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Putting an End to the Rent Economy

By Michael Hudson and Vlado Plaga

Source: Unz Review

Interview with Vlado Plaga in the German magazine FAIRCONOMY, September 2017.

Originally, you didn’t want to become an economist. How did it come that you changed your plans and digged so deep into economics?

I found economics aesthetic, as beautiful as astronomy. I came to New York expecting to become an orchestra conductor, but I met one of the leading Wall Street economists, who convinced me that economics and finance was beautiful.

I was intrigued by the concept of compound interest and by the autumnal drain of money from the banking system to move the crops at harvest time. That is when most crashes occurred. The flow of funds was the key.

I saw that these economic cycles were mainly financial: the build-up of debt and its cancellation or wipe-out and bankruptcy occurring again and again throughout history. I wanted to study the rise and fall of financial economies.

But when you studied at the New York University you were not taught the things that really interested you, were you?

I got a PhD as a union card. In order to work on Wall Street, I needed a PhD. But what I found in the textbooks was the opposite of everything that I experienced on Wall Street in the real world. Academic textbooks describe a parallel universe. When I tried to be helpful and pointed out to my professors that the textbooks had little to do with how the economy and Wall Street actually work, that did not help me get good grades. I think I got a C+ in money and banking.

So I scraped by, got a PhD and lived happily ever after in the real world.

So you had to find out on your own… Your first job was at the Savings Banks Trust Company, a trust established by the 127 savings banks that still existed in New York in the 1960s. And you somehow hit the bull’s eye and were set on the right track, right from the start: you’ve been exploring the relationship between money and land. You had an interesting job there. What was it?

Savings banks were much like Germany’s Landesbanks. They take local deposits and lend them out to home buyers. Savings and Loan Associations (S&Ls) did the same thing. They were restricted to lending to real estate, not personal loans or for corporate business loans. (Today, they have all been turned into commercial banks.)

I noticed two dynamics. One is that savings grew exponentially, almost entirely by depositors getting dividends every 3 months. So every three months I found a sudden jump in savings. This savings growth consisted mainly of the interest that accrued. So there was an exponential growth of savings simply by inertia.

The second dynamic was that all this exponential growth in savings was recycled into the real estate market. What has pushed up housing prices in the US is the availability of mortgage credit. In charting the growth of mortgage lending and savings in New York State, I found a recycling of savings into mortgages. That meant an exponential growth in savings to lend to buyers of real estate. So the cause of rising real estate prices wasn’t population or infrastructure. It was simply that properties are worth whatever banks are able and willing to lend against them.

As the banks have more and more money, they have lowered their lending standards.

It’s kind of automatic, it’s just a mathematical law…

Yes, a mathematical law that is independent of the economy. In other words, savings grow whether or not the economy is growing. The interest paid to bondholders, savers and other creditors continues to accrue. That turns out to be the key to understanding why today’s economy is polarizing between creditors and debtors.

You wrote in “Killing the Host” that your graphs looked like Hokusai’s “Great Wave off Konagawa” or even more like a cardiogram. Why?

Any rate of interest has a doubling time. One way or another any interest-bearing debt grows and grows. It usually grows whenever interest is paid. That’s why it looks like a cardiogram: Every three months there’s a jump. So it’s like the Hokusai wave with a zigzag to reflect the timing of interest payments every three months.

The exponential growth of finance capital and interest-bearing debt grows much faster then the rest oft he economy, which tends to taper off in an S-curve. That’s what causes the business cycle to turn down. It’s not really a cycle, it’s more like a slow buildup like a wave and then a sudden vertical crash downward.

This has been going on for a century. Repeated financial waves build up until the economy becomes so top-heavy with debt that it crashes. A crash used to occur every 11 years in the 19th century. But in the United States from 1945 to 2008, the exponential upswing was kept artificially long by creating more and more debt financing. So the crash was postponed until 2008.

Most crashes since the 19th century had a silver lining: They wiped out the bad debts. But this time the debts were left in place, leading to a massive wave of foreclosures. We are now suffering from debt deflation. Instead of a recovery, there’s just a flat line for 99% of the economy.

The only layer of the economy that is growing is the wealthiest 5% layer – mainly the Finance, Insurance and Real Estate (FIRE) sector. That is, creditors living of interest and economic rent: monopoly rent, land rent and financial interest. The rest of the economy is slowly but steadily shrinking.

And the compound interest that was accumulated was issued by the banks as new mortgages. Isn’t this only logical for the banks to do?

Savings banks and S&Ls were only allowed to lend for mortgages. Commercial banks now look for the largest parts of the economy as their customers. Despite the fact that most economic textbooks describe industry and manufacturing as being the main part of economy, real estate actually is the largest sector. So most bank lending is against real estate and, after that, oil, gas and mining.

That explains why the banking and financial interests have become the main lobbyists urging that real estate, mining and oil and gas be untaxed – so that there’ll be more economic rent left to pay the banks. Most land rent and natural resource rent is paid out as interest to the banks instead of as taxes to the government.

So instead of housing becoming cheaper and cheaper it turns out to be much less affordable in our days than in the 1960s?

Credit creation has inflated asset prices. The resulting asset-price inflation is the distinguishing financial feature of our time. In a race tot he bottom, banks have steadily lowered the terms on which they make loans. This has made the economy more risky.

In the 1960s, banks required a 25-30% down payment by the buyer, and limited the burden of mortgage debt service to only 25% of the borrower’s income. But interest is now federally guaranteed up to 43% of the home buyer’s income. And by 2008, banks were making loans no down payment at all. Finally, loans in the 1960s were self-amortizing over 30 years. Today we have interest-only loans that are never paid off.

So banks loan much more of the property’s market price. That is why most of the rental value of land isn’t paid to the homeowner or commercial landlord any more. It’s paid to the banks as interest.

Was this the reason for the savings and loan crisis that hit the US in 1986 and that was responsible for the failure of 1,043 out of the 3,234 savings and loan associations in the United States from 1986 to 1995?

The problem with the savings and loan crisis was mainly fraud! The large California S&L’s were run by crooks, topped by Charles Keating. Many were prosecuted for fraud and sent to jail. By the 1980s the financial sector as a whole had become basically a criminalized sector. My colleague Bill Black has documented most of that. He was a prosecutor of the S&L frauds in the 1980s, and wrote a book “The best way to rob a bank is to own one”.

That’s a famous quotation, I also heard that.

Fraud was the main financial problem, and remains so.

Since 2007 Americans were strangled by their mortgages in the sub-prime crisis…

These were essentially junk mortgages, and once again it was fraud. Already in 2004 the FBI said that the American economy was suffering the worst wave of bank fraud in history. Yet there was no prosecution. Essentially in the United States today, financial fraud is de-criminalized. No banker has been sent to jail, despite banks paying hundreds of billions of dollars of fines for financial fraud. These fines are a small portion of what they took illegally. Such payments are merely a cost of doing business. The English language was expanded to recognize junk loans. Before the financial crash the popular press was using the word “junk mortgages” and “Ninjas”: “No Income, No Jobs, no Assets”. So everybody knew that there was fraud, and the bankers knew they would not go to jail, because Wall Street had become the main campaign contributor to the leading politicians, especially in the Democratic party. The Obama Administration came in basically as representatives of the bank fraudsters. And the fraud continues today. The crooks have taken over the banking system. It is hard for Europeans to realize that that this really has happened in America. The banks have turned into gangsters, which is why already in the 1930s President Roosevelt coined the word “banksters”.

I also heard the nice English sayings “Too big to fail” or “Too big to jail”…
But what has become of those 10 million households that ended up losing their homes to foreclosure? How are their economic and living conditions today? What has become of their houses? The economy has recovered…

Most of the houses that were foreclosed on have been bought out by hedge funds for all cash. In the wake of 2008, by 2009 and 2010 hedge funds were saying “If you have $5,000,000 to invest, we’re going to buy these houses that are being sold at distress prices. We’re going to buy foreclosed properties for all cash, because we can make a larger rate of return simply by renting them out.” So there has been a transfer of property from homeowners to the financial sector. The rate of home-ownership in America is dropping.

