Thursday, April 24, 2014

A world rate of profit revisited with Maito and Piketty

by Michael Roberts

Back in 2012, I presented a paper to the Association of Heterodox Economists entitled, A world rate of profit (a world rate of profit).  Marx’s model of capitalism and its laws of motion are based on ‘an economy’, in other words, a world economy.  Of course, there are still many barriers to the establishment of a world economy and a world rate of profit from labour, trade and capital restrictions designed to preserve and protect national and regional markets from the flow of global capital.

But in 2014, capitalism is much closer to be being a global economy than it was in 1914.  So I tentatively suggested in that paper that, maybe, we could start to talk about a world rate of profit and start to measure it as an indicator of the underlying health and activity of capitalism globally.
In the paper I set out to try and measure a world rate of profit.  I was not the first to do this.  Minqi Li et al did some ground breaking work in their paper, Long waves, institutional changes and historical trends: a study of the long-term movement of the profit rate in the capitalist world economyLong-Term Movement of the Profit Rate in the Capitalist World-Economy

They developed a world rate of profit for a long period going back to 1870.  For the 19th century, their study integrated just the UK, US and Japanese rates of profit.  For the period after 1963, the authors brought in Germany, France and Italy, to make the G6.  Among other things, Minqi Li et al found that their world rate of profit tended to fall between the late 19th century and the early 20th century and again tended to fall between the mid-20th century and the late 20th century.  And they confirmed a rise from the mid-1980s to a peak in 1997.

In my own study, I developed a world rate of profit that includes all the G7 economies plus the four economies of the BRIC acronym.  So this includes 11 top economies which constitute a significant major share of global GDP.  I use the extended World Penn Tables that David Zachariah used in his individual country study (see his paper, Dave Zachariah, Determinants of the average profit rate and the trajectory of capitalist economies, 4 February 2010, zacha10)  I weighted the national rates for the size of GDP, although the crude mean average rate does not seem to diverge significantly from the weighted average.  A proper measure of the world rate of profit would have to add up all the constant and variable capital in the world and estimated the total surplus value appropriated by global capital.  This is really an impossible task.  So weighted national profit rates are the only feasible way of getting a figure.

I found that there was a fall in the world rate of profit from the starting point of the data in 1963 and the world rate has never recovered to the 1963 level in the last 50 years.  The world rate of profit reached a low in 1975 and then rose to a peak in the mid-1990s.  Since then, the world rate of profit has been static or slightly falling and has not returned to its peak of the 1990s.  And there was a divergence between the G7 rate of profit and the world rate of profit after the early 1990s.  This indicates that non-G7 economies played increasing role in sustaining the world rate of profit.  The G7 capitalist economies have been suffering a profitability crisis since the late 1980s and certainly since the mid-1990s.
World rate of profit
Now I have gone over all this again because there has been a brand new estimate of the world rate of profit in a new paper by Esteban Maito of Argentina (Maito, Esteban – The historical transience of capital. The downward tren in the rate of profit since XIX century). His paper presents estimates of the rate of profit on 14 countries in the long run going back to 1870.  And Maito uses national historical data for each country not the Extended Penn Tables that I used.  His results show a clear downward trend in the world rate of profit, although there are periods of partial recovery in both core and peripheral countries. So the behaviour of the profit rate confirms the predictions made by Marx about the historical trend of the mode of production.  There is a secular tendency for the rate of profit to fall under capitalism and Marx’s law operates.  Here is Maito’s world rate of profit back to 1869 (simple mean version).
World rate simple mean
Maito also finds, as Minqi Li and I do, that there was a stabilisation and even a rise in the world rate of profit from the early or mid-1980s up to the end of the 1990s, the so-called neoliberal period of the destruction of trade unions, a reduction in the welfare state and corporate taxes, privatisation, globalisation, hi-tech innovation and the fall of the Soviet Union.  Again this seems to have peaked about 1997 (if China is excluded).
World rate since 1955 ex China
This is where Thomas Piketty comes into the story.  In his book, Capital in the 21st century, now acclaimed by all the great and good in mainstream economics (see my posts, and, and by many on the heterodox left, Piketty alludes to his book title as a follow-on from Marx’s Capital.

But he takes time out to insist that Marx’s law of profitability has proved to be fallacious.  According to Piketty, “the rate of return on capital is a central concept in many economic theories.  In particular, Marxist analysis emphasises the falling rate of profit – a historical prediction that has turned out to be quite wrong”.  I won’t go into Piketty’s reasons for claiming why Marx was wrong here (I am saving that for my upcoming review of Piketty’s book in Historical Materialism).  But the evidence from Maito, Minqi Li and myself makes a nonsense of Piketty’s conclusion about Marx’s law.

Piketty reckons that the net rate of return on capital (Piketty’s r) has been pretty static over the last 200 years at about 4-5%.  This is crucial to his explanation of how capitalism can get into deep trouble.  For him, it will be due to a rising share of profit going to capital and causing such extreme inequality that it threatens social instability.  In contrast, Piketty does not see any crisis coming from falling profitability in the capitalist mode of production.

Piketty’s calculation that the net rate of return on capital has been steady is dubious even on his own definition of capital.  But the real problem is that he defines capital as the same as wealth and thus includes residential property, even though houses are not means of production and do not ‘earn’ an income (unless they are owned by real estate companies and rented out).  By including residential property in his calculations and concocting the ‘income’ from people’s homes as ‘rental equivalents’, Piketty ends up with completely distorted results for his r.

Moreover, here is some irony.  Maito uses Piketty’s historical data for Germany to get a rate of profit for that economy.  But Maito leaves out residential property and correctly categorises capital as the value of the means of production owned and accumulated in the capitalist sector.  The result is not some steady r, but a falling rate of profit a la Marx.   There a long-term decline, but with a rise from the 1980s to 2007 (which confirms my own estimates for Germany -

Actually, Piketty’s r for Germany also falls from 1950 and then stabilises from the 1980s too.  This is because, by 1950, landed property (also used in Piketty’s measure of ‘capital’) has disappeared in value and Germans generally have a much lower ownership of residential property compared to capitalist means of production as capital.

