Even though Admiral Dennis Blair, the Obama administration's Director of Intelligence, as well as journalist Chris Hedges, both attribute the current financial crisis to Wall Street greed and political incompetence -- rather than underlying contradictions of the economic system -- they both realize that economic failure has dramatic political consequences. Based on historical precedents, as well as the underlying logic of the system, this means diverting the US military to maintaining the domestic economic and political (dis)order.

Redeye


U.S. Intel Chief's Shocking Warning: Wall Street's Disaster Has Spawned Our Greatest Terrorist Threat

By Chris Hedges, Truthdig, February 17, 2009
http://www.alternet.org/story/127252/

We have a remarkable ability to create our own monsters. A few decades of meddling in the Middle East with our Israeli doppelgnger and we get Hezbollah, Hamas, al-Qaida, the Iraqi resistance movement and a resurgent Taliban. Now we trash the world economy and destroy the ecosystem and sit back to watch our handiwork. Hints of our brave new world seeped out Thursday when Washington's new director of national intelligence, retired Adm. Dennis Blair, testified before the Senate Intelligence Committee. He warned that the deepening economic crisis posed perhaps our gravest threat to stability and national security. It could trigger, he said, a return to the "violent extremism" of the 1920s and 1930s.

It turns out that Wall Street, rather than Islamic jihad, has produced our most dangerous terrorists. We will see accelerated plant and retail closures, inflation, an epidemic of bankruptcies, new rounds of foreclosures, bread lines, unemployment surpassing the levels of the Great Depression and, as Blair fears, social upheaval.

The United Nations' International Labor Organization estimates that some 50 million workers will lose their jobs worldwide this year. The collapse has already seen 3.6 million lost jobs in the United States. The International Monetary Fund's prediction for global economic growth in 2009 is 0.5 percent--the worst since World War II. There are 2.3 million properties in the United States that received a default notice or were repossessed last year. And this number is set to rise in 2009, especially as vacant commercial real estate begins to be foreclosed. About 20,000 major global banks collapsed, were sold or were nationalized in 2008. There are an estimated 62,000 U.S. companies expected to shut down this year. Unemployment, when you add people no longer looking for jobs and part-time workers who cannot find full-time employment, is close to 14 percent.

And we have few tools left to dig our way out. The manufacturing sector in the United States has been destroyed by globalization. Consumers, thanks to credit card companies and easy lines of credit, are $14 trillion in debt. The government has pledged trillions toward the crisis, most of it borrowed or printed in the form of new money. It is borrowing trillions more to fund our wars in Afghanistan and Iraq. And no one states the obvious: We will never be able to pay these loans back. We are supposed to somehow spend our way out of the crisis and maintain our imperial project on credit. Let our kids worry about it. There is no coherent and realistic plan, one built around our severe limitations, to stanch the bleeding or ameliorate the mounting deprivations we will suffer as citizens. Contrast this with the national security state's strategies to crush potential civil unrest and you get a glimpse of the future. It doesn't look good.

"The primary near-term security concern of the United States is the global economic crisis and its geopolitical implications," Blair told the Senate. "The crisis has been ongoing for over a year, and economists are divided over whether and when we could hit bottom. Some even fear that the recession could further deepen and reach the level of the Great Depression. Of course, all of us recall the dramatic political consequences wrought by the economic turmoil of the 1920s and 1930s in Europe, the instability, and high levels of violent extremism."

The specter of social unrest was raised at the U.S. Army War College in November in a monograph [click on Policypointers' pdf link to see the report] titled "Known Unknowns: Unconventional 'Strategic Shocks' in Defense Strategy Development." The military must be prepared, the document warned, for a "violent, strategic dislocation inside the United States," which could be provoked by "unforeseen economic collapse," "purposeful domestic resistance," "pervasive public health emergencies" or "loss of functioning political and legal order." The "widespread civil violence," the document said, "would force the defense establishment to reorient priorities in extremis to defend basic domestic order and human security."

"An American government and defense establishment lulled into complacency by a long-secure domestic order would be forced to rapidly divest some or most external security commitments in order to address rapidly expanding human insecurity at home," it went on.

"Under the most extreme circumstances, this might include use of military force against hostile groups inside the United States. Further, DoD [the Department of Defense] would be, by necessity, an essential enabling hub for the continuity of political authority in a multi-state or nationwide civil conflict or disturbance," the document read.

In plain English, something bureaucrats and the military seem incapable of employing, this translates into the imposition of martial law and a de facto government being run out of the Department of Defense. They are considering it. So should you.

Adm. Blair warned the Senate that "roughly a quarter of the countries in the world have already experienced low-level instability such as government changes because of the current slowdown." He noted that the "bulk of anti-state demonstrations" internationally have been seen in Europe and the former Soviet Union, but this did not mean they could not spread to the United States. He told the senators that the collapse of the global financial system is "likely to produce a wave of economic crises in emerging market nations over the next year." He added that "much of Latin America, former Soviet Union states and sub-Saharan Africa lack sufficient cash reserves, access to international aid or credit, or other coping mechanism."

"When those growth rates go down, my gut tells me that there are going to be problems coming out of that, and we're looking for that," he said. He referred to "statistical modeling" showing that "economic crises increase the risk of regime-threatening instability if they persist over a one to two year period."

Blair articulated the newest narrative of fear. As the economic unraveling accelerates we will be told it is not the bearded Islamic extremists, although those in power will drag them out of the Halloween closet when they need to give us an exotic shock, but instead the domestic riffraff, environmentalists, anarchists, unions and enraged members of our dispossessed working class who threaten us. Crime, as it always does in times of turmoil, will grow. Those who oppose the iron fist of the state security apparatus will be lumped together in slick, corporate news reports with the growing criminal underclass.

The committee's Republican vice chairman, Sen. Christopher Bond of Missouri, not quite knowing what to make of Blair's testimony, said he was concerned that Blair was making the "conditions in the country" and the global economic crisis "the primary focus of the intelligence community."

The economic collapse has exposed the stupidity of our collective faith in a free market and the absurdity of an economy based on the goals of endless growth, consumption, borrowing and expansion. The ideology of unlimited growth failed to take into account the massive depletion of the world's resources, from fossil fuels to clean water to fish stocks to erosion, as well as overpopulation, global warming and climate change. The huge international flows of unregulated capital have wrecked the global financial system. An overvalued dollar (which will soon deflate), wild tech, stock and housing financial bubbles, unchecked greed, the decimation of our manufacturing sector, the empowerment of an oligarchic class, the corruption of our political elite, the impoverishment of workers, a bloated military and defense budget and unrestrained credit binges have conspired to bring us down. The financial crisis will soon become a currency crisis. This second shock will threaten our financial viability. We let the market rule. Now we are paying for it.

The corporate thieves, those who insisted they be paid tens of millions of dollars because they were the best and the brightest, have been exposed as con artists. Our elected officials, along with the press, have been exposed as corrupt and spineless corporate lackeys. Our business schools and intellectual elite have been exposed as frauds. The age of the West has ended. Look to China. Laissez-faire capitalism has destroyed itself. It is time to dust off your copies of Marx.

Chris Hedges, a Pulitzer prize-winning reporter, is a Senior Fellow at the Nation Institute. His latest book is Collateral Damage: America's War Against Iraqi Civilians.

A change in U.S. policy toward Israel?

The following article in the California State University Sundial calling for the United States to dissolve its "special relationship" with Israel is well-written, got some positive comments, as well as the expected ad hominum attacks on the author, Prof. David Klein.

While there is a chance that US policy will change in the direction he proposes, it is highly doubtful that it will not be enough and would be done for the wrong reasons.

The U.S. foreign policy establishment, such as the Council on Foreign Relations, largely realizes that since 1967, and especially under presidents Clinton and Bush Jr., the U.S. government bent over too far in support of the expansionists in Israel, which means all of Israel's political parties to the right of Meretz (Israel's Kucinich types). In other words, about 90 percent of the new K'nesset either wants to keep all the settlements in occupied territories, proceed with apartheid, and maintain the seige on Gaza. The moderates among them, such as the Labor Party, want to move down the same path, but with a token bantustan on parts of the West Bank headed by the Palestinian Authority. As for Gaza, I gather the generall hoping to displace Hamas and bring in the PA to do their bidding.

This legacy causes problems for the U.S. in the Middle East when it faces an Iraq dominated by pro-Iranian Shiite parties, an Afghanistan dominated by the Sunni Taliban, a nuclear-armed independent Pakistan, and loss of any credibility for the many Arab dictatorships propped up by the U.S. So, following the arguments of Wald and Meirsheimer, authors of the Israel Lobby, they want to make some mid-course corrections and push harder for a two state solution to try get out of the maze they have created.

