Friday, May 27, 2016

Verizon strike over?

Richard Mellor
Afscme Local 444, retired

So the strike is over is it?  Reading the government statement below doesn't encourage me to feel too confident major gains have been made. I am used to the trade union officialdom referring to defeats as victories so we'll have to see the fine print. This is of course a statement we have to ignore: "I have observed firsthand the parties’ good faith commitment to narrowing differences and forging an agreement that helps workers and the company." How can an agreement between such parties help them both?  The other thing is that if there was such good faith and the workers were out for a month when they had no reason to be, will the company pay them back pay. And what does it mean to "narrow the differences".

The other thing is this: The statement from the government official below says, " Indeed, these two interests are inextricably intertwined."  This is the Team Concept, from the mouths of the other side of the team, the boss.  This idea that workers' interests and bosses' interests are inextricably linked is false. It is false like the argument that higher wages lead to higher prices is false or that you can get 8 hours pay for 8 hours work is false. If that latter were the case what would be in it for the capitalist? How do they get a cut?

Ideas have a class base. The Team Concept philosophy is the bosses' worldview not workers.  Do my comrades, brothers and sisters reading this think that the dominant ideology of feudal times, that the king was king by "divine right", by the will of god, sprung from the head of the serf out there bailing hay and  mending fences? The guy whose future bride the king could sleep with on the night before the wedding, a right the king gave himself.  Of course not, it was the aristocracy's, the king's idea. And having control of society and its institutions, priests, bishops and other flunkies, the king and his buddies (the feudal aristocracy and the clergy) made sure that idea got a lot of press in the pulpit on Sunday. How can you argue with creator? You can't.

I always put it like this when discussing it at work. In the English revolution, the private landowners and rising capitalist class supported by the peasantry, the rural workers of the time, rose up against the landed aristocracy and their system. But they could only go so far. Like Bernie Sanders and others like him with regard to Warren Buffet and the lords of capital, they just wanted to make things nicer, persuade the king to act right. The king told them to piss off. He even dissolved their stupid parliament so they had no voice at all, the landowners and agricultural capitalists that is as the peasants never had any voice anyway.

"I am king by divine right" said the king. "I am here by the will of god, beware gods wrath."  It was frightening. Upsetting god was not what most people wanted to do.

Along comes Cromwell, "Let's cut off the kings head  and see what happens" he says.

God was asleep apparently and missed it. Lo and behold! A new day was born. It turns out they were being duped.

Inextricably means, according to the online dictionary, "incapable of being disentangled, undone, loosed, or solved.".  There you go. We're stuck with the system we call capitalism. There's nothing we can do. We can't have work without the boss. Nothing can be built without the boss.  The system of production we call capitalism cannot be changed; it's the end of civilization.  Who thought that up? It's the same tactic the domestic abuser tells his victim. If tyou'd stop nagging I wouldn't hit you. It's all your fault.

That's why we are taught not to think of systems of production or understand that history changes from one system of production to another. There's only one winner if we start from that position and that's the class that rules, the class that does no work and lives off the labor of others.  Let's not be duped.  

I don't believe in this period and with the class collaborationist, pro management views that the labor hierarchy holds that the bosses interests haven't been strengthened in this dispute and the interests of the working class damaged. I don't care what the union officialdom says.

From the US Department of Labor

U.S. Labor Secretary Thomas Perez announces agreement in principle on a new contract for Verizon workers
WASHINGTON – U.S. Secretary of Labor Thomas Perez issued the following statement today regarding the ongoing labor dispute at Verizon:

“Today, I am pleased to announce that the parties have reached an agreement in principle on a four-year contract, resolving the open issues in the ongoing labor dispute between Verizon’s workers, unions, and management. The parties are now working to reduce the agreement to writing, after which the proposal will be submitted to CWA and IBEW union members for ratification.

Throughout the past 13 days of negotiations at the Department of Labor, I have observed firsthand the parties’ good faith commitment to narrowing differences and forging an agreement that helps workers and the company. The parties have a shared interest in the success of Verizon and its dedicated workforce. Indeed, these two interests are inextricably intertwined.

This tentative resolution is a testament to the power of collective bargaining. I commend the leadership of Verizon, CWA, and IBEW for their commitment to resolving these difficult issues in the spirit of constructive engagement.

I expect that workers will be back on the job next week.”
OPA News Release: 
Media Contact Name: 

Mattie Munoz Zazueta

Phone Number: 
Release Number: 

Thursday, May 26, 2016

A contribution to a debate in Green Party on adding an anti capitalist plank

by Sean O'Torain.

Capitalism will destroy life on earth as we know unless it itself is destroyed. It will do so either through climate change, nuclear war, pollution, drought, mass starvation and poverty or more likely a combination of all of these. And there are people in the GP who are opposed to saying the party should be against capitalism.

These people are blind. Human society is at a cross roads. We had primate hunting and gathering societies, we had slave societies, we had feudalism,we had and have capitalism. Society is now at a stage where it has the science and knowledge to do one of two things. If capitalism continues, this knowledge and science will destroy life on earth as we know it.

If capitalism is ended and replaced with democratic socialism based on an international plan of production then this knowledge and science can be used to transform life on earth in the most unimaginable positive fashion. And the right wing in the Green Party are arguing about mom and pop stores!!! And the leadership of the GP will not take up a strong fight for the anti capitalist amendment.

After Stalinism collapsed, a bourgeois writer, Francis Fukiyama wrote that we were at the end of history. This was nonsense. We are at a cross roads in history. Either capitalism will be ended or life on earth as we know it will be ended. And this is not centuries away. This is decades away.

I will not go on any more about historical materialism because this is what I am talking about here. But just remember, this human society did not develop in a straight line. There were times when what were then advanced societies that no longer advanced . Instead they collapsed or were overthrown by more primitive societies. The ruins of these old societies can be seen in the pyramids in the jungles and deserts, in the old cities under oceans, the old stone formations which show an advanced knowledge of astronomy. But these all were unable to develop further.

Human society today is faced with this danger. Being unable to develop forward into international democratic socialism based on the now progressive class, the working class. If this does not happen, if we do not end capitalism, human society and life on earth as we know it will be destroyed. The blindness of those who refuse to support the anti-capitalist amendment that is being discussed in the Green Party as step forward, is absolutely staggering. We must all organize to prevent this campaign from succeeding. 

And the leadership of the GP must get off their a... and fight for the anti capitalist amendment and further, to make the GP an eco-socialist party based on the progressive class in history at this time - the working class. 

