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John Clark makes the point here that consciousness is not a static thing; it is complicated. It is fluid and we have to recognize, as Marx says, that consciousness is a product of being. He gives a concrete example of this in the essay below.
John writes:
As I’ve argued before, the power of the ruling ideas in this society is considerable but it is challenged by oppositional forms of thinking that flow from the conditions of working-class life. These two factors are always in competition and this can produce strange results.FFWP Admin
John Clark.
Toronto
After a lot of discussions I’ve had and social media posts I’ve read, I want to offer some thoughts on how problematic it is to base your conclusions on immediate consciousness. I’m going to argue that the situation is usually far more complex and often holds more possibilities than that which you can gather by simply noting the opinions working-class people express at a given moment. I’ll begin with a concrete example that made a strong impression on me.
Way back in the 1970s, I was working for the Ford Motor Company in its Basildon Tractor Plant in Essex to the east of London. In this factory, there was a huge problem with racism among the majority white workers and a member of the fascist National Front was even elected as a shop steward. Down the road from us, at the very much bigger factory in Dagenham, things were even worse, with rampant anti-Black racism hugely prevalent. The infamous ‘rivers of blood’ speech that the infamous Conservative Enoch Powell had made a few years earlier to whip up racism was still reverberating in British society.
One day, a young Black worker in Dagenham, after weeks of being harassed by a racist foreman, threatened his tormentor with a hammer and lost his job as a result. The whole factory exploded in anger, with workers stopping work but remaining on the property, and management had to reinstate the worker.
A left-wing shop Dagenham shop steward I spoke to shortly afterwards was predictably thrilled by this development but had to admit that he would never have imagined that such unity in action could instantaneously replace divisive hatred.
Of course, the racism was still there but even white workers with horrible ideas hated the employer and recognized their class interests and the need for solidarity in this situation. Yet, if you had based yourself on the immediate thinking of many of the white workers the day before this struggle broke out, you could never have predicted it or even imagined it possible.
As I’ve argued before, the power of the ruling ideas in this society is considerable but it is challenged by oppositional forms of thinking that flow from the conditions of working-class life. These two factors are always in competition and this can produce strange results. A worker who insists that the boss worked hard for his wealth and should be respected may still be on the lookout for ways to restrict the quantity of surplus value that has to be provided. Someone who expresses great respect for authority may hate the cops with a passion.
This is not to say, of course, that the views people express are irrelevant and they need to be properly understood. It’s just that the contradictions and social tensions in this exploitative society have the potential to spark resistance and this can happen when it is least expected.
The other vital consideration, when it comes to overcoming the ruling ideas that keep working-class people passive and divided, is that the class struggle is engaged in collectively and we are dealing with social consciousness and not just individual thinking.
In my Dagenham example, at the point at which the rebellion broke out, there would have been white workers who actively opposed racism, a minority who deliberately worked to spread it and a majority who had been influenced by racism but only to a certain degree. In the period leading up to active resistance, there would have been discussions and debates in which the racist core lost their dominant position. A leap in consciousness occurred and collective working-class action, based on the real interests of all the workers in the factory, suddenly exploded and scared the living daylights out of management.
So, when you hear depressingly backward talk in your local coffee shop or read a report of an opinion survey on immigration that can lead to pessimism, while you need to take stock of that present reality, you also shouldn’t lose sight of the contradictions and possibilities that can produce very different forms of thinking with great speed.
When you read news reports or watch footage of sweeping struggles of astounding boldness, you should realize that many of those on the front lines held the most conservative and compliant views just weeks or even days before they were caught up in one of the leaps in collective awareness that marks such social explosions.
Benjamin Netanyahu has remained in office for years by empowering the far right of his coalitions, including religious fundamentalist parties. The outlook of Netanyahu – arrogant, military supremacist, with no strategies but endless wars and his own political survival – is a perfect fit for the religious zealots and bigots in and around his cabinet. These are people who see the necessity of asserting Jewish religious traditions at the expense of those of other faiths.
These same politicians, who warn the west against the encroachment of ‘Islamic fundamentalism’, are themselves the authors par excellence of religious intolerance and oppression. They are the ‘Taliban’ of the Jewish faith: blind and ignorant, misogynistic men.
Zionism was originally a largely a secular, non-religious political nationalist movement, although there was an obvious historical association with Jerusalem. But nowadays, the stories from the Torah are being cynically used to boost that nationalism; its embrace of ultra-religious ideology and the rise of the religious neo-fascists is a relatively new development.
Goaded by the apocalyptic myths of the Hebrew bible – and they are mostly myths – these newly unleashed fanatics would be happy to see the Middle East plunged into a religious war, one which they are confident they would win.
The religious right are on the point of provoking a powerful reaction from Arab states in the area, by repeated incursions into the compound of the Al-Aqsa Mosque in Jerusalem. The area has great significance in Islamic tradition, but also has great significance in Judaic tradition.
