Thursday, February 19, 2015

The Collapse of Capitalism and the Rise of Military Dictatorships
Going Quietly Into the Night
 
By
 
Walter Libby

 
Marx begins the Communist Manifesto with: "The history of all hitherto existing society is the history of class struggles." What follows is the gist.
 
The bourgeoisie cannot exist without constantly revolutionizing the instruments of production, and thereby the whole relations of society...constant revolutionizing of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the bourgeois epoch from all earlier ones.. The need of a constantly expanding market for it products chase the bourgeoisie over the whole surface of the globe . It must nestle everywhere, settle everywhere, establish connections everywhere...All established national industries have destroyed or are daily being destroyed.  The are dislodged by new industries  whose introduction becomes a life and death question for all civilized nations, by industries that no longer work up indigenous raw material, but raw material drawn from the remotest zones; industries whose products are consumed, not only at home, but in every quarter of the globe. In place of the old wants, satisfied by the production of the country, we find new wants, requiring for their satisfaction the products of distant lands and climes. In place of the old local and national seclusion and self-sufficiency, we have intercourse in every direction, universal inter-dependence of nations... The bourgeoisie, by the rapid improvement of all instruments of production, by the immensely facilitated means of communication [then the telegraph, now the internet], draws all, even the most barbarian, nations into civilization. The cheap prices of its commodities are the heavy artillery with which it batters down all Chinese walls, with which it forces the barbarians' intensely obstinate hatred of foreigners to capitulate. It compels all nations, on pain of extinction, to adopt the bourgeois mode of production; it compels them to introduce what it calls civilization into their midst, i.e., to become bourgeois themselves, In one word, it creates a world after its own image... It is enough to mention the commercial crises that by their periodical return put on trial, each time more threateningly, the existence of the entire bourgeois society... In these crises there breaks out an epidemic that, in all earlier epochs, would seemed an absurdity--the epidemic of overproduction...   society suddenly finds itself put back into a state of momentary barbarism; it appears as if a famine, a universal war of devastation had cut off the supply of every means of subsistence, industry and commerce seems to be destroyed; and why? Because there is too much civilization, too much means of subsistence, too much industry, too much commerce... And here it becomes evident that the bourgeoisie is unfit to be the ruling class in society... It is unfit to rule because it is incompetent to assure an existence to its slave within this slavery, because it cannot help letting him sink into such a state that it has to feed, instead of be fed by him. 
 
Eventually unemployment reaches a critical mass, the workers rise up, overthrow the existing order, seize the mode of production, establish a dictatorship of the proletariat that oversees the transition from socialism (getting ahold of the productive reins; where the dictate is: from each according to ability to each to work performed) to communism: from each according to ability to each according to need.
 
It's ironic that it was the lure of Chinese cheap labor that would crumble the walls of capitalism as  multinationals driven not so much by their quest for new markets, but by competition as they chased each other across the globe in a race to the bottom for cheaper labor, fewer regulations, and lower taxes. and when they nestled in communist China, they changed the dynamics of Marxism in a number of ways.
 
As multinationals offshored manufacturing to communist China, they became the so-called factory to the world. The  China price was rising unemployment in their respective countries. The contradiction is obvious. Centralizing manufacturing in China has changed the dynamics of Marxism, but the end result is the same; as the Untied States and Europe demand less from China, they in turn demand less from them; the phenomenon feeds on itself and the global economy collapses. But, there is always a but.

In the United States those lost jobs were masked by a booming dot.com bubble. With its bust the Fed lowered rates, a Republican Congress when on a spending spree[swapping]principle for  power, while those low interest rates led to a surge in residential construction and a housing bubble. As prices inflated there was a rush of cash-out refinancing that financed the purchase of everything from electronic gadgets, to home remodeling to new cars and trucks. Quite the stimulus package. When the bubble popped, and prices plummeted they found themselves underwater, and so too the nation; the financial system crashed plunging the nation and world into the Great Recession. In the United States the response was Keynesianism; fiscal and monetary stimulus.

Obama's Recovery Act and the Fed's rock bottom interest rates stimulated demand (here and in China) that led to a modest recovery; those too discouraged to look for work (the participation rate) are not counted, giving a positive spin to the unemployment rate. And even factoring that out, it's not all that rosy; most of the new jobs are low-wage or part-time; wages continue to stagnate; too many live from paycheck  to paycheck, receive food stamps, go deeper in debt while robots continue to take their share of jobs. Altogether, not much bang for the buck.

In 2008 the federal debt was ten trillion dollars, today it stands at 18 trillion and counting.
Since it's an ongoing trend, we can assume that we went in hock somewhere in the neighborhood of another four trillion dollars. However, our debt is just a symptom; it is directly linked to our rising trade deficits that are directly linked to globalism.  As workers lose jobs to the global economy and offshoring, the government loses revenue; the easy way out is to borrow money. The debt is a problem, it's not payable. So why would China, (and others) invest in U.S. bonds? If they cashed in dollars for the Yuan it would strengthen their currency; exports would become more expensive and imports less so. It's a form of currency warfare. Nonetheless, it does prop up our government. But given the contradictions inherent in capitalism, its underlying  message is clear; we are living on borrowed money and borrowed time.

