My approach, of course, has been different: point to the founders of the American republic and emphasize those aspects of their philosophy for political economy we no longer follow, and, indeed, barely even tolerate today. For example, it was generally accepted through most of the first century of USA's national existence that any gross inequality of wealth and income was a danger to the experiment in self-government. In An Examination into the Leading Principles of the Federal Constitution, the second most important book, after The Federalist Papers, in championing the ratification of the Constitution, Noah Webster observed, "Wherever we cast our eyes, we see this truth, that property is the basis of power," therefore, "....A general and tolerably equal distribution of landed property is the whole basis of national freedom.... An equality of property, with a necessity of alienation, constantly operating to destroy combinations of powerful families, is the very soul of a republic."
(Labor historian Steve Fraser has an interesting new book out, which I have yet to read - I'll gladly accept a donation of his book - entitled The Age of Acquiescence: The Life and Death of American Resistance to Organized Wealth and Power. A review in the New York Times is here, and in the Washington Post, here.)
One reason for my approach is that, in the end, who you have to convince, above all, are the military and the police: a revolution only succeeds when the people in charge of suppressing dissent begin to refuse to do so. That's why whistle-blowers like Chelsea Manning and Edward Snowden incur such wrath from TPTB. Or why Occupy Marines was quickly followed by the nationally coordinated crackdown on Occupy, and why Anonymous is such a threat. I simply do not believe that you are going to convince American police and military, and the monitors in the employ of the total surveillance state, that Marx or Mao or whoever is the answer. On the other hand, they just might be convinced that the original ideas of the American experiment in self-government have been trampled on and subverted by TPTB - including by the "vast right wing conspiracy" which has been funded and built up by the wealthy since their opposition to FDR and the New Deal.
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| A Romanian sub-officer gives the victory sign on 31 December 1989, after the fall of the communist Ceaușescu regime. He has removed the insignia of communist Romania from his headwear. |
In reaction to Obama's failure to deal with Wall Street since the crash of 2007-2008, there has been a resurgence on the left of these failed ideologies. Even at DailyKos, there is a regular posting titled "Anti-Capitalist Meet-Up" that draws a decent crowd. I wish these people would read Lawrence Goodwyn,who wrote what is far and away the best history of the populist movement. What makes it the best? Goodwyn fully understood the Greenbacker critique of the U.S. financial and monetary systems that powered the extraordinary political success of the populists in the 1880s through 1910s. Goodwyn delivered a short speech in December 1989, at a special event in St. Louis on the occasion of the 100th anniversary of the populist People's Party "Sub-Treasury Plan" for financial reform. The speech is here: Democratic Money: A Populist Perspective. After dissecting how TPTB have left no room for serious discussion of a truly democratic system of money, credit and exchange, Goodwyn observed:
There is another society in our time -- what we call "the East," what we sometimes call "actually existing socialism." For about 40 years, since Stalin imposed this system on whole populations, an idea floated around in people's heads over there, in "the East." The idea was, "We will try to create some space where we can talk to each other and affect the world we live in. To do that, we're going to have to combat the leading role of the Party. We're going to have to find some way to get around the fact that all the social space in society is occupied by the Party."
This idea would float around kitchen tables on the Baltic coast in the 1950s and 1960s. And workers in shipyards would say to each other, "We have got to create a trade union independent of the Party." Now that is an unsanctioned idea. And they knew it was frightening even to say it out loud; you'd only say it around the kitchen table, around carefully selected brethren and sistren. And the idea would go away, because it was unsanctioned. But then there would be another horrible accident in the shipyard, another insane adjustment of work routines, and the idea'd come back, simply because it was the only idea that made any sense. "Work organized by the Party is insane, Poland is insane, our social life is insane. We've got to have a union free of the Party."
Over 35 years of self-activity the world has not known about -- any more than the world knew very much about how the Farmers' Alliance organized Populism -- they found out how to do it. And in 1980 they did it. There's a certain logic in history every now and then. The single most experienced organizer in the shipyard in Gdansk, Poland, who spent 12 years organizing and brooding about a union free of the Party, who had gone to jail scores of times in the decade -- learning each time a little bit more about how power worked in his society -- the one single most credentialed worker with other workers based on his own activity, is Lech Walesa. There is every now and then a certain justification in history.
