By Andre Brochu

Krugman is always good at peddling his snake oil.

There is no Scandinavian socialism and the universal welfare states in Sweden and
Denmark are at the morgue waiting for the coroners to go to work.
If you live in Scandinavia you can wonder about Krugman’s sources of data and analysis. There is more substance in good SciFi.

Any degree of Keynesianism to promote employment and public investment has
been reduced drastically since the Social Democrats joined the bourgeois parties
in promoting membership and integration in the EU. The false promise of a Social
EU has proven to be a lie before and after the last crisis. The EU is a neoliberal
project since its infancy with the Treaty of Rome. The so-called freedoms are for capital
and finance. Some people from the establishment have woken up. However, it is a little
late. Rightwing xenophobic populists have reaped a bumper crop of voters in the lastest EU
elections since their false but down to earth arguments and propaganda have
convinced many of the unemployed, frustrated and scared electorate. The Social Democrats
and the parliamentary left don’t address economically or ideologically the problems
of the unemployed, underemployed, and youth who face at best job insecurity and
an inability even when working to gain basic social benefits.

The late Peter Cohen wrote cogently on what was developing in Scandinavia
twenty years ago in an article in Monthly Review which is still relevant :
Sweden: The Model That Never Was by Peter Cohen
1994, July-August, Volume 46, Monthly Review
This article is essential to any analysis and debunking of Krugman’s mythology.

Before the referendum for Sweden’s EU membership in 1994 the CEO of Volvo Per
Gyllenhammar delineated the goal of the EEC/EU : long-term low wage increases,
reduced taxation, dismantling of the public sector and reduced welfare benefits.
The Swedish Rockefeller, Peter Wallenberg, said that an EEC/EU membership would result in the most dramatic changes in Sweden in the last hundred years. He drew the same conclusions as Gyllenhammar adding that public services would be privatized to a great degree. Today we have an underfinanced public sector with dire consequences for public health, employment, education, housing and infrastructure.

In conclusion there is at least a burgeoning protest movement against the EU-USA Free Trade Treaty (TTIP/TAFTA) throughout the EU. There should be Transatlantic cooperation on this
issue.

Krugman is part of the problem and not part of the solution. Let him sleep on like Rip Van
Winkle.

http://www.alternet.org/economy/krugman-how-american-capitalism-fails-and-northern-european-socialism-succeeds-job-creation

AlterNet / By Janet Allon

And why that’s not a story the mainstream media likes to tell.

May 26, 2014 |

Paul Krugman wrote his column this morning in the New York Times from Europe, a place which—conservatives like Paul Ryan would like you to believe—demonstrates the complete failure of the welfare state. That’s because, as Krugman points out, “Our political discourse is dominated by reverse Robin-Hoodism — the belief that economic success depends on being nice to the rich, who won’t create jobs if they are heavily taxed, and nasty to ordinary workers, who won’t accept jobs unless they have no alternative.”

France, a country that the American media and conservatives particularly love to bash, is having particular success in employment rates. Krugman reports this “startling, little-known fact: French adults in their prime working years (25 to 54) are substantially more likely to have jobs than their U.S. counterparts.”

Hmmm. There’s a story you won’t hear told in the mainstream media.

He continues:

It wasn’t always that way. Back in the 1990s Europe really did have big problems with job creation; the phenomenon even received a catchy name, “Eurosclerosis.” And it seemed obvious what the problem was: Europe’s social safety net had, as Representative Paul Ryan likes to warn, become a “ hammock” that undermined initiative and encouraged dependency.

But then a funny thing happened: Europe started doing much better, while America started doing much worse. France’s prime-age employment rate overtook America’s early in the Bush administration; at this point the gap in employment rates is bigger than it was in the late 1990s, this time in France’s favor. Other European nations with big welfare states, like Sweden and the Netherlands, do even better.

What about young people? Doesn’t America, with all of its problems, still kick France’s ass when it comes to the employment rate of those younger than 25. Yes, Krugman concedes. Then he wonders if that is something we should be bragging about, since it is certainly due in part to the fact that French students receive a lot more financial aid for their education than American students do, so they are not immediately saddled with huge debt to work off, much less work their way through school.

“Is that a bad thing”” Krugman wonders.

Us too.

Also, the French take more vacations and retire earlier than we do.

How horrible! Who would want to live in a place like that.

But, getting back to Krugman’s main point: “On the core issue of providing jobs for people who really should be working, at this point old Europe is beating us hands down despite social benefits and regulations that, according to free-market ideologues, should be hugely job-destroying.”

