I’ll miss newspapers when they disappear. There will still be a few of them online, but it just won’t be the same.

This morning, I’m sitting at McDonalds and perusing The New York Times while I quaff my coffee.

I should put this in context, both politically and metaphysically.

Politically, I’ve concluded that the U.S. government and political system are irredeemably corrupt. A sufficient number of politicians and government officials are “on the take” from giant corporations and the super-rich that almost nothing positive can be accomplished.

Wall Streeters, banksters, and giant corporations will continue to loot the United States until there’s nothing left to loot. Then they will pick the carcass clean, leaving honest Americans to fend for themselves in a wrecked country. There’s nothing non-violent that we can do about it, and since violence is a very unpredictable instrument of social change, I don’t advocate it. All I can do is get a big tub of popcorn, watch the show, and laugh.

There’s a reason why mature people don’t start revolutions, which are almost always started by the young. When you reach a certain age, you’ve learned not to act without thinking about the results of your actions. You tend to act only if you are reasonably sure that your actions will improve the situation.

Violent action lacks that kind of predictability. Revolutions are launched by young people who are so outraged by injustice that they don’t care about the result. That might happen in the U.S., though corporate control of the army, the secret police, and almost all of the communications and news media would make it difficult. My guess is that our decline will continue until the corporations and super-rich start fighting each other for control of the country, with each side enlisting working-class cannon fodder to “fight for their freedom.” Then the country will break apart, with unforeseeable results.

In any event, that’s my political assessment: We’re done. Stick a fork in us. And the reason for the political situation — indeed, the reason why justice and freedom are such rare commodities in human history — lies in our metaphysical situation.

Metaphysically, in this world at least, the evil have a systematic advantage over the good. And the very evil, such as the Bushes and Hitlers and Stalins, have an advantage over the moderately evil. The pickpocket beats the liar. The robber beats the pickpocket. The murderer beats the robber. The psychopathic mass murderer beats the ordinary “amateur” murderer.

Consider what it means to be a good person. Among other things, it means that:

• You will not do certain things even if they are in your material self-interest.
• You will do certain things even if they are against your material self-interest.

The evil, on the other hand, have fewer such limitations. And the more evil they are, the fewer limitations they have.

Imagine a tennis match between two players of equal ability. One of them not only obeys the rules of tennis, but in the middle of volleys, he runs over to the side of the court to help children and little old ladies. The other player pays no attention to the rules and cheats constantly. He “wastes” no time on anything except winning the game.

Which player wins, the good one or the evil one? The answer is obvious. Unless the good player gets very lucky — which does happen on occasion — the evil player wins.

The same applies to life on earth. Good people have a long list of things they won’t do. Evil people say, “Sod all that, I’m going to win.” And they do.

All that provides a context in which the morning newspaper becomes an exercise in dark humour.

On the front page, we learn that the Libyan dictator Muammar Qaddafi has been using cluster bombs against the rebels who want to overthrow him. The lead paragraph observes that such bombs “have been banned in much of the world.” Only later does the article mention that the U.S. uses cluster bombs. It never mentions that the U.S. and Israel both use cluster bombs against civilians, or that those two countries have not agreed to the treaty banning cluster bombs.

The New York Times is a real newspaper and often does a good job, but when it’s under pressure (or under orders) to publish war propaganda, it does so. The first paragraph demonizes Qaddafi, who is undeniably as bad as Bush or Cheney, but “buries” the inconvenient facts further down in the article. What distinguishes the Times is that to retain a little credibility, it did at least mention some of the inconvenient facts. Dedicated propaganda outlets such as Fox News and The Weekly Standard probably wouldn’t have bothered.

Elsewhere on the front page, we learn that Republican governors and state legislatures want to gut environmental protection laws so that corporations can pollute ad libitum and impose the costs on others.

On the editorial page, we learn that House Republicans want to throw open the Gulf of Mexico once again to the tender mercies of the oil companies, given that they did such a good job almost destroying it last year.

On the op-ed page, Columnist Gail Collins catches Republican presidential candidate Mitt Romney falsifying the history of the 1990s, much the same as almost all Republicans routinely falsify the history of tax cuts for their wealthy sponsors.* Romney would probably take refuge in Republican Sen. John Kyl’s excuse that his lie about Planned Parenthood spending 90 percent of its funds on abortion “was not intended to be a factual statement.”

In fairness to Mitt, Collins found the lie (births to teenaged mothers peaked during the Clinton years) in a book of which Romney was the listed author. As a former Capitol Hill ghost writer, I can tell you that Romney almost certainly didn’t write the book.

Elsewhere on the op-ed page, columnist Charles Blow reiterates what’s widely known to everyone but Fox News viewers and Tea Partiers: corporations and the super-rich get a steadily increasing share of the national income but pay steadily decreasing tax rates. The top income tax rate was 91 percent under Republican President Dwight D. Eisenhower, who would now be considered a radical socialist. Since then, it’s been repeatedly reduced to reach its current level of 35 percent. House Republicans want to cut it even more to 25 percent.

U.S. economic growth was higher when the top tax rate was higher, but that’s one of those inconvenient facts that politicians can forget in the interest of getting money from Wall Street. Republicans are determined to give more tax breaks to “job creators:” but they fail to mention that the jobs are created in China and Indonesia, not in America.

I made my mind up, back in Chelsea,
When I go, I’m goin’ like Elsie.
Start by admitting, from cradle to tomb
Isn’t that long a day.
Life is a cabaret, old chum,
Only a cabaret, old chum.
And I love a cabaret.

– Cabaret

_________________________
* I don’t mean to beat up exclusively on Republicans. It seems to me that Wall Street pays Republicans to commit the crimes, and pays Democrats to stand around whining that they can’t do anything about it.