Meanwhile, while Japan and Europe are struggling, global concern is primarily focused on slowing  growth in China. Putting that into perspective; when Europe and the U.S. fell into recession, China's exports plummeted and they responded with their own stimulus package: massive investment in infrastructure and new cities putting millions to work while at the same time demanding more from the global economy feeding back to China; its exports surged.  However, exports peaked and began a bumpy decline with slight uptick as the U.S.  began to recover from the recession.

Mar2013RBSchartChina2

But as the global economy continues to slow, China's exports are again declining.  Those new investments are the main driver of its economy, and without them the global economy could have arguably collapse. And herein lies the anxiety

China is currently demanding less from global commodity markets, signaling a slowdown in investments (its stimulus bag is pretty much empty). The fear is that their investments in new cities created a  housing bubble (the development of so-called ghost cities) and when it pops, 50 million migrant workers lose their jobs as well as those in upstream and downstream industries (such as steel, cement, glass, furniture and appliances) and the service sector.

But to be clear, it's not housing bubble, there is a population restraint on the number of new cites that can be built. It is not a matter of prices or occupancy, it's a matter of limits, and when they reach those limits, China demands less from world, and world demands less from China. Are we witnessing the collapse of Capitalism? If so, how does it play out?

Communists China is somewhat a misnomer; from a historical perspective it's better to say socialist China, that stage where they captured the means of production. And having captured said means, along with millions of empty houses and empty apartments, they are ready to move to communism; from each according to ability, to each according to need.  As far as resources go, they have a lock on Africa. So what happens  in the rest of the industrialized world where the existing order is in chaos?

Looking at the  United States stock markets crash, banks fail, unemployment reaches a critical mass and general chaos leads to a break in the food chain and supermarkets empty out. There is no revolution, in cities, towns and suburbs a war of all against all breaks out. What happens next? It is either martial law or the federal government taking total control under the provisions of the Defense Production Act of 1950.  Given the track record of our leaders martial law looks like a given.

Following World War II was the golden age of capitalism during which time democratic capitalism was the paradigm, the welfare state working in harmony with capitalism. It was good times, there was a lot of demand as the world rebuilt after the war.  Yet as Japan, Germany, along with the Asian Tigers, rebuilt their nations, they emerged as formidable competitors.

As a consequence, beginning in 1976, America began running continuous and increasing trade deficits and with them decreasing prosperity and increasing private and national debt. The Republicans reaction was to become reactionary.  Under Reagan the assault against unions and the Federal government began anew. With The Great Recession they responded by becoming even  more reactionary. Under Obama it reached a fever pitch bashing all things Obama; obstructing anything that might aid the economy (albeit they do champion another leg of the Keystone pipeline) and so help Obama.

That's not to say Democrats are blameless. Bill Clinton, in his 1996 State of the Union Address, told the Nation the era big government is over. As a Third Way Democrat he embraced neoliberalism and deregulation (signing into law the repeal of the Glass-Steagall Act).

Essentially, Clinton  threw in the towel, our faith and fate was now firmly in the hands of the marketplace god (the all mighty buck); the bourgeoisie were firmly back in power. There were no barriers to trade, no barriers to multinationals , and no barriers for China.

Pat Buchanan called this The Great Betrayal and countered it with his views on trade. Challenging capitalism--while not putting in its proper historical (Marxist) perspective--is an exercise in futility made worse as he sought  his base in the core conservative realm; seemingly a contradiction that weakened his message: we are a Nation at risk.

And notwithstanding the current recovery, we are still at risk. And Obama's  version of its morning in America again belies that risk.

The military can't be too happy; fighting against the communist during the Vietnam war, only to see the wholesale shifting of wealth to communist China. Then there is the veiled warning in The Origins of the Military Coup of 2012; either you do your job, or we'll do it for you.

Certainly here is the economic rationale for marshal law. And those that deny peak oil (and so too peak fracking) and global warming only strengthen their case. And if they take on the responsibility that comes with martial law, they have to make their case to nation.

First, they have to maintain order (that's a given) while  assuring the nation their first priority is getting food back on their tables. At same time working to get utilities back on line, getting money in your pocket by the taking  over the Treasury (printing press) insuring your Social Security and unemployment benefits, so you can pay for your food, rent, and utilities. Now its time to put you to work. Under martial law we are all conscripts now, and following their orders, we'll accomplish what free market democracy could not: re-industrialization, securing our energy future, and full employment.

So, before that happens, what can we do? Become a prepper. I don't mean running for the hills type of survivalist, but the home survivalist; stockpiling food, water and general preparation. While you are preparing, so are the wealthy.

However, instead of peeing themselves and running for the hills, the capitalists might think about saving capitalism.

Multinationals in China are feeling a chill as they find their opportunities restricted while intellectual property theft is a huge problem and yet they still hang on despite the looming rise of communist China. So why not bring manufacturing back home. They are sitting on tons of cash; either they use it or they lose it. Seems simple enough. Re-industrializing our nation is the key to their survival as well as ours. Of course that means doing so ahead of market forces.  Could happen--the capitalist saving capitalism--there is the tendency to man up when your back is against the wall.

A good percentage of Americans feel the nation is on the wrong track; the above scenario could be that wrong track and I put it forward for two reasons: one because it's plausible, and two understanding the risk we can rise up as a nation and meet it. So, consider me a poll taker. Feel at risk, click that follow button and see what happens. Or don't click it and see what happens.