozone.  The Eurozone economy grew just 0.1% in Q4 2022 and if the ludicrous 13% GDP growth figure recorded for Ireland is discounted, Eurozone output fell by 0.1%.  The reason the Irish GDP growth rate is so high is because it includes the booking of multi-national corporate profits in Ireland as a tax haven.

Indeed, major EZ economies like Germany and Italy contracted in Q4, while France just escaped contraction.  And outside the Eurozone, both Sweden and the UK contracted.

As for the UK, the economy is heading down fast.  The economy contracted in Q3 2022 and was probably flat in Q4.  But even the BoE admits contraction is likely this quarter and beyond.  Indeed, according to the IMF, there is only one economy out of 30 it reviewed that will have a slump this year – and that is the UK.

It’s true that headline inflation is coming down in most economies as food and energy prices which drove the rates up last year have begun to fall back – although they are still much higher than at the beginning of 2021.  It is worth remembering that falling inflation does not mean that prices have fallen – just that the rate of increase has slowed.  Indeed, in the US, prices have risen 15% in the last two years, while wage increases have been half that rate.

One measure of the impact on average households in the major economies is the so-called misery index.  This an aggregation of the unemployment rate and the inflation rate – the twin devils for working people.  Official unemployment rates have stayed near post-war lows (I won’t discuss now the validity of this data) but the huge rise in inflation rates has taken the misery index to highs not seen for 35 years.

Headline inflation rates may be falling but what is called core inflation remains ‘sticky’.  Core inflation rates exclude food and energy prices and they show little sign of dropping much.

This is what worries central banks.  And what it also shows is that interest-rate hikes have little effect on reducing inflation, which rose because of food and energy prices, something central banks cannot control and are now falling for reasons nothing to do with central banks.  Instead, central bank rate hikes are increasing the cost of borrowing to spend for households and invest for companies. Indeed, as ECB chief Lagarde said at her press conference, monetary tightening was being ‘very efficient’ in squeezing the real economy.  As I have argued in a previous post, profits are now being squeezed as price inflation abates.  And rising interest rates are squeezing companies at the other end. 

Sure, if consumer spending and business investment slumps, then core inflation will eventually fall, but only as economies drop into recession.  Even then, the major economies may enter a slump in production and a rise in unemployment this year, but still have inflation rates well above the levels of two years ago – the worst of all possible worlds.

Declining US Power and a Little Labor History

Richard Mellor

Afscme Local 444, retired

GED/HEO

1-29-23

The other aspect of any declining power, or a power whose influence is declining in relation to other competitors, it that power becomes ever more dangerous and violent’ like the cornered rat.

We see many examples of this. The last decades of British colonial power in Kenya for example when the British ruling class knew their days were numbered and they could no longer maintain the control over the colonized that they once had. The example of the Apartheid regime in South Africa. They too knew the end was nigh yet continued with some of the of the most fierce and brutal oppression of workers and trade unions. It becomes pretty clear when we see the final days why they kept Mandela alive, they knew they would need him at some point as the regime could not last forever given the immense power and heroic struggles of the Black South African working class. This sort of violence from a declining power has been described to me as similar to a match after it has been struck, yet it is brightest the moment before it dies. 

 

I think Wolff explains these issues very clearly. I do not agree with him though when he says of the 70's and 80's and US capitalism's intensified war on workers and organized labor in particular, that "The Labor Movement felt there was nothing they could do about this" assault. There was a lot we could have done.

From the late seventies through the eighties there was what I would say was the beginnings of a movement within organized labor to fight back and change the balance of class forces in US society. The miners in 1978, PATCO strike in 1980, two Greyhound strikes, Eastern Airlines, TWA, AT and T and more. This potential, this attempt to change the course of organized labor (the UFCW/Hormel strike lasted a year) was crushed and years of decline and declining activity in the form of strikes followed.