Democratic Party Warfare Heats Up

James Zogby and Cornel West

By Richard Mellor
Afscme Local 444, retired

The crisis in the Democratic Party is intensifying as two of Bernie Sanders’ five supporters appointed to the committee that drafts the party platform, Cornel West and James Zogby say they will introduce proposals condemning the Israeli occupation of Gaza and the West Bank. The occupation of the West Bank is considered illegal by most countries in the world and Israel’s ability to maintain it is made possible through US backing.

In April, a Pew Research Center Survey found that “Forty percent of liberals sympathized more with Palestinians, the most since 2001, while 33 percent sympathized more with Israel.”, according to the New York Times.  Sanders’ two appointees are concessions the party power made to the Senator in the hope that he can back off his supporters who have not gone away and do not appear to be doing so at this point in time. Hillary Clinton has six appointees and the party chairperson four. There is no doubt that Sanders himself is surprised by the level and intensity of support he has gotten by  tapping in to the anger and frustration that exists in US society after years of austerity, predatory wars and declining living standards. This is all taking place amid an increased surveillance state.

Cornel West and James Zogby, “…denounced Israel’s occupation of the West Bank and Gaza and said they believed that rank-and-file Democrats no longer hewed to the party’s staunch support of the Israeli government. They said they would try to get their views incorporated into the platform, the party’s statement of core beliefs, at the Democratic National Convention in Philadelphia in July.” The New York Times says.

It was also reported today that Bernie Sanders and Donald Trump have agreed to, or are considering a one on one debate.  If Sanders wins California, which cannot be ruled out, this will strengthen his hand at the Democratic National Convention in July as will a thrashing of Trump in a debate if one were to materialize.

Those of us who have been around for any length of time have lived through many promises made via the Democratic Party and its platform committee.  NAFTA comes to mind and as Bruce Dixon of the Black Agenda Report points out and I am compelled to quote him at length here:

“Take the Democratic party platform of 1992, the year Bill Clinton was elected. It promised targeted jobs programs to reduce inner city unemployment, the building of affordable housing, funding of urban mass transit, measures to begin weaning the economy off fossil fuels. It promised a peace dividend, the investment of some of the former Cold War military budget into the civilian economy to create jobs and opportunities. It pledged new environmental protections and committed Democrats to rolling back carbon dioxide emissions to 1990 levels by 2000. Every bit of this was garbage. On the other hand, the one percent were promised the end of welfare, so that millions would be thrown out onto the low wage labor market, and NAFTA. Those were among the promises that were kept.”

This is not to downplay the importance of the movement around Sanders. There is a seething anger beneath the surface of US society that at some point will burst through the surface with a vengeance and as I have written on this blog in the past, even if Sanders were to make it to the White House, he would be Obama in a different form.

Nevertheless, the Democratic National Convention will most likely be the most contentious in my lifetime here in the United States, I imagine it will be more like a union meeting.

What will happen we cannot say for sure.  Will there be a left split from the party? I do not think Sanders will support that and if it happens without him it will be an inconsequential event most likely.  As I wrote earlier this week there will be those that will become demoralized as Bernie’s Political Revolution is revealed not to be a revolution at all. Sanders admitted as much, that it is a get out the vote revolution and the recipient of that vote is the Democratic Party.  Many will join the Greens and as I write this I am reminded that Sanders has not taken up this issue of only the two Wall Street Parties getting media time. The Greens and other party’s are shut out of the public discourse.

Sanders believes the Democratic Party can be reformed but as we have pointed out on this blog in the past it cannot, it cannot represent the interests of the millions of workers in the US who have sunk below the poverty line or near it, those people who cannot raise $2000 in cash for an emergency, those who have lost their homes.

What we do know for sure is that we are living in interesting times.

"No Single Employee Train Crews!"

Appeal from the Railroad Workers' Union

Public Comment Period Extended to June 15th at 11:59 PM EDT 
Tell the FRA:

"No Single Employee Train Crews!"
Email Your Message today!
Dear RWU Members & Supporters:

On March 15th, the Federal Railroad Administration (FRA) offricially announced a Proposed Rule on the whole question of crew staffing for trains in the United States. After careful consideration, RWU has come to the only conclusion possible: the Proposed Rule provides a road map for any and all rail carriers to obtain the FRA's blessing to run trains with a single employee. Therefore, RWU cannot support this Proposed Rule, period.

We continue to agree with the joint statement from nearly 7 years ago that the BLET and the UTU made in a joint Petition filed in June 2009 with the FRA on the question of traincrew  staffing which reads: “No conditions exist where one-person operations are safe.”  And since the Proposed Rule is predicated on the "safe" operation of trains with a single crew member, we must urge the FRA to promulgate a Rule that outlaws the practice. We urge all RWU members and all railroad workers to contact the FRA and tell them in plain language: "No single employee train crews!"

-- To write/FAX the FRA, click HERE.

-- To email the FRA, click HERE.

-- To view the RWU Letter to the FRA on the Proposed Rule, click HERE.

-- To view the FRA Proposed Rule, Click HERE.

-- To view the RWU Editorial on the Proposed Rule Click HERE.

-- To view a comprehensive article entitled "What's Wrong with Single
    Employee Train Operations?" with 21 reasons why they are unsafe and
    unworkable, click

-- To view the most recent RWU Resolution to Oppose Single Employe
     Operating Crews from March 2nd, 2015, see below or click HERE.

-- To view the original RWU Resolution on Single Employee Train crews from
     January 5th, 2010, click HERE
RWU Resolution to Oppose Single Employee Operating Crews

Whereas, the major rail carriers have made it clear in their words and actions that they wish to conduct operations to the extent possible, “conductor only” in RCL yard operations, and “engineer only” on road trains; and

Whereas, the rail carriers have long stated their intentions to operate road trains with a single employee, when more than decade ago they made their intentions known to both unions of the operating crafts through a “Section 6” notice addressed to the unions dated 11/1/04; and

Whereas, in the words of a Joint Petition filed with Federal Railroad Administration (FRA) in June 2009 by both unions of the operating crafts, No conditions exist where one-person operations are safe”; and

Whereas, both unions of the operating crafts support a bill before Congress known as “The Safe Freight Act” (HR #3040), that would outlaw single employee train operations in the U.S.; and

Whereas, the FRA itself proclaimed on 4/9/14 that “safety is enhanced with the use of a multiple person crew — safety dictates that you never allow a single point of failure.” and

Whereas, the implementation of single employee operations will invariably result in a serious degrading of worker safety, security, and quality of work life; and

Whereas, these unsafe working conditions referenced above would pose a danger to shippers, pedestrians, motorists, trackside communities, the environment and the general public;

Therefore, Be it Resolved, that RWU opposes any current use, and any further expansion of, single employee operations anywhere in North America, in the yard or on the road; and

Be in Further Resolved that RWU is committed to an ongoing continent-wide Campaign for a two employee minimum on every train crew; and

Be it Further Resolved that RWU once again calls upon the BLET and SMART-TD to redouble their efforts and launch an all-out rank-&-file campaign to put and end to the practice of single employee operations; and

Be it Further Resolved that RWU calls upon all rail union members – particularly those of the operating crafts – to become involved in their respective labor organizations and resist any and all efforts of the carriers to implement single employee crews; and

Be it Finally Resolved that RWU calls on community organizations, civic groups, environmental organizations and labor unions to join with us in this crucial fight against single employee operation of trains.

