This is from 2 years ago but an interesting set of questions was sent to me - appearing in the next posting based on this article.
What did the original socialists envision to be the owner and controller of the economy? Did they think it ought to be the state? Did they favor nationalization? Or did they want something else entirely? Let’s have a look, going right back to the late 18th Century, through the 19th and into the 20th, and see what important socialists and socialist organizations thought.
*Thomas Spence – farm land and industry owned by join stock companies, all farmers and workers as voting shareholders.
* St. Simon – a system of voluntary corporations
* Ricardian Socialists – worker coops
* Owen – industrial coops and cooperative intentional communities
* Fourier – the Phlanistery – an intentional community
* Cabet - industry owned by the municipality (“commune” in French, hence commune-ism)
* Flora Tristan – worker coops
* Proudhon – worker coops financed by Peoples Bank – a kind of credit union that issued money.
* Greene – mutualist banking system allowing farmers and workers to own means of production.
* Lasalle – worker coops financed by the state – for which he was excoriated by Marx as a “state socialist”
* Marx – a “national system of cooperative production”
* Tucker - mutualist banking system allowing farmers and workers to own means of production.
* Dietzgen – cooperative production
* Knights of Labor – worker coops
* Parsons – workers ownership and control of production
* Vanderveldt – socialist society as a ‘giant cooperative”
* Socialist Labor Party – industry owned and run democratically thru the Socialist Industrial Unions
* Socialist Party USA – until late 1920’s emphasized workers control of production.
* CGT France, 1919 Program - mixed economy with large industry owned by stakeholder coops.
* IWW – democratically run through the industrial unions.
* Socialist Party of Canada, Socialist Party of Great Britain, 1904-05 program – common ownership, democratically run – both parties, to this very day, bitterly opposed to nationalization.
* SDP – Erfurt Program 1892 – Minimum program includes a mixed economy of state, cooperative and municipal industries. While often considered a state socialist document, in reality it does not give predominance to state ownership.
Well? Where’s the statism? All these socialisms have one thing in common, a desire to create an economy where everyone has a share and a say.
Why The Confusion
The state did play a role in the Marxist parties of the Second International. But its role was not to nationalize industry and create a vast bureaucratic state socialist economy. Put simply, the workers parties were to be elected to the national government, and backed by the trade unions, cooperative movement and other popular organizations, would expropriate the big capitalist enterprises. Three things would then happen: 1. The expropriated enterprises handed over to the workers organizations, coops and municipalities. 2, The army and police disbanded and replaced by worker and municipal militias. 3. Political power decentralized to the cantonal and
municipal level and direct democracy and federalism introduced. These three aspects are the famous “withering away of the state” that Marx and Engels talked about.
The first problem with this scenario was that the workers parties never got a majority in parliament. So they began to water-down their program and adopt a lot of the statist reformism of the liberal reformers. Due to the Iron Law of Oligarchy the parties themselves became sclerotic and conservative. Then WW1 intervened, splitting the workers parties into hostile factions. Finally, under the baleful influence of the Fabians, the Stalinists and the “success” of state capitalism in the belligerent nations, the definition of socialism began to change from one of democratic and worker ownership and control to nationalization and statism. The new post-war social democracy began to pretend that state ownership/control was economic democracy since the state was democratic. This, as we see from the list above, was not anything like the economic democracy envisaged by the previous generations of socialists and labor militants.
Saturday, December 13, 2008
Monday, December 8, 2008
Solidarity Quebec Victory
Solidarite Quebec has won a seat in the Quebec election. Although this is
only one seat this indicates a growing radicalization. The QS is a party of
the social movements and rejects the neo-liberalism of the Parti Quebecois.
It is also more radical than the NDP and is the first new left-wing
See http://www.quebecsolidaire.net/
Friday, December 5, 2008
Conservatives – the Stupid Party?
Yes, there are intelligent people who call themselves conservatives. Most of these hearken back to the humanitarian side of classical liberalism or to old fashioned Tory social consciousness. But they are few in number, cruelly thrust aside by neoconservative or neoliberal barbarism. (See my previous posting.)
It makes some sense that the wealthy and powerful should wish to conserve their power and wealth, even though this is done at our expense. It also makes sense that a host of toadies, such as loyal servants, hangers-on and wannabees, would have similar ideas to their masters. Then there are the various religious hate cults which the wealthy and powerful encourage. These "Christians" can be counted on to hate their neighbor, to be obsessed with the sins of the poor and ignore the atrocities committed by the master class. Combine the rich, the toadies and the nuts and you maybe get 20% of the population. But the cons can get up to 40% support. What about the other 20%?
It is hard for any rational, thoughtful person to be a right-winger. Even a basic knowledge of history shows us that to be "right" is to always be wrong. On every single issue of importance for the last 300 years the forces of progress have been correct and the forces of reaction dead wrong. Consider this list:
Parliament vs. the king. The right chose the king, parliament won. Slavery – the right supported the slave-owners. Universal male suffrage – the right opposed. Democratic and human rights for women, the right opposed. Colonialism – the left opposed, the right supported. Fascism, the left opposed, the right appeased, aided and abetted. Independence for the colonies, the right opposed. The US Civil Rights Movement, the right opposed. The women's movement, the right opposed. Environmentalism, the right opposed. Global warming, the right denies...