Western wall revered today
The compound is on the site of what was the huge so-called ‘Second’ Temple, active around two thousand years ago, but utterly destroyed by the Romans after an unsuccessful revolt, in 70CE. What remains of the Temple – its lower foundation walls – are revered by Jews today as the Western Wall, and the area above it, where the Temple used to stand, is known to Jews as Temple Mount.
However, fourteen centuries ago, during the period of the rise of the first Arab empire, and at the time of the establishment of Islam, the area was put to a new use. Here, the Dome of the Rock was built at the end of the seventh century, by the Caliph Abd Al-Malik. It was Islam’s very first monumental place of worship, built to rival the great cathedrals of Byzantine Christianity.
This was at a time when early Islam had not clearly and decisively differentiated itself from Judaism or Christianity – it is a faith that shares many influences with both religions – and the Dome of the Rock was of a design meant to express the majesty and grandeur of the Caliphate.
Being first-ever major site of worship, the Dome of the Rock was not built in what became the style of later mosques, but it is still revered by Muslims as the third most holy site, after mosques built later in Mecca and Medina. Tradition has it that Mohammed ascended to heaven from the Dome of the Rock.
Al-Aqsa is a huge mosque and is filled regularly…when allowed
In more modern times, a large mosque was built nearby – the Al-Aqsa Mosque and this used to be the place where thousands of Palestinians would gather for Friday prayers. “Used to”…because the Israeli authorities are increasingly asserting their rights to decide how many and which Palestinians are allowed into the compound on Fridays and the entry to the mosque has become a flashpoint of conflict between the IDF and local Palestinian worshippers.
The Jordanian government has an axe to grind on this issue because it is ‘legally’ the custodian of the Al-Aqsa compound, from an Israeli-Jordanian treaty of 1994, not that the Israeli government takes much notice of that fact.
In modern times, Jews have been forbidden from entering the Al-Aqsa compound at all, much less worshipping there, but in recent years there have been repeated encroachments by ultra-religious Jewish groups, goaded by politicians from the far right. Last month more than 2,000 Israelis, many of them settlers – the same groups organising murderous pogroms against Arab villages – stormed the Al-Aqsa compound, alongside Israel’s national security minister, Itamar Ben Gvir. Here, they prayed and performed religious rituals.
There are those on the far religious right in Israel who would be happy to take over the Al-Aqsa compound altogether, in the hope of somehow restoring the area to its “former glory”. The essential thing for them is to ‘liberate’ the area – like the whole of ‘Greater’ Israel – from the yoke of the Muslims. It is the stuff of messianic politics, but it pervades an entire spectrum of Israeli right-wing politics, including many in the army and the state machine.
Ben Gvir – the same ‘security’ minister who gave out ten thousand assault rifles to Jewish settlers – made no bones about who had the whip hand in Jerusalem. “Everywhere”, he toldHaaretz, “people understand that Israel is in charge. There is still more to do, and with God’s help, we will move forward”. The plan to forces changes to the protocols around the Al-Aqsa compound, we should add, are fully endorsed by Netanyahu and his cabinet.
Unsurprisingly, there is growing anger among Muslims, over what is seen as the repeated desecration of a holy Islamic site. There is also a fear that in the weeks approaching the general election in Israel – due in October – that the Israeli religious right would use the issue to provoke religious conflict in the hope of shoring up their position in the polls.
Jordanian government has reasons to worry
Last week, the Jordanian government convened a meeting of foreign ministers of Muslim countries to express their alarm at the developments in Jerusalem. “We warn that tampering with the status quo”, the Jordanian foreign minister, told the Guardian, ”could trigger a religious conflict that will reverberate beyond Palestine and Jordan into the whole Muslim world.”
Jordan has special reason to worry, because half of its population of twelve million are Palestinian, and what happens on the West Bank of the River Jordan will sooner or later have a major impact on what happens on the East Bank.
Ben Gvir, ‘security’ minister, the person who armed settlers and who is, in effect, the main proponent of terrorism in the West Bank
Jordan is a monarchy, but hardly a constitutional one – political activity is severely limited and opposition is actively suppressed by the authorities. There is a parliament, but its powers and activities are strictly curtailed. Nonetheless, opposition is growing, as a result of the genocidal destruction of Gaza and the Israeli depredations on the West Bank. To add insult to injury, Israel has reneged on a previous agreement to share the waters of the Jordan River with the result that there are shortages affecting Jordanian agriculture.
The “normalisation” of relations between the Jordanian monarchy and Israel, established now for decades, has come under considerable strain and the Jordanian monarchy is finding that repeated suppression cannot block opposition forever. The encroachment of Jewish worshippers onto a Muslim holy site in Jerusalem is only increasing support for new, radical Islamic parties in Jordan, the largest of which now has around quarter of the MPs in parliament.