 

I was very excited at this development and took UFCW members from Local P9 that struck Hormel, in to my union and the community. MY union, AFSCME Local 444 adopted a family in Austin. In the initial stages at my Central Labor Council of Alameda the delegates were all gung ho about this development until the national union of the UFCW removed the leaders of local P9 and installed a compliant, concessionary crowd and the delegates all fell in to line. Many of them were not elected or even active members of the unions they represented. They were hired by the officialdom and therefore had no pawer at all to influence the ranks for fear of loosing their positions. This does not mean the leaders of P9 didn't make mistakes, but UFCW P9 was defeated (as were the other strikes) through a powerful combination of the bosses and the trade union leadership at the helm of the national unions and the AFL-CIO. The Team Concept at work.

Order here. New or Used

I urge folks to order that short book, a pamphlet really, Hard Pressed in the Heartland by Peter Rachleff. Peter was an active player in the Hormel/P9 strike and the book is worth reading. I attended a conference during that strike titled National Rank and File Against Concessions. It was a great development that could really lead somewhere and it was an exciting event. But it disappeared, it came to naught and I always wondered why. Peter Rachleff explains why this happened in his book and later on in my union activity I also witnessed the destructive role many, if not all of the self-styled socialist organizations play in the organized labor and workers movement in general. It is not an accident that these groups have failed to build a genuine left current in the US working class inside and outside organized labor

 

Sudden Opening to Win Mumia Abu-Jamal's Freedom. Please Act NOW!

Below is an appeal from Bob Mandel of the Adult School Teachers United (ASTU) Bargaining Team in Richmond California. Learn more below.

Greetings

Unexpectedly, Mumia Abu-Jamal has a shot at freedom.  Judge Lucretia Clemons of the Philadelphia Court of Common Pleas has ordered the District Attorney’s office to turn over its entire file, up to 200 boxes, to the defense.  

 

Mumia’s lawyers expect to find even further evidence that he was framed, that the police coerced and bribed witnesses, and that conscious racism and judicial bias have permeated all the proceedings against him.  The judge has stated that she will issue a ruling within 60-90 days, roughly Feb.16-Mar. 16.   

 

This is the hour to fight for Mumia’s freedom.  On Feb. 16, longshore workers in ILWU #10 will shut down the Ports of Oakland and San Francisco, holding a stop-work meeting to demand his immediate release.  Teachers in the SF Bay Area are organizing to teach on his case around that same date, Feb. 16, the middle of Black History Month.

 

In less than a week, a delegation from ILWU #10 will travel to a labor conference in South Africa and ask that unions there act again in his defense.   NUMSA, the largest union in South Africa, played a critical role in getting Mumia life-saving medicine when he nearly died from hepatitis. In a letter to Pennsylvania’s then-governor Wolf, it compared Mumia’s medical neglect to the treatment prisoners received under the apartheid regime.

 

We urge you to fight for Mumia’s freedom now.  As a first step, write to Judge Clemons demanding that he be released immediately.  Then take whatever action you can—rallies, workplace meetings, political strikes—to give power to the demand.

Judge Clemons address:

Court of Common Pleas of Philadelphia County
1220 Criminal Justice Center
1301 Filbert Street
Philadelphia, PA 19107
215-683-7020

The judge’s order opening the files came after the filing of an Amicus Brief by the U.N. Working Group of Experts on People of African Descent; a public statement by then-sitting Judge Wendell Griffen of the 6^th Circuit Court of Appeals, Arkansas, that the law requires Judge Clemons to release Mumia immediately;  an outpouring of international labor support; and a letter writing campaign to the judge herself based on the contradiction between her preliminary ruling against Mumia and her statement to the Philadelphia Catholic Archdiocese Racial Healing Commission:  http://bitly.ws/z9Yt

Attached you will find a resolution from adult education teachers, (Download this resolution here) a statement by thePresident of the Vermont AFL-CIO, and a letter from the largest union in the UK, Unite. (screenshot below)

After 41 years in prison, 29 of those on death row, Mumia has a real chance now to win his freedom.  Mobilizing our unions can truly make a difference.  We’re hoping you and your union will join us! 

Please keep us posted on your actions,

In solidarity,  
Bob Mandel,
member, Adult School Teachers United (ASTU) Bargaining Team

 

 

Microagrressions You Say

We hear the term "microagressions"with regard to identity, gender, sexual orientation, race, color, eating habits immigration status and so forth. It can be intentional or unintentional. But where microagression is most common and has the most devastating result is the day to day assault on our consciousness by capitalist ideology.

