Re: [OPE] Krugman 's great illusion

paulbullock@ebms-ltd.co.uk

Cut the 'old woman' stuff please Jurriaan

PB.
  ----- Original Message ----- 
  From: Jurriaan Bendien 
  To: OPE@lists.csuchico.edu 
  Sent: Saturday, August 16, 2008 3:31 AM
  Subject: [OPE] Krugman 's great illusion

  In a NYT editorial (August 14, 2008) Paul Krugman writes:

  "So are the foundations of the second global economy any more solid than those of the first? In some ways, yes. For example, war among the nations of Western Europe really does seem inconceivable now, not so much because of economic ties as because of shared democratic values. Much of the world, however, including nations that play a key role in the global economy, doesn't share those values." http://www.nytimes.com/2008/08/15/opinion/15krugman.html?_r=1&em&oref=slogino
  Mr Krugman - he starts to sound like an old woman here - nicely leaves out the recent war in the Balkans which I suppose could be classed as "Eastern Europe" rather than Western Europe, and smouldering inter-ethnic conflicts, but that aside, the emerging world recession intensifies all the social contradictions of capitalist civilisation, and therefore increases the likelihood of new armed conflicts. Effectively, it is a new declaration of war against the world's poor. 

  The "great illusion" Krugman has in common with many American ideologists is that "democratic values" prevent war, and naturally issue out of markets, but historically speaking they rarely have. In fact, World War 1 could begin in earnest when the German social democrats voted for the war credits on August 4, 1914. The "pope of Marxism", Karl Kautsky, advised against this vote at the time, and later wrote a book about the lead-up to the war ("Wie der Weltkrieg entstand" [How the war began], 1919; illiterate leftists do not know this, and of course prefer Lenin's yelling about the "renegade Kautsky"). The stage was set for World War 2 when the Nazis gained more than one-third of the popular vote (this is denied by some, on the ground that Hitler became chancellor via "backroom deals", but this is obviously myopia since Hitler had broad electoral support, attained within a democratic system, without which there would have been no "backroom deals" possible). 

  The worldwide expansion of capitalist markets, destroying older modes of production, has historically always been accompanied by mass violence - there was not one year in the 20th century without some armed conflict occurring somewhere on the planet. http://en.wikipedia.org/wiki/List_of_wars War violence is "normal", though typically more people die of hunger and disease, as Mr Brzezinski would point out.

  Thus, when describing "the process of separation between labourers and conditions of labour, to transform, at one pole, the social means of production and subsistence into capital, at the opposite pole, the mass of the population into wage-labourers", Marx observed that "If money, according to [Marie] Augier [in her 1842 tract on "Du Crédit Public et de son histoire depuis les temps anciens jusqu'a nos jours"], "comes into the world with a congenital blood-stain on one cheek," capital comes dripping from head to foot, from every pore, with blood and dirt." According to many leftists, this had something to do with primitive accumulation in the late middle ages, or else menstruation, but in reality it refers to an continuous forcible global process, since the "process of separation" is a continuous coerced global process. 

  The foundations of the modern world economy are more solid, because the bourgeois class (the core of which is 10 million people personally owning $1million+ and collectively owning $40 trillion, though they have control over far more assets) has accumulated more savings and has more weapons to defend them, and because an enlarged middle class (property-owning salary-earners) provides a stabilizing buffer for bourgeois society. But its great wealth is also less secure, to the extent that the accumulation of capital increasingly relies on assets which can be suddenly devalued, and because internationalized investments and credit lines widen the distance between those who own capital, those who control it, and those who are actually responsible for its use.   

  Michael Hudson's succinct summary is more credible than Krugman's: "capitalism's foundations are proving to be weaker than Marx had believed. (...) The most serious problems lie in the financial sphere, where the economy's debt overhead has grown more rapidly than the "real" economy's ability to carry this debt. (...) Consumer spending has indeed risen remarkably, but in recent years it has been financed increasingly by debt, whose interest and amortization payments will absorb future earnings. These earnings no longer are rising, but have been drifting downward for most workers. Indeed, if women and ethnic minorities have gained equality in the work place in recent years, it is largely because they have been forced into the job market by a tightening wage squeeze on most families. (...) The new objective is to recycle the economy's savings into real estate and the stock market to bid up land and equity prices, not to create new assets. In the stock market, capital gains are achieved by down-sizing the labor force and scaling back production so as to squeeze out more revenue rather than seeking to expand market share by undertaking new direct investment."
  " http://www.michael-hudson.com/

  Hudson also notes that "One of the most remarkable achievements of recent generations has been the disappearance of world war as an imminent threat." Obviously there is not much point in bombing your own investments and people in foreign countries, in particular if it induces rapid and massive capital flight that upsets an already dodgy credit system. Warfare necessarily becomes more selective, targeted and localized. 

  But aside from the spectre of world war, the "remarkable achievement" has been a significant reduction of the scope of military conflicts globally, even although military expenditure continues to rise further.  Can democracy breaking out everywhere explain that? I don't think that's very credible in the light of the facts, and indeed popular democracy is in decline, unless you define democracy as a few hundred wealthy middle-aged men deciding how to redistribute government money. 

  The peace trend has socially speaking much more to do with the expansion of computer technology, telecommunications and the increasing influence of women around the world, reshaping social relations, interdependencies and human natures. Further, to fight a military war and continue fighting it, there has to be some kind of pay-off, a gain or benefit, or it has to resolve something. But if there is often not even any unanimity or broad consensus anymore about the general interest, in a situation of political fragmentation and unstable alliances, or if it is unclear, then there is no stable or credible focus for large-scale military aggression, leaving only guerilla, terrorism and circumscribed military interventions with a specific, limited target. This changes the very nature of the military: the new role is not so much to fight wars, but to exert social control and power over the workers and peasants.  Hence the vague slogan of "security".

  With his "democratic values" idea Krugman panders to a myth which shades off into xenophobia. Democracy means "the rule of the people, by the people, for the people". Let's not confuse it with "the rule of the greenback".

  Jurriaan

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