So Marx’s law of the tendency of the rate of profit to fall is again confirmed by this latest evidence on a world rate of profit.  In my view, it remains the most important law of motion of capitalism, not Piketty’s r.

Wednesday, April 23, 2014

Cliven Bundy, land and the Navajo's Long Walk

Once they arrived at the Bosque Redondo, the Navajo were forced to dig 30 miles of irrigation ditches, plow and plant 2000 acres with corn, then watch helplessly as cutworms and flooding destroyed their crops. They walked 12 miles to gather mesquite for firewood and carried it on their backs. While they were gone, their enemies, the Mescelaro Apache, would raid their camps and steal the few blankets and clothing they had left. Meanwhile, the Spanish, Mexicans, and white settlers stole their land back home with the approving nod of the U.S. Government. Source

by Lisa Hane,

Reading the recent blog on the events around Cliven Bundy the Nevada cattle rancher and his battle with the Bureau of Land Management over his refusal to pay grazing fees for his 900 head of cattle that graze on public lands, it was hard for me to have any sympathy for him or his supporters.  The land he, his family, and his cows have been allowed to use was stolen by the US government from Native American communities who had lived there for centuries. Bundy hasn’t made much mention of how he got the land and how he feels about the original people who used to live there.

Last week I was fortunate enough to take a vacation with my husband and my three school-age kids. We drove about 1,000 miles in an RV visiting national parks in Utah, Arizona and Nevada. The landscape is some of the most spectacular in the world – canyons, lakes, mountains. We were able to talk about the history of the American West and the struggles faced by people who lived there.  Much of the area we traveled was within the Navajo Nation. This land occupies about 27,000 square miles (about the size of West Virginia) and home to about 175,000 Navajo people. The beauty of this countryside belies the terror experienced by the Native People at the hands of the US government about 150 years ago and the nightmare that is still being felt today.

In 1864, over a period of about two years, the US government forced thousands of Navajo men, women, and children to march at gunpoint off this land to internment camps in eastern New Mexico.  Hundreds of people died and all were traumatized. The Long Walk as it became known was one of the most brutal and devastating insults the Native People in North America. After a treaty was signed in 1868 the Navajo people were released from their imprisonment and “allowed” to return to their land. 

The repercussions of Long Walk were felt long after and they are still being felt. Over the late 19th and 20th centuries, Navajo people faced great difficulties re-establishing life after returning to their communities within the Nation. They were not recognized as US citizens until 1924 and even though they now have their own constitution and governing bodies, they are not truly free. Poverty, unemployment, and poor health are rampant.  According to an official Navajo Nation website, unemployment is 42% and the poverty rate in the Nation is 43%. Rates of diabetes, cardiovascular disease and suicide are much higher than in non-native communities.

On our trip, we stopped for gas and picked up a copy of the Navajo Times – the daily newspaper of the Navajo People. A front-page article made me do a double-take. The article was titled: “Entering the Modern Age”, and it reported that for the first time ever, citizens of a Navajo community would be getting…ELECTRICTY!!! In 2014, in the United States, families living in   LeChee, Arizona would finally get to have the use of electricity in their homes.  These families were promised power in 1969 after a confederation of utilities set up the Navajo Generation Station which was established to bring power to communities in the Southwest and they have been waiting ever since. They will at last see some results after paying into the NGS for 40 years.
One of the residents commented, “I bought my first gallon of milk and bought some meat” to put in the first refrigerator she ever owned. Up until last month, this 55-year old woman had to buy ice to keep foods fresh.  Another resident said that she was happy she got electricity and now she hopes this means she “can get water”. 

Reading the article with my kids made me sad and angry (though not surprised) that in a country as wealthy as the US, with all our advanced technological capabilities we are somehow unable to get electricity and clean water to people living in the backyard of one of the largest dams in the Unites States.  This administration, like all since the Long Walk, continues to disrespect a community that descends from the first people to live on this continent. The economic system we live under is continuing to prove incapable of providing the most basic resources to communities, Native American and beyond. My kids saw this first-hand and now see that there needs to be a change. This vacation proved to be a better history and economics lesson for my family than I could have ever imagined.

Domestic violence is a social problem.

Woman Dead

A poem by Evelyn Carmack

I scanned the local paper over breakfast
and as this headline caught my eye
the granola in my throat became a pill I couldn't swallow
and my heart sank like an anchor to the bottom of my stomach

“Her 12 year old daughter found her in the closet”
daddy was the number one suspect

my limbs become icicles
frozen by frigid truth
but my mind is ablaze with rage

the sheriffs had been there before
but I guess “several” isn’t enough when it comes to calls for help

why couldn't I hear her screams through the wall?
what was I doing?
while just on the other side he shot her 3 times
3 days I went to work, bought groceries, watched tv, did homework, ate food and slept
while her body lay

If it was up to me I’d make every house a safe house
seal the lips of every bully with superglue
and healing honey would soothe those
swollen with silent bruises
I’d replace tears with rosewater
and wrap broken bones in a promise
that you’ll never have to go home
to hate

but hate survives
and thrives in a world that binds the beaten
and shields the beast

because their hands are tied
I’m using both of mine, pulling back the rug under which so many stories have been swept
I’m pulling off the duct tape
and I’ll be kicking, screaming, writing and singing
the truth of those souls slain every day by the hands of their loved ones


This blog has taken this issue of domestic violence and the special oppression of women very seriously and thank Ms Carmack for sharing her concerns about it with FFWP.  Men in particular have to try our best to understand and learn from the women around us. The author was inspired to write this poem after reading about the murder of  Yun Yi Zhang by her husband Feng Mi in Castro Valley CA.  She also wrote a letter to the local paper about it.  We publish it below.


To the Castro Valley Forum:

Although I was appalled by the events described, I want to thank you for publishing the article about the suspected domestic violence murder on Stanton Avenue in early March.

I want to encourage you, the editor, and everyone who reads The Forum to use this incident as an opportunity to raise awareness about domestic violence. Statistics from the U.S. Department of Justice state that in 2013 over 6 million children witnessed domestic violence and each day an average of 3 women and 1 man was murdered by their partner.