 Adopted by the RWU Steering Committee 3/2/15

G7 economies in trouble

by Michael Roberts

World leaders are meeting in Japan at the so-called G7 meeting of top capitalist economies.  The state of the global economy is the main subject.  There will be no agreement on what to do about sluggish economic growth, still high unemployment in many countries, falling average real incomes in many others and above all, for capitalism, low productivity growth and dismal business investment.

The policy answers from the G7 leaders to this continued Long Depression vary from “structural reform” (i.e. neo-liberal measures to squeeze more surplus-value out of labour through reductions in labour rights; hiring and firing; privatisation) to more monetary easing (quantitative easing, negative interest rates) and then to fiscal stimulus (more government spending).  But nobody is agreed on common action, so nothing will change on policy.

What is changing is the further deterioration of the world capitalist economy.  Global industrial output growth continues to slow and in the case of the G7 economies (red line below), industrial production is now contracting.
World IP
And world trade, something that I have reported on before, is in significant negative territory (red line below).  This is partly due to the collapse in energy and other industrial raw material prices.  But even when you strip out the impact of the deflation in prices, world trade volume is basically static (blue line) and well below even the low world GDP growth rate of around 2.5%.  Countries with low domestic demand can expect no compensation through exports.
world trade
The most worrying thing for global capitalism is that the US economy, the best performer among the G7 since the end of the Great Recession in 2009, is also showing signs of fading.  In previous posts, I have argued that it would not be China that would pull down the world into a new recession but what happened in the US, which remains the most important capitalist economy, both in production and finance.

The latest survey of business activity among US companies, the so-called purchasing manager index (PMI), made dismal reading.  The PMI surveys companies to see if they think they are increasing production or not.  Anything over 50 suggests expansion.  The latest May figure shows that the US economy, both industry and services, is barely growing, with the PMI at just 50.8 (green line) compared to over 60 just two years ago.
And the prospects for a pick-up in growth ahead are not good.  The US Conference Board monitors the state of productivity around the world.  That’s the measure of output per worker (and per hour).  Productivity growth plus growth in the labour force constitutes the make-up of long-term real GDP growth.  Population and employment growth has been slowing in the Long Depression, so productivity growth is even more important.

The latest data from the Conference Board are particularly shocking. 
 Output per person grew just 1.2 per cent across the world in 2015, down from 1.9 per cent in 2014. Productivity growth in the eurozone, measured by gross domestic product per hour, is set to be a feeble 0.3 per cent and barely better in Japan at 0.4 per cent.  But the US slowed last year to just 0.3 per cent from 0.5 per cent in 2014, well below the pace of 2.4 per cent in 1999 to 2006.  Britain’s output per hour worked fell to an average annual increase of only 0.2 per cent between 2007 and 2013 and after a false dawn in 2015, is expected to show zero growth this year.
UK productivity growth
And now the Conference Board expects -0.2% for the US this year, the first contraction in three decades. Last year it looked like we were entering into a productivity crisis: now we are right in it,” said Bart van Ark, the Conference Board’s chief economist.  The Conference Board pleaded that “Companies really need to invest seriously in innovation. It is time for companies to move on the productivity agenda to turn this story around.”
US productivity growth

But they are not.  US business investment fell 0.4% in first quarter of 2016 compared to the first quarter of 2015 and spending on equipment fell for the first time since the Great Recession ended.

Why are companies in the G7 not rising to the occasion and investing more and more in new technology to get productivity growth up?  The usual mainstream economics argument was repeated by Goldman Sachs CEO Lloyd Blankfein recently.  The notorious head of the world’s most rapacious investment bank had one word to tie together everything happening on Wall Street and in the global economy right now.  “It all comes down to confidence”, he said at the firm’s annual meeting.  Right now, Blankfein said, “we’re in a low-confidence environment.”  But Blankfein’s answer begs the question: why is there a ‘lack of confidence” among companies to raise investment?  I have answered this question on numerous occasions in this blog.  The latest is in this post.    And see this by Jose Tapia Granados.

Corporate investment is stagnating or falling because profitability remains low and total profits have stopped rising.  Also corporate debt burdens are beginning to weight down on ‘confidence’.  Last year in the US, Last year business debt, excluding off balance sheet liabilities, rose $793 billion, while total gross private domestic investment (which includes fixed and inventory investment) rose only $93 billion.

More than 70 corporate borrowers have defaulted globally so far this year, piling up at the fastest pace since 2009 and closing in on the 113 issuers that defaulted in 2015, according to Standard  Poor’s.  It’s true that most of these are in the hard-hit energy and mining sectors.  the energy and resources sector accounted for more than half of the overall 72 issuers that have defaulted so far in 2016. Within this, 29 have been in the oil and gas industry, 12 were in metals, mining and steel and one was a utility company.

But the S&P is concerned that defaults could spread to other sectors: “So far, there has been little spillover effect into other sectors, but we are not ruling this out in the coming quarters. We also expect this stress on many U.S. oil and gas companies to persist with continued low oil prices, ongoing cash flow deficits as a result of declining prices, more limited debt-funding sources (including credit facilities and bank lending), and potentially limited benefits from plans to further cut capital expenditures.”  Corporate defaults are heading back up to territory last seen in 2009, when the financial crisis hit bottom.
US debt
So while the G7 leaders ponder the state of the world, far from corporations taking up the challenge of boosting productivity through more investment and R&D, they are holding back.  And a missing ‘confidence fairy’ is not the reason.

Tuesday, May 24, 2016

Crunchtime for Sanders nears. What then?

By Richard Mellor
Afscme Local 444, retired

That section of the capitalist class represented by the Democratic Party is getting a little edgy as the party nomination process nears completion. Their candidate, the war criminal Hillary Clinton, has the nomination wrapped up through the undemocratic way the process functions but Clinton’s main challenger, Bernie Sanders, will not yet throw in the towel. Sanders himself is no peacenik. He voted to send the Zionists more ammunition after supplies dwindled during the savage assault this regime waged against the Palestinians of Gaza. His recent concession to the people of Gaza claiming the assault was a little excessive arises out of necessity as so many of his young supporters support the Palestinian cause.  He supported the F 35, and while he has attacked defense spending at rallies, according to Jeffrey St Clair of Counterpunch, “Since he always “supports the troops,” Sanders never opposes any defense spending bill.  He stands behind all military contractors who bring much-needed jobs to Vermont.”