Copyright 2011 by N.S. Palmer. May be reproduced as long as byline, copyright notice, and URL (http://www.ashesblog.com) are include

Back in The Day: When I ran for office on the Libertarian Party ticket.

When I was a libertarian, I believed that libertarian ideals and so-called “free markets” would make life better for most people. I stopped being a libertarian when I realized that it wasn’t true.

Libertarianism, the political theory that advocates severely limited government or no government, has two flaws, among others.

The first problem is that libertarianism has a simplistic view of human nature.

Libertarians tend to believe that people rationally assess each situation, think about their moral duties, and act accordingly. But that’s only part of our nature. There is also a vast non-rational underground of impulses, aggression, and instinctive responses to people and situations. We react emotionally on the basis of those impulses, and then afterward we make up all the “reasons” why we had to do what we did and why we felt the way we did.

Their over-simplified view of human thought leads libertarians to ignore the fact that corporations and government agencies spend hundreds of millions of dollars studying how to exploit human psychological weaknesses to manipulate and deceive people.

Libertarians argue, for example, that consumers “should know better” than to buy shoddy products, and that if they suffer as a result, it’s their own fault. They assume that people can reasonably be expected to see through all the carefully calculated deceptions and avoid the cunningly hidden traps that corporations have laid for them. As a matter of ideology, they invariably take the side of business against consumers and workers. They don’t see anything strange about that, in spite of the fact that donations from business and the super-rich underwrite almost all the books, policy studies and magazines that mislead them with biased information.

When libertarians theorize about an ideal society, they’re thinking about an ideal society for people like them: above average intelligence, highly educated, morally reflective, and concerned about doing the right thing. Most people exhibit those qualities only occasionally; politicians, CEOs, and billionaires almost never exhibit them. Their moral reasoning seldom rises above the level of “I want X, and he’s in my way so he is bad.” They are not candidates for citizenship in a libertarian utopia, nor will a majority of people in any society ever be such.

A second problem is the mistaken idea that natural law prescribes very precisely “who owns what.” That allows libertarians to claim that taxation “steals” their money for the benefit of other people in society.

But it’s impossible for valid natural law arguments to get that specific. To use John Locke’s example, if you’re walking in the forest and pick up some un-owned acorns, then the acorns obviously belong to you. If someone hits you on the head and takes them, then it is indeed “stealing.”

In a complex society, however, most useful things are produced by the joint efforts of many people. There is no non-arbitrary way to say that Joe earned X, Sally earned Y, and so forth. Depending on the legal rules and the institutions involved, Joe might get more and Sally less, or Sally might get more and Joe less. Both of them do “earn” what they get in the sense that they work for it, but not in the sense that an exact amount of compensation is prescribed by natural law.

Over the last 70 years and especially the last 30 years, those in our society who have the most wealth have funded an effort to change the rules so that they get more of the social product and everyone else gets less. They have succeeded spectacularly, partly by convincing working people that it’s about “freedom” instead of a grab for power and wealth by a corrupt plutocracy.

When I was a libertarian, I never thought that inequality per se was a problem. If most people were better off, then why should anyone care if the richest people were a lot better off? But it turned out that libertarian and “free market” policies made the richest people a lot better off and made everyone else worse off.

I had not considered the fact that if some people and corporations were rich enough to buy a fleet of oil tankers, then they were also rich enough to buy laws and bribe regulators. Over time, that enables them to corrupt the system and tilt the rules more and more in their favor — as they have done in the last 30 years.

Libertarianism really amounts to a bait-and-switch scam. It’s sold as a way to give people individual freedom to live as they wish. And in small ways, that’s true. The politically connected super-rich and the Wall Street sharks don’t care if you smoke pot, as long as they get to own the country and beat you down into destitution. They don’t care who you sleep with, as long as they can cage you in a cubicle, pollute your environment with toxins, steal your money with hidden fees, bust unions, and make you live in terror of losing your job and medical insurance. That’s the real impact of libertarianism.

Most movement libertarians are true believers, as I was. They’re not in it for money or personal gain. They want to help people and make a better world. But they’re being duped by people who have less admirable goals.

Copyright 2010 by N.S. Palmer. May be reproduced as long as byline, copyright notice, and URL (http://www.ashesblog.com) are included.

I am deeply disappointed in President Obama, but I like him. I think that he’s smart, rational, informed, and that he means well.

His performance in office is another matter. It’s been almost two years of timid half-measures. Obama has tried to make slight improvements without ever rocking the boat or giving up his hope that someday, the Republicans will like him.

They won’t. Ever. Not only is he a Democrat, but he’s black. He’s educated and he uses big words. Even if he doesn’t try very hard, he wants to help working people instead of just throwing more money at Wall Street sharks and military contractors.

What President Obama needs is not more sweet reason: he’s got bags of that. What he needs is steely resolve to get the job done.

There’s no better example of such resolve than President Judson C. Hammond, the fictional hero of the 1933 classic movie, “Gabriel Over the White House.”

When the movie came out, Franklin D. Roosevelt had just become President. The Great Depression had been going on for three years, and the American people were losing hope. Roosevelt saw “Gabriel Over the White House,” so he might have been inspired by it. Some of the things Roosevelt did to give Americans hope and end the Depression were similar to what President Hammond did in the movie.

Just like Hammond and Roosevelt, President Obama inherited an economic depression caused by policies that enriched the few while impoverishing the many.

Just like Hammond and Roosevelt, President Obama faces a stone wall of resistance from corrupt politicians who care only about their own power and privilege.

Just like Hammond and Roosevelt, President Obama must defeat big-money Wall Street sharks, corporations, and the super-rich who care nothing about the United States, its people, or the common good.

Just like Franklin D. Roosevelt, Barack H. Obama could learn a few things from Judson C. Hammond — and from “Gabriel Over the White House.”