There is no reason that our neighbors, friends or family should be silently suffering. The fact that something like this could happen is evidence that we still have some major shortcomings as a community. We must not let domestic violence happen to each other. Even though it is a difficult subject to talk about, we should no longer ignore the suffering of those in our community.

Those who are not fluent in English, such as Yun Yi Zhang, or those who are living here as undocumented immigrants are especially vulnerable to domestic violence because they fear losing their home, children or job if they report any crime to the authorities. You may know someone living in this situation who is afraid to speak up.

If you or someone you know is suffering from domestic violence, talk about it. There are many resources out there for free, confidential, emotional and legal support. 

Evelyn Carmac 

CIA torturers lied but no punishment for them.

By Richard Mellor
Afscme Local 444, retired

The long awaited report on CIA was released recently and it tells us what we already know.  The CIA’s brutal treatment of prisoners produced little if any results.  According to the Washington Post, the CIA, “….misled the government and the public about aspects of its brutal interrogation program for years — concealing details about the severity of its methods, overstating the significance of plots and prisoners, and taking credit for critical pieces of intelligence that detainees had in fact surrendered before they were subjected to harsh techniques.”

Abu Zubaida, the alleged al Qaeda operative was waterboarded by the CIA 83 times the report says yet according to one official quoted in the Post, all useful information from Zubaida was obtained in Pakistan before the CIA got a hold of him and that they were waterboarding a “cooperative” prisoner.  

The CIA’s lies about the torture of prisoners, whether innocent or guilty of any crime or activity against US personnel or property, have been extensive.  The agency also grossly overstated the significance of the information it obtained from those it tortured; a necessary evil as they have to justify their existence.  Even the information that led to the capture of bin Laded was obtained using “conventional interrogational methods”.

The most popular methods were waterboarding, a process that everyone should be well aware of by now and made more well known by Moss Def who agreed to be waterboarded to get a feel of what it was like.  CIA torturers also dunked prisoners in tubs of ice water, naked of course, “slammed their heads in to walls” and “beat them with clubs.”  The torturers continued their activity even after prisoners had no more information to give.  It’s the dream job for a sadist.

So the Senate Intelligence Committee report concluded that the CIA lied to investigators as well along with snooping around on congressional computers.  The CIA along with the entire Homeland Security institution is most likely a far more extensive and broad policing agency than the old Stalinist KGB. The CIA is responsible for numerous assassinations of foreign leftists, politicians, trade unionists and others opposed to its policies pursued in the interests of US capitalism and “Full Spectrum Dominance”.

The committee “refrained from assigning motives to CIA officials whose actions or statements were scrutinized.” Says the Post.  The  “report also does not recommend new administrative punishment or further criminal inquiry into a program…” .  Well, the motive for the agency as a whole is defense of US capitalism’s interests both domestic and internationally.  For individuals, they’re just driven by their sadistic urges, having the power to torture and humiliate human beings without fear of any repercussions for such actions. Despite these findings by the “government of the people” , the torturers will not be punished, will not suffer any loss and be left to continue their practices in our name.

The CIA’s “enhanced interrogation techniques” it turns out, are simply a euphemism for torture, inflicting such pain and terror on a human being that they’ll tell you anything ensuring further funding for your agency and employment for the nasty characters that seek work there. The CIA is a perfect example of big government.

US foreign policy and the brutality of the CIA and mercenary groups like Blackwtaer that has emerged under a new name is the best recruiting tool for al Qaeda or any other group wanting revenge from the source of the drones that blow up wedding parties and murder thousands of innocent civilians.  We as Americans have not a clue what or who the “suspected militant” “insurgent” or “terrorist” is.  It certainly doesn’t matter to the US government.

Next time there’s a terrorist attack on US civilians remember the CIA and US foreign policy.

Tuesday, April 22, 2014

Cliven Bundy's supporters and the struggle for stolen land.

As we have pointed out in previous blogs, Cliven Bundy's right wing supporters were noticeably absent in the struggle against the 1%'s assault on the urban centers of America, nowhere to be seen as people were evicted from their homes by sheriffs representing the bankers. Deafeningly silent in their support of Trayvon Martin because it is evident they support his assassin. But as defenders of people's right to their land, as in the example of Cliven Bundy, they are adamant.  Except in the case of the people below.  They were on their land a little longer than Bundy, a few thousand years longer.  Have they been in the forefront of Indigenous People's rights? We think not. The excerpt below is from Howard Zinn's excellent People's History of the United States, a bit of a change from reader's Digest.
Arawak men and women, naked, tawny, and full of wonder, emerged from their villages onto the island’s beaches and swam out to get a closer look at the strange big boat. When Columbus and his sailors came ashore, carrying swords, speaking oddly, the Arawaks ran to greet them, brought them food, water, gifts. He later wrote of this in his log:*
They … brought us parrots and balls of cotton and spears and many other things, which they exchanged for the glass beads and hawks’ bells. They willingly traded everything they owned… . They were well-built, with good bodies and handsome features…. They do not bear arms, and do not know them, for I showed them a sword, they took it by the edge and cut themselves out of ignorance. They have no iron. Their spears are made of cane… . They would make fine servants…. With fifty men we could subjugate them all and make them do whatever we want.
These Arawaks of the Bahama Islands were much like Indians on the mainland, who were remarkable (European observers were to say again and again) for their hospitality, their belief in sharing. These traits did not stand out in the Europe of the Renaissance, dominated as it was by the religion of popes, the government of kings, the frenzy for money that marked Western civilization and its first messenger to the Americas, Christopher Columbus.
Columbus wrote:
As soon as I arrived in the Indies, on the first Island which I found, I took some of the natives by force in order that they might learn and might give me information of whatever there is in these parts.
The information that Columbus wanted most was: Where is the gold? He had persuaded the king and
Arawak Family
queen of Spain to finance an expedition to the lands, the wealth, he expected would be on the other side of the Atlantic-the Indies and Asia, gold and spices. For, like other informed people of his time, he knew the world was round and he could sail west in order to get to the Far East.
Spain was recently unified, one of the new modern nation-states, like France, England, and Portugal.