While the great mass of conservatives are not well educated and lack cultural sophistication, they in a sense, choose to be stupid. Ignorance is no excuse these days. With the Internet one can find an entire library of information on any subject in history with in seconds. Ignorance today is willful ignorance. To be willfully ignorant is to be stupid, even though you may not be so innately. To be willfully ignorant is to deliberately block out that which you do not want to know about, in other words, to be in a state of denial. But denial is not a conscious choice, like choosing brands of soup, but is rooted in sub-conscious repression.
Does the Conservative Mass Suffer From Stockholm Syndrome?
Dr. Gabor Mate in an interview given recently on CHLY, stated that people who are prejudiced against certain groups, in this case the homeless and drug addicts, are themselves emotionally wounded, but in a state of denial. In denying their own pain they deny it in others. The walking reminders of their own suffering, suffering that they have repressed, and therefore on the surface able to "cope with life", creates the "blame the victim" scenario. We are all familiar with the self-righteous letters to the editor (or even, shamefully enough, editorials) along the lines of "I was abused as as child but I didn't end up __________ " Or "These people could stop doing drugs if they wanted to." "They need to buck up, that's all." "The residential schools closed years ago, they are just an excuse."
I would take this further. One of the key aspects of conservative politics is the authoritarian personality. Statistically, someone with an authoritarian personality is far more likely to be attracted to the right than the left. Authoritarianism does not come out of the air, but is inculcated by authoritarian parenting. Such parenting by its very nature is abusive, as it is based upon repression, fear, and neglect of the child's emotional needs. The children of authoritarian parents are not allowed to express the rage that results from their parenting and thus repress it, giving rise to the state of denial. As adults they will fervently claim they adore their parents and their upbringing was the best imaginable.
Everyone with an authoritarian personality is a wounded individual. For the mass of ordinary people who have been subjected to an authoritarian parenting, the abuse does not end there. Throughout their lives they will be humiliated, bullied, and exploited by a range of authority figures such as teachers, police, bosses, politicians, bureaucrats and so forth. (Keep in mind these abusive officials are themselves deeply wounded individuals.)
What we then get is a form of Stockholm Syndrome. The dominated and humiliated tend to identify with their oppressors, in the same way that the kidnapped victims of terrorists sometimes identify with their captors. While the captive's affirmation of the terrorists is a result of both traumatization and the usually just cause (but not methods) of their captors, the mass conservative form is rooted in childhood trauma and subsequent repression.
The prejudices promoted by the rulers are similar to those that the conservative victim has learned from his parents. This provides the ideological link, in the same way the terrorists claims of fighting for freedom and justice, provide the link for the kidnapped. The childhood trauma and denial allow a shift from "I love my parents" (Who abused me - which is repressed) to "I love my boss" (Who bullies and exploits me – repressed) and "I love my President/Prime Minister" (Who sends my children off to be killed and squanders my tax money – repressed.)
A growing tendency toward humane parenting since WW2 has helped to undermine the dominant nature of the authoritarian personality. The right knows this, and hence the so-called culture war. It would be fine if we had several hundred years, but we don't. We face a triple threat – global economic crisis, global warming and peak oil. How do we neutralize the impact of, if not help cure the victims of conservative Stockholm Syndrome?
It makes some sense that the wealthy and powerful should wish to conserve their power and wealth, even though this is done at our expense. It also makes sense that a host of toadies, such as loyal servants, hangers-on and wannabees, would have similar ideas to their masters. Then there are the various religious hate cults which the wealthy and powerful encourage. These "Christians" can be counted on to hate their neighbor, to be obsessed with the sins of the poor and ignore the atrocities committed by the master class. Combine the rich, the toadies and the nuts and you maybe get 20% of the population. But the cons can get up to 40% support. What about the other 20%?
It is hard for any rational, thoughtful person to be a right-winger. Even a basic knowledge of history shows us that to be "right" is to always be wrong. On every single issue of importance for the last 300 years the forces of progress have been correct and the forces of reaction dead wrong. Consider this list:
Parliament vs. the king. The right chose the king, parliament won. Slavery – the right supported the slave-owners. Universal male suffrage – the right opposed. Democratic and human rights for women, the right opposed. Colonialism – the left opposed, the right supported. Fascism, the left opposed, the right appeased, aided and abetted. Independence for the colonies, the right opposed. The US Civil Rights Movement, the right opposed. The women's movement, the right opposed. Environmentalism, the right opposed. Global warming, the right denies...
While the great mass of conservatives are not well educated and lack cultural sophistication, they in a sense, choose to be stupid. Ignorance is no excuse these days. With the Internet one can find an entire library of information on any subject in history with in seconds. Ignorance today is willful ignorance. To be willfully ignorant is to be stupid, even though you may not be so innately. To be willfully ignorant is to deliberately block out that which you do not want to know about, in other words, to be in a state of denial. But denial is not a conscious choice, like choosing brands of soup, but is rooted in sub-conscious repression.
Does the Conservative Mass Suffer From Stockholm Syndrome?
Dr. Gabor Mate in an interview given recently on CHLY, stated that people who are prejudiced against certain groups, in this case the homeless and drug addicts, are themselves emotionally wounded, but in a state of denial. In denying their own pain they deny it in others. The walking reminders of their own suffering, suffering that they have repressed, and therefore on the surface able to "cope with life", creates the "blame the victim" scenario. We are all familiar with the self-righteous letters to the editor (or even, shamefully enough, editorials) along the lines of "I was abused as as child but I didn't end up __________ " Or "These people could stop doing drugs if they wanted to." "They need to buck up, that's all." "The residential schools closed years ago, they are just an excuse."
