Pakistan: Farooq Tariq comments on the Awami Workers' Party.

We reprint below the comments of Farooq Tariq on the formation of the Awami Workers' Party in Pakistan.  The Awami Party came about through the unification of three left parties, The Awami Party, the Labour Party Pakistan, and Workers Party Pakistan. Reprinted from Viewpoint

AWP founded: Will it sustain itself?

Thursday, 29 November 2012 23:33by Farooq Tariq

The merger will survive because it has more positives and no negatives. The cementing phenomenon is the ideology of Socialism that all three parties have agreed upon

The merger of three left wing parties---Awami Party, Labour Party Pakistan, and Workers Party Pakistan---has generated a lot of discussion among the political intelligentsia and activists. While it has been hailed as a trend setting exercise by many in and outside Pakistan, there are quite a few asking the question: will it sustain itself? The merger undoubtedly has lifted many aspirations of those wanting a just and equitable society. It has been welcomed all over despite a few relating sarcastically and instinctively with some of the failed attempts of the Left to forge unity among organizations over the past 30 years.

Four articles within a week of merger were printed in the editorial pages of commercial media including Dawn, Pakistan Today and Daily Times, written by well respected writers like I. A. Rehman and Professor Aziz-ud-din Ahmad, welcoming the merger on the theme of the “Left reborn” . Several Urdu papers also followed the English papers to welcome the most intelligent move by the Left in decades to expand its social basis in a society dominated by political Islam.
The arguments put forward by some questioning the sustainability of this merger are based mainly on lack of information within the left of Pakistan and are short of understanding the objective and subjective realities under which this bold initiative was taken. Let us look some of the starting points for this merger.

The merger was simply a local act. It was not taken because someone from outside had done this. It was not a mechanical imitation but a dialectical response to some of the successful recent experiences on the Left internationally. Many on the Left in Pakistan were inspired by the success of SYRISA of Greece (The Coalition of the Radical Left –a United Social Front). It won nearly 27 percent popular votes in the general elections in Greece and became the second largest and main opposition party. It brought together several different socialist and political trends to form the party in 2004. Within 8 years, it became the talk of the whole world. However, the merger in Pakistan is not a carbon copy of SYRISA. It has its unique features.

The beginning of merger process was purely a product of the young revolutionaries within the three parties who finally decided to unite in one single platform. The desire of the young revolutionaries for a bold and creative action for the uplift of the Left forces had all the foundations of a success story. It was not a hasty impatience of some “young petty bourgeoisie youth” to build a party overnight as described by some sceptical analysts. It was a painstaking long overdue strategy put into reality.
The merger would sustain and help to develop a radical left party in a short space of time. The main reason is the ideological basis for this process. It is done at a time when the very existence of the Left was in question because of the continuous growth of religious fanaticisms in all spheres of life. The insecurity among the left activists has been halted by this merger process.

The ideological differences in the history of the Left were long overtaken by the extraordinary events of the past 25 years. The collapse of the Soviet Union and euphoria among the capitalist class led them to go for an all out war against the working class in the shape of the brutal implementation of the neoliberal agenda.  The result was, as expected, the growth of poverty at an unprecedented level and the gap among poor and rich widened to an historical high point. The international capitalist crisis worsened this situation even further.

However, Pakistan was a special case. Here, the growth of abhorrence against the “system” was not translated in the progress of progressive forces. On the contrary, the extreme right wing forces with their anti-imperialist demagogy were the main beneficiaries. They were better prepared with over 80,000 Madrassas and a whole range of social work they were involved in coloring with religious sentiments.

The Left was left out by political commentators as mere spectators from outside the mainstream political arena.  However, the slow and patient work of some Left groups and parties in building social and labour movements paved the way for the present merger. One of the main aims of this merger strategy was to strengthen the labour and peasant movement that they were able to build in parts of the country over the years. The movements were in some confusion about the three parties pursuing similar ideology and tactics with three different names. The merger has eased their lives.
One of the main beneficiaries of this merger will be the National Students Federation, a traditional left organization which saw splits among its ranks whenever the Left split for any reason. That was the main consideration among the leadership of the three parties who left their year’s long hard work building their parties to adopt a new name. It was the NSF leadership that initiated the merger process and it is the youth who are in the forefront of joining the new party.

The merger will survive because it has more positives and no negatives. The cementing phenomenon is the ideology of Socialism that all three parties have agreed upon. They agree that the commanding heights of economy be nationalized [under democratic workers’ control and management???]Nations [and national groups?] must have a right of self determination with a voluntary choice of succession. An end of debt with an audit of all the local and foreign loans is the high point agreed to tackle the worsening economic crisis. At least 10 percent of the national budget spent on education and five percent on health with drastic cuts in military spending will ease the life of millions once put in practice.

With a radical programme, committed and experienced self sacrificing leadership and whole hearted support of all the members of the three parties have put the merger formula on the road of guaranteed success.

Farooq Tariq is General Secretry of Awami Workers Party Pakistan. Email: farooqtariq@hotmail.com

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US: it’s investment, not consumption

by Michael Roberts

Just a short one on US growth now that the Q3’12 real GDP data revision has been released.  Third quarter annualised real GDP growth was revised up from 2% to 2.7%.  That sounds good, but the devil is in the detail.  It was only revised up because of an increased estimate of inventories or stocks of goods produced.  In other words, US capitalists produced too much compared to demand and had to stock the excess.  Final demand or sales was revised down and, most significant, non-residential investment (excluding the purchase of homes) growth was taken down substantially. This is last figure is the best measure of new investment by the capitalist sector in an economy and it does not look good.  Real investment is still some 8% below the peak before the Great Recession.  Investment had fallen 24% from its peak in Q3’07 to mid-2009.  Then it recovered but is now slipping back again.

And the indicators for investment over the next few quarters are not good either.  One good indicator of where investment is going is to look at ‘core’ capital goods orders (excluding aircraft and defence).  That is moving into recession territory, although it is probably too early to judge.  The figure is from the Doug Short site.

And yet corporate profits are still rising, at least when measured by the rather artificial methods of the US Bureau of Economic Analysis of corporate profits (after inventory and capital consumption adjustment).  If we take a ‘purer’ figure of net cash flow for US businesses (before they pay tax, interest, dividends and make room for depreciation) it is not quite so rosy.

Indeed, the gap between available profits and investment by the US capitalist sector has never been greater.  US capitalists are on an investment strike, still not convinced that profitability is sufficient to launch into new investment.

And contrary to the views of the underconsumptionists, household consumption in the US as a share of GDP is only just off its all-time high, at 70.5%.  And yet investment to GDP is just 14% of GDP, no higher than it was in the mid-1990s.  The Great Recession was a product of collapse in capitalist investment and the property market, not a collapse in household spending.

So we remain in what I call a Long Depression.  This is best shown in my last graph.  The gap between trend average real GDP growth per head of population prior to the slump and actual growth opened up during the Great Recession.  But unlike previous recessions, that gap has not been bridged in the recovery.  Indeed, the gap is still widening on a per capita basis.  We are in unprecedented times at least since the Great Depression of the 1930s.

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Trace Adkins and the Confederate flag

Trace Adkins

Now this insulting and apart from that, it reflects the biased US mass media. Trace Adkins who I assume is related to Chet Adkins, a country singer, wore an earring decorated with the confederate flag when he performed for the Christmas tree lighting in the Rockefeller Center on Wednesday night.

"Some regard the flag as a racist symbol" the Associated Press says as it reported the incident. Oh, and "who might that be?" "He meant no offense by it", the AP reports Adkins as saying. To prove how un-racist he is, Adkins says that he is a "Proud American who objects to any oppression" and that the flag represents his "Southern heritage."

Well what aspect of "Southern Heritage" does Adkins represent? The slaveowners? If not, he'd better separate himself from them then.  He claims he is a descendant of "Confederate soldiers" and didn't intend "offense" by wearing it. But I can't accept this. If his relatives were poor white sharecroppers or something I would have more sympathy as the ruling classes, industrialist or slaveocracy, always divides us, always tries to set one group of against the other.  But if he is the descendants of landowners and slaveowners then he should publicly admit that they were on the wrong side.