Because that movement existed, even though it was repressed by the government after 15 months, it sent a wave of hope across Eastern Europe. What Solidarnosc combatted, by its simple existence, was mass resignation. This resignation was the dominant political reality in Hungary, Czechoslovakia, East Germany and Poland until the shipyard workers of Gdansk became the nucleus of a mass movement, one of those rare moments in human history when people get back in touch with their own subjectivity. That is to say, they don't lie in public. They say what they mean. And they try hard to say it clearly. They're not trying to make a speech, they're not trying to be an orator. They're trying to be clear, like two people in a marriage struggling not to be political with each other but to be honest. One of those rare democratic moments when reality is projected.
Because Solidarity stayed alive during the years of martial law, and because a man named Brezhnev who put down Solidarity passed off the stage of history and another man named Gorbachev who would not put down Solidarity came on the stage of history, the leading role of the Party this very week is going into the dustbin of history all over Eastern Europe.You especially need to read the speech if you are wondering what the Greenbacker critique is, the truly "American" response to concentrated economic and financial power. But the important thing for me is that after Goodwyn gave us an incredible educational tool in his history of USA populism, he then turned his attention to the Communist bloc of Central and Eastern Europe, and in Breaking the Barrier: The Rise of Solidarity in Poland, showed us that the same problems arose in both settings, and the same populist solutions prevailed.
Well, to be accurate, let's modify that to "almost prevailed." In both the USA and in Russia and the other ex-communist states, the initial flush of populist victory was followed by the descent into radical neo-liberal free market madness. And in both cases, the cause was the decrepitude of accepted economic philosophies.
In the USA, the populist insurgency actually elected to office dozens of populists to the Congress, including a handful of Senators, and hundreds of state legislatures, and a few governors as well. Out of that we got the first regulations on railroads, on food production, on pharmaceuticals, the only state bank in USA (North Dakota), state and federal crop insurance, and other things. Even the Federal Reserve system was made possible by the populist insurgency, though it was not at all what they really wanted. But after the panics of 1901 and 1907, it was the populist insurgency which generated the general clamor for reform of the financial and monetary systems. And even after the populist movement had been destroyed and shoved off history's stage, many of its ideas would later be seized upon by Franklin Roosevelt and the New Dealers desperate to find some way out of the Great Depression.
Instead of what they wanted, the populists got the monstrous Federal Reserve - an institution which by design is even further removed from democratic control, justified under the rubric of preserving the independence of the central bankers. How did we end up with the inherently anti-Democratic Federal Reserve instead of the populists' sub-Treasury scheme? The problem was that the populists' core Greenbacker critique had been fatally devastated by their 1896 compromise with Democratic Presidential nominee William Jennings Bryan's position on silver coinage. This destruction of the populist movement during the 1896 campaign, by the way, is one of the most important case studies we should learn, and Goodwyn's is really the only good history of it I know of.
The last great surge of populist success was the Non-Partisan League in North Dakota in the years just before World War One. The political revolution the NPL brought to that state is detailed in a 1955 book, Political Prairie Fire, which now-defunct ACORN used to train its community organizers. But after the success in North Dakota, and a tentative spread to Minnesota and Wisconsin, the ideologically weakened populist movement was pretty much eradicated by the anti-German hysteria deliberately whipped up during the war. Chris Hedges provides the history in the opening chapters of his book, Death of the Liberal Class.
It is highly pertinent to ask here: why weren't the socialists and the communists wiped out along with the populists during the war? There are, I believe, three reasons. First is not really a reason: the fact is, the socialists and the communists also were attacked. Especially targeted, I believe, were the networks that had been established by the European revolutionaries who had fled to America after the failures of the 1848 revolts.
Here, a digression. These networks of 48ers were integral to the electoral successes of Lincoln and the Republican Party. They also were crucial to the success of the Union on the fields of battle. One entire corps of the Army of the Potomac was comprised of mostly German immigrants, plus an number of other regiments and companies throughout the Union Army. Altogether, 216,000 German immigrants served in the Union Army, comprising nearly ten percent of federal forces. And there is a new book out, The Cause of All Nations: An International History of the Civil War, by Don H. Doyle, which details how the European revolutionaries who remained in Europe literally saved the Union during the Civil War.