The economy itself has not recovered. All economic growth since 2008 has accrued only to the top 5% of the economy. 95% of the economy has been shrinking by about 3% per year… and continues to shrink, because the debts were kept in place. President Obama saved the banks and Wall Street instead of saving the economy.

That’s why we live in an “age of deception” as the sub-title of your latest book suggests, I guess?

“People have the idea that when house prices go up, somehow everybody’s getting richer. And it’s true that the entry to the middle class for the last hundred years has been to be able to own your own home…”

What is deceptive is the fact that attention is distracted away from how the real world works, and how unfair it is. Economics textbooks teach that the economy is in equilibrium and is balanced. But every economy in the world is polarizing between creditors and debtors. Wealth is being sucked up to the top of the economic pyramid mainly by bondholders and bankers. The textbooks act as if the economy operates on barter. Nobel prices for Paul Samuelson and his followers treat the economy as what they call the “real economy,” which is a fictitious economy that in theory would work without money or debt. But that isn’t the real economy at all. It is a parallel universe. So the textbooks talk about a parallel universe that might exist logically, but has very little to do with how the real economy works in today’s world.

If you had a picture you’d see me nodding all the time, because that’s what I also found out: if you look at the mathematics, it is polarizing all the time, it is de-stabilizing. Without government interference we’d have crash after crash… It is not under control anymore.

But you also suggest that there’s another factor that makes housing prices go up – and that’s property tax cuts. Why?

“Taxes were shifted off the Donald Trumps of the world and onto homeowners….”

Whatever the tax collector relinquishes leaves more rental income available to be paid to the banks. Commercial real estate investors have a motto: “Rent is for paying interest.” When buyers bid for an office building or a house, the buyer who wins is the one who is able to get the largest bank loan. And that person is the one who pays all the rent to the bank. The reason why commercial investors were willing to do this for so many decades is that they wanted to get the capital gain – which really was the inflation of real estate prices as a result of easier credit. But now that the economy is “loan up,” prospects for further capital gains are gone. So the prices are not rising much anymore. There is no reason to be borrowing. So the system is imploding.

So, how could we change the situation and make land a public utility?

There are two ways to do this. One way is to fully tax the land’s rental value. Public investment in infrastructure – roads, schools, parks, water and sewer systems – make a location more desirable. A subway line, like the Jubilee tube line in London, increases real estate prices all along the line. The resulting rise in rents increases prices for housing. This rental value could be taxed back by the community to pay for this infrastructure. Roads and subways, water and sewer systems could be financed by re-capturing the rental value of the land that this public investment creates. But that is not done. A free lunch is left in private hands.

The alternative is direct public ownership of the land, which would be leased out to whatever is deemed to be most socially desirable, keeping down the rental cost. In New York City, for instance, restaurants and small businesses are being forced out. They’re closing down because of the rising rents. The character of the economy is changing. It is getting rid of the bookstores, restaurants and low-profit enterprises. Either there should be a land tax, or public ownership of the land. Those are the alternatives. If you tax away the land’s rent, it would not be available to be paid to the banks. You could afford to cut taxes on labor. You could cut the income tax, and you could cut taxes on consumption. That would reduce the cost of living.

To me that’s pretty close to the position of Georgists on how to handle land, isn’t it?

I don’t like to mention Henry George, because he didn’t have a theory of land rent or of the role of the financial sector and debt creation. The idea of land tax came originally from the Physiocrats in France, François Quesnay, and then from Adam Smith, John Stuart Mill, and in America from Thorstein Veblen and Simon Patten. All of these economists clarified the analysis of land rent, who ended up with it, and how it should be taxed. In order to have a theory of how much land rent there is to tax, you need a value and price theory. Henry George’s value theory was quite confused. Worst of all, he spent the last two decades of his life fighting against socialists and labor reformers. He was an irascible journalist, not an economist.

The classical economists wrote everything you need to know about land rent and tax policy. That was the emphasis of Adam Smith, John Stuart Mill… all the classical economists. The purpose of their value and price theory was to isolate that part of the economy’s income that was unearned: economic rent, land rent, monopoly rent, and financial interest. I think it is necessary to put the discussion of tax policy and rent policy back in this classical economic context. Henry George was not part of that. He was simply a right-wing journalist whom libertarians use to promote neoliberal Thatcherite deregulation and anti-government ideology. In Germany, his followers were among the first to support the Nazi Party already in the early 1920s, for instance, Adolf Damaschke. Anti-Semitism also marked George’s leading American followers in the 1930s and ‚40s.

So I guess I have to go back a bit further in history, to read the original Physiocrats as well…

John Stuart Mill is good, Simon Patten is good, Thorstein Veblen is wonderful. Veblen was writing about the financialization of real estate in the 1920s in his Absentee Ownership. I recently edited a volume on him: Absentee Ownership and its Discontents (ISLET, Dresden, 2016).

Germany’s land tax reform seems to go in the wrong direction. Germany has to establish new rules for it’s “Grundsteuer” that in fact is a mingled tax on land and the buildings standing on it, based on outdated rateable values of 1964 (in the West) and 1935 (in the East). The current reform proposals of the federal states will maintain this improper mingling and intend a revenue neutral reform of this already very low tax. It brings about 11 billion Euro to the municipal authorities, but this is only 2% of the total German tax revenue, whereas wage tax and sales tax make up for 25% each. We need a complete tax shift, don’t we?

Germany is indeed suffering from rising housing prices. I think there are a number of reasons for this. One is that Germans have not had a real estate bubble like what occurred in the US or England. They did lose money in the stock market, and many decided simply to put their money in their own property. There is also a lot of foreign money coming into Germany to buy property, especially in Berlin.

The only way to keep housing prices down is to tax away the rise in the land value. If this is done, speculators are not going to buy. Only homeowners or commercial users will buy for themselves. You don’t want speculators or bank credit to push up prices. If Germany lets its housing prices rise, it is going to price its labor out of the market. It would lose its competitive advantage, because the largest expense in every wage-earner’s budget is the cost of housing. In Ricardo’s era it was food; today it is housing. So Germany should focus on how to keep its housing prices low.

I’d like to come back to the issue of interest once more. The English title of “Der Sektor” is “Killing the host – How Financial Parasites and Debt Bondage Destroy the Global Economy”. It’s much more coming to the point. It struck me that you mention John Brown. He wrote a book called “Parasitic wealth or Money Reform” in 1898. I came across his book some years ago and thought that he was somehow America’s Helmut Creutz of the 19th century. He was a supporter of Henry George, but in addition John Brown analyzed and criticized the interest money system and its redistribution of wealth. He said that labour is robbed of 33% of its earnings by the parasitic wealth with subtle and insidious methods, so that it’s not even suspected. Why does almost nobody know this John Brown?

John Brown’s book is interesting. It is somewhat like that of his contemporary Michael Flürscheim. Brown’s book was published by Charles Kerr, a Chicago cooperative that also published Marx’s Capital. So Brown was a part of the group of American reformers who became increasingly became Marxist in the 19th and early 20thcentury. Most of the books published by Kerr discussed finance and the exponential growth of debt.

The economist who wrote most clearly about how debt grew by its own mathematics was Marx in Vol. III of Capital and his Theories of Surplus Value . Most of these monetary writers were associated with Marxists and focused on the tendency of debt and finance to grow exponentially by purely mathematical laws, independently of the economy, not simply as a by-product of the economy as mainstream economics pretends.

So you recommend reading his book?

Sure, it is a good book, although only on one topic. Also good is Michael Flürscheim’s Clue to the Economic Labyrinth (1902). So is Vol. III of Capital.

Brown’s plan of reforms included the nationalization of banks and the establishment of a bank service charge in lieu of interest. The latter sounds remarkably up-to-date. In Germany the banks are raising charges because of the decrease in their interest margins. How is your view on the matter of declining interest rates?

Well, today declining interest rates are the aim of central bank Quantitative Easing. It hasn’t helped. The most important question to ask is: what are you going to make your loans for? Most lending at these declining interest rates has been parasitic and predatory. There’s a lot of corporate take-over lending to companies that borrow to buy other companies. There is an enormous amount of stock market credit that has helped bid up stock prices with low-interest credit and arbitrage. This has inflated asset prices for stocks, bonds and real estate. If the result of low interest rates is simply to inflate asset prices, the only way this can work is to have a heavy tax on capital gains, that is asset price gains. But in the US, England, and other countries there are very low taxes on capital gains, and so low interest rates simply make housing more expensive, and make stocks and buying a flow retirement income (in the form of stocks or bonds that yield dividends and interest) much more expensive.