It is the big lie, the calculated attempt to cover for capitalist exploitation through pathos, appealing to our inherent desire for honesty, kindness, solidarity and so forth. It is an assault on human decency.

The army the capitalist class employs in this assault, are its paid mouthpieces, its professional pimps, (those that are willing and are rewarded monetarily in social status) psychologists, actors, experts in human behavior and its institutions, the media, news anchors and journalists, universities which are capitalist think tanks and so on.

Those that resist are punished through job discrimination, lack of opportunity or, as with Wikileaks founder Julian Assange and Chelsea Manning two human beings to which we owe a debt of gratitude, imprisonment and torture or in many cases death. The greatest cause of depression, alienation, despair and the violence that can accompany it (if we do not have to means to confront the perpetrator) is the capitalist system itself.

I mention the gun issue in here, I want to clarify, that I am not in the camp of gun owners that throw the slogan around "guns don't kill people, people kill people". I would replace it with guns don't kill people Capitalism kills people. Ridding society of guns (and leaving them in the hands of the forces of the state) is not the answer. Ridding society of capitalism and the private ownership of the means of producing needs and human life is the answer.

Why Are We Bombarded With Advertisements?

Richard Mellor

AFSCME Local 444, retired

GED/HEO

 

Another useful introduction by Martin Wolff, to the workings of the so-called free market and why, for the capitalist, the obsession with selling the commodity, or replacing existing commodities that have not lost their use value, (he gives a fridge as an example) is a life and death process for them.

 

I hope working people might take time off from watching sports, the depressing news reports of mass killings, or reading the Bible or Koran, exciting as those books can be at times, and consider what is being said here about the material world in which we live.

 

Wolff talks about how we, as consumers, are inundated with advertising. In the US this is more than any other capitalist country. This is noticeable if one travels to other places, something US workers are not known for particularly, but it’s certainly clear for immigrants who have lived elsewhere.

 

If we take the drug industry for example, we can’t watch a TV show or movie without ads for prescription drugs, often to treat diseases or syndromes (like excessive baldness, restless leg syndrome etc.) we have never heard of. We are told we might have it by an actor wearing a white coat and that we should ask our doctor if it “will work for me”. I have a doctor friend who told me a patient asked her about an ailment she thought she had that the doctor never heard of before. The patient had heard about it on TV. The type of drug advertised depends on the show your watching. If you’re a certain age the drug will be for ailments that effect that age group, if you’re young and athletic, another ailment and a different drug would apply.

 

The US drug industry spends billions of dollars advertising their product. In the UK and many other countries it is illegal to advertise prescription drugs in this way. They are not as "free" as the US you see.

 

Professor Wolff doesn’t go in to it in this video but we should ask ourselves why this obsession with consumption, with selling products? He does say that it is the competition for profits, in a capitalist economic system, it’s a life and death struggle between producers for who can sell the most and who can drive their competitors from the marketplace. It’s the way the world works in this system.

 

But what is the actual source of this profit? The selling of the commodity, assuming it has a buyer, realizes a profit for the capitalist and Wolff does say that not being able to sell their product is a nightmare for them, but the profit itself already exists within the commodity before it is sold. But without the sale it’s trapped there. The sale releases it for the capitalist who owns the product that the workers have produced.

 

The profit is created through the labor process itself and that part of the labor process we call “work”. The capitalist may provide the raw materials and machines needed to produce a fridge say, then they buy the use of the worker over a period of time, or labor power that is needed to make the fridge. The end product, the fridge, contains the raw materials in their new form, steel and other elements used, as well the labor time (the worker’s life activity) involved in the transformation.

 

The trick is that the capitalist pays the worker (wages) for the use of their life activity in transforming raw materials in to a fridge less than the value of the finished product in the marketplace. Workers may produce the value of their wages in 5 hours, but through their control of the state and production itself, the capitalist employs the workers for 8. We are not sent home when the value of commodities we produce equal our remuneration. So in this example, the finished products contain 5 hours of paid labor and three hours for which the capitalist paid nothing. It is the use of labor power, our ability to work that is the source of the capitalist’s profit. Workers produce more than they are paid for. It’s called surplus value and the capitalist owns it.