Aggression and hubris pervades the whole Israeli state
Dima Tahboub, a member of parliament and spokesperson for Jordan’s Islamist Umma (‘Community’) party told the Guardian. “Anti-normalisation sentiment here has grown even larger than before due to the Zionist state’s plans of annexation of the West Bank, the denial of Jordan’s share in the water agreement and also the daily challenges to the custodianship at al-Aqsa mosque…Every day there is penetration by settlers into al-Aqsa mosque and at the same time, [Palestinian]Jerusalemites are prevented from entering the mosque.”
Whether or not the religious arsonists around Ben Gvir are successful in provoking a religious fire remains to be seen, but it is yet another indication of the aggression and hubris that pervades the whole Israeli state and establishment at the present time.
We might also add that the political establishment of the west – including most of the leadership of the Labour Party – are complicit in this process. They wring their hands over the pogroms conducted by armed Jewish settlers against Palestinian villages and they sigh over the ferocity and scale of the killings of tens of thousands of Palestinians in Gaza. But they continue to arm Israel and trade with Israel as if it were a ‘normal’ country, living by ‘normal’ rules, and not a vicious theocracy bent on wiping out all traces of other faiths and traditions in ‘its own’ territory.
Feature picture shows the Dome of the Rock in the Al-Aqsa compound, from Wikimedia Commons, here. Inset picture of Ben Gvir, from Wikimedia Commons, here]
See more on the history of the Dome of the Rock and early Islam, inThe Origins of Judaism, Christianity and Islam,here.
Back last February, I posted about the state of the Japanese economy when Sanai Takaichi, Japan’s first female prime minister called a snap general election, which she won in a landslide. Takaichi, who models her views on Britain’s Margaret Thatcher of the 1980s and now on Trumpism, claimed she would be different from all past prime ministers. She would cut taxes, in particular, the consumption tax which drives up prices in the shops, but at the same time increase government spending on social security and ‘defence’, even if it meant higher budget deficits. Takaichi was ‘going for growth’ in a not dissimilar way as the ill-fated, short-lived British Conservative prime minister, Liz Truss. Truss’s plans for big rises in the UK budget deficit led to a sharp rise in UK government bond yields and a run on the pound. She lasted just over a month before ‘the powers that be’ (the bond markets) got her ousted.
Last February, I forecast that something similar would happen in Japan, if at a slow burn. And now it has come to pass. Japanese government bond yields have rocketed to highs
While the Japanese yen has collapsed to near historic lows.
The problem for Japan is that economic expansion has increasingly depended on permanent government deficits, with government spending on construction and other projects; and yet Japan’s economy has continued to stagnate. With Japan’s corporate sector unwilling or unable to invest, Takaichi has been attempting to end Japan’s stagnation by yet more spending on projects to boost technology, while telling the Bank of Japan to not raise interest rates, as servicing existing government debt is already using up a quarter of all government spending! This Truss-Trump type policy has got the Bank of Japan and the financial institutions really worried, as well as foreign investors.
As I said last February, the Japanese economy has now morphed into stagflation, with rising prices, flat GDP and consumer spending and falling real wages. Consumer prices have risen 12% since 2021. At the same time, real GDP is barely higher than it was in 2018. Real wages are down 7% from their 2018 level.
Takaichi’s policies won’t end up crashing the Japanese government bond market as Liz Truss managed in the UK. That’s because most Japanese government debt is held by Japanese (88%), unlike in the UK. The risk of capital flight only lies in that portion held by private investors, the net debt. And the latter is smaller than it’s been in decades, mainly because the BoJ has bought so much of the debt since 2013.
Instead, it is the currency that is diving. With a 50% depreciation of the yen since 2021 to its lowest rate for 40 years. Far from delivering a kick-start to economic growth and exports, the fall in the yen has just accelerated inflation. The inflation rate is heading to 3% a year, unheard before of in Japan.
In the last week, the fall in the yen eventually prompted the Bank of Japan to intervene and start buying yen with its dollar reserves. But the new development was that US Treasury also came to the aid of the BoJ and Takaichi by starting to buy yen. This has helped to stop the depreciation of the currency, at least for now.
The US entered the fray for two reasons. First, the US Treasury Secretary Scott Bessent was concerned that the fast rise in Japanese government bond yields (2.86% in July, its highest level in some 30 years) would also lead a further rise in US government bond yields, already at highs. The cost of servicing US government debt would rise and other interest rates in the US, like mortgage rates would move up. US government borrowing costs are now at around 4.6 per cent, and 30-year bond rates are north of 5 per cent for the first time since the great financial crisis.
Rising interest rates are not popular with American households, where inflation is also on the rise, the jobs market is stalling and real incomes are stagnating at best.
