[Peace-discuss] The Un-Democratic Face of Capitalism

[C. G. Estabrook]

I did of course quote "the whole final paragraphs of the perceptive analysis"
(and I agree with your description). Didn't you see that I posted the whole article?

And did you notice that the section that you quote is centered on a quotation 
from Larry Bartels, about whom you wrote, "I care not what Larry Bartels, an 
élitest academic, says. You needn't quote someone else for what are your own 
opinions..."?

I assume you don't mean your second sentence to apply to Chomsky.

No one doubts that there are some differences between the two factions of the 
business party.  The question is, How important are the differences, and What 
should the anti-war movement do in regard to them?

What it clearly should not do is construct what Chomsky calls illusions about 
one of these factions, particularly when those illusions allow the anti-war 
movement to be co-opted and rendered ineffectual. The notion that the Democrats 
(and Obama) are anti-war is one of those illusions.

Even the differences that Bartels cites over "six decades" have to be understood 
historically. The tendency through the last generation has been for the 
Democrats increasingly to acquiesce to the rising tide of neoliberalism.  That's 
why Thomas Frank's much-misunderstood book (What's the Matter with Kansas?) 
"blamed the corporatist shift of the Democratic Party to the business-friendly 
right and away from honest discussion of and opposition to economic and class 
inequality for much of Republicans' success in winning over white working class 
voters" (Paul Street).

The retreat became a rout with Clinton, when the right wing of the Democratic 
party (the "Democratic Leadership Council") came to power. The party had become 
the mendacious pro-war cover for the Middle East wars (in Iraq, but also Somalia 
and Serbia) of the Bush/Clinton/Bush administrations.  See Chomsky's 
condemnation of "humanitarian intervention," the watch-word of Obama's advisers, 
notably Samantha Power and Susan Rice.

"Progressive legislation and social welfare have been won by popular struggles, 
not gifts from above" -- or from the Democratic party, who on the evidence of 
their recent behavior (particularly since 2006) are more likely to co-opt those 
popular struggles.  --CGE