This has many, many consequences. One of them is the fierce resistance the capitalist has over shortening the working day with no cut in pay; to do so cuts in to his cash. The struggle over paid and unpaid labor or labor time, is what labor disputes and strikes are all about. It is a struggle between classes with different roles in the production of needs, those that do the actual work and those that don’t.

 

Professor Wolff touches on other by-products of this arrangement. The poisoning of our environment is another, war is another as capitalists compete in the struggle for control over the world’s resources. The stress and alienation over being bombarded with ads and pressure to buy objects that we are told will improve our appearance, make us popular (One advert I see repeatedly on my phone tells young men that the “sneaker makes the man”.) has a devastating effect when we realize it doesn’t work. The mass killings in the US are all a result of the sickness and alienation of capitalist society. But we are not taught about living in a social system and that systems can be changed. The only time systems are central in the mass media is when they want to demonize socialism or communism.

 

I am not a gun freak but it is not simply a gun problem either and we should not fall prey to thinking banning guns would solve it. Those that defend the right to own guns are right about this.

 

Despite all the propaganda and the advertising worshiping consumption and individualism, humans lean toward collectivism and solidarity with each other, we are gregarious creatures and have advanced in history this way. I remember a poll, I think it was a global poll that asked women what they wanted most in a partner. Despite all the ads telling us what car we should drive to attract the best mate, what we must buy, wear, spray on our hair, bodies and other places, the overwhelming choice was kindness.

 

Kindness though is dangerous for those who seek wealth on the backs of others. It breeds solidarity; not good for profits. The US capitalist class that slaughtered some 3 million Vietnamese people in the quest for markets, learned through that experience not to show the reality of what war means on television. We used to see it on our news in the evening. They don’t do that anymore because the lesson of Vietnam was Americans and people throughout the world were moved by the scenes, it does not promote the popularity of war but the horrors of it.

 

We are all human.

If they free him, and he runs away and murders me

"If they free him, and he runs away and murders me, burn it all down!"

On average, 10 women or girls are killed in Mexico every day.

taller ahuehuete

4 hr ago

"If they free him, and he runs away and murders me, burn it all down", stated Elena Ríos, a saxophonist from the Mixteca region of Oaxaca (@brujamixteca).

Ríos was the victim of an acid attack in September 2019, orchestrated by the former deputy of the PRI [Revolutionary Institutional Party], Juan Antonio Vera Carrizal. In 2020, the direct perpetrators of the chemical injury confirmed the responsibility of the businessman and politician, who offered 30 thousand pesos in exchange for workers from one of his construction projects to commit the assault on the 26-year-old woman.

Elena, illustration for risograph printing (2023). Archive: ahuehuete.org

"With a made-up hearing and an agreement reached today, my aggressor was released. This is Mexico", the musician declared via her Twitter account after a judge in the state of Oaxaca decreed house arrest for the politician and intellectual author of the femicide attempt.

The saxophonist stated her aggressor falsely affirmed that he is ill, thus managing to get a lower precautionary measure, guaranteeing him house arrest.

"I am not leaving Mexico, [but] I am a survivor who is denied protection", she expressed to Desinformémonos last year. Out of five of the men who attacked her, four remained in preventive prison for more than a year without being sentenced, and one faced no consequences.

More than 1,000 femicides occurred in Mexico in 2021, second only to Brazil according to the Associated Press

On average, 10 women or girls are killed in Mexico every day.

"If they free him, and he runs away and murders me, burn it all down!"

---

Thanks for reading ahuehuete.org! Subscribe for free to receive new posts and support our work.

1Source: Elena’s Twitter account, January 21, 2023.

2Redacción Desinformémonos, «Con una audiencia maquillada, mi agresor ha quedado libre»: saxofonista María Elena Ríos, January of 2023.

 

3Proceso, “Mi agresor ha quedado libre”: saxofonista María Elena Ríos ante la liberación de Juan Antonio Vera Decretan prisión domiciliaria al exdiputado del PRI, acusado de agredir con ácido a María Elena en el año 2019. January of 2023.