I would take this further. One of the key aspects of conservative politics is the authoritarian personality. Statistically, someone with an authoritarian personality is far more likely to be attracted to the right than the left. Authoritarianism does not come out of the air, but is inculcated by authoritarian parenting. Such parenting by its very nature is abusive, as it is based upon repression, fear, and neglect of the child's emotional needs. The children of authoritarian parents are not allowed to express the rage that results from their parenting and thus repress it, giving rise to the state of denial. As adults they will fervently claim they adore their parents and their upbringing was the best imaginable.
Everyone with an authoritarian personality is a wounded individual. For the mass of ordinary people who have been subjected to an authoritarian parenting, the abuse does not end there. Throughout their lives they will be humiliated, bullied, and exploited by a range of authority figures such as teachers, police, bosses, politicians, bureaucrats and so forth. (Keep in mind these abusive officials are themselves deeply wounded individuals.)
What we then get is a form of Stockholm Syndrome. The dominated and humiliated tend to identify with their oppressors, in the same way that the kidnapped victims of terrorists sometimes identify with their captors. While the captive's affirmation of the terrorists is a result of both traumatization and the usually just cause (but not methods) of their captors, the mass conservative form is rooted in childhood trauma and subsequent repression.
The prejudices promoted by the rulers are similar to those that the conservative victim has learned from his parents. This provides the ideological link, in the same way the terrorists claims of fighting for freedom and justice, provide the link for the kidnapped. The childhood trauma and denial allow a shift from "I love my parents" (Who abused me - which is repressed) to "I love my boss" (Who bullies and exploits me – repressed) and "I love my President/Prime Minister" (Who sends my children off to be killed and squanders my tax money – repressed.)
A growing tendency toward humane parenting since WW2 has helped to undermine the dominant nature of the authoritarian personality. The right knows this, and hence the so-called culture war. It would be fine if we had several hundred years, but we don't. We face a triple threat – global economic crisis, global warming and peak oil. How do we neutralize the impact of, if not help cure the victims of conservative Stockholm Syndrome?
Banks Bankrupt Democracy
The billions upon billions of dollars thrown at banks and insurance companies over the last few months has been beyond comprehension. Has there ever been a time when government has been so lavishly generous to assist, if not bailout, the most economically and politically powerful sector of business corporations?
Under the guise of “too big to fail,” our tax dollars have gone to bailout “Wall Street” with few conditions. Meanwhile, our “main streets,” ”side streets,” and “backstreets” suffer and crumble from neglect.
Those who came before us who struggled for political and economic freedom would be ashamed of our lack of outrage, not to mention resistance.
Public fear and anger toward commercial banks have been a historic reality -- for good reason. Those who control money control credit. Those who control the money supply shape governments and non-financial corporations.
Denial of loans by banks to finance wars brought Kings to their knees. Supplying money to industrial corporations enabled mass production and massive profits
The early founders of Ohio and this nation understood the inherent power of financial interests. Thomas Jefferson said, “We must crush in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government, and bid defiance to the laws of our country.”
In an 1802 letter to his Treasury Secretary Albert Gallatin, Jefferson also reflected:
I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.
Early Ohio governance was based on similar fears. The Ohio Legislature awarded charters, granting the privilege for corporations to exist and operate in the state, to corporations one at a time. The terms were
rigid, especially for banking corporations. In the 1808 law to incorporate the Bank of Marietta, the Ohio General Assembly established stringent defining rules, including:
- The charter was granted for only 10 years
- The maximum interest on loans was set at 6%
- All directors had to reside in the same country as
the bank
- Bank debts could not exceed 3 times the sum
value of capital stock
- Bank directors were personally liable for excessive
debt
The public through the state legislature possessed and used their authority repeatedly to establish defining rules under which banks had to operate.
Business corporations violating the terms of their charters were severely punished by having their charters repealed, effectively dissolving their enterprises with assets distributed to the community and/or among those directly harmed. Banks were frequent violators and targets.
In an act to repeal the charter of the German Bank of Wooster in Wayne County and close its doors, the Ohio legislature stated:
It shall be the duty of the court of common pleas... or any judge of the supreme court...to restrain said bank, its officers, agents and servants or assignees, from exercising any corporate rights, privileges, and franchises whatever, or from paying out, selling, transferring, or in any way disposing of, the lands, tenements, goods, chattels, rights, credits, moneys, or effects whatsoever, of said bank... and force the bank commissioners to close the bank and deliver full possession of the banking house, keys, books, papers, lands, tenements, goods, chattels, moneys, property and effects of said bank, of every kind and description whatever...
The legislature authorized that the bank commissioners,
...shall possess the powers common to sheriffs... and may break open any house, or other building, in which any property, money, books, papers, or effects of said bank may be, having first made demand of entrance into such building; and if the said bank has made any assignment or transfer of its effects, books, property, papers, etc. for the settlement or with a view to its insolence, or for the purpose of avoiding the operations of this law, the same shall be deemed and treated as absolutely void.
Violators of the terms shall be deemed guilty of a crime, and, upon conviction, thereof, shall be imprisoned in the penitentiary and kept at hard labor, not less than one, nor more than 10 years.
Ohioans through their elected state legislature took this controlling bank business seriously. The state legislature in 1816 passed the “bonus law” which extended the charters of existing banks and tax exemption in exchange for a percentage of direct public ownership.