Its population, mostly poor peasants, worked for the nobility, who were 2 percent of the population and owned 95 percent of the land. Spain had tied itself to the Catholic Church, expelled all the Jews, driven out the Moors. Like other states of the modern world, Spain sought gold, which was becoming the new mark of wealth, more useful than land because it could buy anything.
Native Indians enslaved by Spaniards, published in 1596.
Native Indians enslaved by Spaniards, published in 1596.

There was gold in Asia, it was thought, and certainly silks and spices, for Marco Polo and others had brought back marvelous things from their overland expeditions centuries before. Now that the Turks had conquered Constantinople and the eastern Mediterranean, and controlled the land routes to Asia, a sea route was needed. Portuguese sailors were working their way around the southern tip of Africa. Spain decided to gamble on a long sail across an unknown ocean.

In return for bringing back gold and spices, they promised Columbus 10 percent of the profits, governorship over new-found lands, and the fame that would go with a new title: Admiral of the Ocean Sea. He was a merchant’s clerk from the Italian city of Genoa, part-time weaver (the son of a skilled weaver), and expert sailor. He set out with three sailing ships, the largest of which was the Santa Maria, perhaps 100 feet long, and thirty-nine crew members.

Columbus would never have made it to Asia, which was thousands of miles farther away than he had calculated, imagining a smaller world. He would have been doomed by that great expanse of sea. But he was lucky. One-fourth of the way there he came upon an unknown, uncharted land that lay between Europe and Asia-the Americas. It was early October 1492, and thirty-three days since he and his crew had left the Canary Islands, off the Atlantic coast of Africa. Now they saw branches and sticks floating in the water. They saw flocks of birds.

These were signs of land. Then, on October 12, a sailor called Rodrigo saw the early morning moon shining on white sands, and cried out. It was an island in the Bahamas, the Caribbean sea. The first man to sight land was supposed to get a yearly pension of 10,000 maravedis for life, but Rodrigo never got it. Columbus claimed he had seen a light the evening before. He got the reward.
Arwak village

So, approaching land, they were met by the Arawak Indians, who swam out to greet them. The Arawaks lived in village communes, had a developed agriculture of corn, yams, cassava. They could spin and weave, but they had no horses or work animals. They had no iron, but they wore tiny gold ornaments in their ears.

This was to have enormous consequences: it led Columbus to take some of them aboard ship as prisoners because he insisted that they guide him to the source of the gold. He then sailed to what is now Cuba, then to Hispaniola (the island which today consists of Haiti and the Dominican Republic). There, bits of visible gold in the rivers, and a gold mask presented to Columbus by a local Indian chief, led to wild visions of gold fields.

On Hispaniola, out of timbers from the Santa Maria, which had run aground, Columbus built a fort, the first European military base in the Western Hemisphere. He called it Navidad (Christmas) and left thirty-nine crewmembers there, with instructions to find and store the gold. He took more Indian prisoners and put them aboard his two remaining ships. At one part of the island he got into a fight with Indians who refused to trade as many bows and arrows as he and his men wanted. Two were run through with swords and bled to death. Then the Nina and thePinta set sail for the Azores and Spain. When the weather turned cold, the Indian prisoners began to die.

Columbus’s report to the Court in Madrid was extravagant. He insisted he had reached Asia (it was Cuba) and an island off the coast of China (Hispaniola). His descriptions were part fact, part fiction:
Hispaniola is a miracle. Mountains and hills, plains and pastures, are both fertile and beautiful … the harbors are unbelievably good and there are many wide rivers of which the majority contain gold. . . . There are many spices, and great mines of gold and other metals….
Columbus second voyage
The Indians, Columbus reported, “are so naive and so free with their possessions that no one who has not witnessed them would believe it. When you ask for something they have, they never say no. To the contrary, they offer to share with anyone….” He concluded his report by asking for a little help from their Majesties, and in return he would bring them from his next voyage “as much gold as they need … and as many slaves as they ask.” He was full of religious talk: “Thus the eternal God, our Lord, gives victory to those who follow His way over apparent impossibilities.”

Because of Columbus’s exaggerated report and promises, his second expedition was given seventeen ships and more than twelve hundred men. The aim was clear: slaves and gold. They went from island to island in the Caribbean, taking Indians as captives. But as word spread of the Europeans’ intent they found more and more empty villages. On Haiti, they found that the sailors left behind at Fort Navidad had been killed in a battle with the Indians, after they had roamed the island in gangs looking for gold, taking women and children as slaves for sex and labor.

Now, from his base on Haiti, Columbus sent expedition after expedition into the interior. They found no gold fields, but had to fill up the ships returning to Spain with some kind of dividend. In the year 1495, they went on a great slave raid, rounded up fifteen hundred Arawak men, women, and children, put them in pens guarded by Spaniards and dogs, then picked the five hundred best specimens to load onto ships. Of those five hundred, two hundred died en route. The rest arrived alive in Spain and were put up for sale by the archdeacon of the town, who reported that, although the slaves were “naked as the day they were born,” they showed “no more embarrassment than animals.” Columbus later wrote: “Let us in the name of the Holy Trinity go on sending all the slaves that can be sold.” Spaniards cutting off the hands of Arwaks because they do not have enough gold
But too many of the slaves died in captivity. And so Columbus, desperate to pay back dividends to those who had invested, had to make good his promise to fill the ships with gold. In the province of Cicao on Haiti, where he and his men imagined huge gold fields to exist, they ordered all persons fourteen years or older to collect a certain quantity of gold every three months. When they brought it, they were given copper tokens to hang around their necks. Indians found without a copper token had their hands cut off and bled to death.

The Indians had been given an impossible task. The only gold around was bits of dust garnered from the streams. So they fled, were hunted down with dogs, and were killed.

Trying to put together an army of resistance, the Arawaks faced Spaniards who had armor, muskets, swords, horses. When the Spaniards took prisoners they hanged them or burned them to death. Among the Arawaks, mass suicides began, with cassava poison. Infants were killed to save them from the Spaniards. In two years, through murder, mutilation, or suicide, half of the 250,000 Indians on Haiti were dead.