An Old-Style Politician

When he’s elected President, Judson C. Hammond is a typical corrupt politician. He cares only about the wealthy and politically connected. It’s 1933 and the Depression has devastated the economy, throwing tens of millions of people out of their jobs.

On the evening of his inauguration, Hammond talks to the influential party leader who helped him win the White House.

Hammond: When I think of all the promises I made the people to get elected …

Party leader: By the time they realize you aren’t going to keep them, your term will be over.

[Both men laugh]

But God has other plans for Judson C. Hammond.

Hammond doesn’t know what to make of his idealistic young assistant, Hartley Beekman.

Beekman: Sir, I’d like you to know how much I appreciate this opportunity to serve my country.

Hammond: Serve your country. Yes. Hmm.

A Near-Death Experience

After a near-fatal car crash, Hammond lies in a coma for several weeks. When he awakens, his former mistress Pendola Molloy finds him a changed man. Before, he was indifferent to the plight of the unemployed. Now, he wants to meet with them and their spokesman, John Bronson.

Molloy: Jud … Jud …

Hammond: Miss Molloy, I want all available information about John Bronson and the army of the unemployed. I want facts. Unbiased reports. The truth.

Pendola leaves the office and sees Hartley Beekman, the president’s assistant. “Beek … He’s changed. He called me ‘Miss Molloy’.”

Pendola tells Beekman that she seemed to feel a presence in the room, in addition to her and President Hammond. She felt that it was the Angel Gabriel, sent by God to lead President Hammond on a better path.

Meeting with the Cabinet

Hammond calls a meeting with the members of his cabinet, all old-style corrupt politicians. When one of them expresses relief that he’s recovered from his coma, Hammond replies.

Hammond: Please omit all condolences. Conserve your sympathy for the people of the United States, who are in dire need of it.

The Secretary of War tells Hammond that “the army of the unemployed,” consisting of a million laid-off workers, plans to march on Washington. He wants permission to have the military attack the marchers.*

Hammond: Every citizen of the United States should be ensured the elementary necessities for keeping life within his body. This cabinet, every member of Congress, each office holder, is answerable directly to the public conscience. Gentlemen, I refuse to call out the Army against the people of the United States.

Hammond orders the secretary of war to provide the marchers with food and shelter instead of attacking them.

Food for the Hungry

Later, Hammond talks with Beekman and Miss Molloy, who is now a White House aide. Surplus food is sitting in warehouses and on docks. It’s not doing any good for anyone.

Hammond: Tons of food rotting. Millions of people starving. What’s to keep us from putting that food into the mouths of the hungry?

Meeting with the Unemployed

Hammond travels to the outskirts of Baltimore to meet the “army of the unemployed,” who have set up camp there. Against the advice of his Secret Service bodyguards, he walks into the middle of the crowd of jobless workers and talks to them.

Hammond: It is not fitting for the citizens of America to come on weary feet to seek their President. It is rather for their President to seek them out, and to bring to them freely the last full measure of protection and help. And so I came to you.

The unemployed shout, “We want work!” One refers to their service in World War I.

Unemployed worker: Seventeen years ago, the government put guns and bayonets in our hands and told us to bring back peace. We did. Now, put shovels and picks in our hands, and we will bring back prosperity. We want work!

Hammond: You have been told that there is no chance of getting work. But I say there is work, necessary work, waiting to be done. I propose therefore to create an army to be known as the Army of Construction. You’ll receive Army rates of pay. You’ll be fed, clothed, and housed, as we did our wartime armies. You’ll each be put to work in your own field, from baking bread to building dams. Then, as the wheels of industry begin to turn, stimulated by these efforts, you will be retired from the Construction Army back into industry, as rapidly as industry can absorb you.

Facing Down Congress

But in order to start the Army of Construction, Hammond must face Congress, ruled by old-style politicians who care only about their own power and privilege. Congressional politicians and their Wall Street backers are outraged by Hammond’s attempts to help average Americans, the poor, and the unemployed. They want to impeach Hammond because “he is a traitor to his party” — that is, to the party of the corrupt and connected.

With clear and simple eloquence, Hammond explains why helping American workers is the only way to restore America’s economy and its greatness as a society. He refutes the transparent fallacy of “trickle-down economics.”

Hammond: A plant cannot be made to grow by watering the top alone, and letting the roots go dry. The people of this country are the roots of this nation, and the sturdy trunk and the branches, too.

Congressional leaders denounce Hammond for his remarks, saying that he shouldn’t try to help the American people when Congress plans to impeach him. Hammond replies frankly, speaking truth to power.

Hammond: You’ve turned your backs on the people in their hour of need. You’ve closed your hearts to their appeals. You’ve been traitors to the very concepts of democracy on which this government was founded.

Hammond reminds Congress that he is still President, and as commander in chief of the armed forces, he can declare martial law. Under that threat, Congress agrees to adjourn until the economic crisis is over. It cedes all authority to President Hammond.

Safeguarding Americans’ Homes

Hammond begins making weekly radio addresses to the American people. He reports on the progress of his efforts to restore jobs, justice, and prosperity. In one of his radio addresses, he makes a proposal that President Obama should consider.

Hammond: I propose to safeguard the homes of American citizens by a law to prevent the foreclosure of mortgages until the average American worker has had a chance to go to work.

Fighting White-Collar Crime

Hammond recognizes that Prohibition has spawned an enormous criminal industry that saps resources from the American economy and corrupts law enforcement.

After a gangster’s men attack the White House with machine guns and wound Miss Molloy, Hammond assigns Beekman to head the Federal Police, a paramilitary force that will bring white-collar criminals to justice. By this time, Beekman and Miss Molloy are engaged, so Hammond knows that Beekman will be highly motivated.

Tried before courts martial, gangsters and white-collar criminals get due process. Then they get the punishment they deserve:

Just for the record, these men did not work for Goldman Sachs.