In fact, he writes, our “cruel experiment” in depriving so-called lazy unemployed Americans of their long-term benefits so they will get off their asses and look for work has been an abject failure. Did people in terrible straits find jobs?

“No — not at all,” Krugman replies. “Somehow, it seems, the only thing we achieved by making the unemployed more desperate was deepening their desperation.”

Will people listen to the European example? Krugman is doubtful. He concludes:

I’m sure that many people will simply refuse to believe what I’m saying about European strengths. After all, ever since the euro crisis broke out there has been a relentless campaign by American conservatives (and quite a few Europeans too) to portray it as a story of collapsing welfare states, brought low by misguided concerns about social justice. And they keep saying that even though some of the strongest economies in Europe, like Germany, have welfare states whose generosity exceeds the wildest dreams of U.S. liberals.

– from Zoltan Zigedy is available at:
http://zzs-blg.blogspot.com/

In a country where sports stars are offered as role models and actors aspire to political office, celebrity intellectuals are a rarity. Thus, the meteoric rise of economist Thomas Piketty to celebrity status comes as a surprise. The English language edition of his book, Capital in the Twenty-First Century, sold out swiftly while reaching best-seller stature, a unique achievement for a book originating from an academic press. Possessing charm, wit, and youthful good-looks, Piketty toured the US, generating demand from myriad talk-show hosts and magazine interviewers.
A month before its release, sensing that Piketty had something fresh to offer, I wrote:

Piketty’s argument is a welcome antidote to the paucity of explanatory theory presented by the liberal and social democratic punditry. The controversy stirred by Piketty’s argument well before its English-language availability is a sure sign that he offers something beyond the conventional… Closer examination of Piketty’s interesting thesis must await publication of the book. (ZZ’s Blog, Tuesday, February 11, 2014)

Little did I suspect that Piketty-mania would spawn a sustained discussion penetrating the highest reaches of the mass media. Piketty’s argument has shattered the navel-gazing of academic economists, while demonstrating an intuitively obvious fact in a way that even the most thick-headed pundit can understand: capitalism produces and reproduces inequality. Unfortunately, Piketty timidly hesitates to draw an equally compelling conclusion: the only way to eliminate unjust inequality is by eliminating capitalism. It’s as though a researcher has discovered the cause of cancer, but is reluctant to endorse its cure.

My own thoughts on Piketty’s provocative, stimulating book are posted on Philosophers for Change.

The Piketty phenomenon overshadows what may well be an even more provocative, suggestive study by two US professors, Martin Gilens and Benjamin I. Page. Their paper, Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens (forthcoming in Perspectives on Politics), offers results that could shake the complacency of political theory in much the way that Piketty’s book rocked bourgeois economics…. To read the rest of the article, go to: http://zzs-blg.blogspot.com/

By James Thompson

As we anxiously await our annual peptalk by the president which is usually referred to as the “State of the Union” speech, many commentators and pundits are already producing vast quantities of hot air in an effort to excite the audience. However, in spite of their best efforts, many in the audience are frantically searching for something interesting to watch and give them hope or at least entertain them on TV tonight.

Inequality is a problem

On January 25, 2014, our learned professor of economics, Paul Krugman, wrote a Keynesian analysis of our current economic situation “Obama should focus on rising inequality.” It is his peptalk in preparation for the supreme peptalk. He starts with a quote from Keynes from 1936:

“The outstanding faults of the economic society in which we live are its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and incomes.”

Prof. Krugman instructs us that “If, as has been widely reported, Pres. Barack Obama devotes much of his state of the union address to inequality, everyone should be cheering him on.”

He predicts instead that the “usual suspects on the right will, as always when questions of income distribution comes up, shriek ‘Class warfare!'” He also predicts that more sober voices will argue that jobs should take center stage in the grand follies of the state of the union address.

Prof. Krugman goes on to argue that inequality “help set the stage for our economic crisis, and that the highly unequal distribution of income since the crisis has perpetuated the slump, especially by making it hard for families in debt to work their way out.” He notes that high unemployment has destroyed workers’ bargaining power and has become a source of rising inequality and stagnating incomes “even for those lucky enough to have jobs.”

Prof. Krugman fails to explain these and other mysteries to the huddled masses clutching their newspapers or iPads reading his often repeated lines. He fails to explain that high unemployment is detrimental to the condition of the working class for many reasons. When unemployment is high, this means that the working class has fewer jobs and that the distribution of these jobs will be uneven. As a result, workers have overall less purchasing power. When workers purchase fewer goods and services, many companies choose to downsize or close in order to preserve capital which results in more loss of jobs. There is a spiral effect to this economic cyclical activity which eventually leads to another crisis. The crisis comes about when the amount of goods available for purchase substantially exceeds the amount of goods purchased. Economic crises are crises of overproduction as clearly demonstrated by Karl Marx in his scientific study of capitalism “Capital.”