When the federally-chartered Second National Bank called in their debts as a result of the 1819 US economic collapse, Ohio banks were unable to come up with enough gold or silver to meet their $100,000 obligation. Ohioans would suffer as most could not pay off loans at that time. In response, the state legislature passed the “crowbar law” which taxed both state branches of Second National $50,000 each and authorized the state auditor to collect. Ohio auditor, Ralph Osborn, responded by entering one of the branches, showed officials a warrant he had signed, entered the vault, scooped up notes and currency estimated at $100,000 and left.
It was not only the state legislature but the state courts who felt compelled to ensure that citizen sovereignty was protected from rising banking power. The Ohio Supreme Court concluded in four rulings in 1853, all concerning commercial banks, that a corporate charter was not a contract – a direct challenge to an 1819 US Supreme Court decision Dartmouth v Woodward. The Ohio court ruled that bank charters were at root not about individual property rights but public self-governing rights and could be fundamentally controlled.
One of the four cases was Knoup v the Piqua Bank. In its ruling, the Ohio Supreme Court stated:
…[A] banking institution is a public institution, appointed for public purposes – never legitimately created for private purposes… its operations are subject to the control of that public, who may, from time to time, as the public good may require, enlarge, restrain, limit, modify its powers and duties, and, at pleasure, dispense with its benefits.
Our government if founded upon that sublime truth, acknowledged in both our present and old constitutions, as well as in the Declaration of Independence, that all men are created free and equal, and that every exemption, immunity or privilege, is an invasion of the primordial estate, and natural rights of other citizens. Whenever, therefore, a franchise is conferred, upon a corporation, or an individual, nothing but the public good is to be considered: the private advantage which may result to the corporation or individual, is but incidental to the chief object and cannot ripen into a right of property.
…[W]hen the legislature authorizes… a bank to make currency, it grants what belongs to the public. The resumption of which privilege by the public affects no property, impairs no contract, infringes no right, but merely restores to its proper place, so much of popular sovereignty as was claimed by a grant of questionable authority, in clear derogation of common right.
Fears and anger toward economic and political power of banks were not just felt by Ohioans, but by citizens across the land. The Populist movement from the 1870’s to 1890’s focused their educational and organizational resistance to railroads and banks – believing that these corporations were impoverishing farmers and workers and destroying democracy. Their political party treatise, the Omaha Platform, stated:
We demand a national currency, safe, sound, and flexible, issued by the general government only, a full legal tender for all debts, public and private, and that without the use of banking corporations, a just, equitable, and efficient means of distribution direct to the people…
The Federal Reserve Act of 1913 only fueled the fear and anger toward banks and banking power in the minds of millions of citizens. The creation of the private grossly misnamed Federal Reserve Bank centralized currency creation and money supply in the hands of private bankers largely beyond the reach of the public. The Act established basic financial rules defined largely by the largest US banks. It created a financial cartel with all the concentration of economic wealth and political power that goes with it. Money could be created literally out of thin air on bank ledgers as loans issued to individuals, businesses, even governments.
Money is no longer backed by gold, silver or anything of real, intrinsic value or worth. In an economic crisis, whether recession or depression, more money is just added to the economy. This is inflationary.
Over the last several decades, financial institutions have rushed to the government to be bailed out. Risky investments in the 1980’s resulted in the collapse of hundreds of Savings and Loans and cost taxpayers $150 billion (some say twice this amount).
The current financial bailout of $700 billion to rescue the largest US banks in simply the latest installment of the privatizing profits and socializing losses scheme. This doesn’t include the $144 billion to bailout insurance giant AIG.
The financial sector has invested in politicians for years to ensure favorable treatment in the event of conditions like this. The financial sector was the single largest investor to George Bush’s 2004 campaign ($33.8 million) according to Open Secrets. The financial sector in 2008 was the second largest sector investor to Barack Obama’s campaign ($33.1 million) and the largest sector investor to John McCain’s campaign ($26.2 million) just to make sure all their political bases were covered.
This is probably enough to make sure no bank or financial corporation CEO is “imprisoned in the penitentiary and kept at hard labor, not less than one, nor more than 10 years” as was the case in the past to bank officials in Ohio. A little hard labor in a penitentiary, however, certainly seems more appropriate for some of these CEOs than a golden parachute.
When the government bailed out Freddie Mac and Fannie Mae, the two critically wounded government-sponsored mortgage behemoths, to the amount of $200 billion; the Treasury Department effectively took them over….again. Originally these financial entities were public.
That may be the direction to take now – not simply public investment but public control. If banks want public dollars, the public should use their financial leverage to gain public control.
A second option is creating rules that reduce bank size. If banks are too big to fail (and have too much political influence), then they’re too big to exist. Break them up. Instead, recent federal rules coupled with funds from the $700 bailout package have resulted in further bank consolidation, including the acquisition of Cleveland-based National City bank by PNC bank of Pittsburgh.
Third, consideration should be given to revoking the charter of banks that have acted recklessly through risky investments, in particular those of buying and repackaging high risk mortgages for resale as quickly as possible. A charter revocation does not automatically mean a corporation has to be abolished and jobs lost – just remade under different terms. This could include holding managers and directors personally liable for reckless actions.
A fourth option is employee control. The top-down, private corporation is not the only business model known to the human species. If we feel greater democracy is required in our political spheres, what’s wrong with it in our economic spheres?