World Peace and Disarmament

Hammond sees that the international arms race has cost hundreds of billions of dollars that would be better spent producing useful things that help people. He calls leaders of other countries to a summit on a U.S. Navy ship. By demonstrating the awesome might of the U.S. military, he convinces them that continuing the arms race will bankrupt all of their countries. He gets all the nations to agree to a treaty for universal disarmament.

Later, when leaders of all nations are at the White House and have signed the treaty, Hammond enters the room. He seems exhausted by all of his efforts. He walks to the desk and stands behind the treaty, preparing to sign it.

Hammond: With this document, this Covenant of Washington, the world takes its first real step to prevent our civilization from tottering, as did the forgotten civilizations before us.

One of the diplomats hands President Hammond a pen to sign the treaty. Hammond looks at the pen and then returns it to its holder. He picks up a quill pen, like the ones used by America’s founding fathers to sign the Declaration of Independence. He leans over and signs the treaty. As soon as he finishes signing it, he collapses on the desk.

The heads of state carry President Hammond to his office and put him on a couch, then they leave. Hammond’s doctor tries to give him some medicine, but Hammond refuses it. “There’s nothing you can do for me, doctor.”

Hammond: Hello, Pendy. Does the President of the United States meet with your approval?

Molloy: He’s shown that he’s one of the greatest men who ever lived.

Hammond: Pendy, please hold my hand.

The Aftermath

Beekman and Miss Molloy return from the President’s study. Beekman speaks to the heads of state who signed the treaty.

Beekman: Gentlemen, the President of the United States sends you his heartfelt gratitude for your magnificent accomplishment in achieving this Washington Covenant. His only hope was that peace on earth be preserved forever for the peoples of the world. Gentlemen, President Hammond is dead.

A grateful nation mourns the loss of President Hammond. Americans gather outside the White House and watch the flag lowered to half-staff.

Not Exactly a Libertarian Classic, But …

“Gabriel Over the White House” isn’t exactly a classic of Constitutional government or libertarian political philosophy. Vesting all power in one man can be a good thing if it’s the right man — a Marcus Aurelius or a Judson Hammond. But it’s also a dangerous precedent: instead of an Aurelius, you might get a Hitler, a Cheney, or a Bush (any Bush). One issue that the movie does not address is what happened after President Hammond died. Did the Vice President become a virtual dictator like Hammond?

But the most important point is that government should exist to serve the common good, not to frustrate it or destroy it. Sometimes, conciliation and compromise are not the right solutions. Sometimes, it takes a little steel to get the job done.

Will the Angel Gabriel ever visit the Obama White House? We can only hope that he will.

_______________________
* This is a reference to the Army’s July 28, 1932 attack on unemployed protest marchers in Washington. The attack was ordered by President Herbert Hoover and was commanded by General Douglas MacArthur.

Copyright 2010 by N.S. Palmer. May be reproduced as long as byline, copyright notice, and URL (http://www.ashesblog.com) are included. The motion picture “Gabriel Over the White House” was released in 1933 and is no longer under copyright. It is in the public domain.

All hail Marx and Lennon.

The Times newspaper of London recently ran an article and reader forum asking a question that no American newspaper would dare to ask:

“Was Marx Right?”

The Marx in question, of course, was not Groucho, Harpo, Zeppo, or even the 1980s pop-rock singer Richard Marx. It was Karl Marx (1818-1883), whose villainous shade terrified generations of schoolchildren, and more than a few American politicians, from 1917 to 1991.

That terrifying figure, of course, was the Marxist boogeyman of right-wing legend. The real Marx was a considerably less threatening presence. He wasn’t a very nice fellow, to be sure: a personality defect he shared with Beethoven and Wagner. Mostly, however, he was just an academic scribbler with dreams of changing the world.

But the question “Was Marx right?” is too blunt an instrument. Right about what? Marx was an economist, political philosopher, social analyst, activist, and anti-Semite. He had a lot of opinions about a lot of things. Some of them were daft. Some of them, however, are starting to seem pretty brilliant.

Marx the Classical Economist

Unlike the nightmarish cartoon of his alter ego, Marx did not come out of nowhere. He followed in the footsteps of other classical economists and tried to solve problems that had stumped them.

Chief among his predecessors was Adam Smith (1723-1790), who in 1776 published The Wealth of Nations, a book that set the agenda for all work in economics since then. Conservatives and libertarians often wear ties bearing Smith’s picture, but they’ve never actually read anything he wrote. They wouldn’t like him if they did.

What Economics Does

In talking about Marx or any other economist’s theories, it’s important to understand what economics really does.

Almost all economists, for example, talk about what tends to  happen in the long run and “at equilibrium.” But the long run is always in the future and the economy is never at equilibrium. All economists, regardless of their ideological biases, tell a story about how they think the economy works and where they think it’s going. They can often cite evidence to support their stories, but the economy is so complex that that there’s usually some evidence to support almost any theory.

As a result, it’s impossible to “prove” that one economist’s story is right and another’s story is wrong. What you need to do is compare what the story says with what you see going on in the world. How closely do they match? How well does a story explain the current economic situation and predict future economic developments? Does a story make internal sense?

A story that matches reality, explains well, predicts future events, and makes internal sense is a good economic story. Marx’s story is a fairly good one. So is the story told by Keynesian economists. So is the story told by monetarist economists, though the true parts of that story are included in the Keynesian story. Conservatives often prefer the story told by Austrian economists, although — or perhaps because — that story has turned into little more than an apologetic for big business.

How Workers’ Wages Are Determined

Marx was trying to solve a problem that had baffled earlier economists, including Adam Smith.