The other reason for the US intervention was that a weak yen would lead to an accelerated flow out of yen by financial investors and into buying US dollars. This would strengthen the dollar and so make US exports even more difficult to compete in world markets. But what was odd about the US intervention was the US treasury used euros to buy yen, not dollars. This suggests that the US government is now reluctant to print more dollars because foreign investors have to some extent lost their enthusiasm for dollar assets, at least for US government bonds. It’s a sign of a weakening of US dollar’s ‘exorbitant privilege’ in world financial markets.
What can we learn from these currency events? First and foremost, that all roads are now leading to ‘stagflation’, where inflation rises, but economies do not expand. This is the story for Japan, Europe and even the US. Second, that pro-business governments cannot stimulate growth through currency depreciation or through trying to keep interest rates low if capitalist companies won’t invest. Japan’s corporations may have increased profits at the expense of wages, but they are not investing that extra capital in new technology and productivity-enhancing equipment.
The current yen crisis could only be resolved by a sharp rise in Japanese interest rates to encourage investors to hold Japanese financial assets. But this would ensure an outright recession in the Japanese economy. Takaichi is caught in a trap between inflation and slump.
I was looking for some statistics in an old file and found this article I wrote in 2007. I am quite happy with what I wrote and the concerns included in it. It’s so important to understand the past if we want to solve the crises of the present and the impending catastrophe in the future if the working class does not take up the task history has set for us. That task is to end the present capitalist system in which production is set in motion for profit and the accumulation of capital for a tiny minority, and the building of a global federation of democratic socialist states that can work in cooperation with each other producing for social needs in harmony with the natural world, rather than at war with it. RM
Today's terrorism has its roots in US foreign policy
Richard Mellor
AFSCME Locl 444, retired
Oakland CA
02-2007
I rarely watch the news on the major cable or TV channels. But as I flipped through the 80 or so channels I have trying to find something worthwhile watching, a commentator on CNN grabbed my attention. I can’t recall the show but it appeared to be CNN’s attempt to challenge Fox’s mantle as the right wing propaganda machine’s front-runner.
I thought it was Fox news for a minute as the commentator was bashing the French. It wasn’t a news show really; it was sort of childish. I caught a few sentences where the commentator basically accused the French of being cowards because they won’t stand up to Iran.
The Europeans are somewhat concerned. There is a feeling across the pond that either the US or Israel will bomb Iran; that the recent changes in congress won’t amount to anything and they’re probably right. In fact, if you listen to the opposition like Joseph Biden or Barak Obama, they never say that the invasion was an aggressive act against a country that had not threatened the US in any way; they generally attack the way it was handled, the tactics etc.
No serious minded person can deny that the greatest force of terror in the world for some considerable time has been the US government. It is US foreign policy that has given great strength to the numerous forces that fall under the category of what we might call terrorism. Terrorism is a tactic, a means to an end; it’s an absurdity to declare war on a tactic. Marxists traditionally have opposed what we call individual terrorism because it substitutes for the conscious collective movement of the masses, the individual with the bomb or the assassin with the high-powered rifle. It does not empower the working class but weakens it.
I read today that the US is planning to increase spending on funding Fatah in its struggle with Hamas. Fatah has been an enemy of the US for years as it threatens the expansionary policies of the Zionists. But the uncritical support politically and the billions spent annually in support of Israel has given Hamas life. Rather than consider US/Israeli relations or the horrific existence of the Palestinian masses under the Israeli regime, US capitalism is increasing support for Fatah in the hope that at least it will equalize the balance of power between the two Palestinian groups and they can continue killing each other for a while. After all, he American taxpayer will foot the bill. The Palestinians elected their representatives but they weren’t the ones the US wanted.
In the Arab and former colonial world in general, increased association with the US government will increase support for Hamas and other more independent minded groupings even if they have fundamentalist roots and terrorist tactics. The US government has no credibility among the masses of the former colonial world and any resistance movement that allies with it will weaken its base.
The US played a similar role in Iraq, helping Hussein slaughter leftists, trade unionists and other oppositionists. The CIA generously handed Saddam the names and whereabouts of the leaders of the Iraqi Communist Party. With the elimination of the leaders of what was once one of the most powerful political parties in Iraq, along with the pacification of the fundamentalists, Saddam’s reign was secure.
US foreign policy’s best success to date has been Al Queda and the Taliban. As Michel Chossudovsky points out, “”As recently as 1999, US taxpayers paid the entire annual salary of every single Taliban government official.” (1)
The success of the Taliban, supported by the US and Pakistan (a dictatorship) was determined a “positive development” by Martin Miller, vice president of Unocal, the company that was hoping for a pipeline through the country to the Arabian Sea. (2) The US was pleased with the Taliban’s victory. US State Department spokesperson Glyn Davies said that the US found “nothing objectionable” in the Taliban’s imposition of Islamic law.