The reality is that this flag is a racist symbol.  The black folks know that.  Doesn't Trace ever talk to them? Has he never read history or is Trace an idiot?  I don't know him so I wouldn't know.  But he is either an idiot or a racist, what other conclusions can a person draw? .  The Southern Slaveocracy was a racist state in the extreme. Capitalism, the system of production favored by the Northern industrialists is also a racist system but for workers, black or white, a step forward historically.  White workers would not have had the right to vote, the right to organize either under this regime and the fight for such things would have been much harder with racism much stronger had the Southern slaveowners won the civil war. The white workers of the south were barely a step or two above the ladder from the black folks.

So if you can forward this to Trace I would like to hear what he has to say about it. If his descendants were poor white workers then why would he support the southern slaveowners?  And why does he not accept that the symbol of a racist state that considered persons of a different color less than human something to be proud of?  If Germans said they were proud of the Nazi state would he think that was OK?

It is easy for me as a white person to be measured about this. If I were black I'd want to kick his ass.

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Burmese workers protest copper mine

I was talking with a friend today about the very important developments in the fast food industry.  We both agreed that the leaders of the US trade Union movement who are involved in this have their own agenda when it comes to organizing workers.  On the one hand they are supporting the decimation of the living standards of the higher paid along with the weakening of Union rights on the job while supporting the Unionization of the low waged which would bring increased income in to what they see as the trade Union business.

Below we see the protests that have been taking place against a copper mine in Burma the last few days, protests that would have meant certain death a few months ago.  It is a similar situation in the sense that once they lift the boot off the neck of the working  class, once they make some minor reforms, which some condemn as not enough, it can be quite difficult to put that genie back in the bottle.  Every gain the working class makes should be supported.

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Fast-Food Workers Walk Off the Job

McDonald's protest, Auckland NZ

We are sharing this piece from the NYT with our readers given the importance of this walk off of fast food workers.  This is occurring as Walmart workers also take steps toward confronting their bosses which in this industry can have unpleasant consequences.  it shows how in the light of the recent crisis, workers are being forced in to action. The economic crisis is savaging the poor and low waged. (this image did not come with the original article)


NYT
November 28, 2012
In Drive to Unionize, Fast-Food Workers Walk Off the Job

By STEVEN GREENHOUSE

Fast-food workers at several restaurants in New York walked off the job on Thursday, firing the first salvo in what workplace experts say is the biggest effort to unionize fast-food workers ever undertaken in the United States. The effort — backed by community and civil rights groups, religious leaders and a labor union — has engaged 40 full-time organizers in recent months to enlist workers at McDonald’s, Wendy’s, Domino’s, Taco Bell and other fast-food restaurants across the city.

Leaders of the effort said that workers were walking off the job to protest what they said were low wages and retaliation against several workers who have backed the unionization campaign. They said it would be the first multi-restaurant strike by fast-food workers in American history, although it was unclear how many workers would walk off the job.

 The first walkout took place at 6:30 a.m. at a McDonald’s at Madison Avenue and 40th Street, where several dozen striking workers and supporters chanted: “Hey, hey, what do you say? We demand fair pay.” An organizer of the unionizing campaign said that 14 of the 17 employees scheduled to work the morning shift had gone on strike.

Raymond Lopez, 21, an aspiring actor who has worked at the McDonald’s for more than two years, showed up on his day off to protest. “In this job having a union would really be a dream come true,” said Mr. Lopez, who added that he makes $8.75 an hour. He said that he, and fellow fast-food workers, were under-compensated. “We don’t get paid for what we do,” he said. “It really is living in poverty.”

Over the decades there have been occasional efforts to unionize a fast-food restaurant here or there, but labor experts say there has never before been an effort to unionize dozens of such restaurants. The new campaign aims in part to raise low-end wages and reduce income inequality, and is also an uphill battle to win union recognition.

Ruth Milkman, a sociology professor at the City University of New York, said there had been so few efforts to unionize fast-food workers because it was such a daunting challenge.

“These jobs have extremely high turnover, so by the time you get around to organizing folks, they’re not on the job anymore,” she said. Nonetheless, she said the new effort might gain traction because it is taking place in New York, a city with deep union roots where many workers are sympathetic to unions.

Christine C. Quinn, the speaker of the New York City Council who has struggled with various measures intended to improve wages and working conditions in the city, expressed support for fast-food workers.

"I support fast food restaurant workers’ rights to organize and fight for decent wages,’' Ms. Quinn wrote in a Twitter message on Thursday morning.

Jonathan Westin, organizing director at New York Communities for Change, a community group that is playing a central role in the effort, said hundreds of workers had already voiced support for the campaign, called Fast Food Forward.

“The fast-food industry employs tens of thousands of workers in New York and pays them poverty wages,” Mr. Westin said. “A lot of them can’t afford to get by. A lot have to rely on public assistance, and taxpayers are often footing the bill because these companies are not paying a living wage.”

Mr. Westin said the campaign was using techniques that differed from those in most unionization drives, and was still developing overall strategy. He declined to say whether it would pursue unionization through elections or by getting workers to sign a majority of cards backing a union.

McDonald’s issued a statement about the incipient unionization push. “McDonald’s values our employees and has consistently remained committed to them, so in turn they can provide quality service to our customers,” the company said.

It added that the company had an “an open dialogue with our employees” and always encouraged them to express any concerns “so we can continue to be an even better employer.” McDonald’s noted that most of its restaurants were owned and operated by franchisees “who offer pay and benefits competitive within the” industry.

But workers demonstrating outside the McDonald’s on Madison Avenue said their employer paid them wages that made it difficult to pay for basics.

“We can’t pay rent, pay bills,’' said Hector Henningham, 40, a manager, who said he had worked for McDonald’s for eight years and made $8 an hour. “We need change.’'

One customer drinking coffee inside the McDonald’s said she supported the organizing effort. “If anybody deserves to unionize, it’s fast food workers,” said the customer, Jocelyn Horner, 35, a graduate student.

Even with a union, it might be hard to obtain wages of $15 an hour, and many employers say they would most likely employ fewer workers if they had to pay that much.

Mr. Westin’s group, New York Communities for Change, has played a major role in the recent uptick in unionizing low-wage workers in New York, many of whom are immigrants. In the past year, his group, working closely with the retail, wholesale and department store union and other organizations, has helped win unionization votes at four carwashes and six supermarkets in New York.

The sponsors of the fast-food campaign also include UnitedNY.org, the Black Institute and the Service Employees International Union, a powerful union that is playing a quiet but important role behind the scenes.

Several religious leaders are backing the effort. “I’ve become involved because it is primarily a matter of justice,” said the Rev. Michael Walrond of the First Corinthian Baptist Church in Harlem. “We seek to protect those who are the most vulnerable in our culture, and some of the most vulnerable people in the city are fast-food workers who work for poverty wages.”

According to the State Labor Department, median pay for fast-food workers in the city is around $9 an hour — or about $18,500 a year for a full-time worker.

After three years of working at a McDonald’s restaurant on 51st Street and Broadway, Alterique Hall earns $8 an hour — and is yearning for something better.

So when he heard about the unionization campaign, Mr. Hall, 23, was quick to sign on.

“It’s time for a change,” he said, “It’s time to put on the gloves.”

Linda Archer, a cashier at the McDonald’s on 42nd Street just west of Times Square, said she wished she earned that much. She earns $8 an hour after three years there and averages 24 hours a week, she said, meaning her pay totals about $10,000 a year.

“I feel I deserve $15 an hour,” said Ms. Archer, 59. “I work very hard.” She said she hoped a union would deliver affordable health insurance and paid sick days.

“My hope is we can all come together in a union without being intimidated,” she said.

TCB Management, the franchisee that operates Mr. Hall’s McDonald’s, and Lewis Foods, which runs Ms. Archer’s, did not respond to inquiries.

Tim McIntyre, a Domino’s Pizza spokesman, said the few efforts to unionize its stores and drivers had fallen flat.

“It’s a fairly high-turnover position, so there’s never been a successful union effort,” he said. “People who are doing this part time, seasonally or as they work their way through college don’t find much interest in membership.”

Richard W. Hurd, a labor relations professor at Cornell, said the organizations backing the fast-food campaign seemed intent on finding pressure points to push the restaurants to improve wages and benefits.

“But it’s going to be a lot harder for them to win union recognition,” he said. “It will be harder to unionize them than carwash workers because the parent companies will fight hard against it, because they worry if you unionize fast-food outlets in New York, that’s going to have a lot of ramifications elsewhere.”

Nate Schweber contributed reporting.