But, even if the Obama Administration manages to pressure Israel and the Palestinian Authority into such a "solution" I doubt if it will work. Israel will still be an "ethnocracy" run by a business elite, and the little Palestinian state would either be run by the repressive, corrupt, neo-liberals of Fatah or the clerical fascists of Hamas. Both of these parties already operate a modified police pre-state, with death squads, beatings, knee cappings, and incarceration for their Palestinian competitors. And, both would end up being the agents for foreign and Israeli foreign investors, NGO's, and government aid programs.

As for the one state and even the regional solutions which appeal to many progressives, the big questions are still there. Who would run the place? How would they rule it, and for whose benefit? Who would get the short end of the stick? To simply say the one state or the regional authority would be a secular democracy totally dodges these critical questions. The U.S. is such a secular, democratic, settler state, and it is hardly a great model because the democratic part is so flawed and the economic inequality is so great. Ditto for South Africa, which ended apartheid, but not racism and economic stratification.


Daily Sundial

Support for Israel must stop

David Klein / Professor of Mathematics, CSUN


Published: Friday, February 6, 2009


When an impoverished Palestinian boy confronts an Israeli tank in front of his home, how do you explain to American taxpayers that the tank is David and the boy is Goliath?

Apologists for Israel’s devastating attack on the civilian population of Gaza last month would face a task of biblical proportions, were it not for the dearth of information available to the American people.

Israel dropped hundreds of bombs and rained white phosphorus on the Gaza Strip in a three-week period beginning Dec. 27, 2008. The Palestinian population was attacked by U.S. built F-16 fighter jets and Apache helicopters.

The extent of the damage is staggering. At least 37 United Nations schools were destroyed or damaged during the attack. Forty mosques were destroyed. Tanks bombed hospitals and ambulances, the University of Gaza was leveled to the ground, and white phosphorus bombs obliterated the United Nation’s main food storage facility.

Refugee centers were targeted and suffered heavy casualties. Israeli soldiers killed healthcare workers whose only “crime” was attending to the wounded.

More than 1,300 Palestinians were killed and over 5,000 were crippled, many with loss of limbs or eyesight. Half the victims were women, children and the elderly.

Entire neighborhoods were demolished, leaving tens of thousands homeless. Some survivors describe Israeli tanks arriving in front of homes and ordering families to come out. As children, old people and women came forward, in some cases with white flags, they were shot and killed on the spot.

By contrast, the number of Israeli deaths was 13, including four victims of “friendly fire.”
Israel sealed off Gaza in advance of the attack. No one was allowed to leave without a foreign passport. Women, children, the elderly, and the infirm were not permitted to flee to safety. They were forced to remain in the world’s largest open-air prison with no protection from Israel’s chemical weapons, bombs, and bullets.

Gaza, with its 1.5 million people, is the most densely populated region in the world. Since 2005, well before Hamas came to power, Gaza has suffered from an Israeli military blockade that restricts food, medicine, and other vital supplies. The tunnels from Gaza to Egypt, that Israel has repeatedly bombed, provide essential routes for the transport of basic necessities.

Pro-Israel propagandists justify the attack by charging that Hamas, the elected government of Gaza, broke a six-month cease-fire by launching rockets into Israel. But the facts tell a different story. A December 2008 report entitled “The Six Months of the Lull Arrangement” stated it was Israel, not Hamas, which broke the cease-fire.

According to the Israeli Intelligence report, between June 19 and Nov. 4, 2008, “Hamas was careful to maintain the ceasefire.” Then on Nov. 4, Israeli forces attacked and killed seven Palestinians in Gaza.

The report further explains, “In retaliation, Hamas and the other terrorist [sic] organizations attacked Israel with a massive barrage of rockets...” Thus, even the Israeli government admits that Israel broke the truce.

In contrast, the mainstream press, which functions as the public relations arm of Israel, blames the victims of Israel’s attack for their own suffering. Not mentioned in the Israeli Defense Ministry report, however, is the failure of Israel to lift the military blockade, as per agreement of the cease-fire, in itself a war crime.

Israel’s most recent violation of the truce agreement with Hamas is not an anomaly. By a wide margin, it is Israel that most often initiates violence.

An analysis entitled “Reigniting Violence: How Do Ceasefires End?” written by faculty members at MIT and Tel Aviv University, and a graduate student at Harvard, found during the span of years 2000 to 2008, “79 percent of all conflict pauses were interrupted when Israel killed a Palestinian, while only 8 percent were interrupted by Palestinian attacks (the remaining 13 percent were interrupted by both sides on the same day).” Even more significant, “of the 25 periods of nonviolence lasting longer than a week, Israel unilaterally interrupted 24, or 96 percent, and it unilaterally interrupted 100 percent of the 14 periods of nonviolence lasting longer than 9 days.”

Zionism calls for a Jewish state. Israel defines Jewishness, in part, in genetic terms. A person is legally Jewish if his or her mother is Jewish, regardless of place of birth or religious belief.

In pursuit of a Zionist agenda, Israel has followed a 60-year program of ethnic cleansing, including expulsion of the Palestinian population, military occupation, and mass murder.
The attack of Gaza is only the latest in a long history of crimes against humanity. Ariel Sharon summarized Israel’s national goals when he said in 1983, “the only good Arab is a dead Arab.”

Spain’s highest court has recently launched an investigation of crimes against humanity by Israeli leaders stemming from a 2002 bombing of civilians in Gaza. If the identified officials fail to appear in Madrid, the High Court will likely issue international warrants for their arrest.

It is long past due for Americans, including CSUN students, to call upon our government to end its billions of dollars of support of Israel.

For references and more information, see Prof. Klein’s web page:

www.csun.edu/~vcmth00m/boycott.html

Doubts about "the left" supporting Hamas

Feb. 12, 2009

Response to a post from a Belgian activist about how the “left” should support Hamas as an expression of Palestinian resistance to imperialism.

The point is not whether anti-imperialists are religious or not, the question is their class politics.
In this case Hamas, based on their charter, is an expressly anti-communist organization which openly supports the capitalist mode of production. So, what does that say about the nature of their anti-imperialism?

Or, do we support all anti-imperialists regardless of their class position and type of society they would establish upon their anti-imperialist victory. And, what about their history of support from wealthy aristocrats and business interests in Saudi Arabia and Kuwait, as well as the Mossad in the 1980s?

But, let me push the question further. What is meant by the author's terms "the left", especially when the class politics of Hamas are not discussed or evaluated?

Plus, what of the role of the Israeli working class? Depending on the polls, between 5 -10 percent of the Israeli public opposed the Gaza War, and other polls indicate majority support for a two state solution. While obviously a weak solution, it could establish Hamas as the ruling party of Gaza, and possibly the West Bank, after the elimination of the Israeli occupation of those two areas. Furthermore, most Israelis, especially Israeli workers, are victimized by the Israeli state through economic exploitation, a reduced standard of living because of high military expenditures, and being conscripted for the military. How do they fit into the author's or Hamas's anti-imperialism?

And, where does one draw the line with all those who subjectively or objectively present themselves as anti-imperialists? After all, in WWII fascist Japan took up arms against British and American imperialism. They even made appeals to other countries in Asia to join their military efforts to force these Europeans and Euro-Americans out of Asia, so it could be controlled by Asians and not by foreigners. For that matter, Nazi Germany was militantly opposed to British, French, and US imperialism, and actually had some success in places like Lithuania and the Ukraine in generating support from local religious nationalists.

Red Eye

Paul Richter, of the LA Times, has done a comprehensive review of the decline of the United States in comarison to its rivals, whether other great power or regional powers, such as those in Latin America. While few now differ with his observation that the US is a great power in decline, they would challenge two of his conclusions.

First, the decline of the United States is a long-term process, with the most critical events in defeat in Vietnam in 1972, not a result of the Bush administration's efforts to invade and control Iraq.

Since then wages have been static or in decline for most employees.

Second, while some liberal foreign policy analysts, like Charles Kupchan, would support the gradual retrenchment of the US empire, most of the insiders are as committed as ever to military force -- for examply in Afghanistan -- to maintain U.S. hegemony in the Middle East.

This means that decline does not usually promote disarmament, but is still one more force promoting militiarism and war. In fact, these trends were clearly underway under before Bush II, and will continue under the continuity government of Obama.

Whre will the trends lead us? Mostlikely to expanded military activity in the Middle East.

Redeye



http://www.latimes.com/news/nationworld/world/mideastemail/la-fg-bush-world25-2008dec25,0,7822916.story

From the Los Angeles Times, Dec. 25, 2008

Bush a catalyst in America's declining influence

The president oversaw a period of eroding economic and political power, in which the rise of China, India and others was a major factor, but assisted by an aversion to him and his policies.

By Paul Richter

Reporting from Washington — First in a series of occasional reports on President Bush's legacy.As President Bush's term comes to a close, the United States has the world's largest economy and its most powerful military. Yet its global influence is in decline.