Billions of US tax dollars were spent supporting the Taliban and Bin Laden in their attempt to control Afghanistan and defeat a more progressive secular regime. The problem for US oil moguls was the regime was pro-soviet and its leader Dr. Mohammad_Najibullahin, in the Afghani communist movement. The US labor leaders having no independent policies of their own, followed on the heals of US capitalism and refused to support the workers of Afghanistan offering Najibullahin critical support against the seventh century clerics.
In the quest for profits nothing is sacred. Laura Bush’s phony concern for Afghan women didn’t apply when the Taliban visited the state of Texas for discussions with Unocal. Laila Helms, Jesse Helms’ daughter was hired as a public relations agent for the Taliban government. (3) So much for women’s rights when dollars are to be made.
The European capitalist class, although in competition with its American allies, is concerned about the unilateralism that dominates its decision-making. Europe is much more vulnerable to terrorist attacks than the US and the Europeans have suffered the effects of urban destruction on a scale not experienced in the US. outside of 911 and natural disasters like Katrina.
The commentator on CNN last night was undoubtedly reacting to French presidential candidate Nicolas Sarkozy who called on Americans to broaden our horizons. Americans need to “get interested in the world” said Sarkozy. He went on: “Beyond the Pacific and beyond the Atlantic, there are men and women like you. Get interested in the world and the world will learn to love you.” “The world is not just the American Empire. There’s more to it than that.” (4)
Sarkozy lost most of his empire some time ago and his European partners, and by that I mean his class allies, have been forced to take a different approach with regard to imperialist plunder. Coming from a representative of French capitalism that has a bit of an immigration problem of their own, also weakens his credibility but his advice should be taken, not necessarily by his friends in Washington but by US workers. We have allies in Afghanistan. There were some four hundred factories there before the victory of the Taliban and the former regime would have undoubtedly, despite its pro-Soviet bent, strengthened the working class there as opposed to the Mullahs and their seventh century ideology. Women’s rights would also have improved significantly
Mohammad_Najibullah, the leader of the government the Taliban overthrew with US backing and funds, was eventually tortured and killed by them. The Taliban cut off his testicles and hung him from a lamppost in Kabul for a couple of days to deter any other impure elements from corrupting religious ideology with secular ideas and worker’s and women’s rights.
This was a regime whose policies the US state department determined were “not objectionable.”
The policies of the US government are determined not by its workers but by its bankers and oilmen. This applies to domestic as well as foreign policy. Any thinking worker sides with strikers against the forces of the state when we are confronted with these choices during strikes. Even when we do not act on it, the understanding of which side we are actually part of is there. The same must apply when struggles take place outside of our borders and especially when the US government is involved which is invariably the case. We must make decisions about global affairs based on class unity with the workers involved not with the governments involved including our own.
(1)Michel Chossudovsky: War and Globalization
(2)ibid
(3)Karen Talbot “US Energy Giant Unocal Appoints Interim Government in Kabul, Global Outlook #1 Spring 2002 P 70 (Chossudovsky War and Globalization)
As we move closer to the midterm elections, two candidates stand out for their independence from the institutional Democratic Party.
The first is straight-talking chef Francesca Hong, whom I’ve interviewed and is the clear frontrunner to be governor of my home state of Wisconsin. The second is doctor Abdul El-Sayed, who enters Tuesday’s Senate primary in Michigan with a double-digit lead in polls.
Yet the Democratic Party and a compliant mainstream media is not accepting the clear will of voters. Instead, they’re busy manufacturing the sense that if the two candidates are nominated, losses in the general election would be inevitable because they are too “extreme” for ordinary voters.
The evidence for this is largely just vibes. In fact, a leaked memo shows Hong is privately seen by Republicans as the most formidable candidate, as I’ll detail in a moment. But first, take a look at the orgy of fear-mongering by the Party about these candidates.
“The Dem race for governor in WI feels like a slow-rolling car headed for a cliff,” said David Axelrod, Obama’s chief strategist in his 2008 campaign.
Democratic Party elder James Carville went further, declaring “the two-party system is just under tremendous stress” due to the rise of figures like left-wing commentator Hasan Piker, whom Hong has campaigned with. (When asked if she’d condemn Piker, Hong’s characteristically blunt response was simply “No,” as shown in the video below.)
Party leaders have thumbed the scales in both primary races — Wisconsin Governor Tony Evers in his state, Chuck Schumer in Michigan — each backing the party establishment favorite. The Democratic establishment keeps advancing candidates who aren’t gaining any traction; but instead of asking why they are so out of touch with what the people want, they are resorting to tearing down the popular choices. The Party doesn’t like anyone who it hasn’t anointed and who hasn’t risen through its ranks.