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The election's over, Obama's ready to make nice with the Republicans now.

Obama and Boehner: "We'll work it out"

The Democrats have their man in the White House for the next four years so the "class war" rhetoric can fade in to the background as the millionaires of the two Wall Street parties continue their assault on workers and the middle class----the actual class war continues.

Obama is "showing new flexibility" in the discussions over what the mass media terms, the "Fiscal Cliff.", automatic cuts in spending and tax increases that will kick in at the end of this year if the  politicians can't cut a deal.  The failure to act so far has investors in a frenzy as the coupon clippers hate uncertainty and are refusing to invest threatening economic growth.  The two sides have no disagreements over the fundamentals, that workers and the middle class will pay for the crisis of capitalism.  The differences are over the details with Republicans generally opposing taxes on higher earners and corporations and the Democrats claiming the mantle of party of the people by publicly calling for the defense of cuts in entitlements like Medicare and Social Security for example.

The Great Recession has cut in to revenue as the US taxpayer apart from bailing out the system, is paying for predatory wars and the hundreds of global military installations that accompany them. Presently,  the US national debt stands at about $16.28 trillion or about 100% GDP. 

"I am ready and able and willing and excited to go ahead and get this issue resolved in a bi-partisan fashion....." says President Obama.  "Ready, able, willing and excited" all at once is quite a condition to be in I must say.  If the Democrats were actually a party that had the material interests of workers and the middle class at heart, it would not be likely they would be able to get any issue resolved with voluntary cooperation from their Republican counterparts. When two forces with equal rights meet in the world's marketplace, force decides.

The Republicans favor cuts as opposed to tax increases.  If they are forced to accept some form of tax policy they would rather it be curbs on deductions and will swap that for a deal on cuts in spending.  The reason for this of course is that the rich can always find a way out of that, a way to hide income from the taxman. (see Not another Tax Reform Act, on this blog)  or find deductions that work.

The Obama Administration wants to raise taxes on household income above $250,000 and leave other rates as they are. The tax rate on earned income between $250,000 and $388,000 is presently 33%.  Above this amount the rate rises to 35%.  The Clinton Administration rates were 36% and 39.6% respectively.  Obama's "flexibility" amounts to increasing the tax rates above current levels but below Clinton's.  That's above 33% but below 36% for households earning above $250,000 and above 35% but below 39.6% for levels above that.  No class warfare there I would say; and it's no wonder the Republicans have shown a willingness to make a deal as long as they get their curbs on deductions which are not curbs at all. 

One Republican says that they'll accept a deal that raised rates on those earning $500,000 to $1 million as long as their Democratic friends "back substantial entitlement cuts.".  So the options for us are really cuts as the rich will make it work.   The reality is that the US working class has no political party and therefore no representation at all in these discussions.  Two groups of millionaires/billionaires are determining the fate of 300 million people, mostly workers.

The liberals never give up hoping

CEO's were meeting with their representative in the White House this week no doubt pushing for lower corporate taxes and other measures that will make them more competitive in the global marketplace which if it happens, "..could help unleash even more growth and job creation than perhaps anyone has previously expected." says Brian Roberts, the head of Comcast, one of the monopolies that controls what we watch on television.  The 35% corporate income tax rate in the US is one of the highest compared to other countries.  But its interesting to note that despite this, U.S. corporate income tax collections of 1.2% GDP in 2011 were lower than nearly all OECD countries (which average 2.5% GDP).  For the corporations it's very handy to have two political parties while workers have none.  And what does it mean to be competitive? It means we have to compete with Indian and Chinese workers.  Instead, we must join with Indian and Chinese workers in order to raise "all boats" to use a favorite expression of the bourgeois. Our boats of course, don't have any bourgeois in them.

The CEO's, as they always do, floated the threat of shifting production overseas if the business environment in the US isn't made more favorable, more competitive and profit friendly. They'll move fewer jobs offshore with a "more competitive corporate tax structure.", they told President Obama.
Lower taxes, no Unions,  removal of all obstacles to profit taking---this is what they want, a sort of "Full Spectrum Dominance" for the USA. (The bosses are so aggressive and overconfident, even passive Unions and cooperative officials are not enough),

The capitalist offensive has not abated with the election of Obama.  Obama has been able to appease the coupon clippers with somewhat less aggravation than  George W Bush would face.  It is also not so easy to accuse him of supporting or introducing policies that are racist which are inevitable in a system that has inequality, racism and sexism built in to it.

This responsibility for this dismal state of affairs in electoral politics in the US, where workers have no choice but one of two political parties that represent hostile class interests, falls squarely on the shoulders of the leaders of the workers' organizations.  They have tremendous resources at their command, financial, structural and in terms of human resources.  Yet they offer these resources to the Democratic Party in the hopes that they will receive some crumbs from the bosses' table.  As we have explained many times this has led to the incorrect view among millions of workers that all politics is bad as are all politicians.  Politicians are all corrupt workers say as opposed to recognizing that political parties represent forces in society, have a social base. They do what they do as a consequence of the class whose interests they represent.

Consequently, some 90 million Americans refuse to participate in what they see as a fruitless effort at the polls.  The Union hierarchy hopes and would be content with gaining millions of the lowest paid workers in order to maintain revenue and keep what they see as a business afloat. Meanwhile they cooperate with the same bosses in driving down wages at the higher end as well as willingly eliminating safety protections and union rights on the job that are impediments to competitiveness and profit making. Overall, they accept that what took us a couple of centuries to win through heroic sacrifice and struggle can be no more.

The left too must reflect on our failures. In some urban areas like the San Francisco Bay Area, Chicago, LA, New York City etc., there must be thousands upon thousands of individuals, socialists and other activists who have an anti-capitalist bent or simply want to confront this offensive of capital.  The left, with its tradition of sectarianism, its common failure to tap in to the mood that exists in society which tends to isolate it from the mass of workers in one way or another raising demands that do not connect, or making concessions that are seen as opportunist, has failed to offer a alternative to workers in the electoral arena.  A united front campaign------- running candidates on a platform that genuinely confronts the capitalist offensive, make the rich pay, against austerity, cuts in public services, education, and for jobs, a $15 per hour minimum wage, mass transit, an end to all wars (that are extremely unpopular and are only tolerated as a small percentage of US families bear the brunt of the physical and psychological sacrifice this entails)------this would have a tremendous effect and would bring far more results than the "lesser of two evils" philosophy as the strategists of capital would throw reforms at such a movement to head it off, derail it.  It always pays to fight.

Such a campaign, linked to direct action tactics on the ground, would transform the balance of forces and inspire millions of workers.  It would influence the struggle inside of organized Labor and give the left a credibility it has failed to achieve so far while at the same time laying the basis for the formation of a genuine independent mass working people's political party.  Threats to shut production destroying communities while they move to exploit workers in countries like Bangladesh where more than 100 of our brothers and sisters recently died in a factory fire, can be met with occupations and through an independent political alternative, the taking in to public ownership of the firms concerned, with compensation based on proven need.

The stage is already being set for the next election.  They start campaigning two years before. The Democratic Party candidate will be Hilary Clinton who is leaving her position as secretary of state to prepare.   Are we going to have no real choice yet again?

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August Nimtz and Lars Lih: Socialists, Elections and "Soviet Power

Readers might find these two presentations interesting, especially those interested in history and particularly the history of the socialist/communist movements. August Nimtz and Lars Lih from the Historical Materialism Conference in London last month. I have only watched the first one (Nimtz) and enjoyed it.

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The vultures gather round to scoop up a non-union Hostess Corp.

Last week, one of the 1%'s bankruptcy Judges  gave the Hostess bosses permission to liquidate the company and sell off its parts.  Along with ridding themselves of fixed stock, the coupon clippers that own it are also ridding themselves of any obligation to that other side of the capital expenditure in the labor process, some 18,000 workers.

The bosses have many ways of violating contractual agreements with workers, violence, starvation, the military (always a dodgy option), the police, and their courts which is more favorable.  Being in bankruptcy is another way the coupon clippers can relieve themselves of these obligations. They do this even when the company is not broke like Delphi, the auto parts manufacturer that was once part of GM.