First, they assumed that economic value* is created by labor. Therefore, if it took the same amount of labor to produce two things, then they had the same economic value. Market conditions can affect prices in the short run, but in  the long run, the prices of goods tend to reflect how much labor it takes to make them. According to classical economists, that is the “natural price” toward which the actual market price will gravitate over time. Thus, the natural price in classical economics corresponds to the  “equilibrium price” in modern economics: the price toward which the actual market price moves over time but almost never reaches.**

Second, they assumed that if two things exchanged for each other, then they had the same amount of economic value.

Third, they assumed that when workers got paid, they were exchanging the products of their labor for the money from the capitalist.

By those assumptions, the products of workers’ labor should tend to be equal in economic value to the money paid by the capitalist. But if the capitalist pays workers exactly what their produce is worth, and then sells it for exactly what it’s worth, then there’s nothing left over for the capitalist. Where does the capitalist’s profit come from?

Marx answered that the capitalist was paying for not for the products of the workers’ labor, but for the workers’ labor power: for their ability to produce. Instead of buying what the workers made, the capitalist was basically renting their ability to make it. And notice what Marx did: He took the same facts as Adam Smith, but told a different story explaining those facts.

Like any other commodity, the workers’ labor power has its economic value (price) determined by how much labor is required to produce it. In other words, wage levels are determined by how much it costs to feed workers, house them, and sustain their ability to produce value for the capitalists.

How Surplus Value Turns into Profit

Suppose that it takes only four hours of an eight-hour working day for the worker to produce enough to keep himself or herself alive and producing. Under the capitalist system, that’s the value of the worker’s labor power and that’s how much he or she will tend to get paid in the long run.

But the workers still work an entire day for the capitalist, who pays them only for half a day. The extra half-day for which the workers don’t get paid is the “surplus value” that the capitalist receives as profit.

Note that this isn’t because capitalists are bad people: some are and some aren’t. Surplus value exists because of the way the capitalist system works. The capitalist doesn’t produce anything himself, but he gets money because he has money. Most modern economists disagree with this view, but in Marx’s time, it was a tremendous insight and a great leap forward.

Modern Economics Takes a Step Backward

Most modern economists take a more, shall we say, “cooperative” attitude toward capitalism.

Instead of saying that the worker’s labor has a specific value — even if that value is sometimes difficult to calculate — modern economists say that its value is subjective.

In other words, the worker’s output has no specific value: instead, it’s worth whatever the capitalist says that it’s worth. There can be no “surplus value” because the value of what each worker produces is defined as whatever the capitalist pays him or her.

No matter how low wages get or how high profits get, no matter how unfairly the system is rigged in favor of Wall Street, corporations, and the politically-connected rich, it’s all good.

The workers get paid only a pittance because that’s all their labor is worth. The capitalists and their top managers get paid a fortune because — well, because they must be contributing something valuable or they wouldn’t get paid so much. That’s what passes for logic in modern economics.

Money Distorts Our View of the World

Marx’s greatest insight was in seeing how capitalism distorts our way of seeing the world.

Under an economy of simple commodity production, each worker produces a good or service. He/she exchanges that good or service for money, and then exchanges the money for other goods and services. For example, a farmer grows wheat, exchanges some of the wheat for money, and uses the money to buy clothing.

So the pattern of economic life is C-M-C: commodities get money, which in turn gets more commodities. Useful things are the beginning and end of the process, with money seen only as an instrument to get them.

Under capitalism, however, the capitalist starts out with money, uses it to buy goods and services (raw materials, machinery, and labor), and then exchanges the result for more money.

The pattern is now M-C-M: money is the beginning and end of the process, the Alpha and the Omega. No longer merely an instrument to buy useful things, money becomes the center of the capitalist society’s worldview, as it has become the center of ours.

Economic Crises and Unemployment Are Essential

Marx saw occasional economic crises not as a problem for capitalism, but as an essential feature of the system.

Economic crises throw people out of their jobs and into the “reserve army of the unemployed,” to strike terror into any workers who still have their jobs. That makes wages drop and gives capitalists relatively more profit both during and after the crisis.

The current recession follows the pattern Marx predicted. As millions of workers have lost their jobs, and others have taken pay cuts, Wall Street and corporate profits are higher than ever before. There are currently five unemployed people for every new job. Hundreds of people apply even for the most menial and low-paying job openings. Workers know that they can easily be replaced. It’s a race to the bottom.

Update: The New York Times gave additional confirmation of this phenomenon in its July 26, 2010 article “Industries Find Surging Profits in Deeper Cuts.” As the article observes:

Many companies are focusing on cost-cutting to keep profits growing, but the benefits are mostly going to shareholders instead of the broader economy … “There’s no question that there is an income shift going on in the economy,” Mr. Harris added. “Companies are squeezing their labor costs to build profits.”

Marx on Balance

Marx didn’t get everything right. His explanation of what causes economic crises (changes in the “organic composition of capital”) is dubious. His conception of human nature (not discussed here) is completely unrealistic. But on balance, particularly in economics, he got a lot more things right than many modern economists. Maybe that’s why we hear so little about him in our time.

——————————————–
*Classical economists distinguished between economic value (price) and use-value (usefulness). To illustrate the difference, Adam Smith compared water to diamonds. The use-value of water is much greater than the use-value of diamonds: if you don’t get any water, you’ll die. Paradoxically, however, the economic value of diamonds is much greater than the economic value of water. A thing must have use-value in order to have economic value, but they’re not the same.

**The difference is that classical economists thought the natural price of goods was determined by how much labor it took to produce them, but that supply and demand also influenced the current price. Modern “neoclassical” economics says that the equilibrium price of goods is determined by supply and demand, but that labor costs also influence the current  price. The two viewpoints are essentially mirror images of each other, with classical economics focusing on how production affects prices and modern economics focusing on how market conditions affect prices. Both are valid viewpoints, and each is useful in analyzing different aspects of the economy.

For More Information

Marx, Karl, Capital, Volume I. London: Penguin Classics, 1976. There are three volumes of Marx’s Capital, but you can get most of the essential ideas from Volume I, which is available inexpensively in paperback.