Why is there inequality?

Back to the issue of “inequality”, no one is posing the crucial question which should be President Obama’s major challenge tonight “Why is there inequality?”

Marx also proved in his work on capitalism that the aim of capitalists is to produce continuing increasing profits. Profits are based on the amount of wealth extracted by the capitalist from the wealth produced by the worker. In other words, when a worker works, he/she is paid a wage by the capitalist which is usually less than the wealth she/he produces. The capitalist steals the difference between the amount of wealth produced and the amount paid out in wages and this is the basis of profits. In order for profits to increase, wages must fall. This is the basis of the inequality between the capitalist and the worker.

In 1936, another economist not well known to people in the US wrote about another aspect of inequality under capitalism. On page 213 of his book “Political Economy,” A. Leontiev wrote in a section entitled “The law of uneven development under imperialism”:

“In the capitalist system individual enterprises, individual branches of industry and individual countries develop unevenly and spasmodically. It is evident that with the anarchy of production prevailing under capitalism and the frenzied struggle among the capitalists for profits, it cannot be otherwise.
This unevenness of development is manifested with particular acuteness in the epoch of imperialism, and becomes a decisive force, a decisive law.”

This uneven economic development also contributes to inequality.

Leontiev’s work is based on the work of Lenin, particularly “Imperialism, the highest stage of capitalism.”

While Keynes identified inequality as a problem, Leontiev, Lenin and Marx understood the reason for it.

So, we can expect an upbeat view of inequality from the president. We will be likely to hear of economic reforms to address the problem which have been trotted out repeatedly over the history of capitalism. Anything threatening in the slightest way the position of the wealthy will be hysterically attacked by their right wing lapdogs. The left-wing lapdogs will defend the meaningless reforms tossed out by the president and will attempt to spin the reforms as a breakthrough. Even if the reforms were meaningful, it must be remembered that any reforms can and will be taken back by the ruling class when it is convenient for them.

However, such reforms are like spraying perfume on a pile of manure in an effort to make it smell better. The reality is that instead of improving the smell of the manure, it will actually make it smell worse. So it goes with most reforms with the exceptions of Social Security, Medicare and Medicaid as well as the Veterans Administration.

How can inequality be fixed?

What will fix the problem of inequality is another question for the president to answer tonight. One answer would be to throw out the pile of manure, i.e. capitalism itself. Unfortunately, there is a lot of manure to clean out and advancing the economic system towards socialism will take time. In the meantime, meaningful reforms could be proposed and fought for through the legislative process. Some examples of meaningful reforms might include: 1. Universal health care. This would be a true job creator and at the same time reduce corporate waste. It would be highly beneficial to workers and this has been recognized by many elements among organized labor which have endorsed it. 2. Legal services for all. If all people had equal access to quality legal representation, mass incarceration would be reduced. This would also be a job creator. 3. Free higher education for all. The exorbitant costs of higher education for students these days contributes to inequality. 4. Reduce the military budget by 75% and transfer the savings to programs that benefit people such as 1, 2, and 3 above. 5. Public funding for the arts, culture and sports should be dramatically increased. This would also be a job creator. 6. Inheritance should be made illegal except in the case of permanently disabled dependents. Estates of deceased persons should become the property of all the people. 7. Tax incomes above $500,000 a year at a 90% level. 8. Tax the profits of private corporations at a 75% level. Severely penalize any individual or corporation caught transferring funds overseas to avoid US taxes. 9. Severely penalize any individual or corporation caught moving industries overseas in order to chase low wages. 10. Fund meaningful unions and severely penalize any individual or corporation caught attempting to bust any union. 11. Enact and enforce the Employee Free Choice Act. 12. Enact and enforce legislation to criminalize and severely penalize discrimination in any form, e.g. racism, sexism, ageism, classism, etc. 13. Close all overseas military bases to include Guantánamo. 14. Raise the minimum wage to $20 an hour. 15. Long-term care for all. Provide quality assisted living and nursing home care to all people. 16. Comprehensive and equitable immigrants’ rights to include a quick, easily accessible application process for full citizenship. 17. Decriminalize petty drug use and provide comprehensive drug rehabilitation services for all.