Not a week ago, the general line was that the Hostess simply wasn't a viable business, "Nobody wants to have anything to do with these old plants or these union or these contracts", said Hostess CEO Gregory Rayburn.  They blamed the Union for running the business down of course which is only true in the sense that US workers are too expensive on the global market with rights in the workplace the bosses can do without.  Bangladesh offers a more lucrative environment for profit taking. The real issue though is the contracts, that the workers are Unionized.  Despite years of defeats, and elimination of Union power on the job thanks to a cooperative, employer friendly leadership, the bosses would much rather have no Union at all; and why not go for it, they feel very confident after years of concessionary contracts.

Rayburn also commented last week that the only hope for a buyer would be if a, "..liquidated Hostess would be free of its collective bargaining agreements.".  The judge has opened that door for them and suddenly, "Hostess is an attractive target, with its nationwide distribution of Twinkies, Ho Ho's and Ding Dongs."  (Who on earth dreams up these names?).  We should make no bones about it; the name of the game here is close down the show and open up non Union. It is part of the ongoing war to drive US workers wages and conditions closer to those in Vietnam and India.

The front runner for scooping up the remnants of Hostess Corp is Flowers' Foods a company with a healthy 90% of its employees non-Union.  "Flowers is unlikely to rehire Hostess employees as union workers.......and isn't interested in assuming labor contracts" the Wall Street Journal reports. Despite the Union officialdom claiming there are "good" unionized employers and "bad" non Union ones, the only reason we have Unions at all is because workers fought heroic battles for the right to organize against the most violent opposition from the bosses. We have Unions because we fought and died for them.

Is this the end of the Hostess struggle? It would seem so. Back in the eighties during the Eastern Airlines strike, the boss shut the company down and the Labor officials called it a victory.  For the boss, a man named Lorenzo, it's simply shifting capital around, for workers it's a greater loss.  The thought of taking over the company doesn't enter the heads of the strategists atop organized Labor.

The attacks we have been facing for decades have definitely heated up since the bailout.  On the other hand there have been some powerful  responses to the assault of capital; the student movement of a couple of years ago, some big strikes like Verizon and the Southern California grocery strike that was lost entirely due to the UFCW leadership's capitulation to the employers. We also saw 100,000 on the streets of Madison Wisconsin that was successfully channeled in to an electoral campaign for the Democratic Party.  With the Team Concept as their primary policy and no alternative to the market, mobilizing the potential power of organized Labor and the millions of non-Union workers and our communities in to an offensive of our own can only lead to chaos as far as the Union officialdom is concerned.  The capitalists must be the job creators, profit is sacrosanct and workers' can't control our workplaces or society.

There's no escaping the fact that the bosses are becoming more aggressive and emboldened.  But we will see further challenges to this offensive as the class struggle heats up.  Too much confidence is a dangerous thing and there's no doubt the US bourgeois will make some serious blunders up ahead. 

It would also be a mistake for us to forget our history and the explosive nature of the US working class.  After the onset of the Great Depression in 1929 and by 1931 the United Mine Workers, one of the few industrial unions shrunk from 400,000 to 60,000 members and the AFL membership was declining by 7000 members a week until by 1933 it was down to a little over 2 million.  We all know what happened then.  Three general strikes followed in 1934 and then the great factory occupations and growth of industrial unionism culminating in the 44-day Flint sit down and the rise of the CIO.
I am not saying that the situation is exactly the same as at that time there were numerous left and radical forces withing the working class.  Socialists led the general strike in Minneapolis, the Communists in San Francisco and the followers of AJ Muste and the unemployed organizations the Toledo general strike, all in 1934. But it would be a mistake, one that liberals make to readily, to write off the US working class.  Even without the huge workforce in the service industries, the docks, the airlines, communication and heavy industry are still Unionized and the organized sector will be convulsed and radicalised by a generalized movement against the bosses offensive.

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Global growth and the vampire squid

by Michael Roberts

Just today, the OECD slashed its global growth forecasts.  It now reckons the world economy will grow in real terms only 2.9% this year, down from a forecast of 3.4% that it made last May.  For 2013, it now reckons global growth will be just 3.4% compared to its previous forecast of 4.2%.  The main reason for the reduction is the weakening of the Eurozone economies, which the OECD expects to grow only 0.4% this year and even less next year at 0.1%.

This dismal news encouraged me to return to my usual high-frequency measures of the health of the world capitalist economy that readers of my blog will know – namely the surveys of business activity called PMIs (purchasing managers indexes).  The PMIs provide the best immediate guide to how things are.

Well, looking at the combined PMIs (manufacturing and services) for the US – my own invention – the latest October data suggest that the US, up to now in relatively better shape than Europe or Japan, is beginning to weaken.  We are not in recession territory yet, but the direction seems down.

For the US, let me add to mine, two graphics produced by Doug Short on his excellent statistical website (http://advisorperspectives.com/dshort/) that show activity in the heartland of US industry.  The first is the Chicago Fed index.  That index is also heading downwards, although again not yet in recession territory.

It’s the same story using the less well-known Philadelphia Fed activity index, again from Doug Short.

The US economy has been better-performing relative to others up to now for reasons that I have discussed in other posts.  So what is happening in the rest of the capitalist world?  Well, I have brought together various (combined manufacturing and services) PMIs to see.  China and the US economies are still growing according to these indexes (China has picked up slightly from the last period, while the US has dropped back a little, as we have seen). The world as a whole is still expanding (just), again confirming the OECD’s more pessimistic new forecasts.  But Europe and Japan (at a faster pace) are contracting, while the UK has also slipped back into contraction.

There is an even more frequent measure of activity for the US, the ECRI’s weekly indicator and that too is now turning south – although still short of recession territory.

Meanwhile, the most dangerous ‘monster of the market’, Goldman Sachs, the vampire squid of finance capital, has spread its deadly tentacles further over the world.  The UK government has announced the appointment of Mark Carney as the new governor of the Bank of England to start next summer for a five-year term.  Carney is the current head of the Bank of Canada, but guess what?  He worked for Goldman Sachs in senior positions before 13 years before becoming head of the Global Financial Stability Board, the world body supposed to fix the banking system (from poacher to gamekeeper?).  Carney, of course, being a former Goldman Sachs executive, is taking a serious pay cut to do the job and so he has kindly accepted a much higher basic salary than Sir Mervyn King, the current governor.  Sir Mervyn’s pay of £305,000 a year will rise to £480,000 for Carney, plus relocation and housing expenses.

Carney joins Mario Draghi at the ECB and US Treasury Secretary Geithner as former Goldman Sachs executives controlling the world’s finances.  You would think after what has happened over the last five years, including the scandals and trickeries at Goldman Sachs, among other investment banks and monsters of the market, there would be pause for thought before appointing another vampire squid to a completely independent control of the UK’s monetary and financial stability mechanisms, without any democratic accountability.

But no, of course, it is ‘business as usual’.   Indeed, according to the Financial Times it is just that, “the City hailed the appointment as a breath of fresh air and an invigorating sign of the government’s desire to show that Britain was open for business from abroad.”   The FT goes on to say that “Carney may also be seen by City bankers as “one of them”.    The FT goes onto tell us that “Mr Carney’s speeches are notable for their open recognition of the value of market-based finance to the broader economy, even as he has promised to crack down on the risks that shadow banks pose to the financial system.”

It seems that it does not matter if you are right-wing or left, belong to the Austrian school of economics or the Keynesian, mainstream opinion is unanimous in its praise for this vampire appointment.  The right-wing City of London rag and proponent of Austrian economics and Austerian policies, City AM, reckoned that Carney would let the banks have their way: “he is a tough reformer, not a vandal. He is no soft touch – but neither does he want to turn Canary Wharf into a ghost town.  He oozes reasonableness. He doesn’t want to destroy universal banks, unlike some in Britain. His appointment shows Osborne still wants big financial firms to be based here. Carney rightly doesn’t like the Volcker rule, so beloved of banker-bashers; the Canadian, who actually knows what he is talking about, sees that one cannot distinguish between prop trading and hedging. He wants to reform behaviour, reduce leverage and improve supervision, not ditch scale and complexity for the sake of it.  Most important of all, he understands the trade-off between making banks safer and their ability to lend. He is a breath of fresh air. “

Former New Labour Chancellor, Alastair Darling, who presided over the UK’s banking collapse, was equally positive: “Throughout many G8/G20 meetings [Mr Carney] had a clear grasp of what had gone wrong and what to do. He knows the UK and brings international experience. And the bank needs a new broom.”  