Sweezy, Paul M., The Theory of Capitalist Development. New York: Monthly Review Press, 1970. This is a classic, definitive, clearly-written primer about Marx’s economic theory. If you just want to get the basics, it’s the best.

Tucker, Robert C., ed., The Marx-Engels Reader. New York: W.W. Norton, 1978.

One solution, from the 1933 film "Gabriel Over the White House."

The catastrophic oil spill by BP (formerly known as British Petroleum, and before that as the Anglo-Iranian Oil Company) has drawn attention to the fact that corporations can get away with murder. Literally. Largely exempt from accountability or punishment, they cause incalculable damage to communities, ecosystems, economies, and human lives.

The libertarian “solution,” if you want to call it that, is to do nothing. To hear libertarians tell it, corporations are deterred from evil acts by two factors.

First, they are deterred by their fear that consumers will refuse to buy dangerous products or patronize firms that commit crimes. But corporations have found easy ways to get around that problem. The easiest way is to buy up or buy off the news media. If that doesn’t work, they can just change the name of their company or its products. Consumers might remember the old name, but they won’t know the new one. The “magic of the market” doesn’t work.

Second, libertarians claim that corporations are deterred from criminal acts by their fear that the people they harm will sue them. But the BP disaster shows conclusively that corporations have nothing to fear. Millions of gallons of oil have spilled into the Gulf of Mexico as a result of BP’s negligence. However, the company has taken steps (such as using chemical dispersants to break up the oil) that will make it extremely difficult to prove the extent of damages. Even more difficult will be proving that specific amounts of damage were done to specific people and communities as a result of BP’s actions. The company might have to pay out a little, but any damage payments will be dwarfed by the massive profits it continues to make from cutting corners on safety. The numbers are clear: crime does pay, as long as you’re corporate and connected.

So what to do?

As I see it, there are three ways to approach the problem of corporate crime — whether by oil companies like BP or financial bloodsuckers like Goldman Sachs.

First, there’s the libertarian solution: do nothing. Corporations and their owners love that one. It’s great for them. For most people, however, not so much. It means that government ignores its primary obligation to protect the people.

Second, use regulation to prevent corporations from engaging in foolishly risky or criminal activities, particularly when they think that any profits will accrue to them but any costs will be borne by others. That would have prevented not only the BP oil spill, but the Wall Street meltdown of 2008.

Third, don’t regulate, but impose Draconian punishments to induce corporate managers to act responsibly. Without advocating it, let me describe an effective solution. At a certain point in the near future, federal marshals surround the headquarters of BP or Goldman Sachs. They arrest the members of corporate top management who were most guilty of causing the oil spill or the economic crisis. They march them out into the street and, in front of TV cameras, execute them on the spot. We would only need to do that one time. After that, corporate managers and owners would know that if they caused sufficient harm, they might not live to enjoy the profits from their crimes.

My point is that we have only three choices. Two of them are unacceptable. That leaves one which, in spite of any shortcomings, is the best of the three.

Choice number one, the libertarian solution of doing nothing, isn’t an option. Choice number three, shooting corporate executives in the head, would be effective but would violate the rule of law and would sometimes be unjust.

That leaves solution number two: Regulate the daylights out of corporations to prevent them from acting irresponsibly and criminally. That’s what a sensible person can support.

Update: BP and Halliburton Knew They Risked Disaster

In case you missed it, The New York Times reports that internal memos show BP violated its own safety guidelines to use riskier but cheaper methods for the Deep Horizon drilling project:

As far back as 11 months ago, [BP] was concerned about the well casing and the blowout preventer. On June 22, for example, BP engineers expressed concerns that the metal casing the company wanted to use might collapse under high pressure.

BP went ahead and used the riskier methods anyway, having bought off and/or corrupted the U.S. Minerals Management Service regulators who were supposed to be monitoring them. In addition, former U.S. Vice President Dick Cheney‘s company Halliburton, which was also involved, knowingly used faulty cement to seal the well.

Maybe choice number three isn’t such a bad idea after all.

Miscellaneous thoughts while drinking coffee at McDonalds:

Look for the money

The Dow dropped by 1,000 points in just a few minutes on Thursday, then rallied. The Sgt. Schultzes at the Securities and Exchange Commission profess to be baffled about the cause.

My advice: look for the money. Running the market up and down is a classic method that big players use to make money at the expense of smaller investors.

Maybe they did it this time, maybe they didn’t. But with their enormous resources, insider knowledge, and computerized trading, they have the ability to do it. And they are not known for their keen moral sense.

If some investment bank or hedge fund walked away from the “glitch” and ended up billions of dollars richer, then it’s worth investigating.

France affirms it’s a society

Muslims and civil libertarians are enraged that France has banned public wearing of the burqa, a full-body covering that fundamentalist Muslims (but not all Muslims) require their wives and other female family members to wear in public.

There are valid arguments for and against the ban. But the fundamental point, in my view, is that a society is defined and united by its rules and mores, both written and unwritten.

A society in which anyone is allowed (by law or social custom) to do whatever he or she wants is not a society. It’s a “libertarian paradise” of disconnected individuals who have nothing in common and no mutual obligations except to refrain from shooting each other.

France has just reaffirmed that it is a society with shared mores and values that aliens (whether ethnic, national, cultural, or religious) must respect.

If fundamentalist Muslims don’t like that society, then they should consider moving to another country that embodies their values and mores. There are lots of choices.

Should government regulate some economic activity to prevent problems?

Or should it just let the problems occur, and then depend on the “free market” to correct things in the long run?

Those aren’t really economic questions because they depend on value judgments. But I think that the only correct answers are: “Yes,” and “No.”

Nobel laureate economist Paul Krugman wrote a column for today’s New York Times in which he alludes to that dilemma.