Queen Victoria detested the American experiment in self-government, and after some hesitation and misgivings - and no little pressure by a number of Confederate "diplomats" / publicists - British Prime Minister Lord Palmerston finally decided, in September 1862, to dispatch a British army and fleet to Canada. This would create the northern half of a pincers to choke the American republic; the southern half of the pincers were the French and Spanish forces which had already landed in Mexico and the Caribbean, with British assistance, in December 1861 through January 1862.
At this crucial point, just when the British oligarchs thought they could finally get away with crushing the obnoxious experiment in self-government, the Union Army won a major battle at Antietam, Maryland on September 17. This was the victory Lincoln had been waiting for to announce his intent to emancipate the slaves. (The actual Emancipation Proclamation was issued January 1, 1863.) When the news arrived in Europe nearly three weeks later, massive pro-Union demonstrations erupted. These were led by supporters of Giuseppe Garibaldi's fight for Italian unification and independence, the most militant manifestation of the general republican, anti-monarchical sentiments of European progressives at the time. On October 5, 1862, one hundred thousand demonstrators, many garbed like Garibaldi's red shirts, filled Hyde Park in London. Similar demonstrations were held elsewhere in England. With little doubt that there would be fierce popular resistance to any attempt to openly aid the Confederacy and the continuation of slavery, Palmerston quietly abandoned his preparations to deploy British military forces to North America.
Garibaldi leading his Expedition of the Thousand, wearing red shirts, on May 15, 1860, in the Battle of Calatafimi, Sicily, which drove the Bourbon monarchy off the island.
To return to the crushing of American socialism and communism, and what I believe was the second reason it was not as thorough as the annihilation of the populists. It was not until after the Bolsheviks seized Russia that socialists and communists in America could be restyled as "the Bolshevist menace." The crackdown on socialists and communists thus became particularly severe near the end of World War One, and after. Lasting of course through the 1920s and 1930s, right up to today.
But for me, the most important is the third reason. The socialists and communists who survived in USA, I believe, were allowed to survive, because they were funded and controlled by what used to be called The Eastern Liberal Establishment. This is a point that many on the left get hysterical about. But the facts are detailed in Caroll Quigley's Tragedy and Hope: A History of the World in Our Time. And if you don't want to take the time to wade through that massive tome, just take a look at Corliss Lamont, the major funder of American socialism in the 1960s, note who his father was, and don't shy from doing the math of putting two and two together. "You don't like what American capitalism is doing? Here, join us, in the nurturing bosom of J.P. Morgan & Co."
David Ellerman, who was an adviser to Joseph Stiglitz, when the latter was at the World Bank, argues that Marxism is now used by capitalist apologists to confine the debate over political economy to carefully controlled bounds. Ellerman's thesis is that "Marxists (and so-called “democratic” socialists) played into the hands of capitalist apologetics by accepting the public versus private framing of the question, and by arguing for public rather than private ownership of the means of production." This makes it impossible to actually apply democratic principles to the workplace, because Marxists are stuck on the idea that large enterprises, because of their size and impact, have to be taken over by the state. The Marxists are unwilling to agree to private ownership of the means of production, even when the private owners are ALL the employees of an enterprise. In Marxism as a Capitalist Tool, Ellerman writes:
It is rather hard to coherently defend the economic system based on the renting of people, the employment system, once the questions are correctly framed, not in terms of “private ownership of the means of production,” but in terms of the employment contract to rent human beings, the violation of democratic principles in the workplace, and the violation of the standard responsibility principle in the appropriation of property in production based on the employment contract. Capitalist apologetics proceeds not by even trying to address these questions but by using a rather different framing of the questions. The most remarkable aspect of the “Great Debate” about the system is that Marx accepted the capitalist apologetics’ misframing of the questions and then took the other side of the pseudo-questions. Thus Marx and Marxism have somewhat inadvertently become an essential part of the apologetcs for the “capitalist” system by agreeing to the bogus framing of the issues.Though I was completely unaware of the problem as Ellerman defines it, I ran up against it beginning in the late 1980s, when I was in DC writing on economics for a small radical news monthly. One of the first stories I worked on was the Kohlberg Kravis and Roberts leverage buy-out (LBO) of RJR Nabisco in 1988 at the then stunning price of $25 billion. The Marxists I met at the time were utterly clueless. They had no interest in LBOs, and no interest in the dirty drug and mafia money that was behind a lot of the buyout craze and other "M&A" - mergers and acquisitions. In other words, they were too busy debating Bukharin versus Trotsky, and were not at all interested in targeting the real bastards behind the scenes: law firms like Skadden Arps Slate Meagher & Flom or Davis Polk & Wardwell, or the big financial houses at the time like Manufacturers Hanover, First Boston, Salomon Brothers, and Bankers Trust.