The Democratic Party sits at its lowest level of popularity in at least 30 years. It has been fighting the people’s choices since Zohran Mamdani emerged as mayoral frontrunner in New York last year. When he beat the Party’s candidate last year, the smug reaction from election knowers was that his victory was only possible in a deep blue state like New York.
Turns out that was bullshit. Neither Michigan nor Wisconsin is New York. Nor are they lefty outliers. Trump carried both in 2024!
Now the Party hacks and their elite media buddies are trying to put the fear of god in voters that if they choose the candidate most of them want, it is playing into the hands of the Republican Party, Donald Trump, and so on. Though disguised as a warning, it is actually a threat.
It bears mentioning that this is not the view of congressman Tom Tiffany, the Republican who will actually have to run against Hong.
“We Need To Take Francesca Hong Seriously,” reads the subject line of a memo prepared for U.S. Tiffany’s gubernatorial campaign by Republican consultants. Leaked and reported on by Jessie Opoien of the Milwaukee Journal Sentinel, the April memo correctly anticipated Hong’s dominance in the primary. It also described her as “uniquely dangerous in the general election” and that “general election strengths are formidable.”
Per the memo, as reported by Opoien:
Hong’s “combination of grassroots momentum, unapologetically progressive ideology, and a platform centered on high turnout makes her uniquely dangerous in the general election.”
Hong’s platform is “broadly popular and difficult to counter.”
Her agenda “is built around kitchen-table issues that poll strongly with independents, working families, and even some rural voters.”
“more moderate and establishment Democratic alternatives would likely produce lower base motivation and depressed turnout.”
Now compare that with the doomsaying national media coverage. It’s almost surreal how different it is.
The “electability” argument is always a claim about what your neighbors will tolerate, made by someone who has never met them, delivered with the confidence of arithmetic. As a campaign staffer once told me, the horse race’s main function is propaganda to induce voters to feel like voting a certain way is prudent or responsible.
This is all about telling people who they can or cannot vote for. Sometimes it’s barely even concealed. Third Way, the centrist think tank, said in a strategy memo this year that Democrats “cannot run candidates who are far outside the mainstream of their district.”
It’s the very definition of mainstream that is at stake here.
If there’s one thing that ties together Mamdani, Hong and El-Sayed, it is that they have distinct personalities and they talk without the prevarications and doublespeak of what we’ve come to know as “moderates.” Things like democratic socialism are, in my view, a small element of their popularity. That they are willing to directly buck the establishment is their appeal. And when they talk about affordability, it comes from experience and living among normal people rather than the lanyard class that dominates Washington.
As the Republican consultant memo about Hong warns, her “working-class biography and populist economics [could] blunt ‘radical socialist’ framing.”
I have no idea what will happen in the election. Neither does anyone else. But I do know what’s happening in America. People are tired of the establishment, tired of the blow-dried, overproduced version of everything that seeks to manage rather than move.
“I think they’re underestimating voters,” Hong said back in May of the commentariat and their negative predictions. “That has always been a problem for the Democratic Party — that we are not listening to how they are feeling.”
She seems to hear it loud and clear.
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Theories of inflation part two – heterodox and Marxist
This is the second part of my discussion of the causes of inflation in modern capitalist economies, based on an unpublished paper by Guglielmo Carchedi and me. Part 1 is here.
There are various heterodox views on the causes of inflation. Generally, they argue against the mainstream focus on monetarism, excess demand and inflation expectations as discussed in part one. The heterodox views can be divided into two. First, there are those who suggest the focus should be on the sectoral structure of the economy, namely how supply constraints lead to price surges in certain sectors of the economy and then, through input-output linkages and changes in firms’ pricing behavior, spread to the whole economy. And second, there are theories based on the view that inflation is caused by class conflict ie workers’ demands for higher wages and the response of capitalists.
In the sectoral view, some turn to corporate price ‘mark-ups’ as an explanation of inflation i.e. inflation is caused by monopolies and their power to impose market prices above ‘free competition’ prices. Monopolies can raise their profit mark-ups and sale prices if costs rise, including labour costs. Stephanie Kelton, the well known ‘modern monetary theorist’, explains that “companies with enough market power can also unilaterally raise prices in a quest for greater and greater profits.”
Marx would disagree. Yes, the market price of commodities sold can and will deviate from the production price, the price at which all capitals produce commodiities at the same average rate of profit (a rate that is always moving). If the price of production that is based on the average rate of profit in the economy falls, then all individual prices revolving around that should fall as well. But there is a degree of freedom within which some firms might lower their price less than the average or even increase it. However, this ‘monopoly’ ability to do this always has limits. Competition will tend to rule, even with oligopolies. So the market ‘monopoly’ price cannot deviate for long from the price of production.