Economic Cooperatives are enterprises where workers and/or users are also owners. Decisions are democratically made by members (defined in different ways depending on the firm). There are still managers but they are beholden not to stockholders (who have power based on a “one dollar or share, one vote” system) but to members (based on a one person, one vote system). It’s an economic system mirroring our political system.
Banking corporations that may for good reason deserve to have their charters revoked would be prime candidates to have new terms defined encouraging a cooperative business model. If you think such a notion is complete pie-in-the-sky, just consider credit unions – financial institutions that are member owned and directed.
Finally, somewhere along the way the so-called and misnamed Federal Reserve Bank must be either significantly changed or abolished. Private banking corporations should not have the power to issue national currency.
Greater public awareness, action and resistance leading to greater sovereignty of our personal and national finances and financial institutions in not only sound economics but also essential to prevent the further bankruptcy of whatever amount of democracy we have left.
Under the guise of “too big to fail,” our tax dollars have gone to bailout “Wall Street” with few conditions. Meanwhile, our “main streets,” ”side streets,” and “backstreets” suffer and crumble from neglect.
Those who came before us who struggled for political and economic freedom would be ashamed of our lack of outrage, not to mention resistance.
Public fear and anger toward commercial banks have been a historic reality -- for good reason. Those who control money control credit. Those who control the money supply shape governments and non-financial corporations.
Denial of loans by banks to finance wars brought Kings to their knees. Supplying money to industrial corporations enabled mass production and massive profits
The early founders of Ohio and this nation understood the inherent power of financial interests. Thomas Jefferson said, “We must crush in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government, and bid defiance to the laws of our country.”
In an 1802 letter to his Treasury Secretary Albert Gallatin, Jefferson also reflected:
I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.
Early Ohio governance was based on similar fears. The Ohio Legislature awarded charters, granting the privilege for corporations to exist and operate in the state, to corporations one at a time. The terms were
rigid, especially for banking corporations. In the 1808 law to incorporate the Bank of Marietta, the Ohio General Assembly established stringent defining rules, including:
- The charter was granted for only 10 years
- The maximum interest on loans was set at 6%
- All directors had to reside in the same country as
the bank
- Bank debts could not exceed 3 times the sum
value of capital stock
- Bank directors were personally liable for excessive
debt
The public through the state legislature possessed and used their authority repeatedly to establish defining rules under which banks had to operate.
Business corporations violating the terms of their charters were severely punished by having their charters repealed, effectively dissolving their enterprises with assets distributed to the community and/or among those directly harmed. Banks were frequent violators and targets.
In an act to repeal the charter of the German Bank of Wooster in Wayne County and close its doors, the Ohio legislature stated:
It shall be the duty of the court of common pleas... or any judge of the supreme court...to restrain said bank, its officers, agents and servants or assignees, from exercising any corporate rights, privileges, and franchises whatever, or from paying out, selling, transferring, or in any way disposing of, the lands, tenements, goods, chattels, rights, credits, moneys, or effects whatsoever, of said bank... and force the bank commissioners to close the bank and deliver full possession of the banking house, keys, books, papers, lands, tenements, goods, chattels, moneys, property and effects of said bank, of every kind and description whatever...
The legislature authorized that the bank commissioners,
...shall possess the powers common to sheriffs... and may break open any house, or other building, in which any property, money, books, papers, or effects of said bank may be, having first made demand of entrance into such building; and if the said bank has made any assignment or transfer of its effects, books, property, papers, etc. for the settlement or with a view to its insolence, or for the purpose of avoiding the operations of this law, the same shall be deemed and treated as absolutely void.
Violators of the terms shall be deemed guilty of a crime, and, upon conviction, thereof, shall be imprisoned in the penitentiary and kept at hard labor, not less than one, nor more than 10 years.
Ohioans through their elected state legislature took this controlling bank business seriously. The state legislature in 1816 passed the “bonus law” which extended the charters of existing banks and tax exemption in exchange for a percentage of direct public ownership.
When the federally-chartered Second National Bank called in their debts as a result of the 1819 US economic collapse, Ohio banks were unable to come up with enough gold or silver to meet their $100,000 obligation. Ohioans would suffer as most could not pay off loans at that time. In response, the state legislature passed the “crowbar law” which taxed both state branches of Second National $50,000 each and authorized the state auditor to collect. Ohio auditor, Ralph Osborn, responded by entering one of the branches, showed officials a warrant he had signed, entered the vault, scooped up notes and currency estimated at $100,000 and left.
It was not only the state legislature but the state courts who felt compelled to ensure that citizen sovereignty was protected from rising banking power. The Ohio Supreme Court concluded in four rulings in 1853, all concerning commercial banks, that a corporate charter was not a contract – a direct challenge to an 1819 US Supreme Court decision Dartmouth v Woodward. The Ohio court ruled that bank charters were at root not about individual property rights but public self-governing rights and could be fundamentally controlled.
One of the four cases was Knoup v the Piqua Bank. In its ruling, the Ohio Supreme Court stated:
…[A] banking institution is a public institution, appointed for public purposes – never legitimately created for private purposes… its operations are subject to the control of that public, who may, from time to time, as the public good may require, enlarge, restrain, limit, modify its powers and duties, and, at pleasure, dispense with its benefits.
Our government if founded upon that sublime truth, acknowledged in both our present and old constitutions, as well as in the Declaration of Independence, that all men are created free and equal, and that every exemption, immunity or privilege, is an invasion of the primordial estate, and natural rights of other citizens. Whenever, therefore, a franchise is conferred, upon a corporation, or an individual, nothing but the public good is to be considered: the private advantage which may result to the corporation or individual, is but incidental to the chief object and cannot ripen into a right of property.