These programs would help reduce the problem of inequality but until the manure is thrown out, inequality will continue to be a problem.

PHill1917@comcast.net

by Zoltan Zigedy is available at:
http://zzs-blg.blogspot.com/

Co-ops– cooperative economic enterprises– have been embraced by significant groups of people at different times and places. Their attraction precedes the heyday of industrial capitalism by offering a means to consolidate small producers and take advantage of economies of scale, shared risk, and common gain.

At the advent of the industrial era, cooperatives were one of many competing solutions offered to ameliorate the plight of the emerging proletariat. Social engineers like Robert Owen experimented with cooperative enterprises and communities.

In the era of mass socialist parties and socialist construction, cooperatives were considered as intermediate steps to make the transition from feudal agrarian production towards socialist relations of production.

Under the capitalist mode of production, co-ops have filled both employment and consumption niches deferred by large scale capitalist production. Economic activities offering insufficient profitability or growth have become targets for cooperative enterprise.

In theory, cooperatives may offer advantages to both workers and consumers. Workers are thought to benefit because the profits that are expropriated by non-workers in the capitalist mode of production are shared by the workforce in a cooperative enterprise (less the present and anticipated operating expenses and investments, of course). Many argue as well that the working conditions are necessarily improved since workplace decisions are arrived at democratically absent the lash associated with the profit-mania of alienated ownership (though little attention is paid to the consequences for productivity and competitiveness against capitalist enterprises).

Consumers are said to benefit when they collectively appropriate the retail functions normally assumed by privately owned, profit-driven outlets. Benefit comes, on this view, by purchasing from wholesale suppliers, collectively meeting the labor requirements of distribution, and enjoying the cost-savings from avoiding a product markup (little attention is paid to limitations on participation dictated by class, race, or gender; the wholesale quantity discounts enjoyed by capitalist chains are also conveniently overlooked).

A case can also be made for the cooperator’s dedication to quality, safety, and health- promotion.

In reality, cooperatives in the US are largely indistinguishable from small businesses. Like small private businesses, they employ few people and rely heavily upon “sweat equity” for capitalization. Like other small businesses, US cooperatives operate on the periphery of the US economy, apart from the huge monopoly capitalist firms in manufacturing, service, and finance.

Cooperatives as a Political Program

Since the demise of the Soviet Union and Eastern European socialism, many on the US Left have rummaged for a new approach to the inequalities and injustices that accompany capitalism. Where more than a decade of anti-Communist purges had wrung nearly all vestiges of socialist sympathy from the US psyche, the fall of the ludicrously-named “Iron Curtain” found Leftists further distancing themselves from Marxian socialism. Hastily interning the idea of socialism, they reached for other answers.

It is unclear whether this retreat was actually a search for a different anti-capitalist path or, in reality, grasping an opportunity to say farewell to socialism.

In recent years, several Leftists, “neo-Marxists”, or fallen Marxists have advocated cooperatives as an anti-capitalist program. Leading advocates include the Dollars and Sense collective centered around the University of Massachusetts, Amherst, GEO (Grassroots Economic Organizing), Professor Gar Alperovitz, Labor Notes, United Steel Workers of America, and media Marxist-du-jour, Professor Richard Wolff. Some are organizing around the idea of a “New Economy” or a “Solidarity Economy”, with cooperative enterprises as a centerpiece.

Now coops are not foreign to Marxist theory. After World War I, the Italian government sought to transfer ownership of unused land from big estates, latifondi, on to peasants, especially veterans. As much as 800,000 hectares were thus passed on to poor peasants. Through this process and land seizures, the number of smallholders increased dramatically. Socialists and Communists urged the consolidation of these holdings into collectives, agricultural cooperatives. Certainly more than 150,000 hectares ended up in cooperatives. In those circumstances, the rationale was to increase the productivity, to save the costs, to enhance the efficiency of peasant agriculture in order to compete with the large private estates. Cooperatives were not seen as an alternative to socialism, but a rational step away from near feudal production relations toward socialism, a transitional stage.

Likewise, in the early years of the Soviet Union, Communists sought to improve small-scale peasant production by organizing the countryside into collective farms, producers’ cooperatives. They saw cooperative arrangements as rationalizing production and, therefore, freeing millions from the tedium and grind of subsistence farming and integrating them into industrial production. Through mechanization and division of labor, they expected efficiency and productivity to grow dramatically, speeding development and paving the way for socialism.

Again, cooperative enterprises counted as an intermediary for moving towards socialist relations of production. Thus, Marxists see the organization of cooperatives as a historically useful bridge between rural backwardness and socialism.