In the recent inflationary spike after the pandemic slump, the sectoral theory has taken a different form. In this view, inflation is due to supply constraints in key economic sectors, which is then amplified by firms raising markups due to their market power. Supply bottlenecks which spread through sectors in the economy initiate the inflationary process, but then markups by companies can go above the average, so putting additional pressure on prices. Isabella Weber and Even Wasner argue that rising prices in certain “systemically significant upstream sectors” provide an impulse for further price hikes. To protect profit margins from rising costs, downstream sectors propagate, or in cases of temporary monopolies due to bottlenecks, amplify price pressures.
The evidence for profit-led sectoral driven inflation has some basis in the recent post-pandemic inflation spiral, but can it be considered as a general explanation of inflation in capitalist economies? Inflation has existed long term in the major economies even when there have been no increased mark-ups by companies or when there are no spikes in raw material prices. Sure, prices in oligopolistic markets are likely to be higher than in more competitive markets, but higher inflation can occur both with fairly competitive or oligopolistic market structures. In the late 19th century, the so-called Gilded Age Era was characterized by the rise of cartels, but with deflation in prices; and the 1990s, often seen as a second Gilded Age with increasing market concentration, experienced a so-called Great Moderation in price inflation ie disinflation (as shown in part one). Indeed, in the last big inflationary spiral of the 1970s, profits actually fell. According to Sylos-Labini, writing then:“the decline of the share of profits in several capitalist countries can be attributed primarily to the persistent increase of direct costs in labor, raw materials, and energy.” I shall return to the discussion about so-called ‘sellers inflation’, profit mark-ups and sector-driven inflation in part four when I analyse the post-pandemic inflationary spike to date.
The second heterodox explanation for inflation is that it is due to class conflict. This heterodox theory rejects Keynesian theory that attributes inflation to wage-cost pushes resulting from excess demand and worker bargaining power. Instead, this theory reckons that wages rise in response to price rises, as Marx argued. But what about the cause of the original spurt in inflation? This will be due to supply disruptions or mark-up power by monopolies – so back to the first heterodox theory. But inflation will continue, depending on whether workers have sufficient labour power to respond, leading to further attempts by companies to compensate by hiking prices further.Thus inflation depends on the balance of class power between workers and capitalists. But this theory provides no explanation of the initial inflation of overall prices, except the contingent factor of a supply disruption or ‘shock’. And it falls back on the initial trigger for any price surge being due to increased markups or supply constraints as in the sectoral argument above.
There are some overtly Marxist theories of inflation. One ‘Marxist’ explanation of inflation is merely the monopoly mark-up price theory as described above. Baran and Sweezy (1966) explained the cause of inflation as follows: “Keynesian theory assumed free competition; under oligopoly, increased demand leads to rises in prices … and ultimately (as a result of the rising cost of living) to higher wages rather than an expansion of output. The result is general inflation.” Similarly, Kotz (1982) argued that monopolies can set market prices that exceed prices of production. But monopolies since the end of WWII have existed both during the inflationary period (1949-1979) and even increased market power in the disinflationary period (1980-2021). So generalised inflation must be explained aside from monopolies. Indeed, if monopolies have the power to increase uncontrollably their market prices, why do they choose to do so only in very certain circumstances? Specifically, they have chosen to raise their prices significantly only twice in recent economic history (in the late 1970s and in 2021), namely when profitability was low.
Paul Mattick Snr argued that “inflation is an expression of inadequate profits that must be offset by price and money policies … If prices rise faster than wages, then what could not be extracted from the workers in production is taken from them in the circulation process.” (1977, Chapter 3). This is evident. If prices rise faster than wages, there is a pro-capital redistribution at the cost of wages. And if prices grow less than wages, there is a pro-labour redistribution at the cost of profits. But neither explains any cause of the initialrise in the general price level.
Ernest Mandel (1987) attempted a Marxist explanation that involves money: if “paper money circulation has doubled without a significant increase in the total labour time spent in the economy, then the price level will tend to double too.” But why does money in circulation not just match the change in the value of commodities as measured in total labour time? Mandel is close to identifying the relevant factors in inflation, but without an analysis of how they combine.
Harman (1979) correctly identified that the profitability of capital was a key cause of inflation. But Harman adopted a subjective analysis: “in a boom, capitalists feel confident that their goods would sell, even if they increased their prices. … Once the recession sets in, capitalists have to respond … \[by\] contracting markets \[and\] have to slash prices.” This presents the capitalist reaction to a boom and price inflation, but does not explain the cause of inflationary or alternatively disinflationary periods. For example, it cannot explain the persistence of disinflation from the 1980s to 2019. There is no explanation of how movements in profitability are relevant and no recognition of the impact of the monetary authorities.
Choonara (2021) also underscores the role of profitability as the core cause of rising prices: “inflation depends on the interrelation between value creation through the expenditure of labour power, the creation of money (primarily through the credit system), and the relationship between capital accumulation and profit rates.” This is closest to our ‘value theory of inflation’ that I shall deal with in a later post.