…[W]hen the legislature authorizes… a bank to make currency, it grants what belongs to the public. The resumption of which privilege by the public affects no property, impairs no contract, infringes no right, but merely restores to its proper place, so much of popular sovereignty as was claimed by a grant of questionable authority, in clear derogation of common right.
Fears and anger toward economic and political power of banks were not just felt by Ohioans, but by citizens across the land. The Populist movement from the 1870’s to 1890’s focused their educational and organizational resistance to railroads and banks – believing that these corporations were impoverishing farmers and workers and destroying democracy. Their political party treatise, the Omaha Platform, stated:
We demand a national currency, safe, sound, and flexible, issued by the general government only, a full legal tender for all debts, public and private, and that without the use of banking corporations, a just, equitable, and efficient means of distribution direct to the people…
The Federal Reserve Act of 1913 only fueled the fear and anger toward banks and banking power in the minds of millions of citizens. The creation of the private grossly misnamed Federal Reserve Bank centralized currency creation and money supply in the hands of private bankers largely beyond the reach of the public. The Act established basic financial rules defined largely by the largest US banks. It created a financial cartel with all the concentration of economic wealth and political power that goes with it. Money could be created literally out of thin air on bank ledgers as loans issued to individuals, businesses, even governments.
Money is no longer backed by gold, silver or anything of real, intrinsic value or worth. In an economic crisis, whether recession or depression, more money is just added to the economy. This is inflationary.
Over the last several decades, financial institutions have rushed to the government to be bailed out. Risky investments in the 1980’s resulted in the collapse of hundreds of Savings and Loans and cost taxpayers $150 billion (some say twice this amount).
The current financial bailout of $700 billion to rescue the largest US banks in simply the latest installment of the privatizing profits and socializing losses scheme. This doesn’t include the $144 billion to bailout insurance giant AIG.
The financial sector has invested in politicians for years to ensure favorable treatment in the event of conditions like this. The financial sector was the single largest investor to George Bush’s 2004 campaign ($33.8 million) according to Open Secrets. The financial sector in 2008 was the second largest sector investor to Barack Obama’s campaign ($33.1 million) and the largest sector investor to John McCain’s campaign ($26.2 million) just to make sure all their political bases were covered.
This is probably enough to make sure no bank or financial corporation CEO is “imprisoned in the penitentiary and kept at hard labor, not less than one, nor more than 10 years” as was the case in the past to bank officials in Ohio. A little hard labor in a penitentiary, however, certainly seems more appropriate for some of these CEOs than a golden parachute.
When the government bailed out Freddie Mac and Fannie Mae, the two critically wounded government-sponsored mortgage behemoths, to the amount of $200 billion; the Treasury Department effectively took them over….again. Originally these financial entities were public.
That may be the direction to take now – not simply public investment but public control. If banks want public dollars, the public should use their financial leverage to gain public control.
A second option is creating rules that reduce bank size. If banks are too big to fail (and have too much political influence), then they’re too big to exist. Break them up. Instead, recent federal rules coupled with funds from the $700 bailout package have resulted in further bank consolidation, including the acquisition of Cleveland-based National City bank by PNC bank of Pittsburgh.
Third, consideration should be given to revoking the charter of banks that have acted recklessly through risky investments, in particular those of buying and repackaging high risk mortgages for resale as quickly as possible. A charter revocation does not automatically mean a corporation has to be abolished and jobs lost – just remade under different terms. This could include holding managers and directors personally liable for reckless actions.
A fourth option is employee control. The top-down, private corporation is not the only business model known to the human species. If we feel greater democracy is required in our political spheres, what’s wrong with it in our economic spheres?
Economic Cooperatives are enterprises where workers and/or users are also owners. Decisions are democratically made by members (defined in different ways depending on the firm). There are still managers but they are beholden not to stockholders (who have power based on a “one dollar or share, one vote” system) but to members (based on a one person, one vote system). It’s an economic system mirroring our political system.
Banking corporations that may for good reason deserve to have their charters revoked would be prime candidates to have new terms defined encouraging a cooperative business model. If you think such a notion is complete pie-in-the-sky, just consider credit unions – financial institutions that are member owned and directed.
Finally, somewhere along the way the so-called and misnamed Federal Reserve Bank must be either significantly changed or abolished. Private banking corporations should not have the power to issue national currency.
Greater public awareness, action and resistance leading to greater sovereignty of our personal and national finances and financial institutions in not only sound economics but also essential to prevent the further bankruptcy of whatever amount of democracy we have left.
Tuesday, November 25, 2008
The Venezuelan Election
The PSUV, Unified Socialist Party of Venezuela, headed by Hugo Chavez gained 58% of the election, winning 17 of 23 governorships. The spin that the corporate media, and sadly the CBC, is putting on this is to trumpet the gains that the right-wing opposition made. Funny isn't it? Harper gets 38% and is a winner, Chavez 58% and is a loser. But it is going to be harder than ever for US propaganda to deem Hugo a dictator, since this is the second election in a year, the right-wing won the first and made slight gains in the second.