I guess Brown is getting to the positive aspects of low interest also.

What Brown was talking about were the problems of finance. In the final analysis there is only one ultimate solution: to write down the debts. Nobody really wants to talk about debt cancellation, because they try to find a way to save the system. But it can’t be fixed so that debts can keep growing at compound rates ad infinitum. Any financial system tends to end in a crash. So the key question is how a society is NOT going not to pay debts that go bad. Will it let creditors foreclose, as has occurred in the US? Or are you going to write down the debts and wipe out this overgrowth of creditor claims? That’s the ultimate policy that every society has to face.

Very topical, the German Bundesbank sees the combination of low interest rates and a booming housing market as a dangerous cocktail for the banking sector. “The traffic lights have jumped to yellow or even to dark yellow”, Andreas Dombret said, after the Bundesbank had denied the problem in the last years by dismissing it as Germany’s legitimate catch-up effects. The residential property prices have gone up by 30% since 2010, in the major cities even by more than 60%. The share of real estate loans in the total credit portfolio is significantly rising. The mortgage loans of the households have increased in absolute terms as well as relative to their income. It’s only due to the low interest rates that the debt service has not increased yet. But the banks and savings companies are taking on the risk: the mortgages with terms of more than ten years have risen to more than 40% of the residential real estate loans. The interest-change risks lie with the banks. Don’t we have to face up to the truth that interest rates shouldn’t go up again?

What should be raised are taxes on the land, natural resource rent and monopoly rent. The aim should be to keep housing prices low instead of speculation. Land rent should serve as the tax base, as the classical economists said it should. Adam Smith, John Stuart Mill… all urged that the basis of the tax system should be real-estate and natural resource rent, not income taxes (which add to the cost of labor), the cost of labor and not value-added taxes (which increase consumer prices). So tax policy and debt write-downs today are basically the key to economic survival.

Banking should be a public utility. If you leave banking in the present hands, you’re leaving it in the hands of the kind of crooks that brought about the financial crisis of 2008.

Couldn’t the subprime-crisis have been prevented if the Fed had introduced negative interest rates in the 1990s?

No. The reason there was the crash was fraud and speculation. It was junk mortgages and the financialization of the economy. Pension funds and people’s savings were turned over to the financial sector, whose policy is short-term. It seeks gains mainly by speculation and asset price inflation. So the problem is the financial system. I think the Boeckler foundation has annual meetings in Berlin that focus on financialization and explain what the problem is.

Yes, that’s a big topic. The financial sector is interested, as you said, in short-term gains, but people who want to save for their retirement are interested in long-term stability – that is contradictory. Do you know the “Natural Economic Order by Free Land and Free Money” by Silvio Gesell?

It is not practical for today’s world, it is very abstract. The solution to the financial problem really has to be ultimately a debt write-down, and a shift to the tax system, as the classical economists talked about.

Gesell was also advocating the taxing of land. I think he had something in mind with bidding for the land, letting the market fix the prices.

He did not go beneath the surface to ask what kind of market do you want. Today, the market for real estate is a financialized market. As I said, the basic principle is that most rent is paid out as interest. The value of real estate is whatever a bank will lend against it. Unless you have a theory of finance and the overall economy, you really don’t have a theory of the market.

You are advocating a revival of classical economics. What did the classical economists understand by a free economy?

They all defined a free economy as one that is free from land rent, free from unearned income. Many also said that a free economy had to be free from private banking. They advocated full taxation of economic rent. Today’s idea of free market economics is the diametric opposite. In an Orwellian doublethink language, a free market now means an economy free for rent extractors, free for predators to make money, and essentially free for financial and corporate crime. The Obama Administration de-criminalized fraud. This has attracted the biggest criminals – and the wealthiest families – to the banking sector, because that’s where the money is. Crooks want to rob banks, and the best way to rob a bank is to own one. So criminals become bankers. You can look at Iceland, at HSBC, or at Citibank and Wells-Fargo in the news today. Their repeated lawbreaking and criminal activities have been shown to be endemic in the US. But nobody goes to jail. You can steal as much money as you want, and you’ll never go to jail if you’re a banker and pay off the political parties with campaign contribution. It’s much like drug dealers paying off crooked police forces. So crime is pouring into the financial system.

I think this is what’s going to cause a return to classical economics – the realization that you need government banks. Of course, government banks also can be corrupted, so you need some kind of checks and balances. What you need is an honest legal system. If you don’t have a legal system that throws crooks in jail, your economy is going to be transformed into something unpleasant. That’s what is happening today. I think that most Europeans don’t want to acknowledge that that’s what happened in America (USA). There is such an admiration of America that there is a hesitancy to see that it has been taken over by financial predators (a.k.a. “the market”).

We always hear that oligarchies are in the east, in Russia, but hardly anyone is calling America an oligarchy… although alternative media says that it’s just a few families that rule the country.

Yes.

 

Michael Hudson is the author of Killing the Host (published in e-format by CounterPunch Books and in print by Islet). His new book is J is For Junk Economics. He can be reached at mh@michael-hudson.com

 

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Governments and corporations escalate Internet censorship and attacks on free speech

By Andre Damon

Source: WSWS.org

The year 2018 has opened with an international campaign to censor the Internet. Throughout the world, technology giants are responding to the political demands of governments by cracking down on freedom of speech, which is inscribed in the US Bill of Rights, the European Convention on Human Rights, and countless international agreements.

Bloomberg, the financial news service, published a blog post titled “Welcome to 2018, the Year of Censored Social Media,” which began with the observation, “This year, don’t count on the social networks to provide its core service: an uncensored platform for every imaginable view. The censorship has already begun, and it’ll only get heavier.”

Developments over the past week include:

  • On January 1, the German government began implementation of its “Network Enforcement Law,” which threatens social media companies with fines of up to €50 million if they do not immediately remove content deemed objectionable. Both German trade groups and the United Nations have warned that the law will incentivize technology companies to ban protected speech.
  • On January 3, French President Emmanuel Macron vowed to introduce a ban during election cycles on what he called “fake news” in a further crackdown on free speech on top of the draconian measures implemented under the state of emergency. The moves by France and Germany have led to renewed calls for a censorship law applying to the entire European Union.
  • On December 28, the New York Times reported that Facebook had deleted the account of Ramzan Kadyrov, the head of the Chechen Republic, nominally because he had been added to a US sanctions list. As the American Civil Liberties Union pointed out, this creates a precedent for giving the US government essentially free rein to block freedom of expression all over the world simply by putting individuals on an economic sanctions list.
  • This week, Iranian authorities blocked social media networks, including Instagram, which were being used to organize demonstrations against inequality and unemployment.
  • Facebook has continued its crackdown on Palestinian Facebook accounts, removing over 100 accounts at the request of Israeli officials.

These moves come in the wake of the decision by the Trump administration to abolish net neutrality, giving technology companies license to censor and block access to websites and services.

In August, the World Socialist Web Site first reported that Google was censoring left-wing, anti-war, and progressive websites. When it implemented changes to its search algorithms, Google claimed they were politically neutral, aimed only at elevating “more authoritative content” and demoting “blatantly misleading, low quality, offensive or downright false information.”

Now, no one can claim that the major technology giants are not carrying out a widespread and systematic campaign of online censorship, in close and active coordination with powerful states and intelligence agencies.

In the five months since the WSWS released its findings, Google’s censorship of left-wing, anti-war, and progressive web sites has only intensified.

Even though the World Socialist Web Site‘s readership from direct entries and other websites has increased, Google’s effort to isolate the WSWS through the systematic removal of its articles from search results has continued to depress its search traffic. Search traffic to the WSWS, which fell more than any other left-wing site, has continued to trend down, with a total reduction of 75 percent, compared to a 67 percent decline in August.