When it became clear that there was no gold left, the Indians were taken as slave labor on huge estates, known later as encomiendas. They were worked at a ferocious pace, and died by the thousands. By the year 1515, there were perhaps fifty thousand Indians left. By 1550, there were five hundred. A report of the year 1650 shows none of the original Arawaks or their descendants left on the island.
History of the Indians destruction

The chief source-and, on many matters the only source-of information about what happened on the islands after Columbus came is Bartolome de las Casas, who, as a young priest, participated in the conquest of Cuba. For a time he owned a plantation on which Indian slaves worked, but he gave that up and became a vehement critic of Spanish cruelty. Las Casas transcribed Columbus’s journal and, in his fifties, began a multi-volume History of the Indies. In it, he describes the Indians. They are agile, he says, and can swim long distances, especially the women. They are not completely peaceful, because they do battle from time to time with other tribes, but their casualties seem small, and they fight when they are individually moved to do so because of some grievance, not on the orders of captains or kings.

Women in Indian society were treated so well as to startle the Spaniards. Las Casas describes sex relations:
Marriage laws are non-existent men and women alike choose their mates and leave them as they please, without offense, jealousy or anger. They multiply in great abundance; pregnant women work to the last minute and give birth almost painlessly; up the next day, they bathe in the river and are as clean and healthy as before giving birth. If they tire of their men, they give themselves abortions with herbs that force stillbirths, covering their shameful parts with leaves or cotton cloth; although on the whole, Indian men and women look upon total nakedness with as much casualness as we look upon a man’s head or at his hands.
The Indians, Las Casas says, have no religion, at least no temples. They live in
large communal bell-shaped buildings, housing up to 600 people at one time … made of very strong wood and roofed with palm leaves…. They prize bird feathers of various colors, beads made of fishbones, and green and white stones with which they adorn their ears and lips, but they put no value on gold and other precious things. They lack all manner of commerce, neither buying nor selling, and rely exclusively on their natural environment for maintenance. They are extremely generous with their possessions and by the same token covet the possessions of their friends and expect the same degree of liberality. …

Columbus, The Indians, And Human Progress.   Reprinted from Popular Resistance.  Continue reading the entire first chapter here

Anger builds among New York transit workers against sellout contract

By Alan Whyte 21 April 2014 
reprinted from the

After more than two years without a new contract covering New York City’s 34,000 bus and subway workers, a tentative deal was announced last Thursday. Governor Andrew Cuomo made the announcement at his Manhattan office, with the chairman of the Metropolitan Transportation Authority (MTA) and the president of the city’s transit union, Local 100 of the Transport Workers Union (TWU), by his side.

The deal has an economic and political significance that goes beyond the city’s transit workforce. It calls for a retroactive 1 percent hike for 2012 and another 1 percent for 2013; and then 2 percent for 2014, 2 percent for 2015 and 2 percent for 2016. Compounded, this adds up to an 8.25 percent increase over 5 years, which is below even a low projected rate of inflation. Since this is also compounded every year, the 8.25 figure amounts to a cut in real wages.

Although the memorandum of agreement has not yet been made public, there are two other significant concessions that have been revealed. One involves an increase in employees’ contribution for health benefits from 1.5 percent to 2 percent of their wages, alongside a small increase in such benefits, obviously designed to make the concession more palatable. In addition it will take new employees five years instead of the current three years to reach top pay. This type of provision, often called sacrificing the “unborn”—those workers who have not yet been hired—has been a standard practice of the TWU leadership in recent years.

MTA chairman Thomas Prendergast has refused to put a dollar amount on the contract, except to say that it will not force the agency to raise fares above the already scheduled 4 percent hikes scheduled to take effect in 2015 and once again in 2017.

Some observers have claimed that the agency’s fiscal future has improved because of higher revenues that the MTA has been getting from real estate taxes, as well as an increased ridership. However, this ignores the other side of the fiscal picture, the MTA’s more than $32 billion long-term bond debt, which is expected to rise in the coming years.

Despite the fact that Prendergast was appointed by Cuomo and would do nothing without the governor’s approval, Local 100 president John Samuelsen sent Cuomo an open letter just before the agreement was announced, gushing with praise of the governor’s leadership, while urging him to “personally intervene to bring an end to the protracted dispute…. Absent your intervention, I do not see a path to resolving a number of difficult issues.”  Samuelsen’s letter makes reference to Cuomo’s alleged successful intervention that led to an end to ConEd’s 2012 lockout of utility workers, without mentioning the major concessions that were part of the final package.

The union’s move was part of a staged performance, in which the union boosts Cuomo’s plans for reelection later this year while the union bureaucrats obtain a deal falsely heralded as a “victory.”
There are already indications that few transit workers are buying this story, however. Cuomo is widely hated amongst workers for handing over tax cuts to the rich while imposing austerity contracts on government employees. In his first year in office, the governor, in collaboration with two state civil service unions, forced the rank and file to accept a three-year wage freeze by threatening them with layoffs. The governor has just completed a state budget deal that amounts to a vicious attack on New York City’s public schools.

The new contract is bound up with much more than Cuomo’s reelection. It will negatively impact 5,600 workers on the Long Island Railroad (LIRR), which carries passengers through Long Island and connects with New York City, and is part of the MTA. These workers have been without a new contract since June 2010 (see “Rejecting mediator’s proposal, New York transit agency insists on a wage freeze,” February 18, 2014).

Since the LIRR is a commuter line coming under federal regulations, President Barack Obama selected a panel of mediators, which recommended a contract in February of this year that has been calculated to amount to about 16 percent in wage increases over six years. The MTA rejected this recommendation, claiming that it would bust its budget.

This made it possible for the 60 craft unions to legally call a strike on March 21. However, the MTA, as authorized under the federal Railway Act, called for a “cooling off” period, requiring another panel to make a recommendation and postponing the threat of a legal strike until July 19. Usually, the findings of a second panel will not differ very much from the findings of the first panel. However, now it will be able to consider the TWU settlement, which is significantly less than what had been recommended for the LIRR workers.