But modern day proponents of cooperatives see them differently.

“The ‘evolutionary reconstructive’ approach is a form of change different not only from traditional reform, but different, too, from traditional theories of ‘revolution’” says Gar Alperovitz of cooperatives and other elements of the “Solidarity Economy” (America beyond Capitalism, Dollars and Sense, Nov/Dec, 2011). Like most proponents, Alperovitz sees cooperatives as pioneering a “third way” between liberal reformism and socialist revolution. However, a minority of advocates (Bowman and Stone, “How Coops can Change the World”, D&S, Sept/Oct, 1998, for example) see cooperatives as the “best first step towards that goal [of a planned, democratic world economy]. They suggest that the correct road is through “spreading workplace democracy” and on to socialism.

Whether postured as a “third way” or a step towards socialism, it is difficult to get a clear picture of the extent and success of the cooperative movement; it is equally challenging to gather a sense of how it is suppose to function in a capitalist economy.

As for numbers, Alperovitz (“America beyond Capitalism”, D&S, Nov/Dec, 2011) muddies the waters by citing the numbers of “community development corporations” and “non-profits” (Alperovitz, 2011) as somehow strengthening the case for cooperatives. The fact that community development corporations have wrested control of neighborhoods from old-guard community and neighborhood groups and embraced developers and gentrification causes him no distress. Of course “non-profits” count as an even more dubious expression of a solidarity economy. In a city like Pittsburgh, PA, mega-non-profits remove 40% of the assessed property from the tax rolls. These non-profits not only evade taxes, but divide enormous “surpluses” among super-salaried executives. They beggar funding from tax shelter trusts and endowment funds, completing the circle of wink-and-a-nod tax evasion. Of course there are, as well, thousands of “non-profits” that pursue noble goals and operate on a shoestring.

Alperovitz alludes to credit unions as perhaps sharing the spirit of cooperation without noting the steady evolution of these once “third way” institutions towards a capitalist business model. Insurance companies also share this evolution, but they are too far down this path of transition to capitalist enterprise to be credibly cited by Alperovitz.

Alperovitz leaves us with “…11,000 other businesses that are owned in whole or part by their employees.” In this slippery total of whole or partial worker ownership are included ESOPs– Employee Stock Ownership Programs, a touted solution to the plant closing surge that ripped through the Midwest in the 1980s. Alperovitz pressed vigorously for ESOPs in the steel industry in the 1980s as he does cooperatives today. When asked to sum up their track record, one sympathetic consultant, when pressed, said: “I don’t think its been a real good record of success. Some have actually failed…” (Mike Locker, “Democracy in Steel?”, D&S, Sept/Oct, 1998). But we get no firm number for cooperatives in the US.

Another advocacy group for cooperatives gave a more candid picture of the cooperative movement in the Sept/Oct, 1998 issue of Dollars and Sense (“ESOPS and Coops”). A study by the Southern Appalachian Cooperative Organization claimed that there were 154 worker-owned cooperatives employing 6,545 members in the US. In sixty percent of the 154, all workers were owners. Median annual sales were $500,000 and 75 percent had 50 or fewer workers. Twenty-nine percent of the coops were retail, twenty-eight percent were small manufacturing, and twenty-three per cent food related businesses.

Interestingly, the same article claims that there were approximately 11,000 ESOPs in 1988 (source: National Center of Employee Ownership). If we take Alperovitz’s 2011 claim seriously, there has been little growth in the ensuing thirteen years of “…businesses that are owned in whole or part by their employees…”.

From this profile, we can conclude that cooperatives in the US are essentially small businesses accounting for a tiny portion of the tens of millions of firms employing less than 50 employees. As such, they compete against the small service sector and niche manufacturing businesses that operate on the periphery of monopoly capitalism. Insofar as they pose a threat to capitalism, they only threaten the other small-scale and family owned businesses that struggle against the tide of price cutting, media marketing, and heavy promotion generated by monopoly chains and low-wage production. They share the lack of capital and leverage with their private sector counterparts. Cooperatives swim against the tide of monopolization and acquisition that have virtually destroyed the mom and pop store and the neighborhood business.

Some of the more clear-headed advocates acknowledge this reality. Betsy Bowman and Bob Stone concede the point: “…Marx argued in 1864 that capitalists’ political power would counteract any gains that coops might make. This has proven true! When capitalists have felt threatened by cooperatives, they have conducted economic war against coops by smear campaigns, supplier boycotts, sabotage, and, especially, denying credit to them.” (Bowman and Stone, D&S, Sept/Oct, 1998).