The United States emerged from the Cold War a solitary superpower whose political and economic leverage often enabled it to impose its will on others. Now, America usually needs to build alliances -- and often finds that other powers aren't willing to go along.In the 1990s, America exerted leadership in all the remote corners of the globe, from the southern cone of South America to Central Asia.

Now, the United States has largely left the field in many regions, leaving others to step forward. Bush has been blamed widely for the erosion of American prestige. And the decline in U.S. influence is partly the result of the reaction to his invasion of Iraq, his campaign against Islamic militants and his early disdain for treaties and international bodies.

But the shift is also a result of independent forces, though hastened by an aversion to Bush. These include the steady ascent of China, India and other developing countries that throughout the last decade have seen their economies grow, amassing wealth and quietly extending their reach. As smaller countries have built economic and political ties to these rising powers, they have worked to free themselves from exclusive dependence on the United States."There is no return to the time when the United States was the 'indispensable power,' " said Stewart M. Patrick, a former State Department official at the Council on Foreign Relations. "The world has moved on."

Now there are multiple power centers. The institutions that buttressed Western power, such as the United Nations, the World Bank and International Monetary Fund, are under pressure to allow rising powers more influence.A vivid illustration of the power shift came Nov. 15, when Bush convened world leaders in Washington to develop plans for dealing with the global economic crisis. In the old days, experts said, he would have limited the meeting to a few industrial powers. But Bush realized that the world economy now has a larger cast of influential players, and invited all members of the so-called Group of 20 developed and developing nations, which includes countries such as Argentina, Indonesia, Mexico and Turkey.

A decade ago, the U.S. might have been able to bring enough economic pressure on its own to force an end to Iran's disputed nuclear program, said Nikolas K. Gvosdev, professor of national security studies at the Naval War College. But Iran has built economic ties to China and India, among others, so the United States has to assemble a much larger group if it hopes to force Tehran's hand."

Ten years ago, the U.S. was generally the only game in town, and it had the power to close or crack open the door to Iran," Gvosdev said. "Now other countries have more options. . . . This doesn't mean the United States is weak, but it can't unilaterally impose what it wants."

The U.S. National Intelligence Council issued a report this year, "Global Trends 2025," that notes a shift of economic power from the West to the East that is "without precedent." In 2025, the United States will "remain the single most powerful country, but will be less dominant," it predicts.Since World War II, the United States has led by its power of persuasion, as well as its economic might. But other countries' unhappiness with the Iraq war and the conduct of the Bush administration's "global war on terror," means that the "American brand is less legitimate and its persuasive powers are compromised," said Charles Kupchan of Georgetown University and the Council on Foreign Relations.

There also has been a dwindling of U.S. influence as the administration has focused most of its energy and resources on the Middle East and Southwest Asia, leaving much less for Central and Southeast Asia, Latin America and other regions. Many are going their own way, developing new ties among neighbors. Latin American countries, for example, are building an organization called the Union of South American Nations and a NATO-like defense alliance called the South American Defense Council. The United States, long dominant in the hemisphere, is pointedly excluded from both.An 8-year-old group called the Shanghai Cooperation Organization, with Russia, China, and four Central Asian states, has been slowly developing, in part because some members want a bulwark against U.S. involvement in the region.

Other countries are leading diplomatic initiatives that once would have been the province of the United States.Qatar has taken the lead in brokering a deal between Syria and Lebanon, and Turkey has been acting as an intermediary between Israel and Syria.

As the United States' political standing has eroded, its economy has remained powerful. Its gross domestic product of $14 trillion a year dwarfs China's $7 trillion, adjusted for purchasing power.Yet American influence on world economic policy is declining, too. One sign: the failure of the United States and its allies to sell a new agreement to the World Trade Organization in the face of opposition from China, India and other nations."

The influence of the U.S. private sector is as strong as ever," said Gary C. Hufbauer of the Peterson Institute for International Economics. "But the United States is much less able to shape world policy these days."Many analysts expect that the economic crisis, for which the U.S. is blamed by much of the world, will convince many countries that they shouldn't emulate the loosely regulated American economic model.

Another development is the weakening of U.S. ties with Europe. Once, when they formed a common front on an issue, they had enormous leverage.The rift over the Iraq war has largely healed, but Europe continued to differ with the Bush administration on important issues, including climate change and Russia's resurgence.

Many analysts predict growing frictions over the joint effort in Afghanistan."There's a rebalancing of power away from the West," Kupchan said, "but also within the West."

paul.richter@latimes.com

Dialog with an Israeli Peace Activist

Your analysis analysis of Obama is quite accurate. There is no doubt that most of those in the U.S. who call themselves "progressive" which means liberals, left-liberals, and much of what is left of the old and new lefts, are ecstatic about Obama's election. My best guess is that this enthusiasm stems from two reasons:

1) The progressives despised W at the personal and political level and think Obama is Bush's anti-thesis.

2) The progressives heard the campaign buzz-words of "Hope," "Yes, we can!" and "Change you can believe in,", learned about Obama's initial pre-Senate opposition to an invasion of Iraq, and then optimistically projected their own anti-war views onto Obama.

But, reality is already setting in. The Rahm Emanuel appointment as Chief-of-Staff is the first show to drop. He is a very right wing, militaristic Clinton Democrat, who is a hawk on Iraq and Israel.

Then, Obama assembled his team of economic advisers, and they are nearly all drawn from the worlds of finance and corporate CEO's. Even the few outsiders are from old Clinton circles, such as Robert Reich, Clinton's Secretary of Labor, and LA's Mayor, Antonio Villaraigosa, a strong Clinton supporter whose economic approach to city government consists of hiring cops and greasing the wheels for large real estate projects.

As for the mass movement you wrote about, I agree it is truly needed, but hard to generate at this point since most of its potential leaders were and still are strong Obama supporters. I am already hearing their reasons for sticking with Obama and not engaging in protest: "McCain would have been worse." "If we criticize Obama, we undermine his mandate." Or, "We knew he was not a progressive, so what is the surprise." And, "Obama has inherited an awful domestic and international situations, so he must go slow."

If I had to guess how the next four years will unfold, I imagine Clinton facing much deeper domestic economic crises and foreign challenges to U.S. hegemony, especially throughout the Middle East. While there will be some sharp internal debates at the White House, the Clinton outlook will prevail, which means largely neo-liberal approaches to the economy: dramatic cutbacks in public services combined with a stimulus package which will funnel billions to private contractors close to the Democrats for building bridges, roads, and maybe some transit.

As for foreign policy, there will be a few cosmetic changes, such as revoking legal justifications for torture, but the big issues, such as the gargantuan U.S. military budget and the global military footprint of 1000 bases, will continue, but with selected military escalations in response to crises, especially in Afghanistan and Pakistan.

The Israeli-Palestinian situation is probably the one which will generate the most internal debate. On one hand, there are those quiet and ignored voices in the foreign policy circles, like Walt, Mearsheimer, and Carter who know that the U.S. needs that Saudi peace plan to go through in order to sustain the US position in the Persian Gulf and Caspian Sea regions. On the other hand, the Rahm Emanuel types, already well positioned, will do all in their power to continue go no-where negotiations.

At this point, there is no evidence that the foreign policy realists, like Walt and Mearsheimer, who are willing to jettison the settlements in the occupied territories in order to prop up the U.S. empire have any traction in the Obama administration. Even the advocates of Walt and Mearsheimer-light, such as J Street, are, as far as I know, on the side-lines, though its director, Jeremey ben-Ami, worked for Clinton. Their highly prolific analyst, Daniel Levy, has not yet written a thing about the election.

Where to now with Obama Election?

At a very early stage in the campaign, I wrote to friends that though Obama is not a leftist or a part of the left, he must, in the given conditions be the candidate of the left in the United States. It was not the time for any third party fantasies. (This might be the place to suggest that any real genuine left initiative for presidential elections would have to base itself on a modicum of success in local and regional elections. A serious left would not go to national elections without any serious advanced preparation).