In other words, Samuelsen, who in March vowed to support the LIRR unions “in every possible way,” has now effectively stabbed those workers in the back. This will now make it easier for the MTA to impose a lower wage hike on its LIRR employees.

The settlement also helps New York City’s Democratic mayor, Bill de Blasio, to establish an absolute wage and benefit ceiling for city employees. The 300,000 city workers who have been working for many years without new agreements face the threat of contracts that leave them further behind in living standards, worsening the inequality that the “progressive” de Blasio promised to fight when he campaigned for office.

Samuelsen rose to the presidency as a member of the so-called dissident slate calling itself New Directions. Indeed, he was associated with the pseudo-left faction of this group, whose prime aim is to cover up the political issues and oppose the political independence of the working class. The role of these elements was revealed most clearly when the Local 100 executive board voted overwhelmingly to endorse Obama for the presidency. They have now negotiated the kind of concessions deal they claimed to oppose in the past.

The tentative deal now goes to the membership for a vote. The last time transit workers had an opportunity to vote on a contract agreement was in 2006, in the aftermath of the three-day strike that took place in December 2005.

That strike was illegal under New York State’s reactionary anti-strike Taylor Law. As a result, the union was fined $2.5 million, the then-union president was sent to jail for a number of days, and all strikers lost two days’ pay for every day on strike. Nevertheless, to the surprise of some, the proposed contract was again voted down, by a slim margin. As a result, the dispute ended up in binding arbitration, which essentially mandated the same agreement that the workers had rejected.

WSWS reporters spoke to transit workers about the tentative agreement. Many workers had not heard very much or anything at all about it. However, many had heard enough to conclude they didn’t like it.
Maurice Francis
Maurice Francis, a train operator with seven years’ service, told the WSWS, “Look at the cost of living. The 1 percent, 1 percent, 2 percent, 2 percent, 2 percent raises just don’t add up. The average wage increase is about 3 or 4 percent across the country. This is way less than the raises nationwide. We don’t keep up with the cost of living.
“This is a big plot to destroy union wages nationwide. While this is going on, union leaders are acting like politicians, and you can’t trust politicians. They promise you something one day, but they never deliver anything.”

John Bates, a train operator for 17 years, commented: “It’s backwards. They give us the lowest percentage wage increase first so we get less. The highest increase should be first, so we get it now. But neither the high nor the low increase percentages match inflation.”
 Chris Graves
Chris Graves, a conductor with 22 years on the job, criticized the timing. “At least we should wait to see what happens to the LIRR. They got a 3 percent arbitration award for six years, and a strike deadline in July. We should wait at least until something happens with them, and base our action on what happens there.

“I don’t see how this happened so suddenly here. There was no information about any meetings, any bargaining or any back-and-forth. What led up to this agreement? Why now? A notice has just been posted in the crew room for a rally. It is in May. Now it will be used to support the contract.”

Andrew Maddis was discussing the contract with a co-worker. The train operator emphasized to the WSWS, “The contract is terrible. I don’t like it at all. We haven’t had a contract since 2012. One day Samuelsen writes a letter to Cuomo, and the next day there is a contract. Something strange is going on. All this time working without a contract has been a waste.”

Dave was outraged by the MTA deal brokered by Governor Cuomo. He explained, “It is a horrible 
Andrew Maddis
deal. It doesn’t keep pace with the cost of inflation. Samuelsen looks weak. The LIRR could strike as early as July. If this deal is ratified by us, it will pull all the steam out of their engine. Nicole Gelinas of the anti-union Manhattan Institute writing about the Samuelsen-Cuomo press conference on page 23 of today’s Post, ‘There was no question who the alpha male was there. It was Cuomo.’
Mike Quill must be rolling over in his grave.

“Samuelsen has not kept his pledges. He talks a good game. He talks like he is carrying a big stick, but all he carries is a #2 pencil. I’m against this and will campaign to see it is defeated. This is a Cuomo collaborationist contract. That is what we will call it.

“I’m not a leftist. I’m a middle-of-the-road guy. I’m not a leftist or a rightist. But this deal stinks to high heaven. And there are a lot of transit workers across the board who think the same way.

“The only way we can win is we have to stick together. A lot of people are tired of what has been happening to working people across the country. We have to defeat this tentative proposal, and we have to stand together. Working people have to stand together. This contract is horrendous. It is a defeat for all workers. By standing together we can stop this contract.”

The opposition of transit workers raises several crucial issues. Firstly, the role of the unions is not to unite the working class but rather to keep workers divided. TWU Local 100 has a consistent record of helping to isolate workers in struggle. This is what happened with the Verizon strike, the Con Ed locout, the strike of school bus workers last year, and now the cynical betrayal of the LIRR workers.
Behind this treachery is the alliance of the unions with the Democratic Party and their support for the rule of big business. Transit workers and other city workers can establish a genuine unity only through fighting for rank and file committees independent of the union apparatus. At the same time this raises the urgent need for a political perspective, a break with both parties of Wall Street and the corporate establishment, in order to fight for socialist policies.

Monday, April 21, 2014

German Imperialism and the Ukraine

by Stephen Morgan

A recent article in the NYT on Germany and the Ukraine was interesting in that it helps to explain aspects in the changed situation and altered balance of forces in Europe compared to the 1930s, especially with regard to Germany, and how this affects relations between the US and Europe and the differences in their approach to Russia.

Without being explicit in a popular newspaper, it makes the point that since Germany was disarmed after the war, German Imperialism has relied upon “Ruhe und Ordnung” - “peace and quiet and order” in Europe for its continued Imperialist economic exploitation of the continent. Stripped of its military power in the post-war situation, Germany has for a long time taken a more friendly and conciliatory approach to Russia than other countries in Europe, which were without former borders with the ex-Stalinist states.

To some degree, West Germany broke ranks with the other Western powers in the 1970's and pursued what it called an “Ostpolitik” which might be translated as a policy based on collaboration and a realistic and pragmatic approach to maintaining friendly relations with Russia and Eastern bloc countries. This was important for its political relations to East Germany, but also helped stability and opportunities for some trade with the Eastern Block. West Germany also made an agreement with Russia to recognize national borders in Europe, obviously something which is now being torn up by events in the Ukraine.