Alternet.org’s search traffic is now down 71 percent, compared to 63 percent in August. Consortium News’s search traffic is down 72 percent, compared to 47 percent in August. Other sites, including Global Research and Truthdig, continue to see significantly depressed levels of search traffic.

In its statement to commemorate the beginning of the new year, the World Socialist Web Site noted, “The year 2018—the bicentenary of Marx’s birth—will be characterized, above all, by an immense intensification of… class conflict around the world.” This prediction has been confirmed in the form of mass demonstrations in Iran, the wildcat strike by auto workers in Romania and growing labour militancy throughout Europe and the Middle East.

The ruling elites all over the world are meeting this resurgence of class struggle with an attempt to stifle and suppress freedom of expression on the Internet, under the false pretence of fighting “fake news” and “foreign propaganda.”

The effort to muzzle social opposition by the working class must be resisted.

On January 16, 2018, the World Socialist Web Site will host a live video discussion on Internet censorship, featuring journalist and Truthdig contributor Chris Hedges and WSWS International Editorial Board Chairperson David North.

The discussion will explore the political context of the efforts to censor the Internet and abolish net neutrality, examine the pretexts used to justify the suppression of free speech (i.e., “fake news”), and discuss political strategies to defend democratic rights. Hedges and North will also field questions from on-line listeners.

We urge all of our readers to register to participate in this immensely important discussion, and to help publicize it to friends and co-workers.

 

The webinar will be streamed live by the WSWS on YouTube and Facebook on Tuesday, January 16 at 7:00 pm ( EST). For more information, time zone conversions and to register, click here.

 

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The Cost of Resistance

 

(Museum of the Revolution, León, Nicaragua)

By Chris Hedges

Source: TruthDig

Resistance entails suffering. It requires self-sacrifice. It accepts that we may be destroyed. It is not rational. It is not about the pursuit of happiness. It is about the pursuit of freedom. Resistance accepts that even if we fail, there is an inner freedom that comes with defiance, and perhaps this is the only freedom, and true happiness, we will ever know. To resist evil is the highest achievement of human life. It is the supreme act of love. It is to carry the cross, as the theologian James Cone reminds us, and to be acutely aware that what we are carrying is also what we will die upon.

Most of those who resist—Sitting Bull, Emma Goldman, Malcolm X and Martin Luther King Jr.—are defeated, at least in the cold calculation of the powerful. The final, and perhaps most important quality of resistance, as Cone writes, is that it “inverts the world’s value system.” Hope rises up out of defeat. Those who resist stand, regardless of the cost, with the crucified. This is their magnificence and their power.

The seductive inducements to conformity—money, fame, prizes, generous grants, huge book contracts, hefty lecture fees, important academic and political positions and a public platform—are scorned by those who resist. The rebel does not define success the way the elites define success. Those who resist refuse to kneel before the idols of mass culture and the power elites. They are not trying to get rich. They do not want to be part of the inner circle of the powerful. They accept that when you stand with the oppressed you get treated like the oppressed.

The inversion of the world’s value system makes freedom possible. Those who resist are free not because they have attained many things or high positions, but because they have so few needs. They sever the shackles used to keep most people enslaved. And this is why the elites fear them. The elites can crush them physically, but they cannot buy them off.

The power elites attempt to discredit those who resist. They force them to struggle to make an income. They push them to the margins of society. They write them out of the official narrative. They deny them the symbols of status. They use the compliant liberal class to paint them as unreasonable and utopian.

Resistance is not, fundamentally, political. It is cultural. It is about finding meaning and expression in the transcendent and the incongruities of life. Music, poetry, theater and art sustain resistance by giving expression to the nobility of rebellion against the overwhelming forces, what the ancient Greeks called fortuna, which can never ultimately be overcome. Art celebrates the freedom and dignity of those who defy malignant evil. Victory is not inevitable, or at least not victory as defined by the powerful. Yet in every act of rebellion we are free. It was the raw honesty of the blues, spirituals and work chants that made it possible for African-Americans to endure.

Power is a poison. It does not matter who wields it. The rebel, for this reason, is an eternal heretic. He or she will never fit into any system. The rebel stands with the powerless. There will always be powerless people. There will always be injustice. The rebel will always be an outsider.

Resistance requires eternal vigilance. The moment the powerful are no longer frightened, the moment the glare of the people is diverted and movements let down their guard, the moment the ruling elites are able to use propaganda and censorship to hide their aims, the gains made by resisters roll backward. We have been steadily stripped of everything that organized working men and women—who rose up in defiance and were purged, demonized and killed by the capitalist elites—achieved with the New Deal. The victories of African-Americans, who paid with their bodies and blood in making possible the Great Society and ending legal segregation, also have been reversed.

The corporate state makes no pretense of addressing social inequality or white supremacy. It practices only the politics of vengeance. It uses coercion, fear, violence, police terror and mass incarceration as social control. Our cells of resistance have to be rebuilt from scratch.

The corporate state, however, is in trouble. It has no credibility. All the promises of the “free market,” globalization and trickle-down economics have been exposed as a lie, an empty ideology used to satiate greed. The elites have no counterargument to their anti-capitalist and anti-imperialist critics. The attempt to blame the electoral insurgencies in the United States’ two ruling political parties on Russian interference, rather than massive social inequality—the worst in the industrialized world—is a desperate ploy. The courtiers in the corporate press are working feverishly, day and night, to distract us from reality. The moment the elites are forced to acknowledge social inequality as the root of our discontent is the moment they are forced to acknowledge their role in orchestrating this inequality. This terrifies them.

The U.S. government, subservient to corporate power, has become a burlesque. The last vestiges of the rule of law are evaporating. The kleptocrats are pillaging and looting like barbarian hordes. Programs instituted to protect the common good—public education, welfare and environmental regulations—are being dismantled. The bloated military, sucking the marrow out of the nation, is unassailable. Poverty is a nightmare for half the population. Poor people of color are gunned down with impunity in the streets. Our prison system, the world’s largest, is filled with the destitute. And presiding over the chaos and the dysfunction is a political P.T. Barnum, a president who, while we are being fleeced, offers up one bizarre distraction after another, much like Barnum’s Feejee mermaid—the head and torso of a monkey sewed to the back half of a fish.

There is no shortage of artists, intellectuals and writers, from Martin Buber and George Orwell to James Baldwin, who warned us that this dystopian era was fast approaching. But in our Disneyfied world of intoxicating and endless images, cult of the self and willful illiteracy, we did not listen. We will pay for our negligence.

Søren Kierkegaard argued that it was the separation of intellect from emotion, from empathy, that doomed Western civilization. The “soul” has no role in a technocratic society. The communal has been shattered. The concept of the common good has been obliterated. Greed is celebrated. The individual is a god. The celluloid image is reality. The artistic and intellectual forces that make transcendence and the communal possible are belittled or ignored. The basest lusts are celebrated as forms of identity and self-expression. Progress is defined exclusively by technological and material advancement. This creates a collective despair and anxiety that feeds and is fed by glitter, noise and false promises of consumer-culture idols. The despair grows ever-worse, but we never acknowledge our existential dread. As Kierkegaard understood, “the specific character of despair is precisely this: it is unaware of being despair.”

Those who resist are relentlessly self-critical. They ask the hard questions that mass culture, which promises an unachievable eternal youth, fame and financial success, deflects us from asking. What does it mean to be born? What does it mean to live? What does it mean to die? How do we live a life of meaning? What is justice? What is truth? What is beauty? What does our past say about our present? How do we defy radical evil?

We are in the grip of what Kierkegaard called “sickness unto death”—the numbing of the soul by despair that leads to moral and physical debasement. Those who are ruled by rational abstractions and an aloof intellectualism, Kierkegaard argued, are as depraved as those who succumb to hedonism, cravings for power, violence and predatory sexuality. We achieve salvation when we accept the impediments of the body and the soul, the limitations of being human, yet despite these limitations seek to do good. This burning honesty, which means we always exist on the cusp of despair, leaves us, in Kierkegaard’s words, in “fear and trembling.” We struggle not to be brutes while acknowledging we can never be angels. We must act and then ask for forgiveness. We must be able to see our own face in the face of the oppressor.