Symbolic Victory

I share the enthusiasm. Obama made his way to the presidency fighting the Clinton machine and the Mcarthyite sniping of the McCain gang. But more important, anyone who knows anything of the role of racism in US could not but be stirred with joy and satisfaction over Obama’s tremendous victory. This having been said, it is foolish to ignore the plain and simple fact that his core beliefs and outlook are no more than a variant of the dominant ideas in the Democratic Party. Here and there some good and pertinent ideas emerged in the context of the clash with the Republicans. However, there were innumerable examples of wrong and very dangerous positions (Afghanistan, Israel, Iran, the bailout, to name a few). Barack Obama knows the sweet talk. I think that I would pay for a ticket to hear him read the telephone book. But any halfway experienced political progressive knows that “Change” and Yes, We Can” are empty and even dangerous slogans, when we do not know what changes we are talking about and what exactly “we can” do. Unity, as a superficial substitute for ideology, is simply nationalist, right-wing fodder. I cringe at the ideological terminology which either ignores the poor and the working class or enrolls and submerges their identity in the ranks of the middle class. Of course, when looking at the immediate past, any decent advocate of Obama can justify all of Obama’s political weaknesses with the argument that all this was precisely what Obama needed to do to get elected. But even those, who thus argue, will agree that this kind of rationalization would be pernicious, even dangerous if it congeals into a simple minded advance justification for potential failures and disappointments of a Obama presidency. The game is on and from this point we start keeping score.

What Has Not Changed

At this time, we know that black people in the United States are suffering increasingly painful want and poverty. This is true by virtue of a social law well known to all of us. In times of want, recession and depression the poor suffer most and the largest section of the poor is black. l am relating to an euphoric article that was sent to me as one of the best things written on the Obama success. It’s essence:

But there is one thing we can proclaim today, without question: that the election of Barack Obama as president of the United States of America means that "The Ultimate Color Line," as the subtitle of Javits' Esquire essay put it, has, at long last, been crossed. It has been crossed by our very first postmodern Race Man, a man who embraces his African cultural and genetic heritage so securely that he can transcend it, becoming the candidate of choice to tens of millions of Americans who do not look like him. "Root'

I understand that this was written in a moment of deep emotion, but it has been seconded by many liberals and progressives.The “Ultimate Color Line” – the election of a black president seems to be important because tens of millions of (white) Americans did vote for an African American. But the sterling qualities of Barack Obama that enable so many white voters to momentarily and conditionally suspend their racism, are not the main thing. It is a liberal illusion that the election of prominent African-Americans ensures black people’s welfare and progress. The Ultimate Color Line is the gigantic real life and statistical disparity between blacks and the white population in every facet of life – income, opportunity, health, education, administration of justice, etc. Discrimination still reigns and where there is discrimination there is the old color line. Obama’s election proves nothing in this respect and promises, I fear, little. Even the victories of the civil rights movement have yet to bear ample fruit for the masses of black people.

Who Won the Election?

Not Barack Obama. He himself explained what happened. He told the people that it was not his victory, but theirs! Much depends on whether this is just an elegant politician’s way of saying thank you for recognizing my virtues. However, if this sentence is sincere and has any real meaning, it is that Obama owes his election to a mass movement at the grass roots level. And indeed, the 2008 success is the success of the grass roots mass movement.

Is this a movement created by the application of the right technical instruments and merely an arm of the effective and efficient operation put together by the Obama machine? Praise for the success of Obama’s campaign organization tends to portray it as a top to bottom creation and stresses that it is a resource that Obama can use when needed. But in our humble opinion, the movement to elect Obama is not merely an instrument to be used when required. It is a living and breathing social entity.

Obama says the election is not the main thing and he is right. But what forces does Obama take with him to DC? He has supporters in his party but these are usually subservient to Democratic Party bureaucracy which has its own interests and agenda. He has important support in the establishment sections of the business world and the academy. But once again these people usually have their own agenda. If Barack Obama has his own clear, fighting agenda, the only fully reliable ally that he has is the grass roots movement. But he can only rely on this movement if he listens well and builds up a constant, vibrant dialogue with those who worked to get him elected. It is the presence or the absence of this dialogue that will let us know where Obama is headed.

At this point the grass root movement is still celebrating, but through the clamor it hears the footsteps of the old politics: old guard appointments, consultations with representatives of the current elite establishment, foreign policy statements based on the Bush regime’s positions that seem designed to calm potential critics in the military-industrial-foreign policy complex. Every day that goes by without emerging evidence of a developing independent mass based organization working with and for Obama is a sign that Obama is not moving in the right direction. If Obama tries to govern from the center he will dissipate his strength and fall victim to those with whom he sought to curry favor. If he allows the financial experts, in his close vicinity, to advise him that government bailouts are the way to go, he will run out of money very quickly only to realize soon enough that unity between capital and labor is a fantasy. A depression means war on the working class and the poor and yes, large parts of the middle class. If you are indeed their leader, you fight back or you are trounced for having deserted those who put you in power.

Analysis of Obama's Rahm Emanuel appointment

As explained by Prof. Steve Zunes, the appointment of Rahm Emanuel to become President-Elect Barack Obama's Chief-of-Staff is significant because of Emanuel's hawkishness on Iraq, Israel, and U.S. foreign policy in general, and his opposition to anti-war Democrats gaining influence or prominence in the Democratic Party.

So, here are several obvious questions drawn from Zunes's analysis:

1) Does the Rahm appointment confirm the analysis of those who scoffed at Obama's largely successful efforts to present himself as anti-war Democrat because of his pre-Senate opposition to the Iraq war?

2) Is it the first of what will be many more such Obama appointments and policies which continue the long hawkish trajectory of the Democratic Party?

3) At what point, if any, will those many progressives who jumped on the Obama bandwagon jump off and follow through on their proclamations to "keep Obama's feet to the fire?"

Is Obama Screwing His Base with Rahm Emanuel Selection?

By Stephen Zunes, AlterNet
Posted on November 7, 2008, Printed on November 8, 2008
http://www.alternet.org/story/106189/

I had really wanted to celebrate Barack Obama's remarkable victory for a day or so before becoming cynical again. I really did.

And yet, less than 24 hours after the first polls closed, the president-elect chose as his chief of staff -- perhaps the most powerful single position in any administration -- Rahm Emanuel, one of the most conservative Democratic members of Congress.

The chief of staff essentially acts as the president's gatekeeper, determining with whom he has access for advice and analysis. Obama is known as a good listener who has been open to hearing from and considering the perspectives of those on the Left as well as those with a more centrist to conservative perspective. How much access he will actually have as president to more progressive voices, however, is now seriously in question.

Illinois Congressman Rahm Emanuel is a member of the so-called New Democrat Coalition (NDC), of group of center-right pro-business Congressional Democrats affiliated with the Democratic Leadership Conference, which is dedicated to moving the Democratic Party away from its more liberal and progressive base. Numbering only 58 members out of 236 Democrats in the current House of Representatives, the NDC has worked closely with its Republican colleagues in pushing through and passing such legislation as those providing President Bush with "fast-track" trade authority in order to bypass efforts by labor, environmentalists and other public interest groups to promote fairer trade policy.

Emanuel began his political career as a senior adviser and chief fundraiser for the successful 1989 Chicago mayoral campaign of Richard M. Daley to seize back City Hall from reformists who had challenged the corrupt political machine of this father, Richard J. Daley. Emanuel later became a senior adviser to Bill Clinton at the White House from 1993 to 1998, serving as Assistant to the President for Political Affairs and then Senior Advisor to the President for Policy and Strategy, and was credited with playing a major role in shifting the Clinton administration's foreign and domestic policy agenda to the right. Emanuel was the single most important official involved in pushing through the North American Free Trade Agreement (NAFTA), the bill ending Aid for Families with Dependent Children (AFDC), and Clinton's draconian crime bill, among other legislation.

Leaving the administration in 1998, Emanuel worked as an investment banker in Chicago, where he amassed an $18 million fortune in less than three years prior to being elected to Congress.

As head of the Democratic Congressional Campaign Committee since 2004, Emanuel has promoted pro-war and pro-business center-right candidates against anti-war and pro-labor candidates in the primaries, pouring millions of dollars of donations from Democrats across the country into the campaigns of his favored conservative minions to defeat more progressive challengers.

Emanuel was a major supporter of the Iraq War resolution that authorized the invasion of Iraq. Indeed, he was the only one of nine Democratic members of Congress from Illinois who backed granting Bush this unprecedented authority to invade a country on the far side of the world that was no threat to the United States at the time. Even more disturbingly, when asked by Tim Russert on "Meet the Press" whether he would have voted to authorize the invasion "knowing that there are no weapons of mass destruction," Emanuel answered that he indeed would have done so, effectively acknowledging that his support for the war was not about national security, but about oil and empire. Not surprisingly, he has also voted with the Republicans in support of unconditional funding to continue the Iraq War and has consistently opposed efforts by other Democrats to set a timetable for the withdrawal of U.S. occupation forces from that country and related Congressional efforts to end the war.

At a time of record budget deficits, Emanuel has been a passionate supporter of increased spending for the Pentagon and has resisted efforts by fellow Democrats to trim excesses in the Bush administration's bloated military budget. For example, he has repeatedly voted against amendments to cut funding for Bush's dangerously destabilizing missile defense and even voted against an amendment to identify unnecessary Pentagon spending by examining the need, relevance and cost of Cold War weapons systems designed to fight the former Soviet Union.