He now finds himself in the uncomfortable position of having stirred up a hornet’s nest that is dividing the party along class lines and he can’t put the genie back in the bottle quite so easily.

In the last analysis, liberals like Sanders, what we might call an FDR Democrat although while there are similarities there are differences as well, are no real threat to the system. They support capitalism and the free market; they simply want a friendlier, more humane capitalism. For the liberals, it was FDR’s policies of the new Deal that saved capitalism, that “put people back to work”. The reality is different of course; the slump of 1937 was an even deeper one than 1929. It was US war production that led to the destruction of the productive forces of whole nations and the death of more than 50 million people that saved capitalism from the history books.

Sanders, along with other political representatives of the liberal wing of US capitalism like Elizabeth Warren and Robert Reich, have voiced the concerns of millions of Americans who have seen their living standards decline drastically over the past 40 years. They have tapped in to the anger that lurks beneath the surface of US society and above all, want to give it expression through the Democratic Party.

This doesn’t mean that many of their issues shouldn’t be supported. Why would they not be, they are in response to a mood that they clearly know exists. Their greatest fear is that both the public’s desires and anger could lead to social unrest and worse, an independent political party based on workers, our organizations and our communities. The Democratic Party is the 1%’s political safety valve. It is, as the saying goes, the graveyard of social movements.

Apart from his support for a murderous anti-worker US foreign policy which should prevent any class conscious worker from supporting his candidacy, even if he ran as an independent, it is Sanders’ misguided view that capitalism can protect workers’ rights, build an egalitarian society and avoid environmental catastrophe that should be a warning to us all. For Sanders, the vehicle for this magical transformation is the other party of the billionaires, the Democrats.

It’s not that class conscious workers or socialists shouldn’t work with liberals on issues, as the struggle for reforms is important.  It’s whether or not these struggles are to save capitalism or replace it. The liberals have no alternative but the market and capitalism with a friendlier face as it doesn’t occur to them that the working class can actually govern society in its own interests. They just want things to be fair. They want Warren Buffet and other friendly billionaires to help us and they’ll convince them it’s the right thing to do. But we’ve been here before.

Dan Arel,
quoting from Danny Katch’s book, Socialism…Seriously gives an example of the difference between how liberals and socialists see the struggle for reforms under capitalism, Katch writes:

“Liberalism can agree with socialism that some things about capitalism should be reformed, and socialists often work alongside liberals to win those changes. Where we differ is that liberalism views reforms as ways to preserve capitalism while socialism sees them as steps toward replacing it.”

Liberalism/reformism has a history of failure. Even during the post World War 2 boom when US capitalism as early as 1950 had some 52% of world trade and a global market open to its goods, in the west at least, it could not provide the basic necessities of life to millions of its citizens as a brutal Apartheid system flourished in the South and as it imposed Armageddon on former French colonial subjects in South East Asia--- a brutal war that ended in its defeat.

The Democratic Party controlled both houses of Congress and the presidency in the Carter years and during the first two years of the Clinton Administration. Carter used the Taft Hartley against the miners in 1978 and began the deregulation of industry taken up by Reagan. Clinton brought us NAFTA and threw working class women off welfare. Clinton and Gore savaged the public sector and Clinton promised to “make a lot of millionaires” as he lavished praise on Wall Street. Sanders also supported Clinton’s bombing of Kosovo and the breaking up of a sovereign nation.

Sanders I am sure has been shocked at the support he has given expression to. This week, he won some organizational concessions from the power in the Rich man’s party as some of his supporters will get a seat on committees, most notably Cornell West on the platform committee. The party power will ensure even these organizational concessions will mean minority posts and the bankers rule will not be undermined.  As a friend wrote to me today, “The platform, as they say, is what's left behind when the train leaves the station.”

Even if concessions of a more political nature are offered, some aspect of his program for example, the usual road blocks will be erected to that.  Every tax reform introduced by legislators to halt the loopholes used by the rich have accomplished nothing.
I wrote about this some time back.

Numerous Democratic Party bigwigs and supporters have been pressuring Sanders to back off. But he’s got pressure coming at him from both sides. Some notable liberals are saying he’s damaging their ability to beat Trump.  Markos Moulitsas of the liberal news outlet,
Daily Kos attacked him for not coming out strongly enough against his supporters’ behavior in the Nevada delegate convention, as did the Senate Minority leader Harry Reid.

Coupled with the criticism, Reid also urged Democrats to back off Sanders and points out that Sanders has supported Wisconsin Democrat Russ Feingold’s Senate run telling the media that he, "I'm very happy that Sen. Sanders is supporting him bigtime."   The idea that Sanders would run as an independent is practically ruled out in my opinion and as the
Philadelphia Enquirer reported today “Backing Feingold could reassure other Democrats about his intentions and party loyalty.”, strengthens this view I believe.

The end of the road is near and the question of what will happen to his supporters arises. When will the supporters fracture? It seems inevitable to me that much of his base will end up supporting Hillary Clinton. She is qualified, ruthless and is the safest choice for the few unelected people that manage USA Inc. There are others, including women who will not vote for her under any circumstances and some of those will drop out of politics, some will turn to the Greens as myself and others on this blog have pointed out before. There are many Greens who are involved in the Sanders campaign who will return to the fold for the presidential election. They are basically Democrats and do not stake the Green Party seriously or even attempt to build it as a possible alternative.

Were the thousands of people who have involved themselves in the campaign of the Democrat Sanders to have joined the Greens from the beginning and campaigned within this party for a socialist platform and also for a more general orientation to workers, our communities and our organizations, there would be much more of a panic among the Democratic power brokers; a genuine alternative could have been on the table early on.  The Green Party is not, in my opinion, a capitalist or a workers party but its platform is more representative of workers’ interests and its likely candidate, Jill Stein, has a better platform than Sanders including calling for the nationalization of certain sectors of the economy and an end to the present US foreign policy. Its environmental record is far superior.

Instead, following Sanders, they have led the march down the Democratic Party road that has proven time and time again that there is nothing at the end of it but quicksand. This former party of the slaveowners, the only party to have dropped nuclear weapons on civilian populations, is a party of the US ruling class and cannot solve the crisis of capitalism.

*I have not read this book so I can’t give an overall opinion of it. It also matters how revolutionary socialists approach workers with the view that reforms under capitalism either cannot be realized in general or are at best very temporary in nature. In the present epoch, the former is more likely. Revolutionary socialist have not the best record when it comes to explaining these issues outside of an academic setting.