The theologian Paul Tillich did not use the word “sin” to mean an act of immorality. He, like Kierkegaard, defined sin as estrangement. For Tillich, it was our deepest existential dilemma. Sin was our separation from the forces that give us ultimate meaning and purpose in life. This separation fosters the alienation, anxiety, meaninglessness and despair that are preyed upon by mass culture. As long as we fold ourselves inward, embrace a perverted hyper-individualism that is defined by selfishness and narcissism, we will never overcome this estrangement. We will be separated from ourselves, from others and from the sacred.

Resistance is not only about battling the forces of darkness. It is about becoming a whole and complete human being. It is about overcoming estrangement. It is about the capacity to love. It is about honoring the sacred. It is about dignity. It is about sacrifice. It is about courage. It is about being free. Resistance is the pinnacle of human existence.

Posted in Activism, Art, Authoritarianism, consciousness, Corporate Crime, culture, Empire, Philosophy, police state, Revolution, society, Spirituality, State Crime | Tagged , , , , , , , , , , , , , , | 1 Comment

Saturday Matinee: The Brotherhood of the Bell

The Brotherhood of the Bell is a 1970 made-for-television movie produced by Cinema Center 100 Productions and starring Glenn Ford. The director Paul Wendkos was nominated in 1971 by the Directors Guild of America for outstanding directorial achievement in television.

The film relates how a successful Economics professor, Dr. Andrew Patterson, discovers that an elite fraternity he had joined 22 years before in college is really a callous banking and business cabal that obtains wealth and power for its members through nefarious practices.

Posted in Art, culture, Film, Saturday Matinee, Video | Tagged , , , , | 2 Comments

To Liberate Cambodia

By Robert J. Burrowes

A long-standing French protectorate briefly occupied by Japan during World War II, Cambodia became independent in 1953 as the French finally withdrew from Indochina. Under the leadership of Prince Norodom Sihanouk, Cambodia remained officially neutral, including during the subsequent US war on Indochina. However, by the mid-1960s, parts of the eastern provinces of Cambodia were bases for North Vietnamese Army and National Liberation Front (NVA/NLF) forces operating against South Vietnam and this resulted in nearly a decade of bombing by the United States from 4 October 1965. See ‘Bombs Over Cambodia: New Light on US Air War’.

In 1970 Sihanouk was ousted in a US-supported coup led by General Lon Nol. See ‘A Special Supplement: Cambodia’. The following few years were characterized by an internal power struggle between Cambodian elites and war involving several foreign countries, but particularly including continuation of the recently commenced ‘carpet bombing’ of Cambodia by the US Air Force.

On 17 April 1975 the Communist Party of Kampuchea (CPK), otherwise known as the Khmer Rouge, took control of Cambodia. Following four years of ruthless rule by the Chinese-supported Khmer Rouge, initially under Pol Pot, they were defeated by the Vietnamese army in 1979 and the Vietnamese occupation authorities established the People’s Republic of Kampuchea (PRK), installing Heng Samrin and other pro-Vietnamese Communist politicians as leaders of the new government. Heng was succeeded by Chan Sy as Prime Minister in 1981.

Following the death of Chan Sy, Hun Sen became Prime Minister of Cambodia in 1985 and, despite a facade of democracy, he and the Cambodian People’s Party (CPP) have been in power ever since. This period has notably included using the army to purge a feared rival in a bloody coup conducted in 1997. Hun Sen’s co-Prime Minister, Prince Norodom Ranariddh, was ousted and fled to Paris while his supporters were arrested, tortured and some were summarily executed.

The current main opposition party, the Cambodia National Rescue Party (CNRP) was founded in 2012 by merging the Sam Rainsy Party and the Human Rights Party. Emblematic of Cambodia’s ‘democratic’ status, more than two dozen opposition members and critics have been locked up in the past year alone and the CNRP leader, Kem Sokha, known for his nonviolent, politically tolerant views, is currently imprisoned at a detention centre in Tboung Khmum Province following his arrest on 3 September 2017 under allegations of treason, espionage and for orchestrating anti-government demonstrations in 2013-2014. These demonstrations were triggered by widespread allegations of electoral fraud during the Cambodian general election of 2013. See ‘Sokha arrested for “treason”, is accused of colluding with US to topple the government’.

On 16 November 2017 the CNRP was dissolved by Cambodia’s highest court and 118 of its members, including Sokha and exiled former leader Sam Rainsy, were banned from politics for five years.

 

Cambodian Society

Socially, Cambodia is primarily Khmer with ethnic populations of Chinese, Vietnamese, Cham, Thai and Lao. It has a population of 16 million people. The pre-eminent religion is Buddhism. The adult literacy rate is 75%; few Cambodians speak a European language limiting access to western literature. Most students complete 12 years of (low quality public) school but tertiary enrollment is limited. As in all countries, education (reinforced by state propaganda through the media) serves to intimidate and indoctrinate students into obedience of elites. Discussion of national politics in a school class is taboo and such discussions are rare at tertiary level. This manifests in the narrow range of concerns that mobilize student action: personal outcomes such as employment opportunities. Issues such as those in relation to peace, the environment and refugees do not have a significant profile. In short, the student population generally is neither well informed nor politically engaged.

However, many other issues engage at least some Cambodians, with demonstrations, strikes and street blockades being popular tactics, although the lack of strategy means that outcomes are usually limited and, despite commendable nonviolent discipline in many cases, violent repression is not effectively resisted. Issues of concern to workers, particularly low wages in a country with no minimum wage law, galvanize some response. See, for example, ‘Protests, Strikes Continue in Cambodia: Though their occupations differ, Cambodian workers are united in their push for a living wage’. Garment workers are a significant force because their sector is important to the national economy. Land grabbing and lack of housing mobilize many people but usually fail to attract support beyond those effected. See, for example, ‘Housing Activists Clash With Police in Street Protest’. Environmental issues, such as deforestation and natural resource depletion, fail to mobilize the support they need to be effective.

Having noted that, however, Cambodian activists require enormous courage to take nonviolent action as the possibility of violent state repression in response to popular mobilization is a real one, as illustrated above and documented in the Amnesty International report ‘Taking to the streets: Freedom of peaceful assembly in Cambodia’ from 2015.

Perhaps understandably, given their circumstances, international issues, such as events in the Middle East, North Korea and the plight of the Rohingya in neighbouring Myanmar are beyond the concern of most Cambodians.

Economically, Cambodians produce traditional goods for small local households with industrial production remaining low in a country that is still industrializing. Building on agriculture (especially rice), tourism and particularly the garment industry, which provided the basis for the Cambodian export sector in recent decades, the dictatorship has been encouraging light manufacturing, such as of electronics and auto-parts, by establishing ‘special economic zones’ that allow cheap Cambodian labour to be exploited. Most of the manufacturers are Japanese and despite poor infrastructure (such as lack of roads and port facilities), poor production management, poor literacy and numeracy among the workers, corruption and unreliable energy supplies, Cambodian factory production is slowly rising to play a part in Japan’s regional supply chain. In addition, Chinese investment in the construction sector has grown enormously in recent years and Cambodia is experiencing the common problem of development being geared to serve elite commercial interests and tourists rather than the needs (such as affordable housing) of ordinary people or the environment. See ‘China’s construction bubble may leave Cambodia’s next generation without a home’.

Environmentally, Cambodia does little to conserve its natural resources. For example, between 1990 and 2010, Cambodia lost 22% of its forest cover, or nearly 3,000,000 hectares, largely to logging. There is no commitment to gauging environmental impact before construction projects begin and the $US800m Lower Sesan 2 Dam, in the northeast of the country, has been widely accused of being constructed with little thought given to local residents (who will be evicted or lose their livelihood when the dam reservoir fills) or the project’s environmental impact.

Beyond deforestation (through both legal and illegal logging) then, environmental destruction in Cambodia occurs as a result of large scale construction and agricultural projects which destroy important wildlife habitats, but also through massive (legal and illegal) sand mining – see ‘Shifting Sand: How Singapore’s demand for Cambodian sand threatens ecosystems and undermines good governance’ – poaching of endangered and endemic species, with Cambodian businesses and political authorities, as well as foreign criminal syndicates and many transnational corporations from all over the world implicated in the various aspects of this corruptly-approved and executed destruction.