Morton K. Brussel wrote:
> Better to quote the whole final paragraphs of this perceptive analysis. What 
> Chomsky acknowledges there is something that has too often been ignored or 
> considered unworthy. --mkb
> 
> "The United States effectively has a one-party system, the business party, 
> with two factions, Republicans and Democrats. There are differences between 
> them. In his study Unequal Democracy: The Political Economy of the New Gilded
> Age, Larry Bartels shows that during the past six decades "real incomes of 
> middle-class families have grown twice as fast under Democrats as they have 
> under Republicans, while the real incomes of working-poor families have grown
> six times as fast under Democrats as they have under Republicans".
> 
> "Differences can be detected in the current election as well. Voters should 
> consider them, but without illusions about the political parties, and with 
> the recognition that consistently over the centuries, progressive legislation
> and social welfare have been won by popular struggles, not gifts from above.
> 
> "Those struggles follow a cycle of success and setback. They must be waged 
> every day, not just once every four years, always with the goal of creating a
> genuinely responsive democratic society, from the voting booth to the 
> workplace."
> 
> On Oct 10, 2008, at 10:40 PM, C. G. Estabrook wrote:
> 
>> "Differences can be detected in the current election ... Voters should 
>> consider them, but without illusions about the political parties, and with 
>> the recognition that consistently over the centuries, progressive 
>> legislation and social welfare have been won by popular struggles, not 
>> gifts from above."
>> 
>> 	October 10/12, 2008 
 >> 	Exposing the Un-Democratic Face of Capitalism By NOAM CHOMSKY
>> 
>> The simultaneous unfolding of the US presidential campaign and unraveling 
>> of the financial markets presents one of those occasions where the 
>> political and economic systems starkly reveal their nature.
>> 
>> Passion about the campaign may not be universally shared but almost 
>> everybody can feel the anxiety from the foreclosure of a million homes, and
>> concerns about jobs, savings and healthcare at risk.
>> 
>> The initial Bush proposals to deal with the crisis so reeked of 
>> totalitarianism that they were quickly modified. Under intense lobbyist 
>> pressure, they were reshaped as "a clear win for the largest institutions 
>> in the system ... a way of dumping assets without having to fail or close",
>> as described by James Rickards, who negotiated the federal bailout for the
>> hedge fund Long Term Capital Management in 1998, reminding us that we are 
>> treading familiar turf. The immediate origins of the current meltdown lie 
>> in the collapse of the housing bubble supervised by Federal Reserve 
>> chairman Alan Greenspan, which sustained the struggling economy through the
>> Bush years by debt-based consumer spending along with borrowing from 
>> abroad. But the roots are deeper. In part they lie in the triumph of 
>> financial liberalisation in the past 30 years - that is, freeing the 
>> markets as much as possible from government regulation.
>> 
>> These steps predictably increased the frequency and depth of severe 
>> reversals, which now threaten to bring about the worst crisis since the 
>> Great Depression.
>> 
>> Also predictably, the narrow sectors that reaped enormous profits from 
>> liberalisation are calling for massive state intervention to rescue 
>> collapsing financial institutions.
>> 
>> Such interventionism is a regular feature of state capitalism, though the 
>> scale today is unusual. A study by international economists Winfried 
>> Ruigrok and Rob van Tulder 15 years ago found that at least 20 companies in
>>  the Fortune 100 would not have survived if they had not been saved by
>> their respective governments, and that many of the rest gained
>> substantially by demanding that governments "socialise their losses," as in
>> today's taxpayer-financed bailout. Such government intervention "has been
>> the rule rather than the exception over the past two centuries", they
>> conclude.
>> 
>> In a functioning democratic society, a political campaign would address 
>> such fundamental issues, looking into root causes and cures, and proposing 
>> the means by which people suffering the consequences can take effective 
>> control.
>> 
>> The financial market "underprices risk" and is "systematically 
>> inefficient", as economists John Eatwell and Lance Taylor wrote a decade 
>> ago, warning of the extreme dangers of financial liberalisation and 
>> reviewing the substantial costs already incurred - and proposing solutions,
>>  which have been ignored. One factor is failure to calculate the costs to 
>> those who do not participate in transactions. These "externalities" can be 
>> huge. Ignoring systemic risk leads to more risk-taking than would take 
>> place in an efficient economy, even by the narrowest measures.
>> 
>> The task of financial institutions is to take risks and, if well-managed, 
>> to ensure that potential losses to themselves will be covered. The emphasis
>>  is on "to themselves". Under state capitalist rules, it is not their 
>> business to consider the cost to others - the "externalities" of decent 
>> survival - if their practices lead to financial crisis, as they regularly 
>> do.
>> 
>> Financial liberalisation has effects well beyond the economy. It has long 
>> been understood that it is a powerful weapon against democracy. Free 
>> capital movement creates what some have called a "virtual parliament" of 