Greece: the never-ending circle

by Michael Roberts

The next stage in the never-ending tragedy that is the Greek economy takes place today. The Greek government meets with the EU leaders and the IMF to discuss what to do about the current ‘bailout’ programme of credit and its public sector finances.

Over the weekend, the ‘leftist’ Syriza government in Greece got through parliament yet another range of severe cuts in public spending, increased taxes and a programme of extended privatisations, in order to meet the demands of the Troika (the EU, the ECB and the IMF). In return, the Greek government will receive another tranche of funding as part of the third ‘bailout’ package designed to get Greece to repay its pubic sector debts and ‘recapitalise’ its banks.

The funds will be used partly to cover the arrears of payments to the health service and schools that the central government had run up in order to make its own books balance. But most of it will be used to pay back existing loans and interest owed to the ECB and the IMF. So more money is being borrowed from the Troika to pay the Troika in a never-ending circle of madness!

The Greek public debt burden arose for two main reasons. Greek capitalism was so weak in the 1990s and the profitability of productive investment was so low that Greek capitalists needed the Greek state to subsidise them through low taxes and exemptions and handouts to favoured Greek oligarchs. In return, Greek politicians got all the perks and tips that made them wealthy too.

This weak and corrupt Greek economy then joined the euro in 2001 and the gravy train of EU funding was made available.  German and French finance came along to buy up Greek companies and allow the government to borrow and spend. The annual budget deficits and public debt rocketed under successive conservative and social democratic governments. These were financed by bond markets because German and French capital had invested in Greek businesses and bought Greek government bonds that delivered a much better interest than their own. So Greek capitalism lived off the credit-fuelled boom of the 2000s that hid its real weaknesss.

But then came the global financial crash and the Great Recession. The Eurozone headed into slump and Eurozone banks and companies got into deep trouble. Suddenly a Greek government with 120% of GDP debt and running a 15% of GDP annual deficit was no longer able to finance itself from the market and needed a ‘bailout’ from the rest of Europe.

But the bailout was not to help Greeks maintain the living standards and preserve public services during the slump. On the contrary, living standards and public services had to be cut to ensure that German and French banks got their bond money back and foreign investment in Greek industry was protected.

So through the bailout programmes, foreign capital was more or less repaid in full, with the debt burden shifted onto the books of the Greek government, the Euro institutions and the IMF – in other words, taxpayers and citizens. The Greek people were ultimately committed to meeting the costs of the reckless failure of Greek and Eurozone capital.

Last summer 2015, the ‘Greek crisis’ came to head. The newly-elected leftist Syriza government appeared to refuse to accept the austerity measures demanded by the Troika. Finance minister Yanis Varoufakis went into the lion’s den of the Eurozone group meetings to call for debt relief and a rejection of the austerity measures. Eventually, Syriza leader Tsipras called a referendum of the people to say yes or no to the terms of Troika, amid the cutting off of credit to the Greek banks by the ECB, the imminent threat of financial and economic collapse and dire threats from the German leaders and the Eurozone group. The Greek people amazingly (including Tsipras) voted by 62% to say no to these threats and austerity. The No side won every constituency in Greece and Tspiras had a mandate to reject the Eurozone demands.

But he and most of the other Syriza leaders backed down. They could not see any alternative but to accept the Troika demands. As they saw it, otherwise, credit would be cut off, Greece would be thrown out of the Eurozone and the economy would plunge even deeper into depression. They decided to agree to Troika terms in return for the vague promise that, some time later, the EU leaders would agree to ‘debt relief’. This presumably meant that Greece would have to pay less back to its creditors (now mainly the EU official loans) and so would have some ‘fiscal space’ to end austerity and get the economy going again – on a capitalist basis.

This is what I wrote last August on the news that Syriza had agreed to the terms of the third bailout: “The economic uncertainty is whether, even if the Greeks follow the deal to the letter, it will work to reduce Greece’s public sector debt burden, restore economic growth and reduce unemployment and reverse the drastic fall in living standards.  The answer to that question is clear.  It won’t”

“The IMF is not prepared to provide any further credit as part of this bailout because it does not think that Greek public sector debt can be stopped from rising as a share of GDP and that the Greeks can ever service it by borrowing from the market.  In other words, the debt is ‘unsustainable’.”

Now here we are, getting on for a year later, and Greece remains in economic recession.  The Greek economy contracted 0.4 percent on the quarter in the first three months of 2016 after growing by a meager 0.1 percent in the previous period. Compared with the same period a year earlier, the non-seasonally adjusted GDP shrank for the third quarter in a row by 1.2 percent, accelerating from a 0.7 percent fall in the last three months of 2015. So, since the Syriza government backed down, Greece has fallen back again into recession.
Unemployment remains well above 20% and is double that for youth unemployment. Average real wages are still falling; pensions have been cut yet again and public services remain in tatters. And Greece is taking the brunt of the influx of refugees from Syria and the Middle East.

The Syriza government has done everything it has been asked of by the Troika in making the Greek people pay for the failure of Greek capitalism. And yet the EU leaders have still not agreed to ‘debt relief’. Indeed, they are talking of only considering it once the austerity measures in the latest bailout have been implemented in full and the programme comes to an end in 2018. In the meantime, the Greek government is supposed to run a budget surplus (before interest payments on loans) of 3.5% of GDP a year for the foreseeable future. That is a level way higher than any other country in the EU and way higher for so long than any other government has achieved ever!

No wonder the IMF considers this approach as unsustainable. The IMF executives have a mandate not to lend money to any country that it does not think can pay it back – simple. And the IMF analysts reckon that applies to Greece. (
“Even if Greece, through a heroic effort, could temporarily reach a surplus close to 3.5% of GDP, few countries have managed to reach and sustain such high levels of primary balances for a decade or more, and it is highly unlikely that Greece can do so considering its still weak policy making institutions and projections suggesting that unemployment will remain at double digits for several decades.” IMF.

So the IMF wants the EU leaders (who own most of the debt) to agree to ‘debt relief’. The EU leaders stubbornly refuse as they think it would set a precedent for Eurozone governments to get away from ‘honouring’ their obligations and would look bad in particular to the German electorate with a general election only 18 months away and the Eurosceptic parties there gaining ground.  This is an irony considering that in 1953 Germany was allowed to write off the debt it owed to the Allied Powers after the second world war.  That was done to get Germany to return to the capitalist fold and allow economic recovery.  But not for Greece in 2016.

Today, the IMF and the EU leaders meet with the Greek negotiators. The IMF has repeated it would take part in Greece’s €86bn bailout only if its European partners could prove “the numbers add up”.