Much of what I knew abut KKR came from an excellent book that I discovered because of a book review with the very clever name, "When they forgot the nuts and bolts, everybody got screwed."
The book was Max Holland’s When the Machine Stopped: A Cautionary Tale from Industrial America, a history of Burgmaster, a maker of turret lathes which had been the largest machine tool builder west of the Mississippi. Holland’s father was a machinist there, and Holland describes how the founder and owner, Joe Burg, interacted with his employees on the shop floor. The collegiality described by Holland simply does not exist according to Marxist class analysis, but is perfectly comprehended under Thorstein Veblen’s concept of the instinct of workmanship.
Burgmaster was quickly destroyed when it was acquired by a machine tool conglomerate, Houdaille, which in turn was bought up in one of the first leveraged buyouts by Kohlberg Kravis and Roberts in 1978. KKR are archtypical financial predators, who now control more companies and revenues than Exxon-Mobil. General Petraeus is now working for KKR. Holland’s book details the death agonies of Burgmaster under KKR, right to the bitter end. In March 2007, he wrote a summary, entitled, “How to Kill a Company: Anatomy of a Leveraged Buyout.”
There are other flaws in Marxist class analysis. Marx believed that classes were defined by income and ownership. While he engaged in some sociological speculation about how people change as incomes rise, he was mainly concerned with how the rich exploit the poor. The problem is, the really important class division in society is between producers and predators (Veblen termed the predators the Leisure Class) - and there are a lot of producers that end up being included and condemned in Marx's capitalist or owner class. The implications are pretty damn important. Lenin's and Stalin's determination to annihilate the krulaks in Russia was one result. The krulaks were the wealthier peasants, usually able to hire other peasants to work for them, and they were the backbone of Russian agricultural production: they were the producers. Oppressing and dispossessing the agricultural producers resulted inevitably in a catastrophic collapse of agricultural production. So you get the famines of the 1920s and 1930s, which, it should be noted, only made it easier for Western elites to portray the Bolsheviks in the worst possible ways.
Marxist class analysis also is not much help when it comes to climate change, because all of Marx’s classes use energy. Just look at the sources of carbon in rich versus poor countries. What spews more carbon per economic activity: heating a home and cooking meals in a rich, Western country using electricity or even natural gas from the grid. or cutting down trees and burning them in a poor country? Or look at the mess China has made of the environment in its haste to escape economic backwardness and poverty, compared to what Germany and the other countries of northern Europe have been able to do on a number of environmental issues, including developing houses and buildings with little or no carbon footprint, and requiring manufacturers to design their products to facilitate dis-assembly and recycling.
We need $100 trillion in investments over the next two decades to entirely replace fossil fuels. Of what use is Marxist analysis in getting that done? But Veblen's producer / predator analysis, that the major struggle in modern economies is the one between industry and business, is immensely valuable. Capitalists who want to build the 1.7 billion home solar power systems we need? Good - even if they are still capitalists. But, capitalists who want to stymie the move to renewables, like the Koch brothers, in order to continue profiting from fossil fuels? Or capitalists who want to identify and buy up emerging companies in renewables and add them to their already immense corporate empires, such as General Electric, and cartelize the industry? Bad. Does it really make sense to condemn Elon Musk in the same breath as Charles and David Koch?