After the collapse of Stalinism, Germany has continued this “Ostpolitik” in order to help maintain political stability in the East and improve its relations with Russia, so it could, in turn, pursue a more economically aggressive intervention in these newly-capitalist countries. Since then, Germany has gained enormously from becoming the dominant economic power in the former Stalinist states raking in huge profits and helping it better weather the global economic problems and keep its position as the world's 4th largest economy.

It struck up important trading interests with Russia, investing in the economy and importing its gas,

upon which the German economy has become heavily reliant. Initially, Russia was very dependent on Germany in the 1990s, as a result of the social and economic chaos into which the country was plunged after capitalist restoration. It needed Germany a lot for investment and aid and was, at that time, the junior partner in the relationship. However, the boom in the Russian economy under Putin and the simultaneous re-establishment of Russia as a world superpower has freed Russia from its dependency on Germany and reversed positions to some degree. So maintaining good relations with Russia has become even more important for German capitalism. 

The crisis in the Ukraine, the annexation of the Crimea and the international repercussions have been a blow to German plans. It would have preferred a more stealthy take over of the Ukraine based on political stability. With a market of 40 million people, rich in resources and with a skilled workforce and cheap labour, the Ukraine would have been a juicy acquisition for German capitalism. Germany would have begun selling its goods on the Ukrainian markets, investing in the country, asset-stripping its best industries and moving some of its production units there to get a higher rate of profit through greater levels of exploitation.

Of course, if the crisis had resulted in a peaceful annexation of the Ukraine by the EU, without serious damage to relations with Russia, the German capitalists would have been delighted. But after events that is obviously not on the cards any longer. So, they don't want to lose economic opportunities as a result of an escalation of the crisis. The eastern Ukraine is more important to the German bourgeoisie than the western half, because the east is the industrial heartland, while the west of the country is more agricultural. Furthermore, the Ukraine's physical proximity and economic links to Russia and other neighbouring states would help Germany a lot.

Now the crisis is undermining German interests, both in the short term and potentially the long term. Its interests are more firmly linked to stable politics in Eastern Europe and Russia than other European countries, like France and Britain and most certainly the US. When the crisis first broke out, Western financiers began pulling out investments from neighbouring Eastern European countries. This could open a Pandora's box damaging Germany's vital interests across the region.

Germany also has interests in other Russian allies like Belarus and Kazakhstan and must tread carefully elsewhere. Even EU member, Bulgaria, has opposed sanctions on Russia. For the German capitalists, continuing instability will undermine confidence in investing in the region. Even the broader interests of Western Imperialism in Central Asia could be undermined if, at some point, a similar conflict erupted in the important oil producing country of Kazakhstan, where Russians make up a quarter of the population, living mostly just within the Kazakh border with Russia, much like the Russian-speakers in Eastern Ukraine.

Germany is, therefore, now in a very weak position and its interests clash to some degree with those of the US, which is pursuing a harder line, because its economic interests in Russia are far less and because, for the US, this is more about broader, superpower global rivalry. Therefore, Germany has been distancing itself from the US and is trying to quietly protect its friendly relations with Russia, because the German bourgeoisie has to look at the wider picture. It still hopes to come to some agreement with Russia on opportunities to exploit the Ukrainian market, if things can be stabilized. They have not given up on eventually achieving a strong German presence in the Ukraine through some sort of compromise with Russia.

As The NYT article points out, unlike the 1930's, Germany has no military clout to throw about when backing up its interests. Its economic advantages depend entirely on “Ruhe und Ordnung” - and it can't rock the boat or threaten to pursue its interests in the Ukraine by military deployment in the west of the country. The article quotes a German publication which points out that compared to Germany, Britain and France could defend themselves, given that they retain important armies and nuclear weapons.

In modern times, of course, this doesn't give British or French Imperialism much leverage in the European economy, but unlike Germany, they can compensate for this by using their military power to intervene where they have economic interests elsewhere in the world. We saw the joint role of Britain and France in leading NATO action in Libya and we have seen it recently in France's military actions in the Ivory Coast, Mali and Central Africa to maintain its economic interests in these regions. In fact since 1960, France has launched a total of 46 military operations in Africa.

Britain tends to utilize its old economic ties to ex-colonies through the “Commonwealth” to maintain its Imperialist interests, but we have seen it in action in the Suez crisis, Malaya, Yemen (Aden), Falklands, Yugoslavia and recently as a poodle of US Imperialism in Afghanistan and Iraq, where it had major oil interests. Germany, on the other hand, has no former areas of colonial influence to fall back on. Incidentally, Prime Minister Cameron's hypocrisy over how Russia has “trampled on the rights” of Ukrainians is rich, given the fact that out of almost 200 countries in the world, there are only 22, which Britain hasn't invaded.

Of course, Britain and France wouldn't be able to withstand the military might of Russia, but they would at least have the “bargaining chip' of eventually launching a joint nuclear strike on Russia. The point the journalist is really making is that Germany is, on its own, totally defenceless in the face of any future Russian aggression and this again reinforces its tendencies towards conciliation, compromise and de-escalation. Russia has the upper hand in the present crisis and therefore the European and German talk of sanctions amounts to little more than the wiggling of a rubber sword. 

Full-scale European war again is not an immediate prospect. But that could change, however, if the new instability in the Ukraine leads to a feedback loop of unrest in Russia itself, especially given its growing economic problems. If a new world economic crisis led to the Ukrainianization of Russia, Putin could, in the future, be replaced by an extreme right-wing, nationalist, military-based dictatorship.

Such a regime could possibly attempt to overcome its economic and social problems by grabbing foreign markets through the invasion of neighbouring countries, in the way Nazi Germany did in the 1930's. Putin's annexation of the Crimea and possibly the eastern Ukraine are eerily similar to Nazi Germany's policy of “Ansluss” or military annexation of German-speaking Austria, the German populated area of Czechoslovakia, followed by the invasion of Poland which started World War 2. So the present crisis is not just a threat to the short-term interests of Germany, but a potential threat to the whole future of German capitalism.