And leading Keynesian commentator for the FT, Martin Wolf,  and a member of the Vickers Commission on banking reform (whose recommendations, by the way, still have not been implemented), was positively ecstatic: “the appointment of Mark Carney is a historic event. It is extraordinary – and admirable … George Osborne, the chancellor of the exchequer, deserves credit not only for choosing an exceptional person but for persuading him to take the job.  Unquestionably, Mr Carney is a man of quality, with a broad background in economics, finance and central banking.” etc, etc.

As the world economy dips, another monster takes over the reins.

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Bangladesh- 100 plus workers burnt to death. Walmart again?

Murdered in the quest for profits

Over 100 people died in a fire in a garment factory in Bangladesh over the weekend. At least 111 people died and scores of others are missing or injured. Bangladesh is the second largest exporter of clothing after China. Since 2006 more than 500 workers have died in fires in Bangladesh according to Clean Clothes Campaign an anti-sweat shop group based in Amsterdam. The industry employs more than three million workers in Bangladesh, most of them women.

Outfits like Walmart, Tommy Hilfiger and Gap get clothing produced in these sweat shop death traps. A spokesperson for the Clean Clothes Campaign says that these profit addicted companies "have known for years that many of the factories they choose to work with are death traps. "Their failure to take action amounts to criminal negligence."

This factory where all these workers died had sales of $35 million a year. Fire officials said they were killed because there were not enough fire exits. The managing director of the Tuba Group, which ran Tazreen Fashions which ran the factory, said he was too busy to comment. Then in an astounding statement he said: "Pray for me," and hung up. Not pray  for the dead workers, not for the burnt and suffering workers, but pray for him the managing director. As we say on this blog again and again capitalism and its dirty profit addicted degenerates are much worse than you could ever imagine. Yes pray for him. It is something else he needs.

But these degenerates are not only owners of Bangladeshi factories. Documents found at the site showed that the factory produced clothing for Walmarts Faded Glory line. The dirty degenerate Walton family have their fingers in this too. As the drive to organize Walmart develops in the US links must be built with workers in other countries who are working in sweat shop conditions and death traps over seas. The Walton family which has wealth equal to at least the lower income 30% of the US population are making their billions off the US low paid workers and also the even lower paid Bangladeshi workers. A united drive to bring this Walmart and its poverty wages to its knees must be launched.

The workers, mainly women, in the Bangladesh factory were getting $37 a month. They have been demanding an increase. A union organizer, Aminul Islam, who campaigned for better working conditions and higher wages, was found tortured and killed outside Dhaka last year. Sweat shop conditions, mass deaths by burning because of lack of safety conditions, the torture and murder of organizers fighting for better wages and safety. This is what lies at the heart of the US clothing industry and its cheap clothes in its garish malls.

Sean

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The US rate of the profit – the latest

by Michael Roberts

In this blog on economics and economic issues from a Marxist viewpoint, I seem to have become obsessed by two things in particular: measuring the rate of profit and criticising Keynesian economics.  I don’t think these are bad obsessions because I maintain that the level and trajectory of the rate of profit on advanced capital in a capitalist economy is the best underlying guide to the health of that economy.  And also, it is essential for us to understand the theories and arguments of John Maynard Keynes and his followers in order to see that even the most radical approach to the ‘economic problem’ (as Keynes called it) won’t work to resolve the contradictions in the capitalist mode of production.

But anyway, let me return to the first obsession of mine once again. We now have the latest data for the US up to 2011 in order to measure the rate of profit a la Marx (to use the term of Gerard Dumenil and Dominique Levy, the French Marxist economists).  The US Bureau of Economic Analysis recently released updated figures on net fixed assets.  This provides the missing part in measuring the profitability of capital in the US for 2011 from a Marxist viewpoint.

How do we measure the rate of profit?  Well, there are a host of ways, most of which I have discussed in lots of previous posts (and more at length in one of my papers, (The profit cycle and economic recession).  But I still like to use Marx’s basic formula for the rate of profit i.e. total surplus value divided by the stock of advanced capital (constant (means of production) and variable (labour).    My favourite measure is to take the annual net domestic product of any economy (that’s gross domestic product less depreciation) less employee compensation (wages and benefits paid by the employers) to get surplus value.  Then I divide that by a measure of the cost of employing the labour force (employee compensation again) plus constant capital (which can be measured by the stock of fixed assets owned by the capitalist sector after allowing for depreciation).  There are lots of other ways: just looking at the corporate sector, for example, before and after tax and so on.  But my ‘whole economy’ measure is the simplest, takes into account all sectors in the economy, and is the easiest for comparisons between countries or in measuring a ‘world rate of profit’ (see my paper on this roberts_michael-a_world_rate_of_profit.).

One vexing issue is whether to measure net fixed assets in historic or current cost terms.  Marx measured profitability more or less like capitalists, namely you start with a stack of money (M) to invest in employing labour and machinery (C) and, thanks to the power of labour in production (P), the value of those commodities rises above the original investment (C’) and is realised in sales for more money (M’).  So the initial advance of capital is given in money and is not altered by the production process, even if the value of the commodities may alter during and by the end of the process (see my post, http://thenextrecession.wordpress.com/2012/02/21/trying-to-understand-the-difference/).

That means you should measure the stock of fixed assets in historic terms and not in current cost terms, which revises (nonsensically) the value of the original advance in current costs.  This conclusion comes from what is called the Temporal Single System Interpretation (TSSI) of Marx’s accumulation and profitability law.   The TSSI is not supported by the bulk of Marxist economists who reckon that measuring fixed assets in current costs is either correct or better (there is an endless amount of papers and debate on this question including on this blog – see http://thenextrecession.wordpress.com/2011/07/29/measuring-the-rate-of-profit-and-profit-cycles/).   So most of the measures of profitability are on a current cost basis.

But does it make a lot of difference?  Well, I reckon that it does not make that much difference in the outcomes.  And so does a recent paper by Deepankur Basu (Basu on RC versus HC) in which he looks at the two different measures of the net stock of capital for the US economy and finds that both generate pretty similar trends over the long term “making the choice irrelevant for the empirical analysis of profitability trends”.  I know this is disputed, but Basu’s conclusion is really a concession to the historic cost measure in admitting that it is just as good as the current cost one used by most Marxist economists in measuring the rate of profit.

In my measures I use the historic cost measure because I think it is closest to Marx’s view and so theoretically more correct.  And as the figure below shows, it removes much of the exaggeration and volatility in the rate of profit exhibited by the current cost measure, which is prone to the distorting effect of inflation or deflation in the price of capital goods.   But, as you can see, whichever of the two cost measures you use, the trends in the rate of profit in the US are the same.

There is another issue of measurement.  Many Marxist economists exclude variable capital from the denominator for the rate of profit because employee compensation is turned over much quicker than in one year, so the size of variable capital in the equation is much more difficult to calculate.  Well, I did some variations on this: making a plausible estimate of the turnover of variable capital, excluding altogether, or keeping it all in.  The results for profitability are much the same.   For more on the issue of the turnover of variable and circulating capital in measuring the rate of profit, see Peter Jones’ recent excellent paper (Jones_Peter-Depreciation,_Devaluation_and_the_Rate_of_Profit_final).

Phew!  That’s got some of the most important measurement issues sorted.  So what do the results tell us?  First and foremost, the US rate of profit shows a secular downtrend from 1947 right up to 2011.  And second, the latest data continue to confirm my own view of the movements of the US rate of profit that I first expressed in my book, The Great Recession, namely that we can discern a profit cycle in the US, at least since the war.  From 1947-65, there was high profitability, which although falling in the 1950s, stabilised through the mid-1960s.

Then we entered a downphase in profitability, a period of crisis, eventually to hit a low in the deep recession of the early 1980s.  After that, profitability rose, not back to the level of the 1960s, but still up significantly.  This was the so-called neo-liberal era.  However profitability peaked in 1997 and I reckon that it is now in another downphase that is not yet over.  In that sense, the neo-liberal era came to an end in the late 1990s, although there was another burst in profitability in the early 2000s, driven by the credit boom.

We can sum up the movement in the US rate of profit by measuring the change in the rate in the different phases in the graph below.  Between 1947 and 2011, the US rate of profit fell over 30%.  Most of that fall was between 1965-82 when it fell over 20%.  Then there was a recovery in the rate of nearly 20% from 1982 to 1997.  Since then, the rate has fallen about 9% (so far), only half the rate of the previous downphase.