Mondragon

Until recently, cooperators and their advocates had one very large arrow in their quiver.

When pressed on the apparent weakness of cooperatives as an anti-capitalist strategy, they would counter loudly: “Mondragon!”.

This large-scale network of over 100 cooperative enterprises based in Spain seemed to defy the criticisms of the cooperative alternative. With 80,000 or more worker-owners, billions of Euros in assets and 14 billion Euros in revenue last year, Mondragon was the shining star of the cooperative movement, the lodestone for the advocates of the global cooperative program.

But then in October, appliance maker Fagor Electrodomesticos, one of Mondragon’s key cooperatives, closed with over a billion dollars of debt and putting 5500 people out of work. Worker-employees lost their savings invested in the firm. Mondragon’s largest cooperative, the supermarket group Eroski, also owes creditors 2.5 billion Euros. Because the network is so interlocked, these setbacks pose long term threats to the entire system. As one worker, Juan Antonio Talledo, is quoted in The Wall Street Journal (“Recession Frays Ties at Spain’s Co-ops”, December 26, 2013): “This is our Lehman moment.”

It is indeed a “Lehman moment”. And like the Lehman Bros banking meltdown in September of 2008, it makes a Lehman-like point. Large scale enterprises, even of the size of Mondragon and organized on a cooperative basis, are susceptible to the high winds of global capitalist crisis. Cooperative organization offers no immunity to the systemic problems that face all enterprises in a capitalist environment. That is why a cooperative solution cannot constitute a viable alternative to capitalism. That is why an island of worker-ownership surrounded by a violent sea of capitalism is unsustainable.

The failures at Mondragon have sent advocates to the wood shed (see www.geonewsletter.org ). Leading theoretical light, Gar Alperovitz, has written in response to the Mondragon blues: “Mondragón’s primary emphasis has been on effective and efficient competition. But what do you do when you are up against a global economic recession, on the one hand, or radical cost challenges from Chinese and other low-cost producers, on the other?”

What do you do? Shouldn’t someone have thought of that before they offered a road map towards a “third way”? Are “global economic recessions” uncommon? Is low cost production new? And blaming the Chinese is simply unprincipled scapegoating.

Alperovitz goes on: “The question of interest, however – and especially to the degree we begin to face the question of what to do about larger industry – is whether trusting in open market competition is a sufficient answer to the problem of longer-term systemic design.” Clear away the verbal foliage and Alperovitz is admitting that he never anticipated that open market competition would snag Mondragon. Did he think that Fagor sold appliances outside of the market? Did he think that Mondragon somehow got a free pass in global competition?

Of course the big losers are the workers who have lost their jobs and savings. It would be mistaken to blame the earnest organizers or idealistic cooperators who sincerely sought to make a better, more socially just workplace. They gambled on a project and lost. Of course social justice should not be a gamble.

The same sympathy cannot be shown for those continuing to tout cooperatives as an alternative to capitalism. If you want to open small businesses (organized as cooperatives), be my guest! But please don’t tell me and others that it’s somehow a path beyond capitalism.

Comrades and friends: It’s impossible to be anti-capitalist without being pro-socialist!

Zoltan Zigedy
zoltanzigedy@gmail.com

By James Thompson

On January 9, 2014 the bourgeois liberal Princeton faculty economist Paul Krugman, who completed the best US education money can buy at MIT and Yale, wrote an op-ed piece for the New York Times entitled “The War over Poverty.” http://www.nytimes.com/2014/01/10/opinion/krugman-the-war-over-poverty.html?_r=0out  In the piece, Prof. Krugman discusses the fallacious received view in this country and throughout the other capitalist controlled countries that the plight of the poor is due to some vague fault of the poor. Admirably, Prof. Krugman argues against this insane attempt to blame the poor.

He goes on to argue that low income people in the US “are much healthier and better nourished than they were in the 1960s” and ties this to the success of anti-poverty programs initiated 50 years ago. He concludes “the problem of poverty has become part of the broader problem of rising income inequality, of an economy in which all the fruits of growth seem to go to a small elite, leaving everyone else behind.”

The article elucidates the differences between liberals and conservatives on the issue of poverty. He characterizes conservatives as “callous and mean-spirited.” He sums up the conservative position as “government is always the problem, never the solution; they treat every beneficiary of a safety net program as if he or she were ‘a Cadillac driving welfare queen.’ And why not? After all, for decades their position was a political winner, because middle-class Americans saw ‘welfare’ is something that Those People got but they didn’t.”