In the words of Cambodian researcher Tay Sovannarun: ‘The government just keeps doing business as usual while the rich cliques keep extracting natural resources and externalizing the cost to the rest of society.’ Moreover, three members of the NGO Mother Nature – Sun Mala, Try Sovikea and Sim Somnang – recently served nearly a year in prison for their efforts to defend the environment and the group was dissolved by the government in September 2017. See ‘Environmental NGO Mother Nature dissolved’.

 

Cambodian Politics

Politically, Cambodians are largely naïve with most believing that they live in a ‘democracy’ despite the absence of its most obvious hallmarks such as civil and political rights, the separation of powers including an independent judiciary, free and fair elections, the right of assembly and freedom of the press (with the English-language newspaper The Cambodia Daily recently closed down along with some radio stations). And this is an accurate assessment of most members of the political leadership of the CNRP as well.

Despite a 30-year record of political manipulation by Hun Sen and the CPP – during which ‘Hun Sen has made it clear that he does not respect the concept of free and fair elections’: see ‘30 Years of Hun Sen: Violence, Repression, and Corruption in Cambodia’ – which has included obvious corruption of elections through vote-rigging but also an outright coup in 1997 and the imprisonment or exile of opposition leaders since then, most Cambodians and their opposition leaders still participate in the charade that they live in a ‘democracy’ which could result in the defeat of Hun Sen and the CPP at a ‘free and fair’ election. Of course, there are exceptions to this naïveté, as a 2014 article written by Mu Sochua, veteran Cambodian politician and former minister of women’s affairs in a Hun Sen government, demonstrates. See ‘Crackdown in Cambodia’.

Moreover, as Sovannarun has noted: most Cambodians ‘still think international pressure is effective in keeping the CPP from disrespecting democratic principles which they have violated up until this day. Right now they wait for US and EU sanctions in the hope that the CPP will step back.’ See, for example, ‘The Birth of a Dictator’. He asks: ‘Even assuming it works, when will Cambodians learn to rely on themselves when the ruling party causes the same troubles again? Are they going to ask for external help like this every time and expect their country to be successfully democratized?’

The problem, Sovannarun argues, is that ‘Cambodians in general do not really understand what democracy is. Their views are very narrow. For them, democracy is just an election. Many news reports refer to people as “voters” but in Khmer, this literally translates as “vote owners” as if people cannot express their rights or power beside voting.’

Fortunately, recent actions by the CPP have led to opposition leaders and some NGOs finally declaring the Hun Sen dictatorship for what it is. See, for example, ‘The Birth of a Dictator’. But for Sovannarun, ‘democratization ended in 1997. The country should be regarded as a dictatorship since then. The party that lost the election in 1993 still controlled the national military, the police and security force, and the public administration, eventually using military force to establish absolute control in 1997. How is Cambodia still a democracy?’

However, recent comprehensive research undertaken by Global Witness goes even further. Their report Hostile Takeover ‘sheds light on a huge network of secret deal-making and corruption that has underpinned Hun Sen’s 30-year dictatorial reign of murder, torture and the imprisonment of his political opponents’. See ‘Hostile Takeover: The corporate empire of Cambodia’s ruling family’ and ‘Probe: Companies Worth $200M Linked to Cambodian PM’s Family’.

So what are the prospects of liberating Cambodia from its dictatorship?

To begin, there is little evidence to suggest that leadership for any movement to do so will come from within formal political ranks. Following the court-ordered dissolution of the CNRP on 16 November 2017 – see ‘Cambodia top court dissolves main opposition CNRP party’ – at the behest of Hun Sen, ‘half of their 55 members of parliament fled the country’. And this dissolution was preceded by actions that had effectively neutralized the opposition, with two dozen opposition members (including CNRP leader Kem Sokha) and critics imprisoned in the past year alone, as reported above, and the rapid flight of Opposition Deputy President Mu Sochua on 3 October after allegedly being notified by a senior official that her arrest was imminent. See ‘Breaking: CNRP’s Mu Sochua flees country following “warning” of arrest’. But while Mu Sochua called for a protest gathering after she had fled, understandably, nobody dared to protest: ‘Who dares to protest if their leader runs for their life?’ Sovannarun asks.

Of course, civil society leadership is fraught with danger too. Prominent political commentator and activist Kem Ley, known for his trenchant criticism of the Hun Sen dictatorship, was assassinated on 10 July 2016 in Phnom Penh. See ‘Shooting Death of Popular Activist Roils Cambodia’ and ‘Q&A With Kem Ley: Transparency on Hun Sen Family’s Business Interests is Vital’. Ley was the third notable activist to be killed following the union leader Chea Vichea in 2004 – see ‘Who Killed Chea Vichea?’ – and environmental activist Wutty Chut in 2012. See ‘Cambodian Environmental Activist Is Slain’. But they are not the only activists to suffer this fate.

In addition, plenty of politicians, journalists and activists have been viciously assaulted by the security forces and members of Hun Sen’s bodyguard unit – see, for example, ‘Dragged and Beaten: The Cambodian Government’s Role in the October 2015 Attack on Opposition Politicians’ – and/or imprisoned by the dictatorship. See ‘Cambodia: Quash Case Against 11 Opposition Activists: No Legal Basis for Trumped-Up Charges, Convictions, and Long Sentences’. In fact, Radio Free Asia keeps a record of ‘Cambodian Opposition Politicians and Activists Behind Bars’ for activities that the dictatorship does not like, including defending human rights, land rights and the natural environment.

Moreover, in another recent measure of the blatant brutality of the dictatorship, Hun Sen publicly suggested that opposition politicians Sam Rainsy and Kem Sokha ‘would already be dead’ had he known they were promising to ‘organise a new government’ in the aftermath of the highly disputed 2013 national election result. See ‘Rainsy and Sokha “would already be dead”: PM’. He also used a government-produced video to link the CNRP with US groups in fomenting a ‘colour revolution’ in Cambodia. See ‘Government ups plot accusations with new video linking CNRP and US groups to “colour revolutions”’.

In one response to Hun Sen’s ‘would already be dead’ statement, British human rights lawyer Richard Rogers, who had filed a complaint asking the International Criminal Court (ICC) to investigate the Cambodian ruling elite for widespread human rights violations in 2014, commented that it was simply more evidence of the government’s willingness to persecute political dissidents. ‘It shows that he is willing to order the murder of his own people if they challenge his rule’. Moreover: ‘These are not the words of a modern leader who claims to lead a democracy.’ See ‘Rainsy and Sokha “would already be dead”: PM’. Whether Hun Sen is even sane is a question that no-one asks.

So what can Cambodians do? Fortunately, there is a long history of repressive regimes being overthrown by nonviolent grassroots movements. And nonviolent action has proven powerfully effective in Cambodia as the Buddhist monk Maha Gosananda, and his supporters demonstrated on their 19-day peace walk from Siem Reap to Phnom Penh through war ravaged Khmer Rouge territory in Cambodia in May 1993, defying the expectations of the United Nations Transitional Authority in Cambodia (UNTAC) coordinators at the time that they would be killed by the Khmer Rouge. See ‘Maha Gosananda, a true peace maker’. However, for the Hun Sen dictatorship to be removed, Cambodians will be well served by a thoughtful and comprehensive strategy that takes particular account of their unique circumstances.

A framework to plan and implement a strategy to remove the dictatorship is explained in Nonviolent Defense/Liberation Strategy with Sovannarun’s Khmer translation of this strategy here.

This strategic framework explains what is necessary to remove the dictatorship and, among consideration of many vital issues, elaborates what is necessary to maintain strategic coordination when leaders are at high risk of assassination, minimize the risk of violent repression while also ensuring that the movement is not hijacked by government or foreign provocateurs whose purpose is to subvert the movement by destroying its nonviolent character – see, for example, ‘Nonviolent Action: Minimizing the Risk of Violent Repression’ – as well as deal with foreign governments (such as those of China, the European Union, Japan and the USA) who (categorically or by inaction) support the dictatorship, sometimes by supplying military weapons suitable for use against the domestic population.

