I find it interesting that we are living in a time where the average person can, with a little research every night, have a good idea of what is going on globally with the economy, the environment, and societal structures. But with that knowledge comes the realization that you are essentially powerless to change the big picture. And so it is with our slide into a truly barbaric future. Having avoided any news this past week, I slept well. Tonight, however, is a different story as I start back into reading up on the latest world events and perspectives from prominent authors. It’s a real horror show developing these days.
We know that our ‘political economy of aristocracy‘ is a major impediment in moving away from our fossil fuel-based system and creating a socially just society, but the elite will do whatever is within their power to hold onto their place in the capitalist hierarchy:
…It is in any individual’s self-interest to preserve that in which they are most invested; but the rich pose a particular danger because their self-interest often leads them to attempt to protect and preserve entire modes of economic activity that society needs to move past in order to avoid colliding with the limitations of natural resources inherent in any specific mode of technology. No more clear example can be imagined that the Koch family interest pouring hundreds of millions and billions of dollars into conservative think tanks and political lobbies that not only deny global climate change, but also actively oppose the development of clean energy technologies. But a more instructive example may be the Walton family interests, which seek to avoid the development of public understanding of how the Wal-Mart business model shifts much of its employment costs onto the government – a modern twist on the methods by which the wealthy “pauperize the multitudes” identified in the Founders’ political economy of aristocracy…
Professor David McNally has an insightful new essay spelling out the machinations of capitalism which the elite have and will continue to carry out in order to preserve the status quo and gross inequality of our political economy. Some excerpts:
…Of course it is better for businesses if there is lots of demand for their goods. But the purpose of a capitalist enterprise is not to make sales; it is to make profits. The ability of firms to accumulate, invest, grow and beat out their competitors depends on profitability. And once capitalism gets into a systemic crisis of the sort that broke out in 2008, profitability cannot be restored without enormous destruction. There are two key mechanisms by which this happens.
The first involves destroying excess or unproductive capital. If firms in one industry after another are forced into bankruptcy and/or gobbled up by the competition, those that remain will eventually restructure and reorganize themselves to produce at lower cost (and higher profits). Having bought up bankrupted assets on the cheap, and having taken over the market shares of failed companies, they will be in a position to invest again.
The second capitalist mechanism for exiting a crisis involves driving down working people’s living standards. Put simply, by devaluing human life and the costs of reproducing people – via lower wages and benefits and reduced “social wages” (the public services available by way of pensions, social assistance, health care and education) – capital reduces its costs of doing business. And it is the latter strategy, reducing the costs of reproducing people, that has dominated thus far.
The reason for this is simple. In addition to funneling trillions of dollars to bail out the financial sector, the world’s central banks, particularly those in the Global North, have lowered borrowing costs to just a hair above zero. This means that faltering companies can stay alive by borrowing money that is virtually free. That is why there has been nothing so far like the wave of corporate bankruptcies witnessed during the Great Depression or across the 1980s. And because such a wave of bankruptcies would once again rock the financial system, nothing like it should be expected in the short term.
That leaves austerity as the capitalist class’ principal strategy. Here, they have racked up considerable success. Not only have public services been drastically curtailed, so have living standards generally. In the U.S., median incomes contracted more than four percent during the “recovery” since 2010 and have now declined to where they stood in 1995. That represents the elimination of all wage gains in the past 17 years. In the U.K., meanwhile, living standards have been pushed 13 percent below their 2008 levels. Now, all of this may be bad for “the economy” in the abstract: reduced incomes mean less spending and less employment. But we don’t live in an economy in the abstract. We live in a capitalist economy whose imperative is profit. And reduced incomes are highly functional for capital.
To that end, governments everywhere have embarked on programs designed to increase the precariousness of everyday life. They know that insecurity makes it harder for workers to fight back, and so they are using every weapon in their arsenal to render workers less comfortable, confident and secure. They are attacking labour rights, undermining job security, driving down wages, benefits and social entitlements, and relying heavily on migrant labourers. Indeed capital’s ideal precarious worker for the age of austerity is the migrant who enters a country bound to a single employer, with no rights to live and stay beyond the length of their employment contract. In Canada, the proportion of entrants admitted under the Temporary Foreign Worker Program is skyrocketing, and the same is true for similar programs elsewhere.
Not surprisingly, austerity and growing precariousness have done wonders for corporate profits, which have risen persistently since 2009. However, in the absence of significant destruction of capital, those profits are sitting idle rather than being invested in new means of producing wealth. By early 2012, U.S. corporations were sitting on nearly $2 trillion in cash, a record amount. European firms were doing the same, holding around two trillion euros. And that is the dilemma capital faces at the moment. Austerity has boosted profitability, but it has not made investment attractive. Moreover, the lack of a new investment boom sets limits to just how high profits can rise (indeed, by mid-2012 corporate earnings seemed once again to be faltering). Consequently, the system keeps spinning its wheels unable to acquire the traction required for a sustained recovery and expansion.