There are a lot of people on the left who try to avoid the opprobrium of an open embrace of socialism or communism, most often by arguing that the American republic was intended, from its very beginning, to be anti-democratic and tilted in favor of the owners of property. This, of course, is the analysis of Charles Beard in his 1913 An Economic Interpretation of the Constitution. Since I'm already jabbing at many leftist sacred cows, I might as well jab at this one.
I wonder if these people have actually read Beard. In Beard's Interpretation, there were two basic interest groups: "...the merchants, money lenders, security holders, manufacturers, shippers, capitalists, and financiers and their professional associates" comprised one group. The other was "... the non-slave-holding farmers and the debtors." This grouping commits the very same error Marx does: not distinguishing adequately, as Veblen does, between producers and predators. It is simply too crippling a mistake to lump money lenders, security holders, and financiers in with manufacturers.
At the beginning of the American republic, according to E.A.J. Johnson in his 1973 book, The Foundations of American Economic Freedom: Government and Enterprise in the Age of Washington (University of Minnesota Press), political theorists recognized eight distinct interests. Five of these interests were seen to be “natural,” meaning that they were interests resulting from having a livelihood in a socially useful capacity. The five natural interests were: agriculture, commerce, manufacture, mechanic arts, and the professions. For Jefferson, agriculture was the most important interest, because it was the purest and most virtuous. In a letter to John Jay in 1785, for example, Jefferson wrote, "Cultivators of the earth are the most valuable citizens. They are the most vigorous, the most independent, the most virtuous, and they are tied to their country and wedded to its liberty and interests by the most lasting bonds. As long, therefore, as they can find employment in this line, I would not convert them into mariners, artisans, or anything else."
Three interests - financial, corporate, and foreign - were viewed as “unnatural” and inherently venal and corrupting, the last (foreign) being “a rather vague gather-all [which] reflected not only the age-old suspicion of aliens, but a particular hatred of British factors, merchants, and financiers.” And of course, James Madison argued in his classic Number 10 of The Federalist Papers that economic disputes and factions most often arise from the conflict between different economic interests.
But the most common and durable source of factions has been the various and unequal distribution of property. Those who hold and those who are without property have ever formed distinct interests in society. Those who are creditors, and those who are debtors, fall under a like discrimination. A landed interest, a manufacturing interest, a mercantile interest, a moneyed interest, with many lesser interests, grow up of necessity in civilized nations, and divide them into different classes, actuated by different sentiments and views. The regulation of these various and interfering interests forms the principal task of modern legislation...I will also note here that Beard's analysis of Alexander Hamilton is completely at odds with the way Hamilton is portrayed by people who like to quote Beard. These people paint a picture of Hamilton as a secret monarchist, desiring a strong, authoritarian central government able to suppress the democratic aspirations of common people and impose government policies and programs that favor the rich. Here is Beard's own conclusion regarding Hamilton, from An Economic Interpretation of the Constitution:
...an extensive augmentation of his personal fortune was no consideration with him. The fact that he died a poor man is conclusive evidence of this fact. That he was swayed throughout the period of the formation of the Constitution by large policies of government — not by any of the personal interests so often ascribed to him — must therefore be admitted. Nevertheless, it is apparent from the additional evidence given here that it was no mere abstract political science which dominated his principles of government.Just to make the point about Beard's conclusion crystal clear, Harvard professor Thomas K. McCraw writes in his 2012 book, The Founders and Finance: How Hamilton, Gallatin, and Other Immigrants Forged a New Economy, that what drove Hamilton above all else was his concern for
…the good of the nation as a whole, not of any particular state or section. His thought centered on national economic aggregates—in agriculture, industrial production, and finance. In addition, he understood better than any other founder—indeed, better than any other American of his generation who left enough records to judge—how everything in the national economy was related to everything else. A first-class student of both economics and administration, he saw that in the construction of grand strategy, every move must be coordinated so as to make the whole of public policy greater than the sum of its parts….And I'm absolutely certain those people who champion Beard's analysis have never read Beard's later work, The Economic Basis of Politics, which Beard himself considered more important because it addressed the great misconceptions that had arisen concerning his Economic Interpretation of the Constitution. To quote from the introduction to a 2002 republication of The Economic Basis of Politics, by Clyde Barrow:
Hamilton attached great importance to the innovating role of an entrepreneurial elite… Hamilton believed that real economic breakthroughs required the leadership of visionaries like himself, whether in the public or private sector. He did not, as his enemies charged, favor the rich so much as he respected talented entrepreneurs and managers….