He characterizes the liberals’ position as “Meanwhile, progressives are on offense. They have decided that inequality is a winning political issue. They see war-on-poverty programs like food stamps, Medicaid, and the earned income tax credit as success stories, initiatives that have helped Americans in need-and should be expanded. And if these programs enroll a growing number of Americans, rather than being narrowly targeted on the poor, so what?”

He draws the conclusion “So guess what: On its 50th birthday, the war on poverty no longer looks like a failure. It looks, instead, like a template for a rising, increasingly confident progressive movement.”

Although some of Prof. Krugman’s arguments are not completely without merit, he still remains a well-paid cheerleader for bourgeois liberal “safety net” programs. We must concede that such programs as Social Security, Medicare and Medicaid have benefited a great number of people across all economic classes. Even people among the wealthiest classes have benefited from “safety net” programs because they shamelessly shuffle their poorer loved ones off to these programs so they don’t have to pay for their subsistence. The same people hypocritically argue that “safety net” programs should be eliminated. Some doctors even argue that Medicaid and/or Medicare should be eliminated while they bill their patients’ Medicaid and/or Medicare.

What Prof. Krugman and his bourgeois liberal readers fail to recognize is that the US government functions to protect the interests of the capitalists with little or no regard to the interests of the people of this country. He makes a swift tangential reference to the “class war” but fails to recognize that the class war is raging in this country. Even Warren Buffett has warned us that the capitalists are winning the class war with little opposition from the people.

He also fails to recognize that interest among the people in alternative socioeconomic systems such as socialism or communism has grown remarkably recently. Since he does not recognize this reality, he cannot make the connection that income inequality leads to such tendencies.

Although the struggle between liberals and conservatives is real, Prof. Krugman does not seem to recognize that as long as the US government functions to protect the interests of the wealthy, reforms such as the “safety net” programs mentioned above will be under constant attack. And they can be eliminated by the government at any time if it is deemed to be in the interest of the capitalists.

Prof. Krugman also fails to recognize and factor in the fact that the most important interest of the capitalists is to constantly expand profits. Prof. Krugman has also failed to recognize that the necessity for capitalists to constantly expand their profits has led to an era of unending imperialist wars of occupation across the globe. Prof. Krugman fails to recognize that these wars have been conducted for the benefit of the capitalists so that they can continue to expand their profits. He also fails to recognize that the taxpayers have spent far more of their hard-earned money on the wars than the capitalists have made in expanded profits. It should be noted that throughout history capitalist governments have repeatedly spent taxpayer money to protect capitalist profits overseas and the money they spend to protect the profits exceeds the profits themselves.

In short, the Bush and Obama administrations have spent an extraordinary amount of money on killing working people in foreign countries to protect the profits of the capitalists in those countries. Unfortunately, the working man in the US foots the bill. It should be noted that the money expended is nothing compared to the loss of human life as well as permanent physical and mental injuries among the combatants and people in the foreign countries where the imperialist wars are conducted. Of course, the surviving, injured combatants return to the US and their working families must care for them using the pathetic “safety net” programs available. Prof. Krugman fails to note this point as well.

So, a combination of multiple imperialist wars being fought for the benefit of the wealthy at the expense of the poor working people as well as the wholesale exportation of jobs and industry to foreign countries in pursuit of the lowest wages possible have resulted in sustained high unemployment in the US. Meanwhile, the stock market rises and profits continue to expand because capitalists benefit when wages fall. However, there is an end to this process and it is called a crisis of overproduction commonly referred to as an economic depression.

What Prof. Krugman and other bourgeois liberal pundits fail to discuss is that the responsibility for the downward spiral of the economy rests with the capitalist system itself. As long as the system functions to benefit the capitalists, working people will continue to suffer and their suffering will expand proportionally with the expansion of profits.

Another thing that conservatives and liberals are oblivious to is that “safety net” programs tend to perpetuate inequalities between rich and poor. “Safety net” programs are carefully designed to provide a subsistence level for certain segments of the population such as elderly, disabled and to a lesser extent, unemployed pregnant mothers. They allow certain impoverished individuals to survive and such programs are funded by extracting a minimum amount of money from the public wealth created by working people. This enables the wealthy to continue extracting a maximum amount from the public wealth created by working people. In other words, if the public wealth was conceptualized as a pie, “safety net” programs would be a mere sliver. On the other hand, the piece of the pie reserved for the wealthy would be gigantic. The “safety net” programs also serve to reduce the general misery of the public just enough to prevent them from engaging in revolutionary activities. The capitalists must walk a fine line to provide just enough misery relief to prevent revolution and at the same time must limit the misery relief in order to expand their profits. This serves as the basis for the struggle between liberals and conservatives.