The IMF reckons that without debt relief, Greece’s public sector debt to GDP ratio (the measure everybody follows) would not fall even with further austerity. Indeed, it would rise from around 180% now to nearly 300% by 2060 – in a ‘snowball’ effect where debt is repaid with more debt and interest payments keep rising on top.

Greece’s gross financing needs, or GFN, (the money it would need to service its debt pile) would soar to 67.4 per cent of total economic output. That compares to financing needs of just 18.5 per cent today. With sufficient ‘debt relief’, Greek public debt could finally start to fall, the IMF claims. Even so, the debt ratio would still be above 100% over 40 years from now!

And what is this ‘debt relief’. Well, the IMF suggests “payment deferrals” until 2040 – which would mean Greece would pay none of the costs of servicing any of its bonds or loans for the next 24 years. This would mean extending the grace period on its existing European Financial Stability Fund loans by another 17 years, ESM loans another 6 years, and loans owed to member states by 20 years. In total, these measures would help reduce the country’s payments bill by 4.5 per cent of GDP over the next 24 years, according to the IMF.

An additional proposal is to extend the life on the loans owed to Greece’s fellow member states (known as the Greek loan facility) by 40 years, from their current maturation date of 2040 to 2080 instead. And loans issued by the eurozone’s emergency bailout fund – the European Financial Stability Facility – would be extended by 24 years from 2056 to 2080 and from the permanent European Stability Mechanism (Greece’s largest single creditor) by another 20 years, also taking them up to 2080. Combined, the IMF calculates such measures would help keep the cost of servicing Greece’s total loans below 20 per cent of GDP by 2060.

The IMF also proposes that Greece should pay no more than 1.5 per cent of its GDP every year to service the costs of its ESM/EFSF loans until 2045. The fund proposes this be done by swapping current expensive short-term bonds with higher interest rates, with longer term paper with lower repayments.

All these ideas are not really debt relief in the sense of actually writing off the debt. Such a move is taboo. Greece must honour its ‘debts’. In reality, these proposals would mean that the debt would be perpetually ‘rolled over’ to the future and interest payments would be reduced to the minimum. The IMF wants these measures of debt relief to start now while the Euro leaders, led by Germany want to push them back to after 2018.

But even these measures of debt relief won’t work unless the Greek economy starts to grow again.  How can the Greek economy be made to grow? I posed three possible economic policy solutions last summer. There is the neoliberal solution currently being demanded and imposed by the Troika. This is to keep cutting back the public sector and its costs, to keep labour incomes down and to make pensioners and others pay more. This is aimed at raising the profitability of Greek capital and with extra foreign investment, restore the economy. At the same time, it is hoped that the Eurozone economy will start to grow strongly and so help Greece, as a rising tide raises all boats. So far, this policy solution has been a signal failure. Profitability has only improved marginally and Eurozone economic growth remains dismal.

The next solution is the Keynesian one. This means boosting public spending to increase demand, cancelling part of the government debt and for Greece to leave the euro and introduce a new currency (drachma) that is devalued by as much as is necessary to make Greek industry competitive in world markets. The trouble with this solution is that it assumes Greek capital can revive with a lower currency rate and that more public spending will increase ‘demand’ without further lowering profitability.

But the profitability of capital is key to recovery under a capitalist economy. Moreover, while Greek exporters may benefit from a devalued currency, many Greek companies that earn money at home in drachma will still be faced with paying debts in euros. Many will be bankrupted. Already over 40% of Greek banks loans to industry are not being serviced. Rapidly rising inflation that will follow devaluation would only raise profitability precisely because it will eat into the real incomes of the majority as wages failed to match inflation. There would also be the loss of EU social funding and other subsidies if Greece is also ejected from the EU and its funding institutions.  This solution has been rejected by the Greek government and most of its people too.

The third option is a socialist one. This recognises that Greek capitalism cannot recover to restore living standards for the majority, whether inside the euro in a Troika programme or outside with its own currency and with no Eurozone support. The socialist solution is to replace Greek capitalism with a planned economy where the Greek banks and major companies are publicly owned and controlled and the drive for profit is replaced with the drive for efficiency, investment and growth. The Greek economy is small but it is not without an educated people and many skills and some resources beyond tourism. Using its human capital in a planned and innovative way, it can grow. But being small, it will need, like all small economies, the help and cooperation of the rest of Europe.

This solution has never been posed by the Syriza leaders.  So the EU leaders and the Syriza government will continue trying to meet the demands and targets of the Troika in the vain hope that European capitalism will recover and grow and so allow Greeks to get some crumbs off the table.

There may be some deal on ‘debt relief’ from the discussions. But it will still mean that Greece has an unsustainable burden of debt on its books for generations to come, while living standards fro the average Greek household fall back below where they were before Greece joined the Eurozone. And another global recession is fast approaching.

Sunday, May 22, 2016

Socialists aren't exempt from sexual violence

We  share this piece that was originally published at We hope it stirs some discussion on the issue of sexual violence in left organizations, more importantly, how it is dealt with. Facts For Working People commented on these events as they occurred and we did not then nor do we now, do so out of any hostility to the British SWP, for sectarian reasons or to gloat at the failings of the SWP.  We do so in order to continue to direct our concern over this issue and the failure of the left and socialist organizations, including the CWI, the group from which we were expelled, to correctly address it. It is a scourge that will not go away on its own and ignoring the sexism and undemocratic top down life of revolutionary organizations will make things worse. The attempts to slander the victims and those that support them or criticize these failings brings shame on revolutionary socialism.

Why I don’t buy Socialist Worker

You weren’t a member, you tell me, in 2013 when the arguments happened. You’ve heard, of course, there was some controversy but you have been told that the people who left were sectarians. That’s true, isn’t it, they had some grievance with the SWP and they used a disagreement about the SWP’s internal procedures as an excuse to leave? Hadn’t they been planning to leave for years? 

In 2010 a man called Martin Smith (“Comrade Delta”) was the National Secretary of the SWP, its day to day leader, the person who employs the other party workers. In July of that year, a 19 year old woman (“Comrade W”) complained that he had mistreated her. She didn’t use the word “rape”, but the people who met her and heard her knew what she was talking about.

From the start, Smith’s supporters (including Weyman Bennett, who worked with him on the SWP’s anti-fascist campaign) put pressure on the women who helped Comrade W, calling one of them a “traitor”, ostracising and dismissing them and forcing them out of the SWP.

The complaint was investigated by Charlie Kimber, who is now the editor of Socialist Worker. He met comrade W, told her that he believed her and that disciplinary action would be taken against Martin Smith. The extent of the punishment was as follows: Smith was demoted from his position as National Secretary but remained in the SWP’s full-time leadership on its Central Committee.