Like it or not, the Chavistas remain firmly in the camp of social democracy, as much as the US State Department and knee pad wearing liberals everywhere, would like to claim otherwise. But for me, this is a problem. Why? US and corporate-backed right-wing parties, with the corporate media at their side, undermine progressive governments, creating situations where they are thrown out of office. The right takes power and attacks the gains the people have made. All these reactionary measures are tarted up as "reforms". This see-saw has to stop, our rights and freedoms must be made permanent. The problem is, social democracy, not only allows this see-saw to occur, but sees the possibility of reactionaries taking power as an essential part of democracy.
No, I don't favour dictatorship. A dictatorship leads only to bureaucracy, paranoia and corruption. In seeking to protect the people from the oligarchs and CIA bum buddies, a dictatorship disempowers the people even more than a healthy social democracy.
What then is the alternative, one that is democratic and prevents the enemy from rolling back social progress? Certainly democratization of the media is necessary, but that would only be a small step in the right direction.
First off the oligarchy, its wannabees, its hired hounds and shills, religious fanatics and all-round haters, make up a fairly small minority of the population. There is another sector of the population that does not identify with the oligarchy, yet is not particularly conscious or educated, and will if suitable media campaigns are constructed support the forces of reaction. This sector, on the ground, that is, in the neighborhoods or the workplace, tends to work in its own interest and not that of reaction. It is only within the field of party politics or ideology that it acts otherwise. At the level of the workplace or neighborhood class trumps ideology and prejudice. (I should add, if this weren't the case, neighborhood associations and trade unions would be almost non-existent) Aside from a tiny fanatical minority, neighbors, no matter what religion or ideology, stand shoulder to shoulder against threats to their community. Trade union members are a cross section of the work force and when a strike is called both socialist and non-socialist workers stand side by side.
The solution then is to increase the amount of democracy in society, to bring it down to the local level and thus allow class interest to pre-dominate over acquired prejudices and ideologies. The basic political units should be neighborhood and work place councils, which are federated together and elect delegates to the higher levels of government. This will tend to reduce oligarchy's support to its own core, making it impossible for it to re-take power legally.
(I know that the PSUV has introduced neighborhood councils, but the government still runs on the old hierarchical system of representative government, favored by social democracy the world over.)
Like it or not, the Chavistas remain firmly in the camp of social democracy, as much as the US State Department and knee pad wearing liberals everywhere, would like to claim otherwise. But for me, this is a problem. Why? US and corporate-backed right-wing parties, with the corporate media at their side, undermine progressive governments, creating situations where they are thrown out of office. The right takes power and attacks the gains the people have made. All these reactionary measures are tarted up as "reforms". This see-saw has to stop, our rights and freedoms must be made permanent. The problem is, social democracy, not only allows this see-saw to occur, but sees the possibility of reactionaries taking power as an essential part of democracy.
No, I don't favour dictatorship. A dictatorship leads only to bureaucracy, paranoia and corruption. In seeking to protect the people from the oligarchs and CIA bum buddies, a dictatorship disempowers the people even more than a healthy social democracy.
What then is the alternative, one that is democratic and prevents the enemy from rolling back social progress? Certainly democratization of the media is necessary, but that would only be a small step in the right direction.
First off the oligarchy, its wannabees, its hired hounds and shills, religious fanatics and all-round haters, make up a fairly small minority of the population. There is another sector of the population that does not identify with the oligarchy, yet is not particularly conscious or educated, and will if suitable media campaigns are constructed support the forces of reaction. This sector, on the ground, that is, in the neighborhoods or the workplace, tends to work in its own interest and not that of reaction. It is only within the field of party politics or ideology that it acts otherwise. At the level of the workplace or neighborhood class trumps ideology and prejudice. (I should add, if this weren't the case, neighborhood associations and trade unions would be almost non-existent) Aside from a tiny fanatical minority, neighbors, no matter what religion or ideology, stand shoulder to shoulder against threats to their community. Trade union members are a cross section of the work force and when a strike is called both socialist and non-socialist workers stand side by side.
The solution then is to increase the amount of democracy in society, to bring it down to the local level and thus allow class interest to pre-dominate over acquired prejudices and ideologies. The basic political units should be neighborhood and work place councils, which are federated together and elect delegates to the higher levels of government. This will tend to reduce oligarchy's support to its own core, making it impossible for it to re-take power legally.
(I know that the PSUV has introduced neighborhood councils, but the government still runs on the old hierarchical system of representative government, favored by social democracy the world over.)
For More information on the election outcome see Jame Petras' article at
http://www.venezuelanalysis.com/analysis/3986
and Patrick Larsen's at http://www.marxist.com/venezuela-first-balance-sheet-elections.htm
Sunday, November 23, 2008
The Global Economic Crisis and the Experts
If it weren't for the suffering engendered by the global economic crisis, I would be laughing myself sick. None of the self-styled pundits and experts touted in the media knew it was coming. Other than a couple of mavericks, ignored by the mass media and especially the political leaders, none of the economists foretold it either. I, on the other hand, did, expecting it to happen any time in the last three or four years. The obvious signal of the coming crisis would be the imminent collapse of the housing bubble. This spring, I saw that the US housing market was really and truly in trouble, would soon collapse, and due to the interlinked nature of contemporary economies, the rot would spread globally. So I dumped my mutual funds, saving a chunk of my retirement money. In the years previous to this, I had paid off my mortgage, and indeed, had chosen a house within walking distance of down town and a yard big enough for a garden, all in preparation for the ''big one.''