>> investors and lenders, who closely monitor government programmes and "vote"
>>  against them if they are considered irrational: for the benefit of people,
>>  rather than concentrated private power.
>> 
>> Investors and lenders can "vote" by capital flight, attacks on currencies 
>> and other devices offered by financial liberalisation. That is one reason 
>> why the Bretton Woods system established by the United States and Britain 
>> after the second World War instituted capital controls and regulated 
>> currencies.*
>> 
>> The Great Depression and the war had aroused powerful radical democratic 
>> currents, ranging from the anti-fascist resistance to working class 
>> organisation. These pressures made it necessary to permit social democratic
>>  policies. The Bretton Woods system was designed in part to create a space 
>> for government action responding to public will - for some measure of 
>> democracy.
>> 
>> John Maynard Keynes, the British negotiator, considered the most important
>>  achievement of Bretton Woods to be the establishment of the right of 
>> governments to restrict capital movement.
>> 
>> In dramatic contrast, in the neoliberal phase after the breakdown of the 
>> Bretton Woods system in the 1970s, the US treasury now regards free capital
>>  mobility as a "fundamental right", unlike such alleged "rights" as those 
>> guaranteed by the Universal Declaration of Human Rights: health, education,
>>  decent employment, security and other rights that the Reagan and Bush 
>> administrations have dismissed as "letters to Santa Claus", "preposterous",
>>  mere "myths".
>> 
>> In earlier years, the public had not been much of a problem. The reasons 
>> are reviewed by Barry Eichengreen in his standard scholarly history of the
>>  international monetary system. He explains that in the 19th century, 
>> governments had not yet been "politicised by universal male suffrage and 
>> the rise of trade unionism and parliamentary labour parties". Therefore, 
>> the severe costs imposed by the virtual parliament could be transferred to 
>> the general population.
>> 
>> But with the radicalisation of the general public during the Great 
>> Depression and the anti-fascist war, that luxury was no longer available to
>>  private power and wealth. Hence in the Bretton Woods system, "limits on 
>> capital mobility substituted for limits on democracy as a source of 
>> insulation from market pressures".
>> 
>> The obvious corollary is that after the dismantling of the postwar system,
>>  democracy is restricted. It has therefore become necessary to control and
>>  marginalise the public in some fashion, processes particularly evident in 
>> the more business-run societies like the United States. The management of 
>> electoral extravaganzas by the public relations industry is one 
>> illustration.
>> 
>> "Politics is the shadow cast on society by big business," concluded 
>> America's leading 20th century social philosopher John Dewey, and will 
>> remain so as long as power resides in "business for private profit through 
>> private control of banking, land, industry, reinforced by command of the 
>> press, press agents and other means of publicity and propaganda".
>> 
>> The United States effectively has a one-party system, the business party, 
>> with two factions, Republicans and Democrats. There are differences between
>>  them. In his study Unequal Democracy: The Political Economy of the New 
>> Gilded Age, Larry Bartels shows that during the past six decades "real 
>> incomes of middle-class families have grown twice as fast under Democrats 
>> as they have under Republicans, while the real incomes of working-poor 
>> families have grown six times as fast under Democrats as they have under 
>> Republicans".
>> 
>> Differences can be detected in the current election as well. Voters should
>>  consider them, but without illusions about the political parties, and with
>>  the recognition that consistently over the centuries, progressive 
>> legislation and social welfare have been won by popular struggles, not 
>> gifts from above.
>> 
>> Those struggles follow a cycle of success and setback. They must be waged 
>> every day, not just once every four years, always with the goal of creating
>> a genuinely responsive democratic society, from the voting booth to the 
>> workplace. 
>> ____ Note
>> * The Bretton Woods system of global financial management was created by 
>> 730 delegates from all 44 Allied second World War nations who attended a 
>> UN-hosted Monetary and Financial Conference at the Mount Washington Hotel 
>> in Bretton Woods in New Hampshire in 1944.
>> 
>> Bretton Woods, which collapsed in 1971, was the system of rules, 
>> institutions, and procedures that regulated the international monetary 
>> system, under which were set up the International Bank for Reconstruction 
>> and Development (IBRD) (now one of five institutions in the World Bank 
>> Group) and the International Monetary Fund (IMF), which came into effect in
>>  1945.
>> 
>> The chief feature of Bretton Woods was an obligation for each country to 
>> adopt a monetary policy that maintained the exchange rate of its currency 
>> within a fixed value.
>> 
>> The system collapsed when the US suspended convertibility from dollars to 
>> gold. This created the unique situation whereby the US dollar became the 
>> "reserve currency" for the other countries within Bretton Woods.
>> 
>> This column originally appeared in the Irish Times.
>> 
>> <http://www.counterpunch.org/chomsky10122008.html>