...Beard (1945, 62) concludes that "modern equalitarian democracy, which reckons all heads as equal and alike, cuts sharply athwart the philosophy and practice of the past centuries." These themes are woven together in Beard's claim that the central problem of contemporary political theory, as well as the motor of contemporary political development, is the contradiction between the ideals and institutions of political democracy and the reality of economic inequality (i.e., classes).... The fact that neither capitalism nor communism had solved the problem of class conflict led Beard to the "grand conclusion" that it was Madison's economic interpretation of history rather than Marx's, that had withstood the greatest test of modern political history. Madison was correct to the extent that he identifies the problem of regulating class struggle, rather than eliminating it, as the central problem of political statesmanship and constitutional development, regardless of the mode of production or any particular distribution of wealth. There is no end to class struggle and, therefore, no end of history (or politics)....Screw you, Francis Fukuyama, and your neo-liberal sugar-daddies, who believe the triumph of neo-liberalism is the end of history.
Besides acquiescing to the monstrous evil of slavery, Jefferson's great error lay in refusing to see that the United States could not remain agrarian forever. Rather than denounce urban dwellers as repositories of vice, he should have tried to find ways to encourage the growth of republican ideals within the people who comprised the other natural interests.
Hamilton's great error lay in refusing to see what powerfully corrupting influences the financial and commercial could be. He should have joined Washington and Adams in their desire to prohibit bankers and financiers from holding seats in Congress. Had that precedent been established, it would be a relatively simple thing to also prohibit lobbyists from the financial interests from besmirching the halls of power with their presence.
The classical republican ideals that inspired the creation of the American republic warned that concentrations of economic power were as dangerous as concentrations of political power; and indeed economic power and political power go hand in hand. This is also, I believe, the idea of classical liberalism. But what we have now is neo-liberalism, which argues that only concentrations of political power are a problem, and we should not worry about concentrations of economic power because the forces of the market will correct any abuses of economic power. "Keep the gubmint's hands off my international conglomerate."
Liberalism was a revolt on behalf of a rising middle class against the power and privileges of European ruling oligarchs and monarchs, who used their connections and influence at royal courts to gain economic monopolies and other privileges. (This is generally known as the system of mercantilism.) The intent of classical liberalism was to sweep away the power of these oligarchical and monarchical states to make room for greater economic freedoms and property rights for the rising middle class. To make enough room for Hamilton's "innovating role of an entrepreneurial elite."
The culmination of liberalism was the creation of the American republic. However, it is crucial to note that under the Constitution of the new American republic, economic freedoms and property rights were subject to the Constitutional mandate to promote the general welfare. And in advanced industrial economies, the way a sovereign nation-state promotes and protects the general welfare is by imposing environmental, workplace, and consumer regulations on economic activity. There should also be strict limits on usury, speculation, and economic rent-seeking, which all drain financial capital away from the industrial economy and industrial enterprises. Credit default swaps and collateralized mortgage obligations are NOT the result of the "innovating role of an entrepreneurial elite," but the spore of rich pricks who engage in usury and speculation and have never actually created real wealth in their entire lives.
Neo-liberalism is a revolt, by a newly arisen class of corporatist oligarchs and plutocrats, enraged that the promotion of the general welfare by modern sovereign nation-state involves laws and regulations which "stifle" their "business opportunities" and "economic creativity."
People dismayed and even angered by Barack Obama's inability or unwillingness to confront the rising blood tide of neo-liberal economic destruction, understandably are looking for and demanding alternatives to "capitalism." But what type or form of capitalism are they referring to? Are they referring to British imperial capitalism, as expounded by the paid lackeys of the British East India Co. such as Adam Smith and David Ricardo? Or the capitalism established by Hamilton, which a century ago was referred to as The American System? Or the capitalism if Milton Friedman and the Chicago Boys, under which usury and speculation and sociopaths thrive, but not much else? And what do they propose as an alternative to "capitalism"? Whose ideas are they promoting?
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