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Thu Jan 9, 2014, 04:03 AM


Historically, capitalism in protracted crisis without an organized Left generates fascism

From Cambridge University in 1932-1933, John Maynard Keynes observed a promising new U.S. president presiding over what he saw as half-baked and confused policies, while labor insurgency was mounting. Roosevelt’s measures were, Keynes conceded, without precedent, but novelty was not enough. Long-term commitment to direct federal employment was required.

Existing programs were not only too small, but they were also either temporary (Civilian Conservation Corps and Civil Works Administration) or irrationally tied to the severely weakened states’ ability to raise substantial revenues on their own (Federal Emergency Relief Act and Public Works Administration)...Roosevelt feared that CWA would raise workers’ expectations of what they could permanently expect from government...

The 1920s was the benchmark decade for mature pre-Keynesian capitalism. The major capital-intensive industries were in place and oligopolized (or rapidly becoming so), technological development raced ahead and production and profit levels were high. By 1919 union power had been dealt a crippling blow; labor was almost entirely unorganized during the 1920s.

The remarkable increases, between 1919 and 1929, in GDP (40 percent), production (64 percent in manufacturing), productivity (43 percent in industry as a whole, 98 percent in automobiles) and profits (200 percent) were not matched by a comparable increase in wages. Productivity advances did not lead to higher wages; wages were no higher in 1929 than they were in 1922. Nor did they bring about falling prices; industrial concentration made for “downwardly sticky” prices. The result was inexorable: national income was distributed upward so that by 1928 the nation exhibited the greatest inequality of the century to that point.

In his landmark study of the economy of the 1920s (3), George Soule spelled out the consequences of that settlement:

“…toward the end of [the decade] large amounts of cash remained in the hands of of the big manufacturing and public-utility corporations that they did not distribute either in dividends or by means of new investment… the large corporations accumulated even more cash than they needed for their own uses… This money eventually spilled over into stock speculation. … ...surplus funds of large business corporations were now being lent directly to speculators… A curious commentary on the state of the American economy at the time is the fact that business could make less money by using its surplus funds in production than it could by lending the money to purchasers of stocks, the value of which was supposed to be determined by the profit on that production.”

A comparable dynamic was in effect during the period preceding September 2008...After the postwar boom began the term ‘secular stagnation’ fell out of use as the 1920s fantasy of endless growth and prosperity once again took hold. But two post-Golden-Age factors have made it increasingly difficult for mainstream economists to sustain optimism. The slow growth rates since 1974, and especially the ineffectiveness of the Fed’s recent unparalleled monetary stimulus, defies orthodox comprehension. More importantly, we are seeing both the mass destruction of full-time jobs, many of which will never return, and record levels of long-term unemployment (unemployed for 15 weeks or longer).

Most revealing is that long-term unemployment has been rising since the late 1960s, well before the triumph of neoliberalism. The short-term unemployed have been a shrinking percentage of all unemployed throughout the entire postwar period. Looking at the business cycle over the last forty years, an ominous trend emerges: in each business-cyclical expansion, the long-term unemployment rate remains either at or above the level of the previous expansion. In a word, for the last forty years the short-term unemployed have been a declining, and the long-term unemployed an increasing, percentage of all unemployed. By Keynes’s own standards, pretend-Keynesian fiscal policy has been a seventy-year bust...

Bluntly put, if you don’t want a full-fledged Depression, you’ve got to keep the bubble going. Slow growth, high un- and underemployment and low wages are the best we can do. Expect no relief, says Summers: “The underlying problem may be there forever.”

The Summers-Krugman point confirms Keynes’s central claim that, contrary to the neoclassical theory that the free economy naturally tends toward full-employment equilibrium, the economy can reach equilibrium (the quantity of goods supplied is equal to the quantity of goods demanded) at any level of employment.

Secular stagnation leaves the nation with a large number of permanently un- and unemployed persons devoid of hope for themselves or their children. But it is just this hope that constitutes the “American dream.” With the dream become a nightmare, we are on the path to social dislocation on a potentially terrifying scale: higher rates of crime, suicide, domestic violence, psychological depression and other forms of social disorder characteristic of periods of intense material insecurity. These are forms of unorganized resistance, and cannot be “wrung out” of the system like idle plants. They will be repressed. The powers that be have been putting in place for some years now, surely in anticipation of widespread social turbulence, the infrastructure of a police state. This comes as no surprise. Historically, capitalism in deep and protracted crisis and without an organized and active Left generates the makings of fascism. If the Left remains dormant, we are in for big trouble.


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Reply Historically, capitalism in protracted crisis without an organized Left generates fascism (Original post)
El_Johns Jan 2014 OP
freshwest Jan 2014 #1
El_Johns Jan 2014 #2

Response to El_Johns (Original post)

Fri Jan 10, 2014, 02:25 AM

1. Organized working class, at first thought. But the Teapartiers are an organized working class.

And people want results, thus the appeal of fascism. Bad results for some, good for others.

Which has pretty much been the reason for the mixed results of the left = unionism in the USA.

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Response to freshwest (Reply #1)

Fri Jan 10, 2014, 02:51 AM

2. Agreed. The working class can be organized to any number of ends.


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