Now one of the interesting things that I have tried to dig out of the data is how much growth there has been in what Marx defined as the ‘unproductive’ parts of the capitalist economy, i.e. the sectors that do not contribute to creating new value but merely usurp or appropriate value created by the productive sectors.  This is important, because only the productive sectors can drive the capitalist economy forward, even if the unproductive sectors may be necessary to maintain the capitalist mode of production and its social relations.  Very crudely (and it is crude – there is yet another long debate among Marxists on how to define unproductive  and productive labour), the unproductive sectors can be be identified as government, along with finance, insurance and real estate (FIRE).    The productive sectors can thus be encompassed (crudely) by the non-financial corporate sector of the economy.

The graph below shows that the share of surplus value in total surplus value held by this sector has declined, especially in the neo-liberal period.  So, over the long term, the available profits for investment in the productive sector of the economy are being restricted.

Indeed, profitability in this productive sector did not rise even in the neo-liberal period, unlike profitability in the whole economy, while the rate of profit in the financial sector took off, after a long period of decline.  The financial sector rate of profit coincided with the rise in so-called financialisation.  But it was at the expense of stagnation in the rate of profit in the productive sector.

In a period when the share of financial sector profits rose at the expense of profit in the non-financial sector, you might expect that to affect growth in new investment.  And the data show just that.  As the share of financial profit rose from under 15% of all profits in the early 1980s to  nearly double that by the end of the century, the rate of growth in net investment (after depreciation) plummeted.

So what is happening in the latest downphase in US profitability?  Well, so far the fall in the rate of profit from the peak in 1997 has not been as great as in the last downphase between 1965-82.  Over those 17 years, US profitability dropped by 23%.  So far from 1997, after 14 years, the  drop has been just 3% (see graph below).  Now if I am right about my argument that there are discernible phases and cycles in profitability, then the US rate of profit must have further to fall before this downphase is over and it’s got to happen over the next three years or so.

The rate of profit has not fallen as much as in the previous downphase because this time we have had a very sharp rise in the rate of surplus value.  Under Marx’s law of profitability, a rising rate of surplus value is the most important counteracting factor to Marx’s law ‘ as such’, which is that there will be a tendency for the rate of profit to fall because there is an inherent rise in the organic composition of capital.  This measures the value of constant capital (means of production) to variable capital (labour power).

Marx expected this ratio to rise over time as capitalists ploughed more capital into technology to raise the productivity of labour.  However, as only labour power can create new value (not machinery and raw materials), and the value of labour power begins to lag the value of constant capital, the rate of profit will tend to fall.

As the graph below shows, when the organic composition of capital fell, as in the neo-liberal period, due to the slump in the early 1980s and then from the cheapening effects of new technology in the 1990s, the rate of profit rose.  But in the 2000s, those cheapening effects have worn off and organic ratio has risen back to levels not seen since the crisis period of the 1970s.  But this time, the rate of profit has not fallen as much because the rate of exploitation (surplus value) has also risen, unlike in the 1970s.

The rise in exploitation and growing inequality (well recorded by many and in this blog) may lead to social upheavals down the road, but it does help to keep the rate of profit up.  But there are limits on increasing the rate of exploitation and the US economy has probably reached them, especially with productivity growth slowing and real GDP growth so weak.  So the current rate of profit can only be sustained by a sharp fall in the organic composition of capital.  That can only happen if there is large depreciation of the value of the means of production (and in fictitious capital, as I have discussed in previous posts).  And that means another slump or recession, perhaps equivalent to 1980-2.

Indeed, after making some reasonable assumptions about the data for 2012, I reckon the Marxist rate of profit fell in 2012 back to levels of the early 2000s – but we’ll see.  A crucial indicator that another slump is in offing is the mass (not the rate) of profit.  Every time the mass of profit has fallen absolutely in the productive sector of the economy, it has been followed within a year or two by a slump in investment and production (the red boxes in the graph below).

We were not yet in negative territory in 2011.  But if you look at corporate net cash flow, fairly close to a Marxist measure of the mass of profit, there has been a downturn in the first two quarters of 2012.   So maybe the next recession is not too far away.

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Reject austerity: Fight back against the coupon clippers

Here's one reason your public services are cut

Steven A Cohen is a rich man.  He is the head of SAC Capital Advisers, one of the "Biggest names in the hedge fund world" says the Wall Street Journal. If you work for a living its not likely you'll be using the services of SAC Capital Management. SAC helps those who prefer not to work for a living.

The FBI have been trying to build a criminal case against Cohen as a partner in one of what the WSJ claims is the "most lucrative insider trading scheme" ever.  Cohen's firm has a $14 billion fund and brings some of the best returns on Wall Street.  "Returns" are like wages for the coupon clippers except they don't have to do any real socially productive labor* to achieve them; "returns" are dependent on others to do that.

Cohen has done very well as $10 billion or so of the $14 billion fund is "his own money" according to reports. That depends which side of the class divide you're on of course as all the overtime in the world couldn't bring $10 billion in to a wage workers' savings account. If our economic status in society was dependent on the sacrifices we make for the common good, a social worker or war veteran would be a millionaire and Donald Trump or the hedge fund managers (15 of them earned $25 billion in 2006)  would be begging at a freeway on ramp.

The FBI has accused Mathew Martoma, one of Cohen's underlings, with securities fraud and insider trading and have been trying to get him to turn on his former boss claiming that the two of them participated in the scam.  It seems Martoma got a hold of confidential information about a drug trial from a neurology professor  at the University of Michigan.  Using this information Martoma traded shares based on this illegal information as did his boss which allowed the fund to rake in a handy $246 million in profits.  As they can't yet prove Cohen knew about the information, he is named as "portfolio manager A" in the filed complaints.  For snitching on Martoma, the esteemed professor has been given immunity from prosecution.

Basically, the complaints against the two claim that they shared this information and used it to trade in the shares of two companies involved in the drug trials, Elan Corp and Wyeth Pharmaceuticals, now part of the giant Pfizer Corp.  Rather suspiciously, a week before poor results of the trial were made public which sent share prices south, Cohen and Martoma began selling "hundreds of millions of dollars" of the shares and----get this---- made bets that the share prices would head south; some insight, some savvy eh! See, if workers had those sort of smarts we'd be rich.

Technically, you can get long sentences for insider trading as, after all, your stealing directly from other coupon clippers.  But as the Journal reports, most of those caught in insider trading scams who cooperate with the government serve no jail time at all. The esteemed professor is "very thankful" he won't serve any jail time says the Journal.

The health industry is very lucrative field for making what the bourgeois refer to as "illegal profits".  "If you have a pending application for a new drug, the difference between yes and no on approvals can be tens or hundreds of millions of dollars." says  Rod Rosenstein, a US attorney for the state of Maryland. When we consider the sales of some of these drugs like the statins, we are talking about billions of dollars.  It's no wonder they call them "blockbusters".   It's no different than having your capital employed in the movie industry.  That profits come from the unpaid labor of the worker is no matter, it is legal theft.  Swapping a $10 bill for a $20 would be considered an unfair exchange and cheating, but paying labor power less value than its use creates is revered activity, the epitome of success.

Outside of the extraction of surplus value from labor, this type of theft is rampant and amounts to trillions of dollars.  Part of it included in the more than $26 to $32 trillion estimated to be stashed away in offshore accounts. It's not just health care either, "The markets are awash in insider trading..." says Bloomberg Businessweek. I take that to mean what it says, that the markets are awash in insider trading. And it's from the horses mouth.

Just as an aside, we should consider another source of funds when we are asked for "shared sacrifice" and the need for austerity in the form of slashing of public services and jobs, and that's what they call the Shadow Banking Industry. According to the Financial Stability Board, worldwide assets in shadow banking totaled $67 trillion in 2011 with the US accounting for 35% of that figure. The Shadow banking industry has little regulation,  like most of the 1%'s activity that affects our daily lives, determines whether we eat or starve, we are not privy to it.

Most workers understand this sort of thievery goes on in the abstract but for me, and this might be a little selfish, I have to constantly remind myself of it ( and anyone else that might listen) as a means of defense against the onslaught of lies, trickery and arguments about hard times and merits of so-called capitalist democracy that we are forced to endure from the mass media, the pulpit, the universities and other institutions of theirs.  We cannot stand against this ideological warfare and more importantly fight for an alternative to this madness if we do not lay bare the objective truths, if we do not allow objective reality to prevail.