A major hawk regarding Iran, Emanuel has also voted against Democratic efforts to prevent the Bush administration from launching military action against that country and has joined the administration in exaggerated claims about Iran's alleged nuclear threat. He is not opposed to nuclear proliferation if it involves U.S. allies, however. Emanuel has consistently voted against a series of Democratic amendments that would have strengthened safeguards in the Bush administration's nuclear cooperation agreement with India to prevent U.S. assistance from supporting India's nuclear weapons program.

Emanuel is also a prominent hawk regarding Israel, attacking the Bush administration from the right for criticizing Israel's assassination policies and other human rights abuses. He was also a prominent supporter of Israel's 2006 attacks on Lebanon, even challenging the credibility of Amnesty International and other human rights groups that reported Israeli violations of international humanitarian law. Emanuel's father had emigrated from Israel in the 1950s, where he had been a member of the terrorist group Irgun, which had been responsible for a series of terrorist attacks against Palestinian and British civilians in mandatory Palestine during the 1940s. Emanuel himself served in a civilian capacity as a volunteer for the Israeli army in the early 1990s.

It is unclear how serious of a blow Obama's selection of Emanuel is to those who hoped that Obama might actually steer the country in a more progressive direction. It's easy to see it as nothing less than a slap in the face of the progressive anti-war elements of the party to whom Obama owes his election, particularly following his selection of Sen. Joe Biden as vice president. (See my articles "Biden's Foreign Policy 'Experience'" and "Biden, Iraq, and Obama's Betrayal.")

However, this does not necessarily mean that Obama as president will pursue nothing better than a Clintonesque center-right agenda. Someone with Obama's intelligence, knowledge and leadership qualities need not be unduly restricted by the influence of his chief of staff as less able presidents have. At the same time, this shocking appointment of Emanuel is illustrative of the need for the progressive base that brought him to power to not celebrate too long and to refocus our energies into pushing hard to ensure that the change Obama promised is something we really can believe in.

Stephen Zunes is a professor of politics and chair of Middle Eastern Studies at the University of San Francisco and serves as a senior policy analyst for Foreign Policy in Focus.

© 2008 Independent Media Institute. All rights reserved.

View this story online at: http://www.alternet.org/story/106189

Excellent analysis of the political-economy of current crises

Four Crises of the Contemporary World Capitalist System

http://monthlyreview.org/081006tabb.php

By William Tabb, Monthly Review, October 15, 2008

This essay examines aspects of the global political economy that I hope will inform progressive governments and movements for social change. It evaluates the constraints and opportunities presented in the current conjuncture of world capitalist development by analyzing four areas of crisis in the contemporary world capitalist system. These are not the only contradictory elements in the contemporary conjuncture, but they are, in my view, the most salient.

The first problem is the financial turbulence that has gripped the economy of the United States and has had widespread effects. It is a crisis that further discredits mainstream Anglo-American economics. I do not know that it is the crisis of capitalism. For this to be the case it would not only have to become much deeper, but its impacts would have to be felt more dramatically as a systemic failure. Most importantly, a party formation capable of explaining how such crises are inherent in the nature of the functioning of capitalism and of inspiring a socialist alternative would have to mobilize a movement of the sort that ended apartheid in South Africa. Without the last, even a deep and painful crisis will be, at best, only the occasion for reforming and not abolishing capitalism.

A second crisis is that of U.S.-led imperialism, which has been discredited both in terms of its regime-change-wars-of-choice and the increasingly effective resistance to the international financial and trade regime we know as the Washington Consensus. Because of the incalculable harm neoliberalism has done, and continues to do, it is now ideologically on the defensive. A third point of crisis is the rise of new centers of power in what had been the peripheries of the capitalist system and the tensions this has unleashed, providing room to maneuver for countries wishing to break with the United States. A fourth area of crisis has to do with resource usage, the uneven distribution of the necessities of life, and a growth paradigm that is no longer sustainable. Here grassroots social movements in South Africa and elsewhere are leading actors in resisting privatizations and the imposition of a hyper-individualism that brings disaster for the most oppressed and exploited.

Crisis One: Financialization and Financial Crisis1

How much damage the current financial meltdown will cause remains to be seen, but the harm is already extensive. At the level of systemic crisis an important issue relates not just to the economic costs and the way rescue operations are premised on tax payer bailout, but whether financial capitalism can sustain itself. Martin Wolf, the Financial Times senior economic columnist, writes about capitalism "mutating" from "mid-20th century managerial capitalism into global financial capitalism."2 John Bellamy Foster, editor of Monthly Review, argues "that although the system has changed as a result of financialization... financialization has resulted in a new hybrid phase of the monopoly stage of capitalism that might be termed ‘monopoly-finance capital.'"3 Finance has been able to restructure productive capitalism, the economy that actually produces real goods and services people consume. In a new way it appropriates more and more of the surplus created in the processes of production, not only in the core, but in what has been the periphery of the world system.

Taken as a whole the corporate profits of the financial sector of the U.S. economy in 2004 were $300 billion, compared to $534 billion for all nonfinancial domestic industries, or about 40 percent of all domestic corporate profits. They had been less than 2 percent of total domestic corporate profits forty years earlier, a remarkable indication of the growth of financialization in the U.S. political economy. This was both an economic and a political development, as the financial sector gained leverage over the rest of the economy, in effect gaining the power to dictate priorities to debtors, vulnerable corporations, and governments. As its power grew, it could demand greater deregulation, allowing it to grow still further and endangering the stability of the larger economic system.

It seemed that finance had developed a new magical M-M' circuit, in which money could be made solely out of money, without the intervention of actual production. The new secret of accumulation was presumed to be leverage and risk management, which allowed the purchase of assets that promised higher returns even if they carried a higher risk, and the borrowing of many times the amount the investor had in equity capital—perhaps ten, twenty, thirty, or in some cases a hundred times as much. When so highly leveraged, even a small rise in value could return great profit on the initial investment. Given global markets, the money might be borrowed at low interest rates in Japanese yen and invested in high return U.S. financial assets, junk bonds, and derivatives of all sorts.

So long as asset values rose, whether in bundles of mortgages in collateralized debt obligations (CDOs), or more exotic products, investors made a great deal of money. This encouraged others to copy these strategies, to bid up asset prices. The increasing value of these assets allowed even greater borrowing to purchase still more, further bidding up prices, in an upward spiral producing bubbles that eventually popped. Financialization as an accumulation strategy has brought not only severe crisis with the failure of financial markets but has put the United States in a position resembling that of a poor nation in debt to foreign creditors—its currency declining, its trade policies favoring elites, and its government demanding that some taxpayers pay more to recapitalize the financial system while providing more tax cuts to the affluent and corporations.

Toxic collateralized debt obligations are featured in most discussions, but a central aspect of financialization is the growth in debt itself: government debt (much of it the result of military spending and tax cuts and other "incentives" for corporations and the rich), consumer debt of all kinds, and corporate debt. The explosion in debt creation has powered an economy that has strong stagnationist tendencies. The irrationality of a class divided society is that profits accruing to corporations will not be reinvested to produce things people and the society as a whole need and want, because the purchasing power of the working class is kept limited and the corporate rich will not pay the taxes needed by the state sector to provide desired public goods.

There is an overinvestment in capacity to produce that cannot be utilized within an irrational social structure in which the only effective demand is that backed by adequate purchasing power. Overproduction in the midst of unmet social needs characterizes the system, as does pressure on workers everywhere to take lower compensation as a result of the class power of capital and its ability to pit workers against each other. The surplus produced and appropriated by capital cannot find outlets in production and spills over into financial speculation where it is absorbed in speculative bubbles that eventually collapse, spreading chaos and pain through the economy.

Beyond these general tendencies is the connection between financialization and rising inequalities and the declining economic fortunes of most working-class people as prices for basics—home heating oil, gasoline, health care, and food—have soared. In the United States, where the victory of shareholder capitalism has been extreme (as opposed to stakeholder capitalism in which workers, communities, and the public are also considered interested parties whose views and needs must to a greater extent be taken into consideration), workers have been squeezed the hardest.

During the Bush presidency, the United States lost one in five manufacturing jobs and that too is part of financialization and globalization. Wages have been pushed down, pension benefits curtailed, health care burdens shifted onto workers and their families, employees made to work part-time or fired and hired back as "temporary" workers, and so on—all in order to meet profit targets and to finance the huge debts companies are burdened with as a result of widespread borrowing to finance takeovers. More people are working part-time or as temporary workers and are pessimistic about the prospects of their children. They see their government captured by the corporations and the wealthy.