As Krugman explains, one cause of the recent economic crisis was that credit-rating agencies misled investors by giving AAA ratings to investments that were in fact very risky. The credit-rating agencies were paid to rate those investments by the same companies that were selling them. So even with the best of intentions, the credit-rating agencies were under pressure to give good ratings and they had a significant conflict of interest.

Those are the facts. But people disagree on what to do about them. I can’t say “reasonable people disagree” as I normally would, because I don’t believe that there can be reasonable disagreement about the issue. But there is disagreement.

Supporters of the “free market” advocate little more than a Hobbesian view of the economy in which the strongest and most ruthless individuals do whatever they want. In their view, the market will take care of everything. Now that credit-rating agencies have been exposed as less than reliable, investors will take their advice less seriously. Credit-rating agencies, on the other hand, will be under pressure to demonstrate their objectivity, independence, and accuracy. “In the long run,” say these self-proclaimed defenders of freedom, “everyone will be better off.”

That’s their theory. The problem is that the long run is like tomorrow: we never get there. It’s always just over the horizon. The economy operates not in the long run, but in a series of short runs and medium runs.

What happens in an unregulated “free market” is that in the short run, the corrupt, connected, and evil make out like bandits — which they are. Honest people are forced to pay the costs of the robbery. When the dust has settled, the bandits get to keep their loot. The honest people face stagnant wages and 10 percent unemployment. Sound familiar? That’s exactly the story of the recent economic crisis.

One of FDR‘s economic advisors, Harry Hopkins if memory serves, put it very well: “People don’t eat in the long run. They eat every day.” John Maynard Keynes, the most influential economist of the 20th century, put it even more bluntly: “In the long run, we are all dead.”

The idea that the market can take care of everything is simply a prescription to let the corrupt and connected do whatever they want at the expense of honest people.

Economics can’t tell you if  that idea is right or wrong, because economics doesn’t answer questions like that.

But common sense says that it’s better to prevent problems than it is to let them happen, and let the people who caused them keep the loot, and make the victims pay for the cleanup. It’s to prevent such problems that we need government regulation.

The current financial reform bill in the U.S. Senate is far from perfect, but it’s a good start toward more adequate regulation of Wall Street.

Is President Obama a socialist?

Probably not. But dare I ask: Would it be such a bad thing if he were?

“Socialist” is the latest epithet to be flung at President Obama by the Republican establishment that controlled Washington for the last eight years. Falsely calling themselves “conservatives,” these apostles of fiscal prudence gave America record budget deficits and economic depression. In their role as guardians of the Constitution, they gave America torture and illegal wiretapping, abrogated the first, fourth, and fifth amendments, and eliminated the centuries-old right of habeas corpus. In their role as patriots, they lied America into aggressive wars and invented the unitary-executive doctrine, a thinly-veiled update of “the divine right of kings” that purported to grant the Bush-Cheney regime arbitrary power beyond the wildest fantasies of of Britain’s King George III, against whom the American colonists revolted in 1776.

But what is a socialist, anyway? The president’s critics take care to avoid defining the concept. They’re counting on the fact that most people don’t know what a socialist is, except that they’ve been told it’s something bad. And if President Obama is a socialist, then that’s something bad. Right?

Several points are worth noting. First, calling people and policies “socialist” has been a standard scare tactic of the corporate state and its media shills for most of the last century. They called Social Security “socialist.” They called Medicare “socialist.” They went even further in attacking Martin Luther King and called him a “communist.” It’s a measure of their desperation that they’ve pulled out the same old smears yet again.

Second, in America, only one national politician identifies himself as a socialist. That’s Senator Bernie Sanders of Vermont — who is, by the way, one of the best friends that working people have in the American government.

Third, President Obama does not claim to be a socialist. Indeed, even the Republican weekly tabloid Human Events reported that officials of various American socialist parties have denounced President Obama as a middle-of-the-roader.

What Socialism Means

Fourth, socialism means different things to different people. George Orwell, the author of Nineteen Eighty-Four and Animal Farm, said that “the underlying ideal of socialism is justice and liberty.” Albert Einstein, the most famous scientist of the 20th century, said that it was a way to “overcome and advance beyond the predatory phase of human development.” To the Mexican Zapatistas who fought against the North American Free Trade Agreement (NAFTA) that impoverished both Mexicans and Americans, socialism is “education, housing, health, food, land, good pay for our work, democracy, and liberty. Some people may call this socialism. But it doesn’t matter what name you give it.” Some socialists have supported significant government control of the economy; others have called for abolishing government altogether.

What ties all socialists together is a belief in the fundamental equality and dignity of all human beings. They think that at the very least, government should not promote vast inequalities of wealth and condition by handing out special privileges, tax breaks, and legal preferences to the rich and the politically connected. At best, government should provide a legal framework that limits economic, social, and legal inequality, while recognizing that some inequalities are inevitable and even desirable in any society. To the extent possible, government should guarantee basic human rights and a minimum level of economic security to all citizens.

Fifth, a lot depends on the execution. In the movies, there are only a few basic stories that appear over and over. The difference between a classic film and a clunker is often not the story itself, but how well it is told.

Likewise, in political economy, there are only a few basic approaches. One approach is a “free market” system based on private ownership and control of economic resources. The main problem of the last eight years under the Bush-Cheney regime was not that free markets can’t work in principle, but that they were run in such a corrupt and incompetent fashion under a flawed legal framework. An alternative approach is socialism. The Soviet Union and China showed us how not to do it; Britain’s experience has been imperfect but mostly positive; and other places, it’s been extremely successful in providing a decent, secure, fulfilling life for the majority of people.

Capitalism and Socialism

It’s just as unrealistic to condemn socialism because of Soviet oppression as it is to condemn free enterprise because of the Bush-Cheney regime’s corrupt “crony capitalism.” Socialism can work, and so can free-market capitalism, though each aims for a different type of society.