 

4Manzo, Diana. Desinformémonos, “Soy una sobreviviente a la que le niegan protección”: María Elena Ríos. May 2022.

 

5Sánchez, Fabiola and Pesce, Fernanda. Femicides in Mexico, December 27, 2022

Support ahuehuete.org

Launched 2 years ago

Frente al gran capital, una milpa en común. In the face of capital, our common cornfield.

Michael Roberts: China: zig zagging

by Michael Roberts

China is in deep trouble.  Its zero-COVID policy has failed; the economy has slowed to halt; it now has a falling and fast-ageing population; it is in the midst of a property and debt crisis; so it is heading for a permanent, low productivity growth stagnation like Japan.  Xi’s leadership is in crisis as he flails about swinging from one policy to another.  And the risk is that the ‘aggressive nationalism’ of the CPC will lead to military action against ‘democratic’ Taiwan, just as Russia did with Ukraine. 

That’s the line of the Western economic experts and the media on a daily basis. All these arguments have been raised before and for that matter for the last 20-plus years: namely, that China is about to implode and the CP-control is about to collapse.  I have provided balanced answers to all these issues many times before, in particular in a series of three posts only last October.  So what can I add to the latest round of ‘expert’ speculation on the future of the Chinese economic model’?

Well, the first obvious addition is the end of China’s zero-Covid policy.  The experts paint this as a failure of the previous policy of the last three years.  And yet in those three years, millions of lives were saved.  John Ross gives us a comparison: if the world per capita death rate from Covid had been kept as low as China’s there would only be 29,000 Covid deaths globally instead of 6.7 million, while in the US there would have been only 1,200 deaths instead of the 1.1 million which actually occurred.  So great is the impact of this US failure that after the pandemic China’s life expectancy, at 78.2 years, is now significantly higher than the US at 76.4 years.

At the same time, China did not slip into a slump in 2020 unlike every other major economy; and indeed, increased the size of its economy in real terms and raised average living standards, while most major capitalist economies are only now getting back to the level of pre-pandemic 2019, as they now experience a dismal cost of living crisis.

The zero-COVID policy was clearly exhausted by the end of 2022.  New COVID variants were spreading and the government had to give way on the policy – but at least by now the majority of the population had been vaccinated and the health service capacity raised – if still insufficient to deal with the rise in infections.  Deaths are up, but not anywhere near the level projected by Western experts.  I explained this in a recent post.  We shall see if the rise in cases accelerates during the Chinese New Year holiday starting now.

The media are making much of the fact that for the first time since the 1990s, China’s real GDP growth this year was lower than the average growth in the East Asian region.  In 2022, real GDP was up only 3%, well below the long-term target of about 5-6% a year.

Why the slowdown? Clearly over the last three years, China’s zero COVID policy played a role in suppressing economic activity.  But China opted to save lives over economic expansion.  The other reason that China’s economic growth has slipped is the general slowdown towards a slump in the rest of the world.  The major capitalist economies are stuck in supply-chain congestion, weak investment expansion and now rising interest rates and inflation that threaten outright global recession this year. 

But China is not heading into a slump like the G7 economies.  Indeed, both the World Bank and the IMF expect China’s real GDP to rise by over 4% this year, while the most G7 economies will be contracting or have near zero growth.  If we take the years 2019-23, China’s economic growth rate will have been at least three times as fast as the US and more than five times as fast as the EU – and that’s assuming no slump in the latter economies this year.

Looking longer term, Western analysts reckon China is heading for much slower growth and this will threaten Xi’s future.  Up to now, China’s unprecedented economic growth record has been based on high investment rates and exports of manufactured goods to the rest of the world. But from hereon, the Western analysts claim that China will enter a period of low growth and will not escape the ‘middle income trap’ that so many so-called emerging economies are locked into.  China will not catch up even with the GDP level of the US as previously expected.

This claim is based on two assumptions.  First, that China’s ageing population and declining working-age sector will reduce growth rates; and second that the high-saving, high-investment model of Chinese growth no longer works.  China’s National Bureau of Statistics announced that the total population fell by 850,000 in 2022 to 1.41175bn, the first decline in 60 years. The birth rate in 2022 was the lowest since records began more than seven decades ago — 6.77 births for every 1,000 people, down from 10.41 in 2019.   