CA Bay Area. Movie: Miners Shot Down

 Showing this Wednesday at 7 pm, April 23, 2014, at La Peña Cultural Center, 3105 Shattuck Avenue, Berkeley.

Suggested donation: $10, though no one will be turned away for lack of funds. Proceeds will be sent to currently striking platinum miners' strike fund in Rustenburg.

In August 2012, mineworkers in one of South Africa’s biggest platinum mines began a wildcat strike for better wages. Six days later the police used live ammunition to brutally suppress the strike, killing 34 and injuring many more. Using the point of view of the Marikana miners, Miners Shot Down follows the strike from day one, showing the courageous but isolated fight waged by a group of low-paid workers against the combined forces of the mining company Lonmin, the ANC government and their allies in the National Union of Mineworkers.

What emerges is collusion at the top, spiralling violence and the country’s first post-apartheid massacre. South Africa will never be the same again.

This is a rare opportunity to see a courageous documentary in a class of its own – the only feature-length documentary on the Marikana massacre.  Never before screened in the United States, its director Rehad Desai has generously agreed to let us show this film.

With the impending Bay Area visit (see second attached flyer) of Mphumzi Maqungo from the National Union of Metalworkers of South Africa (NUMSA), this screening will provide ample background on the rise of rank-and-file militancy in South Africa and the completion of the African National Congress’ long  road to capitulation.

Saturday, April 19, 2014

Piketty fest continues – some directions for the reader

As yet more reviews pour out on Thomas Piketty’s book, Capital in the 21st century, and Piketty does video conferences galore online with an assembly of the great and good among mainstream economists, I thought that I might help the followers of my blog by presenting them with a pdf of the whole book.  Here it is.
wp146 Thomas_Piketty,_Arthur_Goldhammer_Capital_in_the_Twenty-First_Century__2014

Also, although I have not posted my review of the book and an analysis of Piketty’s arguments, I think the following reviews offer the most perceptive analyses that I have seen so far.
and you can find all the data for his tables here:
except the one that really matters, the sources for estimating the r.  The search for the r continues (see my previous post,

One thought: it seems that rising inequality has become both the flagship for opposition to neo-liberal economics and at the same time the explanation for crises under capitalism – although Piketty says nothing about the latter at all in 677 pages.

For my view on inequality and Piketty on inequality, see

The fest continued with a hugely laudatory review from Paul Krugman  Krugman makes some good points about how Piketty has exposed the deniers of rising inequality:  “But there’s something else: this analysis isn’t just important, it’s beautiful. Piketty gives us something we didn’t know we needed — a sweeping, elegant integration of growth theory, the factor distribution of income, and the personal distribution of income and wealth. He even (in work linked to but not presented in the book) shows how to derive the power laws that we know govern the distribution of income and wealth at the top, and shows how r-g determines the crucial exponents.” 

It is precisely because Piketty relies on mainstream noeclassical analysis that he falls well short of Marx in explaining the laws of motion of capitalism.  My review will explain why.

Rich people live longer. Didn't we know that already?

By Richard Mellor
Afscme local 444, retired

Well the Wall Street Journal reports that the richer you are the longer you will live.  Barry Bosworth, an economist at the Brookings Institution compiled the data and not only do rich people live longer but the gap is also getting wider.  All men are actually living longer the report explains but “While the wealthiest women from the 1940s are living longer, the poorest 40% are seeing life expectancy decline from the
previous generation.” the Journal adds.

This is not news to working class people but for the idea that money brings better health care, diet, living conditions, education etc. to get any credibility it must come from someone with letters after their name.

One of the reasons suggested for the declining life expectancy of lower income women is smoking, Mr. Bosworth suggests, as smoking is more common among low income or poor
Source of graphics: Wall Street Journal
women apparently.

I always say that rich people have socialism they just don’t want it for the rest of us. They have the best health care, they eat higher quality food, have access to all of society’s benefits.  They have healthier working conditions if you can call trading currencies or managing money and living off the profit of capital work.

Papers like the Journal always write about how hard the billionaires work and that they get up at 5 in the morning blah blah blah, But if life was so hard for the hedge fund managers and other coupon clippers they’d all be trying to get our jobs.   The super rich are forever justifying their wealth on the basis that they work hard.  But when you think about it they should live longer, they don’t do their own gardening, they don’t care for their own kids, and they normally have working class women do that on top of caring for their own.  They don’t do their own home repair, car maintenance or even walk their own dogs in most cases; they’re really some lazy bastards with good benefits.

“It’s really hard to come up with some effective means of trying to equalize this,” said Mr. Bosworth, “and that’s a serious concern.”  Well I can come up with some ideas that would improve people’s mental and physical health, it's not complicated:

Increase social services
health care for all on demand
Federally funded education at all levels
reduce the workweek to 25 hours and retirement age to 50
Take the dominant industries under workers control and management
Production for need not profit; a rational plan of production so working people can participate in the planning and administration of the labor process
Most importantly take the profit motive out of all agricultural production
Take profits out of sports, human entertainment and social life
End all wars and occupations and reach out to the workers of the world on the basis of solidarity and cooperation and a rational, planned system of production to replace the insanity of the market.

Here’s another suggestion.  With workers’ control and ownership of the mass media, not only can we participate in the generation and sharing of knowledge and ideas, culture and human activity, we can eliminate ads and the never-ending sales pitch that we have to endure every minute of every day. Kim Kardashian and Brad Pitt will no longer be so prominent, we don’t have to live our lives through them. We can have one channel that we can go to for details about consumption and where we can find what we need.  But we can go to it, not it force itself on us, come in to our homes every three minutes. We can get rid of being told to call our doctor to see if we need Viagra for erectile dysfunction at 30, Rogaine for excessive baldness or, whatever pill they have for restless leg Syndrome, or Excessive Shyness Syndrome. This will also enable theater and other cultural arts flourish as actors won’t have to sell things for a living which is what most of them do today.
So these are just a few quick thoughts about why we get sick and how the gap between the health and longevity of the rich (those who do no productive labor but live off the profit of capital), and workers that produce wealth, can be eliminated.