And so, the capitalist class and their governments continue to do what they know best: enforce ever-greater sacrifices on working people. Greece, of course, is the center of the austerity storm. Pensions there have been cut in half, wages slashed by a third. Homelessness is soaring and soup kitchens struggle to keep up with those in need of food. Suicide rates have risen alarmingly. Notwithstanding all that, the “troika” – the European Central Bank, the IMF and the European Commission – demand more blood. Already, the Greek government has tabled a budget for 2013 that will cut billions more from pensions, wages and social benefits, notwithstanding their own forecast that the Greek economy will contract once again by nearly five percent. The whole purpose of these cuts is to prove to international capital that Greece will abide by the discipline of financial markets and that, should it receive new “loans” from the troika, it will use this money only to pay back global banks. Perish the thought that some of these funds might find their way to teachers, nurses or pensioners. Indeed, to say the money is “loaned” to Greece is entirely false: these funds enter a special account through which they are channelled directly to banks. And for that purpose the Greek people are being bled dry.…
We now see the corporate elite in America, the beneficiaries of taxpayer bailouts, off-shore tax havens, government contracts, as well as near zero Fed loans, sharpening their blades to cut the throats of the American people:
The corporate CEOs who have made a high-profile foray into deficit negotiations have themselves been substantially responsible for the size of the deficit they now want closed.
The companies represented by executives working with the Campaign To Fix The Debt have received trillions in federal war contracts, subsidies and bailouts, as well as specialized tax breaks and loopholes that virtually eliminate the companies’ tax bills.
The CEOs are part of a campaign run by the Peter Peterson-backed Center for a Responsible Federal Budget, which plans to spend at least $30 million pushing for a deficit reduction deal in the lame-duck session and beyond.
During the past few days, CEOs belonging to what the campaign calls its CEO Fiscal Leadership Council — most visibly, Goldman Sachs’ Lloyd Blankfein and Honeywell’s David Cote — have barnstormed the media, making the case that the only way to cut the deficit is to severely scale back social safety-net programs — Medicare, Medicaid, and Social Security — which would disproportionately impact the poor and the elderly.
As part of their push, they are advocating a “territorial tax system” that would exempt their companies’ foreign profits from taxation, netting them about $134 billion in tax savings, according to a new report from the Institute for Policy Studies titled “The CEO Campaign to ‘Fix’ the Debt: A Trojan Horse for Massive Corporate Tax Breaks” — money that could help pay off the federal budget deficit.
Yet the CEOs are not offering to forgo federal money or pay a higher tax rate, on their personal income or corporate profits. Instead, council recommendations include cutting “entitlement” programs, as well as what they call “low-priority spending.”
Many of the companies recommending austerity would be out of business without the heavy federal support they get, including Goldman Sachs and JPMorgan Chase, which both received billions in direct bailout cash, plus billions more indirectly through AIG and other companies taxpayers rescued.
Just three of the companies — GE, Boeing and Honeywell — were handed nearly $28 billion last year in federal contracts alone. A spokesman for Campaign To Fix The Debt did not respond to an email from The Huffington Post over the weekend…
Now this brings me to Chris Hedges’ last essay which I just read tonight. He’s becoming more apocalyptic as time goes on. Chris knows what I know: we are headed towards a hellish future in which a tiny elite will try to hang on to their wealth and power at the expense of everyone else, including the planet. High tech weaponry and surveillance technology will be used to enslave and control the masses while maintaining capitalism’s grip on society:
…The impending collapse of the international economy, the assaults on the climate, the resulting droughts, flooding, precipitous decline in crop yields and rising food prices are creating a universe where power is divided between the narrow elites, who hold in their hands sophisticated instruments of death, and the enraged masses. The crises are fostering a class war that will dwarf anything imagined by Karl Marx. They are establishing a world where most will be hungry and live in fear, while a few will gorge themselves on delicacies in protected compounds. And more and more people will have to be sacrificed to keep this imbalance in place…
…As the world breaks down, this becomes the new paradigm—modern warlords awash in terrifying technologies and weapons murdering whole peoples. We do the same in Afghanistan, Iraq, Pakistan, Yemen and Somalia.
Market forces and the military mechanisms that protect these forces are the sole ideology that governs industrial states and humans’ relationship to the natural world. It is an ideology that results in millions of dead and millions more displaced from their homes in the developing world. And the awful algebra of this ideology means that these forces will eventually be unleashed on us, too. Those who cannot be of use to market forces are considered expendable. They have no rights and legitimacy. Their existence, whether in Gaza or blighted postindustrial cities such as Camden, N.J., is considered a drain on efficiency and progress. They are viewed as refuse. And as refuse they not only have no voice and no freedom; they can be and are extinguished or imprisoned at will. This is a world where only corporate power and profit are sacred. It is a world of barbarism…
Evil unencumbered by the slightest conscience seems to me to be what has been described above. By comparison, the droogs in ‘A Clockwork Orange’ appear quaint.