We do not live in an economic democracy. Their financial books and industrial methods are secret. Who knows about the Financial Stability Board or the Bank of International Settlements or the inner workings of the Business Round Table, the National Association of Manufacturers or other institutions of national and global capitalism?  I was trained to read their serious journals, we can't fight the class that rules without understanding what they're thinking and discussing about how they can best govern society and facilitate the plunder of its wealth.  But I come across institutions daily that I never knew existed like the Financial Stability Board.  These structures are part of the interconnected web of capital that links them all together and helps to maintain a semblance of stability in their rapacious quest for surplus value. Capital abhors obstacles, interruptions in the process of accumulation and exploitation of labor and it demands a certain honor among thieves and between nations, an impossible dream in a social system based on thievery but try they must, the consequences of conflict in the nuclear age are too dire.

We cannot begin to transform society, to see another way forward, to rid ourselves of a system of production that makes a commodity out of everything, art, water, air, the human body, if we don't reject in our own consciousness the alien view that society cannot provide a decent and productive existence for all humanity; that poverty is the fault of the poor.  Yesterday, more than 100 workers died in a fire in a factory in Bangladesh.  They died, like the 23 or so who died in a similar fire in a factory in North Carolina some years ago because they were unable to escape, there were no emergency exists.  In the NC incident if I recall, the doors were blocked to stop the workers' stealing out for a smoke.  Many of these workers' were women, possibly children.  They were murdered by the institutions of capitalism and those who perpetuate it and enforce its rule. These conditions are not accidental.

The alternative to this madness is for us to collectively own, manage and determine how we produce the necessities of life and how we allocate the capital and the labor to facilitate that process in a way that is harmonious with the natural world.  A global federation of democratic socialist states. We can only gain by hasting the demise of a social system that has reached a historical dead end.

* For the capitalists, "productive" labor is that which produces surplus value.  Surplus value is the difference between the value of the commodity produced and the value of the capital involved in the production process and is the source of profit.  "To be a productive laborer.." wrote Marx, "....is therefore not a piece of luck, bit a misfortune." Capital Vol 1 Chap XV1  By socially productive labor I am referring to the production of use values, products society needs to maintain our existence and improve it.

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Walmart protests throughout the world.

These developments against Walmart are very positive and a long time coming. However, we must not lose sight of the fact that the leadership of the Union most heavily involved in the drive, like the entire leadership of organized Labor, have the business view of these organizations. They see the Unions as employment organizations with them as the CEO's. To win Walmart would be a huge revenue enhancer in the form of dues.

As far as the already existing members in the retail grocery outlet, the UFCW leadership like their colleagues throughout the AFL-CIO and Change to Win federations, have presided over a never ending slide backwards through their cooperation with the employers and their Team Concept approach to the Labor/Capital struggle.  The Team Concept, the dominant ideology of the trade Union leadership holds that workers and bosses have the same economic interests.  This means that workers must take measures (concessions) to assist their own individual employers in winning "market share" at the expense of their rivals. 

This disastrous world view leads workers in one company competing with workers at a competitor for who can work the hardest, fastest and most cheaply. It has the same effect globally as workers from one country compete against workers from another.  The bosses can only win when the game is played this way.  It is a disastrous race to the bottom and makes solidarity organizing and the building of a generalized offensive of our own much harder.  Any rank and file movement from below that wants to fight back in a serious way and opposes this relationship the Union heads have built with the employers and their Democratic Party based on Labor peace is seen as hostile and suppressed with the help of an army of full time staff at their disposal.

To Unionize Walmart would be a great step forward as long as we recognize that the other struggle, the more complex battle within our organizations to change the concessionary and employer friendly policies of the leadership, and the leadership themselves is the much harder war that has to be fought.

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Misery, death and hunger an everyday reality for millions in India

This video is from Bloomberg Business Week.  It accompanies an article I read in the latest issue that gives a vivid account of life in an Indian village as told by an American whose father was born there.
What the article lacks of course is any serious criticism of capitalism.  India, the US capitalist class likes to boast, is the world's most populous democracy.  The problem though is corruption and "crony capitalism" and that India has not gone far enough in opening up its economy.  More of the so-called "free market.", that's what will cure India.

If India was a Stalinist state like the former Soviet Union, or the author was a Cuban exile retuning home and detailing the poverty and hunger that existed there, the article would very clearly explain that "communism" or "Socialism", in other words, the social system was at fault, was the reason the economy and society was unable to develop. But when it comes to capitalist economies, it's as if a social system of production doesn't exist.

That said, I found the piece very moving and a real glimpse in to the everyday misery that millions of Indians face every day.  1000 children a day die due to diseases related to insufficient water and sewage systems. Two million Indians are infected with tuberculosis each year and 400 million have no electricity at all. This is the the failure that capitalism is in India.

The author describes the sanitary situation, "Every act of nature requites a 15 minute walk to a field where pigs rot around in the remains of yesterday's visit."  And the small river that runs through the village, "Downriver from the village around a quick bend, the bank was a squelching, stinking toilet."

India, like the rest of us, needs less of the market not more. The article is to be found in the latest issue of Business Week

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Black Friday Protest at San Leandro Walmart

I went down to my local Walmart in San Leandro tonight on Hesperian Blvd (Thanksgiving night).  The store opened at 8 and the consumers were there in droves. There was a small but spirited protest or more accurately informational picket about the plight of the Walmart workers I shot some video and have to apologize for the bad volume at times as the I phone takes good video but the mike is not the best.

I noticed that the workers referred to themselves as "associates", which is the bosses' term for us. I recall when this term, and "team member", became prominent here in the Bay Area as a replacement for worker. There will be another protest/picket tomorrow from 4 to 6 pm. According to the Walmart workers I talked to there is a strike planned and some workers will walk out. If you are in the San Leandro East Bay area try to come down tomorrow and show support for Walmart workers. Below the video is the flier Facts For Working People put out for the protests. Check here for Walmart event locations.

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Bayes law, Nate Silver and voodoo economics

by Michael Roberts
Nate Silver is the new hero of the liberal left in the US.  This mathematician and statistician correctly forecast Obama’s victory in the presidential election and in the Senate and the result for the electoral college in all 50 states. On the morning of the 6 November 2012, the final update of Silver’s model gave President Barack Obama a 90.9% chance of winning a majority of the 538 electoral votes. Both in summary tables and in an electoral map, Silver forecast the winner of each state.  Silver’s model correctly predicted the winner of every one of the 50 states. In contrast, individual pollsters were less successful. For example, Rasmussen Reports, widely quoted by the right-wing “missed on six of its nine swing-state polls”.

Silver has now published a new book that is already a best seller and he now regularly appears on TV talk shows.  Silver brilliantly exposed the biased commentaries of the right-wing TV channels and papers whose pundits regularly appeared on screen or in print to say that they ‘had a hunch’ that Romney would win or that the polls were ‘biased’ against the Republican candidates.  Silver, in the meantime, quietly presented a statistical analysis of the polls and concluded the probability of Obama winning was over 80% and rising.  His forecast was dead right.  On November 12th, his new book, The Signal and the Noise (print edition) was named Amazon’s Best Book of the Year for 2012.

The evidence is that statistical analysis is way better at forecasting things than ‘hunches’ or human intuition.  Indeed, out of the one hundred studies comparing the accuracy of actuarial statistics (probability analysis) and intuition, there has not been one case humans doing better (Stuart Sutherland, Irrationality, p200).  Indeed, in most studies, actuarial analysis was way better.  Take bank loans, nowadays 90% of loan applications are reviewed by computers taking into account client details against aggregate evidence on bank accounts, jobs etc to gauge risk.  Loans granted by computer using statistical probabilities turn out to have far less defaults than those borrowers chosen by bankers on their own judgement.   Insurance companies have applied to risk in life expectancy and accidents for many years.  So when somebody tells you that their intuition delivers better results, they are talking out of their hats.  Why would you not choose statistical methods to raise your chances of getting things right even if nothing is 100% certain?

Take the stock market.  We are continually told in investment adverts by expensive investment advisers that they can make your money work for you more than just tracking a stock index, like the S&P-500.  In other words, they can beat the market.  But a host of statistical studies prove the opposite.  Sure, some advisers can do better than the index for a few years, but eventually, they all come a cropper.   It’s just so much snake oil voodoo investing.