Widespread popular pessimism is justified because three trends interact to make the prospects of the majority of U.S. workers bleak. The first is continued globalization of the production of goods and services to lower-wage venues. Less skilled work can be done more cheaply elsewhere. Further, no amount of education can preserve many jobs that can be done by well educated workers in India, China, Eastern Europe, and elsewhere. Second, technology increases output per worker, meaning that each worker can produce more, and when demand for output does not expand faster than their productivity, fewer workers are needed. We see this in basic industries such as auto and steel that once employed far more production workers. Third, the jobs that are expanding are mostly low paid, nonunionized McJobs. Furthermore, the unrelenting attack on unions starting with Ronald Reagan's destruction of the air traffic controller's union set the precedent for using replacement workers to break strikes, not to mention the ability of owners—thanks to National Labor Relations Board connivance—to fire workers.

Anglo-American expertise in finance was presumed to be the lever that would ensure the continued prosperity of these economies. Having pioneered the growth of financialization in their own economies, promoting growth through the creation of vast amounts of debt, and forcing its financial regime and rules on the developing world through the mediation of the International Monetary Fund and World Bank, capital has been expanding financial operations into the so-called emerging markets. Now we see a meltdown on Wall Street and the irony of foreign sovereign wealth funds and other investors having to rescue the pillars of the U.S. financial empire. How should we understand these contradictory developments? This is a political question. It needs to be answered like any other economic matter in which a small elite benefit at the expense of the many. Its solution should not be how to allow them to continue to do so but how to force social regulation so they cannot do so.

It is here that the loyal opposition, in the United States the Democratic Party, in Europe the social democrats, and third-way triangulators everywhere, by essentially accepting the power of capital, lose the respect of working people, who now must self-organize by creating anticapitalist parties if they are to defend their interests and change the social relations that promise only a future of further exploitation. In Die Linke, the German party formation far to the left of the Social Democrats, we see a successful example of such a party, which is becoming a force in that country's politics. As noted later in this essay, in Latin America, the continent with the longest experience with the devastation of neoliberalism, the masses have supported a variety of left parties that promise to one degree or another to break with capitalist social relations.

Crisis Two: U.S. Imperialism—Losing Hegemony

There have been two recent failures of U.S. imperialism: the discrediting of the neoliberal Washington Consensus and the revulsion against the shock and awe violence of Washington's arrogant militarism. The growing condemnations qualify, I think, as a crisis for the continued easy exercise of hegemony and for the ruling-class presumption that it has the capacity unilaterally to run the world. After the failures of Iraq and Afghanistan, the hubris of the Bush neocons has been discredited and their program of wars and conquest has been questioned and perhaps now rejected by most Americans.

One faction of this ruling class has seen international trade and finance regimes favoring U.S. capital as key. The other wing has been quick to threaten and take military action to reassert and impose U.S. hegemony. The U.S. ruling class always employs both strategies, but the balance between the two shifts with the state of the world and domestic politics.4 The two dominant ideological factions of this class can be characterized by looking at the most powerful cabinet figures and policies of two recent presidents. The key figure in Bill Clinton's administration was Robert Rubin, the secretary of the treasury. Under Bush, Donald Rumsfeld, the secretary of defense was the most powerful.

Of course, the dominant figure in the administration is Vice President Cheney, a man of incomparable devious devotion to an imperial presidency and the rewarding of a small elite, willing to use whatever means necessary to intimidate and destroy opposition at home and abroad. With Clinton, although the projection of U.S. power and use of violence were important, the spreading of the Washington Consensus was the key foreign policy. Under Bush it was shock and awe. Today both strategies are proving unsuccessful to a remarkable extent. The failure of the Washington Consensus to bring development is widely recognized, and despite its imposition on dozens of countries in the 1980s and 1990s, it is now being effectively resisted around the world. Again, this is not to say that both policies have not done and continue to do great damage.

Let me comment briefly first on U.S. militarism and then more fully on the demise of the Washington Consensus. Americans were led into a war in Iraq on the basis of lies and are now unconvinced that the attack on Iraq was a good thing. There is a dawning understanding that the United States not only lost Iraq but that the situation in Afghanistan is further revealing an inability to occupy and enforce regime change and imperialist stability. The increased awareness that such adventurism is bankrupting the country while domestic priorities like health care and jobs with adequate pay need to be the priority is challenging imperial America from within to an extent not previously seen.

Many Americans may still support the assertion of national power in easy victories over weaker "enemies," but they have had their fill of long, drawn out, costly misadventures. For many, the charade of "Mission Accomplished" has produced reactions ranging from unease to hatred of those who think them stupid and so easy to manipulate. U.S. imperial ambitions in Iraq have led to much elite soul searching, and they have promoted popular opposition not only abroad but increasingly at home where the claim to be spreading democracy and fostering development are wearing thin. Globally these pretenses are thoroughly discredited. The decline of U.S. credibility and hegemonic power is a major part of what is new in the world system.

Last year on the tenth anniversary of the East Asian financial crisis, two points were widely made. The first was the acknowledgment that capital market liberalization had brought instability and not growth. Even studies by International Monetary Fund (IMF) economists came to this conclusion. A paper coauthored by the chief economist of the IMF concluded that it is difficult to make a convincing connection between financial integration and economic growth once other factors are taken into account. The sudden stop of capital inflow can be devastating. Second, neoliberal policies were hardly mistakes. It is clear that neoliberal ideologues and Wall Street interests pushed policies that harmed debtor countries while the financiers profited from financial liberalization. It is not only radical leftists who now hold this view.5

What took place in countries forced into accepting Washington Consensus neoliberal policies was a process of accumulation by dispossession—a construct introduced by David Harvey.This is a process in which working people are divested of their assets and their rights. He has in mind the privatization of water, health care, and education, goods that had been or should be entitlements. The sale of these things in private markets dispossessed those who could not afford what should have been theirs by right. The term is a propos of what has happened in the aftermath of financial crises. Global state economic governance institutions have imposed structural adjustment programs and conditionalities that, in privatizing public goods, dispossess people through debt repayment, the loss of government benefits, and the liberalization of the local economy to the benefit of foreign investors and domestic elites.

When the United States got in trouble in 2007, Washington rescued financial institutions, rather than imposing the harsh medicine it advocated and forced on others. Instead, it lowered interest rates and bailed out those responsible for the crisis. Moreover, after decades of denouncing the unsophisticated banking structures and practices and crony capitalism of the third world, the United States financial system was revealed as incompetent. The presumed sophistication of bank risk-assessment models were shown as so much hogwash. The dishonesty revealed in the subprime market was far more extensive than anything found in any developing nation. Rather than letting the value of financial assets find their equilibrium level in transparent markets, the U.S. Treasury tried to organize a cartel to prevent this process and to shore up the housing market and save the collateralized debt instruments from collapsing, much at odds with what the Treasury Department had recommended to others. As Martin Wolf wrote, "Not for a long time will people listen to U.S. officials lecture on the virtues of free financial markets with a straight face."6 Of course, countries like South Africa are left with heavy debt burdens and the neoliberal policies embraced by the Mbeki government, while the United States itself follows far different policies.

One impact of this unmasking of the interests that benefited from the Washington Consensus policies was a rush by Western leaders to invite the now more significant developing countries to take a greater role, to be given greater voting rights, and to exercise more power in the Bretton Woods institutions. By 2007, when the developing economies were accounting for a far larger share of the world economy and many were growing significantly faster than the richer economies that had long dominated these regimes, we began to hear statements such as the one from Mervyn King, governor of the Bank of England, that the IMF could "slip into obscurity" without radical reform.7 That the developed countries with 15 percent of the global population hold 60 percent of the voting power at the IMF and World Bank is perhaps finally no longer in their own interests.

On the diplomatic front, there have been proposals to broaden the G-8. Philip Stephens, the chief political commentator of the Financial Times, proposes expansion to a G-13 by adding the IBSA countries (India, Brazil, and South Africa), along with Mexico and China. The idea of such expansion according to World Bank President Robert Zoellick is that they are being invited to become "responsible stakeholders."8 It may be that the reorganization of the world economy is producing a more inclusive transnational capitalist class with a global interpenetration of ownership most prominently through sovereign wealth funds but more commonly through a diversification of ownership on a global scale and the increased interaction among elites.9

At the same time, discontent with growing inequalities and the arrogance of capital, local and foreign, has created local movements for fundamental change and awareness through venues such as the World Social Forum that another world is possible. There are conflicting pressures on the governments of the South, from capitalists at home, the masses below, and governments and international agencies representing foreign capital above. While there is at the moment the expectation that these governments will generally throw their lot in with the traditional imperial powers, there has been increasing popular pressure against this.

There is of course the likelihood that financialization centered in the North will continue to grow in the countries of the South, with banks and other financial institutions (many foreign-owned) appropriating a larger slice of the surplus. Such a repetition of the historic pattern of the penetration of imperialist finance in these countries will undoubtedly produce new and more severe crises and once again the people will have to bear the cost. The alternative would have to be a fundamental shift to social control over capital. We will have to use what we have learned in opposing neoliberalism to say no to the growth of high-risk finance and its depredations.