Smith’s demotion was eventually explained to the membership at the SWP’s 2011 conference, where it was introduced by Alex Callinicos who complained about outside forces reporting on internal difficulties within the SWP. He said there was a complaint, he didn’t explain its seriousness and he said that Smith himself had asked to be moved to a different role. The session ended with delegates clapping, stamping their feet in Smith’s defence and shouting, “The workers united will never be defeated.”

In 2012, W, taking at face value the SWP’s recent involvement in anti-rape campaigns, decided to rejoin. She was still traumatised by what had happened, suffering flashbacks and was tearful, and eventually she asked the SWP’s disputes committee (“DC”) to investigate. This time, she did describe what had happened to her in 2010 as rape.

The investigation was loaded: a majority of those investigating were Smith’s friends and appointees. He was given sight of her written statement (which the SWP has always refused to publish). She was not allowed to read his.

A second complainant came forward: at this stage, the DC heard but refused to investigate her complaint.

By a majority, they decided to take no action against him. One person who dissented was the chair of the committee, who found that there probably had been improper sexual conduct – “sexual harassment” – and that Smith’s behaviour was incompatible with membership, or leadership, of a left-wing party.

At the start of 2013, the SWP conference narrowly approved the disputes committee report; from then on large parts of the organisation operated a loyalty test: if you were willing to back Smith, you could remain in the party. if not, you were told to leave. The atmosphere, at its worst, was as hostile as could be. Members of Smith’s personal anti-fascist bodyguard, men in the late 40s, spat in the faces of a woman in her 20s who disagreed with them. Smith’s supporters threatened to beat up another young, male critic. People were silenced, jeered, told to their faces to leave.

The second complaint was eventually heard. It was in writing. It too, has never been published. In careful, painful detail, it described further improper sexual conduct by Smith. This time, and for the first time in the entire scandal, the SWP’s leadership decided that a degree of damage limitation was necessary. A fresh panel was convened and Martin Smith resigned rather than face investigation.

In the SWP, you will be told that Martin Smith was vindicated. He wasn’t. The last panel to investigate his complaint found that there was enough evidence of sexual harassment that if he was to ever seek to rejoin he would have to explain his conduct.

In the SWP, you will be told that the leadership’s critics were a few malcontents, people who were on the verge of leaving the organisation anyway. They weren’t. At least 700 people left, or around a quarter of the SWP’s subs-paying membership. Among those who left were people who had given twenty, thirty, even fifty years of their lives to that organisation. 

In the SWP, you will be told that this incident belongs to history, that the SWP has learnt from its mistakes. It hasn’t, the men and women who attempted to cover up a crime are all still in its leadership.

Eating Jim Crow, the poison fruit.

Great quote from MLK. This columnist used it at an ACLU forum yesterday.

“And when his wrinkled stomach cried out for the food that his empty pockets could not provide, he ate Jim Crow, a psychological bird that told him that no matter how bad off he was, at least he was a white man, better than the black man,”

This Mr. Pitts ( see below) is absolutely correct in my opinion. The white liberals on the other hand make a similar mistake in supporting the Democratic Party and it's representatives, Clinton is the most obvious, but then there is this former hedge fund manager Tom Steyer. Steyer once worked at Goldman Sachs and has fine words to say about former Treasury Secretary Robert Rubin, another Democrat. Steyer graduated from Yale where he learned about capitalist economics. That and the connections these representatives of the ruling class earn over time has allowed him to accumulate close to $2 billion. His history enabled him to raise lots of money from the moneylenders and other speculators for Barack Obama and Hillary Clinton and has had fundraisers at his house for both of them. 

Many white (and workers of color) workers, not just conservative ones, recognize that there is no future hanging their hat on people like Steyer or other "liberal" representatives of the 1%. They are not fooled and millions withdraw from politics, some descending in to resignation and apathy becasue they are presented only with these two options, a left and right wing of the ruling class. 

Those white liberals that correctly criticize white workers that support politicians and causes that are against their economic self interest (and racism is against their self interest) need to look in the mirror. I am not familiar with Leonard Pitts and agree with his comments completely, but I am familiar with the know it all superior attitude of the white liberals and their criticisms don't hold much water with me when their "radicals" are former billionaire hedge fund managers and speculators. And they call conservatives stupid. It's more com0licated than that.

The labor officials who hang on to the coattails of the Democratic Party are as bad, offering no serious way out for workers, only a slightly slower death. The message to the white worker from the liberal wing of capitalism is it's your turn to be poor now. Like millions of other workers in this country, I will fight for my class, for other workers to get a job, but not mine.

Steyer and his Harvard wife are no friends of working people and most workers know it. Steyer is seen as a possible lefty savior and Democratic Party player.  Any worker with an ounce of class consciousness would wonder how a billionaire money trader and speculator could be one of ours. Steyer uses the general mood of concern over the state of the environment to boast his liberal credentials.  Yet his general direction and life activity and of those like him is what is destroying the world in which we live. We should not be fooled by his phony claims that capitalism can head of environmental destruction, it is the root cause of it. He's the other side of a nasty coin.

The divide and rule racial tactic must be rejected. Without class unity we cannot defeat the likes of Steyer or Trump. Without class unity we cannot rid ourselves of a social system that will destroy life as we  know it. We have an obligation to our children  (white workers) to heed Mr. Pitts words and fight racism whenever it rears its head. History has hurt us too.

We share the piece below for the interest of our readers it was originally published at:
Richard Mellor


Columnist Leonard Pitts tells Lawrence crowd it’s time for white Americans to ‘stop eating Jim Crow’

Journalist Leonard Pitts, Jr., delivers the keynote address at the 2016 Free State Forum hosted by the ACLU of Kansas at Abe and Jake's Landing, 8 E. Sixth St.
Journalist Leonard Pitts, Jr., delivers the keynote address at the 2016 Free State Forum hosted by the ACLU of Kansas at Abe and Jake's Landing, 8 E. Sixth St.

May 21, 2016
Pulitzer-winning columnist Leonard Pitts Jr. addressed a crowd of about 350 people at the ACLU of Kansas’ first Free State Forum on Saturday, calling for a realization that people “don’t need common blood to reach common ground.”

Much of Pitts’ talk, held at Abe and Jake's Landing in downtown Lawrence, focused on issues of race in America, and how those concepts are playing a role in the presidential election. He quoted a lesser-known speech from Martin Luther King Jr. to explain the concept of “eating Jim Crow” — how white southern aristocracy during the Reconstruction era symbolically fed the white underclass.

“And when his wrinkled stomach cried out for the food that his empty pockets could not provide, he ate Jim Crow, a psychological bird that told him that no matter how bad off he was, at least he was a white man, better than the black man,” Pitts said, quoting the speech King delivered at the conclusion of the Selma to Montgomery March on March 25, 1965.