But everything is not entirely random.  If you were to read Nicholas Taleb’s book, Black Swan (see my book, The Great Recession, chapter 31), you would think that it was.   Or to be more exact, even the most unlikely can happen under the law of chance.  It was assumed that there were only white swans until Europeans got to Australia and found black ones.  It was the ‘unknown unknowns’, to quote Bush’s neo-con Secretary of State, Donald Rumsfeld.  The most unlikely can happen but you cannot know everything.  For Taleb, the Great Recession was one such event that could not have been predicted and therefore bankers, politicians and above all, economists are not at fault.  This was the excuse used by bankers when giving evidence to the US Congress and to the UK parliament.

But modern statistical methods do have predictive power – all is not random.  In his book, Silver offers detailed case studies from baseball, elections, climate change, the financial crash, poker and weather forecasting.  Using as much data as possible, statistical techniques can provide degrees of probability, like “the probability of Obama winning the electoral college is 83%  and the probability of him winning the popular vote is 50.1%”.   This is different from much statistical method in colleges and universities today that rely on idealized modelling assumptions that rarely hold true. Often such models reduce complex questions to overly simple “hypothesis tests” using arbitrary “significance levels” to “accept or reject” a single parameter value.  In contrast, the practical statistician needs a sound understanding of how baseball, poker, elections or other uncertain processes work, what measures are reliable and which not, what scales of aggregation are useful, and then to utilize the statistical tool kit as well as possible. You need extensive data sets, preferably collected over long periods of time, from which one can then use statistical techniques to incrementally change probabilities up or down relative to prior data.

This is the modern form of what is called the Bayesian approach, named after the 18th century minister Thomas Bayes who discovered a simple formula for updating probabilities using new data. The essence of the Bayesian approach is to provide a mathematical rule explaining how you should change your existing beliefs in the light of new evidence. In other words, it allows scientists to combine new data with their existing knowledge or expertise.

What constitutes Bayes approach that led to Nate Silver’s accurate forecasts?  Let me try and explain as best I can, using the help of examples provided by Eliezer Yudkowsky in his excellent blog (http://yudkowsky.net/).

Suppose it is an established fact through other studies that 1% of women at age forty who participate in routine screening have breast cancer.  Second, 80% of women with breast cancer will get positive mammographies.  But 9.6% of women without breast cancer will also get positive mammographies.  A woman in this age group has a positive mammography in a routine screening.  What is the probability that she actually has breast cancer?  The correct answer is 7.8%, obtained as follows:  out of 10,000 women, 100 have breast cancer; 80 of those 100 have positive mammographies.  From the same 10,000 women, 9,900 will not have breast cancer and of those 9,900 women, 950 will also get positive mammographies.  This makes the total number of women with positive mammographies 950+80 or 1,030.  Of those 1,030 women with positive mammographies, 80 will have cancer.  Expressed as a proportion, this is 80/1,030 or 0.07767 or 7.8%.  So the answer is not 1% who do have cancer or the 80% with a positive mammo.

The original proportion of patients with breast cancer is known as the prior probability.  The chance that a patient with breast cancer gets a positive mammography and the chance that a patient without breast cancer gets a positive mammography are known as the two conditional probabilities.  Collectively, this initial information is known as the priors.  The final answer – the estimated probability that a patient has breast cancer, given that we know she has a positive result on her mammography – is known as the revised probability or the posterior probability.  The mammography doesn’t increase the probability that a positive-testing woman has breast cancer by increasing the number of women with breast cancer – of course not; if mammography increased the number of women with breast cancer, no one would ever take the test!  However, requiring a positive mammography is a membership test that eliminates many more women without breast cancer than women with cancer.  The number of women without breast cancer diminishes by a factor of more than ten, from 9,900 to 950, while the number of women with breast cancer is diminished only from 100 to 80.  Thus, the proportion of 80 within 1,030 is much larger than the proportion of 100 within 10,000.  The evidence of the positive mammography slides the prior probability of 1% to the posterior probability of 7.8%.

Actually, priors are true or false just like the final answer – they reflect reality and can be judged by comparing them against reality.  For example, if you think that 920 out of 10,000 women in a sample have breast cancer and the actual number is 100 out of 10,000, then your priors are wrong.  In this case, the priors might have been established by three studies – a study on the case histories of women with breast cancer to see how many of them tested positive on a mammography, a study on women without breast cancer to see how many of them test positive on a mammography, and an epidemiological study on the prevalence of breast cancer in some specific demographic.

Let’s say you’re a woman who’s just undergone a mammography.  Previously, you figured that you had a very small chance of having breast cancer; we’ll suppose that you read the statistics somewhere and so you know the chance is 1%.  When the positive mammography comes in, your estimated chance should now shift to 7.8%.  There is no room to say something like, “Oh, well, a positive mammography isn’t definite evidence, some healthy women get positive mammographies too.  I don’t want to despair too early, and I’m not going to revise my probability until more evidence comes in.  Why?  Because I’m an optimist.”  And there is similarly no room for saying, “Well, a positive mammography may not be definite evidence, but I’m going to assume the worst until I find otherwise.  Why?  Because I’m a pessimist.”  Your revised probability should go to 7.8%, no more, no less.

What’s so great about Bayes’ theorem is that it can be used for reasoning about the physical universe.  But I think Bayes law also shows two other things that are useful to remember in economic analysis.  The first is the power of data or facts over theory and models. Neoclassical mainstream economics is not just voodoo economics because it is ideologically biased, an apology for the capitalist mode of production.  But in making assumptions about individual consumer behaviour, about the inherent equilibrium of capitalist production etc, it is also based on theoretical models that bear no relation to reality: the known facts or priors.  In contrast, a scientific approach would aim to test theory against the evidence on a continual basis, not just to falsify it (as Karl Popper would have it) but also to strengthen its explanatory power – unless a better explanation of the facts comes along.  Newton’s theory of gravity explained very much about the universe and was tested by the evidence, but then Einstein’s theory of relativity came along and better explained the facts (or widened our understanding to things that could not be explained by Newton’s laws).  In this sense, Marxist method is also scientific.  Marx went from the abstract (theory) to the concrete (facts).  The facts would strengthen the explanatory power of the theory or modify it.

This approach using statistical methods like Bayes law is what mainstream economics does not do.  Here is what Dan Kervick said in his blog recently (http://neweconomicperspectives.org/2012/09/shamanistic-economics.html), in a brilliant post on mainstream economics:

You guys in economics are supposed to be empirical scientists, not philosophers. You are supposed to develop the a priori elements of your science only so that you can produce empirically testable models of the real world, and then bring those models to bear on the world we actually live in. You are also supposed to help develop techniques that are relevant to decision-making and government policy in having predictable outcomes. You need to map the terrain of the actual world in detail, so you can help others navigate through it. To the extent you want to give policy advice that deserves to be taken seriously, your focus needs to be on contingent reality, not a priori possibility.
My criticism is that an awful lot of the policy advice we are getting lately is from theorists who are lost in the clouds of a priori models, and who don’t have a clear understanding of the structure of the actual economic order we live in, based on the functioning of actual, highly contingent and specific economic and political institutions.
If you are trying to navigate your way through a mountain range, you don’t ask a geologist; you ask a guide who has explored the mountain range in detail. If the guide has geological knowledge that can definitely help, but the geological knowledge itself is not sufficient to guide people through the terrain. If you want to fix a broken airplane engine, you don’t ask a theoretical thermodynamicist, you ask an engineer. The engineer’s knowledge of thermodynamics can help, but the thermodynamical knowledge itself is not sufficient to know how to fix an airplane engine.
It is not enough for you to describe logically coherent possible worlds with possible sets of beliefs about possible equilibria and possible time paths to those equilibria, where possible statements, and possible actions have possible effects as a result. You need to show we live in such a world – and this is a task for which you don’t seem to have much patience. When challenged on the score of institutional facts, you have repeatedly retreated back into the construction of other models and thought experiments.

The second thing we can glean from the use of Bayes law and Nate Silver’s results is the power of the aggregate.  The best economic theory and explanation comes from looking at the aggregate, the average and its outliers.  Data based on a few studies or data points provide no explanatory power.  That may sound obvious but it seems that many political pundits were prepared to forecast the result of the US election based on virtually no aggregated evidence.  It’s the same with much of economic forecasting.  Sure, what happened in the past is no certain guide to what may happen in the future, but aggregated evidence over time is a hell of sight better than ignoring history.

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