Herein lies the difference between bourgeois liberals and Marxist-Leninists. Social democratic bourgeois liberals fight for reforms that they justify on the basis of charity and maintain it is the right thing to do. They characterize their detractors as “callous and mean-spirited.” Marxist-Leninists agree that reforms that benefit working people and the poor are for the good. However, we recognize that such reforms are not sufficient and can easily be overturned and/or manipulated by the capitalists when socioeconomic conditions permit. Marxist-Leninists maintain that only by advancing from capitalism to socialism can humanity build a system which benefits all working people. In a socialist system, workers would achieve political dominance and would form a government that would function to protect the interests of workers.

Perhaps such ideas were not taught to Prof. Krugman and his classmates at MIT and Yale. Such ideas would probably not be received very well at Princeton either.

PHill1917@comcast.net

By Darrell Rankin, People’s Voice, May 1, 2013

Dealing a blow to workers and the poor, the Manitoba NDP raised the provincial sales tax from seven to eight percent in its April 16 budget. Take-home pay is taking another hit, reinforcing Manitoba’s status as a low-wage province.

An active coalition to demand a Peoples Budget is needed now, or business groups will increase their grip on the provincial government in the 2015 election.

The wealthy elite will barely notice the PST hike. However, workers will have less for the necessities of life. This is a wage cut by other, indirect means – about $300 a year per family. Before-tax wages in Manitoba were $3,500 (or 8 percent) below the country’s annual average in 2012.

The budget follows the model of pro-corporate governments around the world, making cuts that harm workers and the needy and protecting the corporations and the wealthy. Impoverishing workers prolongs and deepens the economic crisis that has gripped global capitalism since 2008.

In one sense, it is a standard Canadian Prairie provincial budget with no grand vision or hope for a fair society. It is blind to inequality, the wholesale robbery of Aboriginal peoples, the inequality of women and the growing climate catastrophe. Good-paying jobs, higher education and child care will continue to be just a crushed dream for many.

Without any factual basis, Manitoba NDP Finance Minister Stan Struthers claims that the PST hike will be “shared by everyone.” Struthers emphasizes the need for urgent flood protection spending, but most new spending is for overdue maintenance and an aging population’s needs.

Needed spending has been delayed for decades as a way to keep public spending low and give Manitoba a “competitive advantage,” but there is a limit to how long our infrastructure will last. The Manitoba NDP’s spending and tax hikes were demanded by local corporate leaders.

There is no other reason why workers and the poor are facing this new burden. The Chamber of Commerce differs with the NDP only by suggesting that the PST hike be entirely directed to municipal infrastructure. And unlike the two-year wage pause announced in the 2010 provincial budget that continues to rob public sector workers of hundreds of millions of dollars, this tax hike hurts all workers.

Labour and other groups are condemning the budget for promoting inequality and failing to reduce poverty. For example, the Progressive Conservative and Liberal opposition parties both endorsed an anti-poverty campaign pledge to raise the welfare housing allowance to 75 percent of market value, weeks before the budget.

The budget raised the housing allowance by a paltry $20 a month, far below the required amount of $100 to meet the anti-poverty coalition demands. This is the first real increase in the allowance since 1992.

A relatively small sum of $19 million would solve the housing allowance demand, something the NDP might do before the 2015 election. It will take far more significant measures to eliminate poverty, create good-paying jobs and grow the economy than this minor reform.

The Manitoba Federation of Labour is pointing out that the NDP has cut $1 billion in personal and corporate taxes since it was elected in 1999. These tax cuts helped the corporate elite. They also helped create a weaker and more unequal economy.

Taxes must shift to a progressive basis, on ability to pay. An inheritance tax on large estates would also go a long way to boost revenue for needed public spending and reduce social inequality.

Working people and the poor are being told by the Manitoba NDP that they must pay more to solve the crisis. It’s like the NDP has no memory how Canada’s economy grew faster and more people had better paying jobs when the wealthy and the corporations paid higher taxes.

The NDP is pushing the line that taxes are good regardless who pays them because we need medicare and roads, but the NDP overlooks the main reality. Today’s tax hikes and spending cuts are impoverishing workers. They protect the greedy, not the needy.

The Manitoba NDP is creating a new, cruel reality just like other pro-corporate governments.

Darrell Rankin is the leader of the Communist Party of Canada Manitoba