On the positive side, some third world governments have shifted in a progressive direction, sometimes in an effort to strike a better bargain for local capital, sometimes because of genuine commitment to a social agenda, and often as the result of a compromised tension between the interests at stake. In Latin America, after periods of military rule and neoliberal policy dominance, Mercosur under Brazilian leadership has put a crimp in the U.S. attempt to form a Free Trade Area of the Americas. As a single market, it is the world's sixth largest economy. With 260 million people and a combined Gross Domestic Product of over four trillion dollars, it represents a formidable development.

The more radical Bolivarian Alternative for Latin America (ALBA) promotes not only regional solidarity but social transformation based on socialist goals and ideals. In 2007 the Mercosur and ALBA countries created a Banco del Sur (Bank of the South) to offer an alternative development finance instrument premised on solidarity and totally rejecting Washington's thinking and controls.10 Some of the member countries have withdrawn from the IMF and the World Bank. The Banco del Sur operates on a one country, one vote principle and, building on the Venezuelan Bank for Economic and Social Development priorities, favors cooperatives and community ownership, offering below-market interest rates to public and social enterprises. With a proposed capitalization of seven billion dollars, it represents a serious challenge to the U.S.-controlled Bretton Woods Institutions as well as the Washington-dominated neoliberal Inter-American Bank.

The changes in the region have been dramatic as leftist governments have come to power. In 2005 South America accounted for 80 percent of IMF outstanding loans. Today the region's borrowing accounts for less than 1 percent of the IMF global loan portfolio. Along with the Banco del Sur there is talk of a regional monetary system so that bilateral trade can take place in domestic currencies with a goal of eventually creating a common currency for the region.

Social movements are pushing the Banco del Sur to take a more grassroots approach, to reject mega infrastructure (as pushed by Brazil) that supports monocultures including agrofuels, and instead finance local infrastructure to support food and energy sovereignty, produce generic medicines, and extend membership to other countries of the South. Such formations—always a mix of transformational and reformist elements—illustrate important historical momentum. The failures of the Washington Consensus and the increased strength of alternative centers of power, both of the left and the national-developmentalist right, are reshaping the global political economy. Also significant is the great weakening of the U.S. dollar—its former strength having been both a result and a source of U.S. power.

We are now witnessing the loss of what Charles DeGaulle once called the "exorbitant privilege" of the United States, derived from its role as issuer of the international currency. George Soros, speaking to the World Economic Forum in January of 2008, suggested, "It's basically the end of a sixty-year period of continuing credit expansion based on the dollar as the reserve currency."11 The advantage the United States has enjoyed by being able to borrow in its own currency has been undercut by abuse, outsized current account deficits, and the buildup of dollars in foreign hands. This has progressed to the point where the money creation and lower U.S. interest rates implemented by the Federal Reserve to stave off financial collapse have driven down the currency's value and encouraged further flight from the dollar.

Given the dollar's serious decline, there would be fear of free fall if not for the fact that it is not easily replaceable in the short term. While at present about a quarter of the world's monetary reserves are in euros and two-thirds are held in U.S. dollars, there are predictions from respected sources that the euro could be a more important reserve currency than the dollar within a decade. These predictions are based on rising inflation in the United States, its large current account deficits, the costs of imperial overreach, and simulation models by leading economists.12 Of course, the economic situation continues to deteriorate everywhere; at this writing Europe is facing severe economic problems, and there is a slow down in the "emerging economies" suggesting a larger crisis than has heretofore been acknowledged. A renewed strength of the dollar could be a reflection of greater trouble elsewhere rather than economic recovery in the United States.

Finance capital has expanded in parasitic form. Not only have the masses in the South suffered but the working people of the rich countries are now being told they must bail out "their" banks and other financial institutions. The class component of this redistributive model is becoming more apparent. As the international political economy becomes more multipolar U.S. hegemony will increasingly be challenged in other areas in addition to the currency issue.

Crisis Three: The New Centers of Power

Let me turn then more broadly to the world historic phenomenon of the rise of non-Western economic and political players. In 2006, for the first time, emerging markets accounted for over 50 percent of global output. If they continue to grow at the rate they have, forecasts project a very different world by mid-century. Their rise will, I expect, prove as significant as the emergence in the late nineteenth century of Germany, Russia, and Japan. A 2006 study by PriceWaterhouseCoopers projected that in the year 2050 the Chinese economy would be almost as large as that of the United States in dollar terms, and that India would be the third largest. A year later Goldman Sachs researchers predicted China would pass the United States in 2027 and India's economy would become larger than that of the United States before 2050. Investment bankers predict Brazil's economy in 2050 will be as large as Japan's, and the Indonesian and Mexican economies will be larger than those of the United Kingdom and Germany.

PriceWaterhouseCoopers' researchers expect the "E-7" (Brazil, China, India, Indonesia, Mexico, Russia, and Turkey) will be about 25 percent larger than the current G-7 and will be driving the growth of the global economy. Whatever one may think of the details of such projections, there is little doubt that momentous changes in relative nation-state economic standing are in the offing. The role these new economic powers play in the international political economy will matter significantly. Whether they will be prone to new crises brought on by increased financialization of the sort now plaguing the United States will also be important. Greater financialization and fragility creates new dependencies and therefore new possibilities for global crisis.

The importance of China is hard to overstate. It has already made advances in a number of parts of the world. For example, at its recent summit with forty-eight African leaders, Hu Jintao pledged to double assistance to the continent, cancel debt owed by thirty-three countries, and provide five billion dollars in concessional loans and credits. The Chinese president has also been traveling in Latin America, which is increasingly orienting its trade to Asia. Other developments in Asia, such as the move by the region's finance ministers toward creating a common currency, also have major implications for the dollar.

In Asia itself there are major historical changes underway. A recent Foreign Policy essay begins: "Northern Asia is in transition. After 60 years of U.S. domination, the balance of power in the region is shifting. The United States is in relative decline, China is on the ascent, and Japan and Korea are in flux. The implications for Washington are profound."13 What has been called a "Beijing Consensus" based on respect for sovereignty and mutual economic benefit is widely appealing as an alternative to Washington's version of spreading democracy and the "free" market by cruise missiles and economic threats. Nonetheless, China is an exploitative power repressive to its working class. It is a transitional capitalist economy in which the children of high party officials have appropriated the social wealth as a result of the defeat of socialism.

The point is not that these emerging state powers are progressive but rather that a multipolar world offers other countries some space they did not have when U.S. hegemony was unquestioned. There is emerging what Conn Hallinan calls a "consortium of convenience,"14 the drift toward a partnership among China, India, and Russia, which, if it matures, could shift global power from Washington. Russia is selling advanced military systems to both India and China and cooperating on energy. Daniel Drezner, writing in Foreign Affairs, the publication of the establishment Council on Foreign Relations, describes "a coalition of the skeptical," which includes states ranging from Argentina to Pakistan and Nigeria, and a revitalization of the nonaligned movement in an anti-Americanism that is taking on renewed salience.15 It is possible then that we are entering a period where there will be more room for progressive states to maneuver.

The need for access to energy on the part of India and China is a factor in the Shanghai Cooperation Organization (SCO) formed in 2001, which includes China, Russia, and the "stans" (Uzbekistan, Turkmenistan, Kyrgyzstan). India has joined SCO and Iran, Pakistan, Mongolia, and Afghanistan have been given observer status. (The United States was pointedly denied observer status.) The SCO has declared that the United States should leave the Middle East and is emerging as a counter to NATO.16 While a country like India plays all sides in global maneuvering, it has invested tens of billions in gas and oil interests in Iran. Such actions, driven by the need for energy supplies, impact the prospects for U.S. violence toward Iran and the future of U.S. military bases in Turkmenistan, Kyrgyzstan, and Azerbaijan. China, which in a few years will be the biggest consumer of energy in the world, has been exceedingly active all over the planet in search of energy supplies and indeed other commodities.

There is as well the emergence of a new "Seven Sisters," a term Enrico Mattei coined to describe the seven Anglo-American companies that controlled oil in the Middle East after the Second World War. Today it is not ExxonMobil, Royal Dutch Shell, and the others but Russia's Gazprom, CNPC of China, Venezuela's PDVSA, Brazil's Petrobras, Saudi Aramco, and Petronas of Malaysia that are the seven giant producers. Resource nationalism is likely to grow in importance as these state-owned companies squeeze the Anglo-American companies to force additional concessions. The politics of the new Seven Sisters is, of course, diverse; the Saudis, a staunch U.S. ally, are the most powerful. That Venezuelan oil is controlled by the Chávez regime, which is trying to lead the nation toward a twenty-first century socialism, is an important development, as are new nationalizations in Ecuador, Peru, and Bolivia. Putin's takeover of Gazprom symbolizes a reawakened Russian bear.