Socialism aims for a society in which everyone is guaranteed a basic standard of living and human dignity. It lacks both the highs and the lows of free-market capitalism. Free-market capitalism aims for a society in which anyone can become very rich — though it also allows anyone to be struck down by poverty and desperation. In theory, a person can get richer in a free-market capitalist society than under socialism. But the vast majority of people won’t, and many people will be far worse off than they would be under a socialist system.

Let’s be frank. Socialism is indeed “un-American,” if that means it’s different from what the American founders envisioned. But so is the corporate state under which Americans now live: if anything, rule by giant multi-national corporations is even more “un-American” than socialism. Therefore, what’s at issue is not a choice between one system that’s consistent with American political traditions, and another system that isn’t. It’s a choice between two systems that both depart from how America’s founders understood their country.

The Real Question

The real question is not “what’s traditionally American,” but “What is the best system for the majority of Americans?” And the answer to that is certainly closer to socialism than to the corporate capitalism under which they currently live.

So far, however, President Obama appears determined not to rock the boat. He’s a definite improvement on the psychopathic savagery of his predecessor, but he seems reluctant to take the radical steps necessary to make the American economy serve the American people in general instead of a small, stupendously wealthy minority.

The online social networking site Facebook recently changed its terms of service to give it more control over users’ personal information. After a widespread uproar on the Internet and in traditional news media, Facebook rescinded its policy change and returned to its old policy.

Facebook’s terms of service are an instance of a more general problem that consumers face in dealing with giant corporations. Who has enough time to read every 25-page legal document in fine print and impenetrable jargon from the credit card company, the insurance company, the cable company, the bank, and the countless other corporations that dominate our lives?

When a corporation buries abusive clauses at the bottom of page 17 and puts them in deliberately obscure language, how are consumers supposed to cope with that?

When corporations spend hundreds of millions of dollars studying language and psychology to find better ways of manipulating and deceiving their customers, how are consumers supposed to cope with that?

They can’t. Corporations count on it. The practice even has a name: it’s called “gotcha capitalism.”

Only strong regulation, carefully and thoroughly enforced, can level the playing field between consumers, workers, and corporations.

Rush Limbaugh, the American radio talk-show host, recently said that he “wanted President Obama to fail” because he disagreed with his policies.

His comment illustrates a problem that isn’t unique to Limbaugh, Republicans, or the corporate war-mongers who falsely call themselves “conservatives.”

President Obama is trying to prevent a collapse of the U.S. economy that would lead to suffering for millions of Americans. If the economy crashes, they will lose their jobs, their homes, and their self-respect. They will go bankrupt. They will go without needed medical care. And if the U.S. economy collapses, it will drag the world economy down with it. In poorer countries, thousands of people will starve and freeze to death — something that now happens even in America, though infrequently.

Whether we like President Obama or not, whether we agree with his policies or not, we should all wish him success. Shouldn’t we?

Limbaugh’s comment suggests that he places his ideology and his narrow political loyalties above the welfare of real, living people. And that’s the problem: When we make abstractions more important than real people, we make ourselves indifferent to the welfare of others. Whether the abstraction is neoconservative ideology, corporate profits, Social Darwinism, economic theory, or a future libertarian/communist utopia, the result is the same. We sit in our comfortable little offices spouting self-righteous rhetoric and we cause real people to suffer.

The problem isn’t that Rush Limbaugh is a bad person. He might be, or he might not: None of us knows what is in someone else’s heart. Even good, well-intentioned people occasionally support policies that end up being harmful. I’ve done it, too.

The problem is a defect of vision that we all have and against which we must all be on guard: We believe in what we see, and we tend not to believe in what we don’t see.

Once upon a time, I believed that people who received government welfare payments were simply lazy and chose to loaf instead of work. I believed that people who lost their jobs due to so-called free trade agreements could easily re-train for and obtain other jobs. I believed that people without university education did not deserve to be paid as much money as those who had the advantages that I have enjoyed in life.

Why did I believe such things when their falsity is so obvious to anyone with an ounce of common sense?

The answer is ideology. I had a particular way of looking at the world that blinded me to its sometimes unjust realities. The people around me, both in school and in the conservative – libertarian movement, all shared my ideology and my blindness. None of us knew anyone who had to depend on welfare, or who had lost a factory job, or who worked 12 hours a day to eke out a meager living at two or three minimum-wage jobs. So we prattled on about our “principles” and congratulated each other for being so much smarter and better informed than the rest of the human race.

One big difference between me and Rush Limbaugh, apart from our weights and the size of our bank accounts, is that I have seen and repented of my errors (at least the ones I know about). He hasn’t, and from the way he talks, he probably won’t. The grip of ideology is too strong on him.

Ideologues don’t care about the people they hurt because they don’t know them and almost never see them. Consider average libertarian economists, safely ensconced in a university or foundation. They would happily see the U.S. economic system collapse because it doesn’t match their utopian theories and because, after collapse, it might be replaced by something that they’d find more ideologically appealing. The millions of innocent people who would suffer in such a collapse barely register. The economists don’t know any of those people — certainly, they don’t know any grubby blue-collar workers — and their eyes are firmly fixed on the future. Today’s workers might lose their jobs, their homes, their health, and even their lives, but the ideologues believe that in the coming utopia, everyone will be better off — at least, the people who “deserve” to be better off. That is, people like themselves.

The problem with always focusing on “someday” at the expense of “today” is that you can’t get there from here. “Someday” will only arrive for people who manage to make it through today. If today ends with 99 percent of the population crushed by poverty and desperation, while the favored few control the wealth and run the government, then someday won’t be worth waiting for.

Abstractions and ideals are only useful when they help real people lead better and happier lives. They’re not an end in themselves.