The two most thorough Marxist explanations of the causes of inflation are by Anwar Shaikh and more recently, by Greek Marxist economists Stavros Mavroudeas and Athanasios Chatzirafailidis.
Shaikh does not like to call his theory Marxist, preferring ‘classical’. He argues that “modern inflation is the balance between a demand-pull generated by new purchasing power and a supply-response depending on profitability and the degree of growth utilization.” The combination of these two provides “a general theory in which inflation responds positively to new purchasing power because the portion of the latter which is not absorbed by current supply spills over into price increases; and negatively to net profitability, since this raises real output growth; and positively to the growth-utilization rate insofar as the latter inhibits real output growth.”
Where does this ‘new purchasing power’ that represents demand come from? It comes from new domestic credit from private and central banks, ie in effect an increase of money in circulation. The supply capacity to meet this increase in demand depends on the profitability of capital, which is the ‘motivation’ for investment. If the stock of capital rises, it will provide an increase in capacity to produce and allow more ‘growth utilisation’, ie more real output. If the stock of capital falls, the capacity to produce is lowered. In other words, Shaikh is saying that inflation is caused by aggregate demand exceeding supply capacity. If the profitability of capital rises, then capitalists will increase supply and inflation will be avoided. If the profitability of capital falls, then supply capacity will fall and inflation will emerge.
So inflation is driven up by increased demand (new purchasing power) and by low supply capacity, the latter being caused by falling profitability. Inflation slows or disappears if new purchasing power is satisfied by rising supply and that will tend to happen when profitability rises. Thus in the period when US profitability fell (1964-82), the increase in supply capacity slowed and inflation accelerated. In the period 1982-2007, when profitability rose, supply capacity rose and inflation decelerated. Shaikh provides empirical evidence to support this theory, while at the same time, refuting the Keynesian Phillips curve. I have reproduced his graph 15.10 from his magnum opus, Capitalism, p711 and recalculated it.
The graph shows a high correlation (0.63) between rising inflation and the using up of capacity (in other words, a slowing increase in supply) and vice versa. The correlation is very high in the inflationary (accelerating inflation) sub-period 1948-1981 (0.83) and still relatively strong in the disinflationary (slowing inflation) period from 1982-2010 (0.59).
Stavros Mavroudeas and Athanasios Chatzirafailidis define inflation as the phenomenon “in which the total sum of market prices significantly exceeds the total sum of prices of production for an appreciable period in the economy.” A strong and persistent inflationary phenomenon (namely the rise in total market prices above the total prices of production) arises when the capitalists’ demand for more means of production significantly exceeds investment for a considerable period.
Why would demand exceed investment for periods? Mavroudeas and Chatzirafailidis fall back on Marx’s reproduction schema as in Volume 2 of Capital. For them, inflation is due to the systematic over-accumulation of capital and specifically due to an incessant demand for more means of production. Investing in more means of production relative to labour drives up the organic composition of capital, which in turn eventually leads to a fall in profitability which slows investment and delivers weaker output growth. So demand outstrips supply and market prices rise above prices of production and inflation ensues.
Both theories have the merit of placing the role of profitability of capital at the centre of the causes of inflation. Unlike Shaikh, Mavroudeas and Chatzirafailidis emphasise that the supply side in Marxist terms depends on the growth in the value of commodities: “inflation should not simply be perceived as a process in which the market prices of commodities are vaguely rising above an arbitrary “normal” price level. On the contrary, they should have the values of commodities as their “anchors.”
But in my view, both theories do not provide a complete Marxist theory of inflation. While Shaikh says that aggregate demand is driven by credit growth or money in circulation, which in my view is correct, he offers no explanation why that demand should accelerate or decelerate. What he does not explain is why demand does not also sink along with a fall in supply capacity and thus avoid inflation. After all, that is what happens in a slump. Also his emphasis on capacity utilisation rather than on the rate of growth in value for the supply side of the inflation equation suggests a Keynesian excess demand theory rather than Marxist value theory..
In contrast, Mavroudeas and Chatzirafailidis put the value of commodities firmly as the anchor for prices of production around which market prices fluctuate. But they have no role for money. For them, inflation of prices in a capitalist economy is purely a real, not a monetary phenomenon. They start with the assumption that money is a commodity (gold), which rules out the role of money in inflation. This is unrealistic in modern economies where money can be created by central banks and governments (fiat money) that is not tied to the value of the gold commodity. In modern economies, money growth can diverge from growth in the value of commodities and so affect market prices. Without money in the story, we cannot explain why demand should outstrip supply and cause inflation.
In part three, I shall present what Carchedi and I call a ‘value theory of inflation’, which incorporates the role of the profitability of capital, changes in the value of commodities and the role of money. Bringing all these together offers a more comprehensive theory.
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