I write this, not to pat myself on the back. I am a retired health care worker, not an economist. It doesn't take a genius to figure out the basic nature of the economy, just a little reading and a dollop of common sense. This same common sense suggests that you should read material critical of the system rather than its touts and ideologues, since they have a stake in it. One should no more believe capitalism's shills, than believing advertising for dish soap.
You find that crisis is endemic to the system, a relatively minor turn-down (that still puts millions out of work!) every 5 to 10 years and a whopper once and a while. Speculation booms are usually the last event before a crisis. A fall in profit in "real" industry – industry that makes things – due in part to market saturation, leads to speculative investment in areas such as real estate. As the value of a speculative product is largely hot air, eventually the balloon bursts, bringing the whole structure down with it. The situation was made worse by deregulation of the financial institutions which allowed vast frauds to be perpetuated.
Getting back to the pundits, experts, and economists who "didn't get it." I suspect that on the sly, most of them did, and have their money stashed safely. But their job was to pimp the system, to get as many suckers rounded up as possible and to protect the political gangsters and corporate bandits who set up the financial fraud.
These same pundits, experts, political gangsters and corporate bandits now claim "the turn-down should end by 2010", "Canada won't be effected much", and "de-regulation wasn't the problem."
They expect us to believe them?
I write this, not to pat myself on the back. I am a retired health care worker, not an economist. It doesn't take a genius to figure out the basic nature of the economy, just a little reading and a dollop of common sense. This same common sense suggests that you should read material critical of the system rather than its touts and ideologues, since they have a stake in it. One should no more believe capitalism's shills, than believing advertising for dish soap.
You find that crisis is endemic to the system, a relatively minor turn-down (that still puts millions out of work!) every 5 to 10 years and a whopper once and a while. Speculation booms are usually the last event before a crisis. A fall in profit in "real" industry – industry that makes things – due in part to market saturation, leads to speculative investment in areas such as real estate. As the value of a speculative product is largely hot air, eventually the balloon bursts, bringing the whole structure down with it. The situation was made worse by deregulation of the financial institutions which allowed vast frauds to be perpetuated.
Getting back to the pundits, experts, and economists who "didn't get it." I suspect that on the sly, most of them did, and have their money stashed safely. But their job was to pimp the system, to get as many suckers rounded up as possible and to protect the political gangsters and corporate bandits who set up the financial fraud.
These same pundits, experts, political gangsters and corporate bandits now claim "the turn-down should end by 2010", "Canada won't be effected much", and "de-regulation wasn't the problem."
They expect us to believe them?
Wednesday, November 5, 2008
The Free Lunch Gang or the Coming Demise of Neo-liberalism
This was originally written in December 2003
"There Ain’t No Sec Thing as A Free Lunch," (TANSTAAFL) the old libertarian slogan means everything is interconnected and influences everything else. Nothing exists in isolation. Acting as though it did is dangerous abstract thinking and has severe negative consequences. No group is more guilty of the free lunch mentality than the so-called conservatives who have been at the helm of government in the UK, Canada and the US for more than 20 years.
Monetarist policies were adopted by these governments to defeat the stagflation that had been infecting the economy. With typical abstract thinking, “unions” were deemed as a major part of the problem and they sought to crush them. Conservatives sought a “free lunch” of lower wages and lower expenditure on social welfare. In spite of the criticisms one can make of the trade union bureaucracy, there are no such thing as “unions”, in concrete terms what you have (or had) were tens of millions of wage earners, some of whom were reasonably well paid.
When the payment for the “free lunch” of destroying people’s living standards came due the following occurred:
The millions of unemployed, as whenever you have a great deal of unemployment, created massive social problems. It is surely no coincidence that the 1980’s saw a vast increase in suicide, crime, drug addiction, child poverty and homelessness. All of these social problems cost money, in the short term, and especially the long term.
Since two-thirds of the economy is consumer-based and the overwhelming majority of consumers are ordinary people, the recessions of the ‘80’s and early ‘90’s were long and it took years for “consumer confidence” to return. Furthermore, since many of these wage earners are now permanently earning less, the body of well paid potential consumers is less numerous, making the economy more fragile. In order to consume at an “acceptable” level, people turn to credit, which in turn adds to the potential fragility.
In the US and UK, the traditional manufacturing areas were devastated by “conservative” policies, resulting in a loss of manufacturing industries. Goods once made at home are now imported. For the USA, this has exacerbated the balance of payments problem, making the economy fragile.
Cut-backs at work have resulted in much heavier work loads. Many people work longer hours to keep up living standards. The result is employee burn-out and an enormous rise in stress-related illness. All of this costs money, in terms of time lost at work and insurance payments.
The hypocrisy of the “conservatives” has created cynicism among the populace. Voters were told that they would “get government off your back”, but what happened was more government than ever. People were told there was no money for wages or social services, yet hundreds of billions of dollars were spent on corporate welfare, government megaprojects and their favorite form of corporate welfare, war and “defense” industries. Along with this “lack of money” came an astronomical increase in incomes for CEO’s and government bureaucrats. It can be all summed up thus; when its something we want, there’s no money. When it’s something they want, the coffers are bottomless. “Conservatism” has revealed itself as nothing more than a sleazy racket to steal our money, destroy our communities and rob us of our liberties.
But the real payment for the “free lunch” has yet to be made. Twenty-five years of abuse, lies and out-right robbery have created the potential for immense social unrest. Should some act or event crystallize this latent anger, payment for the “free lunch” will be demanded in full. And the bill is going to be a big one.
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