Pitts said these words were a succinct summary of what he believes is the greatest con in American history: rather than provide poor white Americans a living wage, affordable housing, quality schools or health care, the money and political interest in the country has given them “whiteness.”

Historically, Pitts said, when the white underclass would complain about working conditions, the “money” would respond with threats to bring in black workers for less pay. Today, he said, the same principle is still being applied in order to prevent the underclasses from uniting into a powerful force for change, regardless of party lines and other differences, or even imagining the possibility of doing so.

“For a visceral example of this, you need look no further than the presidential election of 2016, in which Republican voters have fallen in love with a preening, narcissistic bully who doesn't even represent the things they’ve always said that they value,” Pitts said, referring to the presumptive GOP presidential nominee Donald Trump, who Pitts said has “routinely insulted and alienated Muslims, African-Americans, Hispanics and women.”

“How is it that the party of religious conservatism is swooning for a man who cannot name a Bible verse?” he asked.

Pitts also discussed disproportionate rates of incarceration, traffic stops and police frisking of African-Americans, despite statistics showing that a majority of drug users and dealers in this country are white, and that whites are more likely to be found carrying contraband. He also named nine individual black men and boys who have recently died as a result of police use of force, including Tamir Rice, Eric Garner and Sean Bell.

Pitts concluded his talk emphasizing the importance of the election.

“Six months from now we will find out if the greatest con job in history will take a serial liar and open bigot to White House,” he said. “... We are long overdue for a moment of reckoning in this country, a moment of truth on race and class. It is long past time that we begin to call that con job for what it is and help people to see the intersection between their misery and the misery of those other people who don’t look like them on the other side of town, because Jim Crow is a pitiful excuse for a meal.”

Labour’s new economics – not so new

by Michael Roberts

Over 1000 people packed into a London college to take part in a day of analysis of the state of the British economy.  And hundreds had been turned away.  This was a conference called by the new left-wing leadership of the opposition Labour party in Britain.  The hardworking and dedicated activists within the Labour party that had backed Jeremy Corbyn, the new leftist leader, had turned out in droves to discuss with due intent what is wrong with capitalism in Britain and what to do about it. It was an unprecedented event: the leadership of the Labour party calling a meeting to discuss economics and economic policy and allowing party members to discuss.

Labour’s finance leader, John McDonnell opened the conference by saying the aim of the various sessions was to see how Labour could “transform capitalism” into delivering a “fairer, democratic sustainable prosperity shared by all”.  We needed to “rewrite the rules” of capitalism to make it work for all.  He argued the British capital was failing to invest for growth and jobs.  We needed to break with the ‘free market’ ideology of the neo-liberal agenda and “reshape the narrative” with “new economics”.

What was this new economics?  Well, I’m afraid it was not new but really a rehash of old Keynesian arguments and policy proposals.  As McDonnell said, the aim was to “transform capitalism” with new rules and state intervention, not to replace it.

The key note speaker at the conference was left Keynesian Cambridge University economist Ha-Joon Chang.  He delivered an entertaining and amusing presentation, the gist of which he had already written in an article for the British liberal Guardian newspaper that week.  Chang presented a compelling argument that the strategy adopted by previous right-wing and Labour governments of weakening manufacturing and industry in favour of finance, property and other unproductive services (in other words, turning Britain into a rentier economy) was a big mistake.

British capitalism was failing to compete in world markets with a record high deficit on trade with the rest of the world – see graph below (all graphs in this post have been researched by me and are not those of any speaker).
And its people had seen no rise in real incomes for eight years since the global financial collapse.  British economic strategists reckon that the UK economy did not need a thriving industrial base and could rely on its financial services – just like Switzerland.  The irony was that Switzerland is actually the most industrialised economy in the world, as measured by manufacturing output per person (see below).
manuf peer head
In contrast, British manufacturing has been in fast decline as a share of total output among major capitalist economies.
uk manuf
Chang reckoned Labour should aim to boost industry, R&D and investment, because those sectors can raise productivity for all sectors and incomes.  But he did not expand on how that was to be done in an economic world where banks and hedge funds rule, loans are made for property, while businesses hold back from investment.

In the finance workshop, the poverty of analysis and policy was very evident.  The main speakers were Frances Coppola, who has worked as an economist in many banks and now runs a blog on economics; and Anastasia Nesvetailova, who is a professor at the City of London university on finance and has spoken before at the series of ‘new economics’ meetings run by the Labour party.

Both speakers basically told hundreds before them that the regulation of the banks  would not avoid a future financial crash – indeed by making regulation ‘too tight’, it was strangling the ability of the banks to lend.  A financial transaction tax would not work either in controlling risk-taking by banks, particularly in new finance areas outside regulation.  Breaking up the big banks or separating their speculative operations from basic banking would not work either. Indeed, nothing would work to avoid yet another crash in the future: “we just had to prepare for one”!

So our finance experts had not a clue what to do. Staring them in the face was the obvious answer.  If the big banks are still engaged in risk activities, in greedy laundering and in paying grotesque salaries to their top executives, despite regulation, why not take them into public ownership under democratic control so that banking becomes a public service for the people to help investment and growth? This policy move was never even considered by these banking experts and yet Britain’s own firefighters union have produced an analysis showing why it was the best way forward, which was formally approved by the trade union federation.  I was told that state-owned banks would not work because they are corrupted by politicians – sure, as opposed to privately-owned banks that are as pure as snow.

At least in the session on fiscal and monetary policy, Michael Burke provided a coherent account of how the weak economic recovery in the major economies including the UK was not due to a lack of consumer demand as the Keynesian ‘experts’ keep arguing, but to one major factor: the failure of business to invest. The graph below for the UK shows how it was investment that collapsed in the Great Recession not consumption. It was the same story in all the major economies.
investment and concumption
The large companies were hoarding cash, small business were just hanging on and governments were cutting back on public sector investment.  Indeed, British capital has the lowest level of investment to GDP of the major capitalist economies (see black line in graph below).
investment to gdp
Weak and even falling investment had lowered growth rates and so held down incomes.  The answer was a new plan for growth based on public investment.

The conclusion of the day’s conference screamed out to me.  The capitalist sector had caused the crash, not the public sector.  But the public sector had to pay with increased debt and a reduction in the role of the state as support for growth and as a safety net for those who lost their jobs, homes and incomes.

So instead of trying to “transform capitalism”, Labour needs to develop a programme to replace capitalism by bringing into public ownership the major banks and business sectors under democratic control to be integrated into a plan for investment in people’s needs not profit.  Instead, Labour’s advisers and experts offered just some old ideas that had been tried and failed before to direct or regulate capitalism to make it work better.  No new economics there.