Crisis Four: Resources and Sustainability

The final and perhaps greatest crisis is that of the availability and distribution of such critical resources as oil, food, and water. The sustainability of human life is simply not consistent with inherently wasteful capitalist growth.

The International Energy Agency's World Energy Outlook tells us that 50 percent more energy will be needed in 2030 than in 2005 (after adjusting for efficiency improvements) and that almost three-fourths of this increased demand will come from developing countries, with China and India alone responsible for 45 percent of the increase in demand. After 2015, China is expected to be the planet's biggest carbon dioxide emitter, ahead of the United States, followed by India as the third largest emitter. (Other studies show China is already the biggest contributor of greenhouse gases.)

There are two political issues of some significance here. The first is that the United States and other rich countries have used the lion's share of the world's resources for a long time. Social justice requires not simply that the developing countries help ration future use of nonrenewable resources but that those who have long overconsumed bear a greater than proportionate share of the cost of such a transition. Second, there must be new patterns of human development premised on ecological concerns as well as social justice and these must take a more prominent place in the work of international councils, which now seem to accept that the only important thing is terrorism. A sixth of the world's population enjoys an energy-intensive lifestyle. As the numbers aspiring to this type of consumption grows, the planet's problems will increase. The American Dream will become much more expensive and finally unsustainable. It cannot be widely shared along present production and consumption patterns. Not only are billions of people not benefitting from global capitalism, but those who do are adding pressure to the resource base of the planet.

Today a quarter of all deaths in the world have some link to environmental factors and most of the victims are poor people who are already vulnerable due to malnutrition and lack of access to medical care. Malnutrition is likely to become a more serious issue as food prices continue to rise. Seventy-five percent of the world's poor people are rural and most of them depend on agriculture. Since it is hard for them to make a living, there is massive migration to the cities of the developing world. A billion people now live in the slums of these growing cities where they scavenge a living or eke out a marginal existence as street vendors. Agronomists tell us that almost every country in the world has the soil, water, and climate resources to grow enough food for its people to have an adequate diet.17 However, this would require serious land reform and technical and financial support. In very few places are such policies practiced, and food insecurity is said to affect close to half of humanity.

On the more hopeful side, we are seeing countries reject the World Bank's insistence that they not subsidize agriculture. Malawi, which for years hovered at the brink of famine, with five million of its thirteen million people needing emergency food aid after a disastrous 2005 maize harvest, decided to subsidize its poor farmers and was soon exporting hundreds of thousands of tons of maize thanks to the help it gave the farmers, whose yields grew dramatically. The United States, while willing to provide food aid from its agricultural surplus (grown with huge federal subsidies to U.S. farmers), refuses to assist farmers in poor countries. Even as it insists that they follow the free market, the United States undermines the ability of third-world farmers to compete by dumping free or low-cost agricultural exports in their countries.

There is a growing use of maize to produce ethanol and soy beans for diesel fuel, as well as an increased desire of large numbers of the newly affluent to consume meat. Increasingly, grains feed animals and not people. China's average caloric intake from meat consumption, for example, has doubled since 1990, and given that it takes ten pounds of grain to produce one pound of pork and double that for beef, such a growing demand has consequences for those who find the staples of life becoming too expensive for their own survival. The food-price index computed by The Economist magazine went up by 30 percent in 2007 and will go up by far more in 2008. Indeed, the United Nation's World Food Program issued an extraordinary emergency appeal on March 23, 2008, to governments to increase their collective donations by at least a half-billion dollars to fund the higher cost of their feeding seventy-three million people in close to eighty countries. They noted a 20 percent jump in food costs in just three weeks along with the impact of the increase in oil prices on shipping costs. Grain prices are rising at an annual rate of 80-90 percent. Rice prices surged 30 percent in one day in late March 2008, having doubled in the less than three months since the start of the year, provoking protests among the poor in some Asian countries where rice is a dietary staple.

At the same time, what has been called the American diet of refined white flour, corn sweeteners, and corn-fed animal fats is replacing traditional diets for too many of the world's people. Refined sugars create obesity and promote diseases such as diabetes by replacing the complex nutrients of traditional foods. The uncontrolled profit motive is destroying health and increasing medical costs dramatically as it poisons its customers with adulterated and unhealthy foods. Each of these broad areas of crisis is brought about by the normal activities of capitalists in a system that accepts the right to profit at virtually any cost. The mass media and the political system strive at all times to keep the public from understanding the heavy burden on global humanity that these systemic priorities impose.

Conclusion

In my remarks I have stressed four areas of crisis of the contemporary world system: the financial crisis, the loss of relative power by the United States, the rise of other centers of accumulation, and resource depletion and ecological crisis. The U.S. strategy remains to project military power to control oil and other resources. The other wing of the eagle is relying on appropriation of surplus through financial vehicles, but this hardly exhausts its tactics. It also demands the enforcement of protected monopoly rents by international patent and licensing regimes to protect intangible property rights, from Microsoft Windows to Big Pharma claiming ownership of the human genome. The extension of property rights and the enclosing of the scientific commons need to be (and are being) opposed by developing countries, which pay exorbitant licensing fees and are not allowed to use what in the past would be common knowledge inheritance.

Just as high-risk finance needs to be limited and socially controlled, science should be liberated so that technological progress is not artificially constrained and monopoly rents cannot be demanded. For the developing world, the strategies of both wings of the imperial eagle have been exposed.

The Washington Consensus has been discredited, and although the damage it causes continues, it has not achieved Washington's goals. There has been a uniting of much of the world into a coalition of the unwilling. If serious left-wing governments took power in many countries of the South, there could be dramatic reconstruction of the global political economy. However, those who now run these countries are hardly revolutionaries. We can expect elements of collaboration, cooperation, and contestation depending on what pressures these elites are subject to. A progressive South Africa could help shape an alternative to the Anglo-American capitalist world system and influence new centers of power that claim to represent the interests of the Global South and someday may have governments that actually do so.

Notes
1. This section draws on William K. Tabb, "The Centrality of Finance," Journal of World-Systems Research, XIII (2007), 1.
2. Martin Wolf, "Unfettered finance is Fast Reshaping the Global Economy," Financial Times (June 18, 2007).
3. John Bellamy Foster, "The Financialization of Capitalism," Monthly Review (April 2007): 1.
4. William K. Tabb "The Two Wings of the Eagle," in John Bellamy Foster and Robert W, McChesney, eds., Pox Americana: Exploring the American Empire (New York: Monthly Review Press, 2004).
5. Kenneth Rogoff, Eswar Prasad, Shang-Jin Wei, and M. Ayhan Kose (2003) "The Effects of Financial Globalization on Developing Countries: Some Empirical Evidence," http://www.imf.org/research.
6. Martin Wolf , "Why the Sub-Prime Crisis is a Turning Point for the World Economy," paper presented at the Globalisation and Economic Policy Centre, Nottingham University, March 5, 2008, http://globalisationandeconomicpolicy.org. The Powerpoint presentation, which is available on the Web, has a number of useful graphs and tables.
7. Krishna Guha and Chris Giles, "IMF wants more say for rising economies; Asian countries would have greater influence," Financial Times, April 5, 2008.
8. Philip Stephens, "A Table for Thirteen," Foreign Policy (January/February, 2008): 65.
9. Willaim K. Tabb, "Globalization Today; At the Borders of Class and State Theory," Science & Society (January 2009).
10. Mark Engler "Latin America Banks on Independence," In These Times (February 2008): 43.
11. Craig Karmin and Joanna Slater, "Dollar's Dive Deepens as Oil Soars," Wall Street Journal, February 29, 2008.
12. Jeffrey Frankel, "The Euro Could Surpass the Dollar Within the Next Decade," (March 18, 2008), http://www.voxeu.org. 2008.
13. Jason T. Shaplen and James Laney, "Washington's Eastern Sunset; The Decline of U.S. Power in Northeast Asia," Foreign Policy (November-December 2008): 82.
14. Conn Hallinan, "Challenging a Unipolar World," Foreign Policy in Focus, January 21 2008, http://www.fpif.org/fpiftxt/4904.
15. Daniel W. Drezner, "The New New World Order," Foreign Affairs (March/April 2007).
16. William K. Tabb, "Fumbling Through the Great Game in Eurasia: the British and U.S. spreading ‘Freedom' through Invasion, Occupation, and Regime Change," Z Magazine (November 19, 2006).
17. Fred Magdoff "The World Food Crisis," Monthly Review (May 2008)

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From:	Z Net - The Spirit Of Resistance Lives
URL:	http://www.zcommunications.org/znet/viewArticle/19135