The UN has projected that China’s population will fall to 1.31bn by 2050 and 767mn by the end of the century. The 2050 estimate would still make China 3.5 times larger than the US, which is projected to have 375mn people by then. But it is currently 4.7 times larger than the US.  The UN’s 2022 estimates also project that India will overtake China as the world’s most populous nation this year. India’s population currently stands at 1.4066bn.  But what’s missing from that stat is that India will remain a predominantly rural agricultural population way behind China, now mainly an urbanized and industrialised people.

Nevertheless, the Western experts continue to make much of China’s demographics.  “This is a truly historic turning point, an onset of a long-term and irreversible population decline,” claimed one Western-based expert on Chinese demographic change, Wang Feng, at the University of California, Irvine.  “China cannot rely on the demographic dividend as a structural driver for economic growth,” said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management. The argument goes that China won’t be able to grow as fast as before now that the working population is declining and there will be an insufficient rise in the productivity of labour to compensate.  I have discussed these arguments at length in previous posts.

The arguments are weak and faulty.  Indeed, even on the adjusted (A) Western (Conference Board) measures of labour productivity growth during the COVID period, China has done way better than the ‘dynamic’ USA.

The answer to the demographic decline is a rise in the productivity of the existing workforce.  And China is taking steps to ensure just that.  China is the leader in industrial robots with a rise from 69,000 units in 2015 to 300,000 units last year; although of course, it is still well behind on robots per person – yet ahead of France, the UK and Canada before the pandemic.

Longer term, the IMF forecasts that China will grow at a subdued rate of 5% a year.  But that rate would still be more than twice as fast as the US, and more than four times as fast as the rest of the G7 – and that’s assuming no slump in the G7 economies in the next five years.

The other argument of the Western analysts is that China cannot grow at any reasonable pace from hereon, unless it switches from a high-savings, high-investment, export-oriented economy to a traditional consumer-led capitalist economy existing in most of the major capitalist economies, particularly the US and the UK.  

The usual basis for this view is that personal consumption rates are too low in China and this will hold back demand-led growth.  For example, take this view by Chen Zhiwu, a professor in Chinese finance and economy at the University of Hong Kong.  Chen argues that, under Xi, major reforms towards a larger private sector, consumer-led economy have been sidelined.  “The 60 reforms would have largely expanded the role of consumption and private initiatives,” he says. “However, the market-oriented reform agenda has been largely sidelined . . . resulting in a larger role for the state and a shrunken role for the private sector.”  According to Chen, this will mean China’s economy will stagnate from hereon.

Another prominent and widely-followed Western analyst, Michael Pettis, who is based in Shanghai, makes a similar argument, namely that what will push China into Japanese-style stagnation is the failure to expand personal consumption and continue to expand investment through rising debt.  And only this week Keynesian guru Paul Krugman joined the chorus, talking of China’s “wildly unbalanced” economy, which Krugman claims: “For reasons I don’t fully understand, policymakers have been reluctant to allow the full benefits of past economic growth to pass through to households, and that has led to low consumer demand.”

Unfortunately, sections of the Chinese leadership, particularly their economists in the finance sector, accept this annoyingly stupid argument from the Western experts.  How can anybody claim that the mature ‘consumer-led’ economies of the G7 have been successful in achieving steady and fast economic growth, or that real wages and consumption growth have been stronger there?   Indeed, in the G7 consumption has failed to drive economic growth; and wages have stagnated in real terms over the last ten years (and are now falling), while real wages in China have shot up.

This is the real point.  Actually, consumption is rising much faster in China than in the G7 and that’s because investment is higher. One follows the other; it is not a zero-sum game. Pettis’ view is a crude Keynesian analysis that ignores even Keynes’ view himself that it is investment that grows an economy with consumption following, not vice versa.

And not all consumption has to be ‘personal’; more important is ‘social consumption’, that is, public services like health, education, transport, communications and housing; not just motor cars and gadgets. Increased consumption of basic social services is not accounted for in the personal consumption ratios. 