Sovannarun is not optimistic about the short-term prospects for his country: Too many mistakes have been repeated too often. But he is committed to the nonviolent struggle to liberate Cambodia from its dictatorship and recognizes that the corrupt electoral process cannot restore democracy or enable Cambodians to meaningfully address the vast range of social, political, economic and environmental challenges they face.

 

Biodata: Robert J. Burrowes has a lifetime commitment to understanding and ending human violence. He has done extensive research since 1966 in an effort to understand why human beings are violent and has been a nonviolent activist since 1981. He is the author of ‘Why Violence?’ His email address is flametree@riseup.net and his website is here.

Websites:
Nonviolence Charter
Flame Tree Project to Save Life on Earth
‘Why Violence?’
Feelings First
Nonviolent Campaign Strategy
Nonviolent Defense/Liberation Strategy
Anita: Songs of Nonviolence
Robert Burrowes
Global Nonviolence Network

Posted in Activism, anti-war, Authoritarianism, civil liberties, culture, Economics, History, imperialism, Labor, police state, Social Control, society, State Crime | Tagged , , , , , , , , , , , , | 1 Comment

Gaius Publius: Defining Neoliberalism

By Yves Smith

Source: Naked Capitalism

For years I’ve been using the term “neoliberalism” (or sometimes neo-liberalism*) and I’m always uncomfortable, since it sounds so academic. So I usually add one-phrase definitions and move on. For example, this from a recent piece on Puerto Rico:

If neoliberalism is the belief that the proper role of government is to enrich the rich — in Democratic circles they call it “wealth creation” to hide the recipients; Republicans are much more blatant — then the “shock doctrine” is its action plan.

That’s sounds pretty blunt, but it’s a true statement, even among academics. See this great interview (start at about 6:15) with Professor Philip Miroski of the University of Notre Dame on how modern neoliberals have come to see the role of government in society. It’s weedy but excellent.

I want to offer our readers a better description of neoliberalism though, yet not get into too many weeds. So consider these excerpts from a longer Guardian essay by the British writer George Monbiot. (My thanks to Naked Capitalism commenter nonclassical for the link and the idea for this piece.)

Neoliberalism — The Invisible Water the West Is Swimming In

We’ll start with Monbiot’s brief intro, just to set the scope of the problem:

Imagine if the people of the Soviet Union had never heard of communism. The ideology that dominates our lives has, for most of us, no name. Mention it in conversation and you’ll be rewarded with a shrug. Even if your listeners have heard the term before, they will struggle to define it. Neoliberalism: do you know what it is?

Ask people to define “neoliberalism,” even if they’ve heard of it, and almost no one can. Yet the comparison of our governing ideology to that of the Soviet Union’s is a good one — like “communism,” or the Soviet Union’s version of it, neoliberalism defines and controls almost everything our government does, no matter which party is in office.

The Birth of Neoliberalism

What is neoliberalism and where did it come from? Monbiot writes:

The term neoliberalism was coined at a meeting in Paris in 1938. Among the delegates were two men who came to define the ideology, Ludwig von Mises and Friedrich Hayek. Both exiles from Austria, they saw social democracy, exemplified by Franklin Roosevelt’s New Deal and the gradual development of Britain’s welfare state, as manifestations of a collectivism that occupied the same spectrum as nazism and communism.

Neoliberalism is an explicit reaction to Franklin Roosevelt and the welfare state, which by a quirk of history was called “liberalism” at the time, even though, in the nineteenth century, “liberalism” had roughly the same meaning that “neoliberalism” has today. In other words, “FDR liberalism” is in many ways the opposite of classical “liberalism,” which meant “liberty (freedom) from government,” and a quirk of history has confused these terms.

Back to Monbiot and Hayek:

In The Road to Serfdom, published in 1944, Hayek argued that government planning, by crushing individualism, would lead inexorably to totalitarian control. Like Mises’s book Bureaucracy, The Road to Serfdom was widely read. It came to the attention of some very wealthy people, who saw in the philosophy an opportunity to free themselves from regulation and tax. When, in 1947, Hayek founded the first organisation that would spread the doctrine of neoliberalism – the Mont Pelerin Society – it was supported financially by millionaires and their foundations.

With their help, he began to create what Daniel Stedman Jones describes in Masters of the Universe as “a kind of neoliberal international” [a term modeled on “the Communist International]: a transatlantic network of academics, businessmen, journalists and activists. The movement’s rich backers funded a series of thinktanks which would refine and promote the ideology. Among them were the American Enterprise Institute, the Heritage Foundation, the Cato Institute, the Institute of Economic Affairs, the Centre for Policy Studies and the Adam Smith Institute. They also financed academic positions and departments, particularly at the universities of Chicago and Virginia.

As it evolved, neoliberalism became more strident. Hayek’s view that governments should regulate competition to prevent monopolies from forming gave way – among American apostles such as Milton Friedman – to the belief that monopoly power could be seen as a reward for efficiency.

Note the mention of Milton Friedman above. Neoliberalism is a bipartisan ideology, not just a Clintonist-Obamist one.

Democrats, Republicans and Neoliberalism

As Monbiot explains, for a while neoliberalism “lost its name” and was more or less a fringe ideology in a world still dominated by the ideas of John Maynard Keynes and Keynesian economics. When neoliberalism later came back strong in the Republican Party, it wasn’t called “neoliberalism” but “Milton Friedman free market conservativism,” or something similar.

Only when Bill Clinton and his Democratic Party allies adopted it in the 1980s did the term “neoliberal” re-emerge in public discourse.

[I]n the 1970s, when Keynesian policies began to fall apart and economic crises struck on both sides of the Atlantic, neoliberal ideas began to enter the mainstream. As Friedman remarked, “when the time came that you had to change … there was an alternative ready there to be picked up”. With the help of sympathetic journalists and political advisers, elements of neoliberalism, especially its prescriptions for monetary policy, were adopted by Jimmy Carter’s administration in the US and Jim Callaghan’s government in Britain.

After Margaret Thatcher and Ronald Reagan took power, the rest of the package soon followed: massive tax cuts for the rich, the crushing of trade unions, deregulation, privatisation, outsourcing and competition in public services. Through the IMF, the World Bank, the Maastricht treaty and the World Trade Organisation, neoliberal policies were imposed – often without democratic consent – on much of the world. Most remarkable was its adoption among parties that once belonged to the left: Labour and the Democrats, for example. [emphasis added]

Note the role of Jimmy Carter and start of deregulation in the late 1970s. For that reason, many consider Jimmy Carter to be the “proto-neoliberal,” both for the nation and the Democratic Party.

Neoliberalism — “Just Deserts” for Predators and Prey

What makes “neoliberalism” or “free market conservatism” such a radical — and destructive — ideology? It reduces all human activity to economic competition. It creates and glorifies, in other words, a world of predators and prey, a world like the one we live in as today:

Neoliberalism sees competition as the defining characteristic of human relations. It redefines citizens as consumers, whose democratic choices are best exercised by buying and selling, a process that rewards merit and punishes inefficiency. It maintains that “the market” delivers benefits that could never be achieved by planning.

In a world where competition is right and good, a world in which the “market” is the defining metaphor for human activity, all social ties are broken, the individual is an atom left to survive as an individual only, the strongest relentlessly consume the weakest — and that’s as it should be. (It’s easy to imagine how the apex predators of our social order would be attracted to this, and insist on it with force.

Thus the bipartisan world we live in today. Under a neoliberal regime, everyone gets what they deserve. Big fish deserve their meal. Little fish deserve their death. And government sets the table for the feast.

The Role of Government in a Neoliberal World

Since for neoliberals, the “market” is the source of all that is good in human interaction, non-interference in “the market” is rule one for government.

Over time that has changed, however, as winners have grown more successful and their control of government more absolute. The proper role of government in today’s neoliberal regime is not merely to allow the market to operate for the benefit of wealth-holders; it’s to make sure the market operates for the benefit of wealth-holders.

In other words, the role of government is to intervene in the market on behalf of wealth-holders, or, as I put it more colloquially, to proactively enrich the rich. The interview with Professor Mirowski, as I noted above, makes that same point, but from an academic standpoint.