China has a long way to go in social consumption too, but it is way ahead of its emerging market peers in many social areas and not so far behind leading G7 economies, who started more than 100 years before.  I defer to Citibank’s economists in their recent in-depth study of the Chinese economy “In other words, it is quite possible for the Chinese economy to deliver greater opportunities for consumption without consumption being a specific target for policy: household disposable income has been growing faster than GDP in the real terms in the past few years (except 2016), a trend likely to extend into the future. At the same time, the unlocking of wealth effects should help the consumer.”

The real challenge for China’s economic future is how to avoid much of its investment going into unproductive areas like finance and property that have now led to serious problems.  And also, in what way the growing contradictions between the state and capitalist sectors in China are being handled in Xi’s third term.

And on this issue, it is China’s large capitalist sector that threatens China’s future prosperity.  The real problem is that in the last ten years (and even before) the Chinese leaders have allowed a massive expansion of unproductive and speculative investment by the capitalist sector of the economy.  In the drive to build enough houses and infrastructure for the sharply rising urban population, central and local governments left the job to private developers.  Instead of building houses for rent, they opted for the ‘free market’ solution of private developers building for sale.  Of course, homes needed to be built, but as President Xi put it belatedly, “homes are for living in, not for speculation.” 

Indeed Xi’s call for ‘common prosperity’ is a recognition that the capitalist sector fostered by the Chinese leaders (and from which they obtain much personal gain), has got so out of hand that it threatens the stability of Communist Party control.   What Xi and the Chinese leaders have called the “disorderly expansion of capital”.   The capitalist sector has been increasing its size and influence in China, alongside the slowdown in real GDP growth, investment and employment, even under Xi.  A recent study found that China’s private sector has grown not only in absolute terms but also as a proportion of the country’s largest companies, as measured by revenue or (for listed ones) by market value, from a very low level when President Xi was confirmed as the next top leader in 2010 to a significant share today. SOEs still dominate among the largest companies by revenue, but their preeminence is eroding. This is intensifying the contradictions between the profitability of the capitalist sector and stable productive investment in China.  The accumulation of financial and property assets based on huge borrowing is detracting from growth potential. 

The other problem is the democratic accountability of the Chinese
government.  China’s leadership is not accountable to its working people; there are no organs of worker democracy. There is no democratic planning. Only the 100 million CP members have a say in China’s economic future, and that is really only among the top.  As a result, the CP leaders lurch from periods of expanding the private sector and the market to periods of trying to restrict and control it. Chinese workers are pawns in this game. 

Branco Milanovic in a recent post recognized this, in what he called the attempt of the CP leaders to maintain ‘a middle line’, by favoring alternatively pro-leftist and pro-rightist policies.  Xi has been following the former up to now, but now there are signs than the government wants to swing back towards pro-market policies to conciliate with Western interests, as US imperialism and its allies step up their policy of containment over China.

And indicator of the latest zig zag is found in Vice-Premier Liu He’s attendance at the jamboree of the rich in Davos, Switzerland.  Li told the Davos audience that Xi Jinping’s “common prosperity” initiative is “definitely not to introduce equalitarianism nor welfarism.” Liu said the main point of the strategy is to avoid polarization, while admitting a certain level of income and wealth disparity is inevitable. “What we want to emphasize is that it is about equality of opportunity and not equality in results,” the vice premier said, sounding like a good pro-capitalist Western politician. 

Li privately met a group of top corporate executives in Davos to tell them that the world’s second-largest economy was back, in an effort to rekindle economic ties damaged by the pandemic and tensions with the US.  He told them that “Some people say China is trying to move toward a planned economy, but that is absolutely not possible.” The conclusion of the corporate leaders was that “They are reversing everything that has been done in the last three years; they will be business-friendly and [know] that the economy cannot be successful without the private sector.”

It is now crystal clear that the US, enabled by a bipartisan consensus in Washington, is determined to stop China upgrading technologically. China is now treated as “an enemy” of the US.  Without the involvement, backing and control of workers organisations, the Chinese CP government is leaving itself open to imperialist encirclement.  So the zig zags of CPC policy are wasteful, inefficient and dangerous to China’s future.