From this it should be also clear that until we free ourselves of rule by neoliberals and the pain and misery they create, we’ll always be victims to the predatory giants — the very very wealthy and the corporations they use as power-extenders — those, in other words, who want merely to own everything else in the world.

This means we need to free ourselves from neoliberals in both parties, not just the ones in current seats of power. But that idea seems to have been excised from most discussions these days. Fair warning though. If the Age of Trump ends with the Restoration of Mainstream Democrats, we’ll have won almost nothing at all.

____________

* I sometimes spell “neo-liberalism” with the hyphen to suggest the following connection: Neo-liberalism is “new liberalism,” and has the same relationship to FDR liberalism as New Labour has to Labour — the two are exactly opposite.

Posted in Corporate Crime, culture, Economics, Empire, Financial Crisis, History, Inequality, Labor, Law, media, Neoliberalism, news, Philosophy, police state, propaganda, Social Control, Social Engineering, society, State Crime | Tagged , , , , , , , , , , , , , , | 3 Comments

The Public Are All Alone: Understanding How the Enemy of Your Enemy Is Not Your Friend

By Eric Zuesse

Source: Strategic Culture Foundation

In political matters, the public are taught to believe that some political Party is ‘good’, and that the others are “bad”; but the reality in recent times, at least in the United States, has instead been that both Parties are rotten to the core (as will be clear from the linked documentation provided here).

Belief in this myth (that the opposition between Parties is between ‘good’ ‘friend’ versus ‘bad’ ‘enemy’) is based upon the common adage that “The enemy of my enemy is my friend.” One side is believed, and ones that contradict it are disbelieved — considered to be lying, distorting: bad. But, maybe, both (or all) Parties are deceiving; maybe all of them are enemies of the public, but just in different ways; maybe each of them is trying to control the country in the interests of (and so to obtain the most financial support from) the aristocracy, while all of them are actually against the public.

Can it really be false that “The enemy of my enemy is my friend?” Not only can be, but often is. And no one is able to vote intelligently without recognizing this fundamental political fact.

It’s true between entire nations, too — not only within nations.

For example: Hitler and Stalin were enemies of each other, but neither of them was a friend of America (except that Stalin did more than anyone else to defeat Hitler, and thereby saved the world, though the U.S. — far less a factor than the U.S.S.R. was in defeating Hitler — still refuses to acknowledge the fact that Stalin did more than anyone else did to prevent the entire world’s becoming dictatorships; so, whatever democracy exists today, is a result of that dictator, Stalin, even more than it’s a result of either FDR or Churchill).

What about internally, then?

Hillary Clinton and Donald Trump became enemies of each other, but neither of them had ever really been a friend of the American public: both of them were instead liars who would, and did, do everything they could to grab control (on the aristocracy’s behalf, who financed their respective campaigns) over what is supposed to be our Government, in a democracy. That’s just a sad fact about reality, which both of America’s political Parties deny (because they both need those voters, not merely those mega-donations; they need the public to believe that the Party cares about them).

Most of the American public have been successfully deceived by the ‘news’media, and by the ‘history’-books (likewise published by agents for the aristocracy), to believe that the U.S. Government serves the public-interest, and not the interest of the centi-millionaires and especially billionaires, who finance political campaigns. But it’s no truer than it’s true that the enemy of your enemy is necessarily your friend: both enemies of each other can be your enemies, too. The difference here is that the enmity between the aristocracy and the public is basically intrinsic, whereas the enmities between (Republican versus Democratic, or any other divisions between) aristocrats, are basically personal — these are matters of business, instead of matters of state. They are, in a sense, different business-plans — competing business-plans. But they are all assisting the aristocracy, to control the public, so as to advance the interests of the aristocracy. They’re all competing for the aristocracy’s support, and deceiving for the public’s support. Two blatant recent examples displaying this were America’s invasion in 2003 that destroyed Iraq, and America’s invasion in 2011 that destroyed Libya. Did either of those invasions advance the interests of the American public? But the owners of Lockheed Martin and other ‘defense’ contractors blossomed after 9/11. In fact: U.S. arms-exports are at record highs.

The now-proven reality in America is that the U.S. Government really does represent those billionaires and centi-millionaires, and not the public. It’s a now-proven reality, that the U.S. isn’t a democracy but a dictatorship — albeit, a two-Party one, with a real competition between billionaire and centi-millionaire Republicans on the one hand, versus billionaire and centi-millionaire Democrats on the other. But all billionaires and centi-millionaires are takers (that’s how they came to be super-rich, even the ones who didn’t inherit it from their parents), who (notwithstanding any ‘charity’ they may establish to avoid taxes while extending their control) receive from the public far more than they give to the public; and, so, there is actually an intrinsic class-war — not at all like Karl Marx famously said, between the bourgeoisie (including small-business owners) versus the proletariat (including some centi-millionaires and billionaires who became super-wealthy from being movie-stars or athletic stars and who don’t necessarily actually control any business at all, and so they’re “proletariats”), but instead between the aristocracy versus the public: the ancient and permanent class-conflict. It’s the entire aristocracy-of-wealth (which is maybe half of the nation’s wealth) that’s arrayed against the public (the poorer 99+% of the people). (In fact, Marx — the promoter of the view that the bourgeoisie are the public’s enemies — had aristocratic sponsors, and he would have remained obscure and died poor, if he had instead blamed the aristocracy, not “the bourgeoisie” — which is mainly the middle class — as being the exploiting-class. Marx, too, was an agent of aristocracy. He succeeded and became famous because he had aristocratic sponsors. Otherwise, his name would have simply been forgotten.)

Anyway, the American public are now alone. No Government represents our interests. It’s now been proven that America’s Government doesn’t represent us; and it’s not even the business of any other Government in the world to represent us; so, no foreign government does, either. No Government represents us.

In order to understand any aristocracy, one must understand what gives rise to almost all wars, because almost all wars throughout history have been between contending aristocracies — between the aristocracies of different nations. Each aristocracy needs to be able to fool its national public, to believe that they’re fighting against the foreign public, when, in fact, they’re fighting against the foreign aristocracy, and they’re fighting for the home-nation’s aristocracy — they are, almost always, fighting for one aristocracy, against another aristocracy. Any public who would know that this is the reality, would just as soon commit a democratic revolution, against the local aristocracy, as go to war for the local one, against the foreign ones. This is the reason why, in every dictatorship, the local centi-millionaires and billionaires buy up all of the ‘news’media that inform, or (on essential matters) misinform, their audiences about international relations, and about who did what to whom and why. They hire only ‘reporters’ who comply with whatever deceptions the owners feel to be necessary, in order to be able to attract sponsorships from other aristocrats’ corporations and ‘charities’. But, the aristocrats themselves are actually all in this together, because their mutually shared enemy is the public. Without deceiving the public about essential matters, no national news-medium would be able to attract the sponsorships it needs in order to grow, or even to survive.

The public thinks it’s fighting an international war, when, in fact, they’re fighting for the local aristocracy (and its allied aristocracies), against foreign aristocracies (and their allied aristocracies). This has been true since the dawn of human civilization. Only the weapons are bigger now, and the alliances (in the World Wars) are now global. (But, of course, if there is another World War, then all of human civilization will immediately end, and not long thereafter, all human and most other forms of life will also end.)

An excellent example of the real class-war, and of its international nature, is James Bamford’s 3 April 2012 masterful and pioneering article in Wired, “Shady Companies With Ties to Israel Wiretap the U.S. for the NSA”. He documented that even very high-up people in America’s NSA were kept out of the loop when joint U.S.-and-Israeli intelligence-agencies and private corporations were creating the present 1984-ish, “Big Brother” reality, in (at least) those countries (but, actually, the Sauds, and probably a few others, were also on the inside — the aristocracies not merely of those two countries, U.S. and Israel, are in the alliance).

The “Deep State” isn’t merely one nation’s aristocracy and its agents; it is basically a form of actually international gang-warfare. That’s what got us into invading and destroying Iraq 2003, Libya 2011, Syria 2012-, Ukraine (by coup 2014), and so many other nations. It wasn’t done in order to serve the American public’s interests. That’s just the standard lie — and it keeps going on, and on. Maybe until we invade Russia.

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