Tag Archives: karl marx

The 1% won a counter-revolution while we played. We forgot that we are America’s crew, not passengers.

Summary: Now inequality has become too extreme to ignore and the 1% has crushed all opposition, we begin to see the results of their successful counter-revolution. But we do not yet see the hidden struggle that brought the 1% back to power, and cannot yet see how to reform America. Until we see these things others will control our future. Here’s a first step to doing so, stepping outside the approved narrative to see America.

The Universe was 5 miles long, and 2,000 feet across. Men scoffed at the legends of such things as stars, or the demented idea that the Ship was moving… for the Ship was the Universe, and there could be nothing outside. Then one man found his way into a forgotten room, and saw the stars – and they moved…

— Summary of “Orphans of the Sky” by Robert Heinlein (1951), one of the first stories about a generation ship traveling to the stars. Like them, we are a crew on an endless journey — who have forgotten who we and where we are.


Somewhere in our future lies the Third Republic

(1)  A recap of the plot so far

During the long halcyon days of the post-WW2 summer America forgot about economic/social classes — and their cousin, social mobility. The reforms of the New Deal, the post-WW2 social programs (especially the GI bill, the ample funding to education (from primary to graduate-level), the civil rights legislation, and sustained growth of GDP and wages — these fertilized the rise of a middle class and provided a modest degree of social mobility.

We came to consider that social order to be our due as Americans. We came to consider the America of the post-WWII era as the true America — not what it actually was, a hard-won victory after generations of oligarchy.

All this culminated with the long boom — the debt-fueled expansion from 1982 – 2000, the fall of the Berlin Wall in 1989 and the late 1990’s tech boom. America was exceptional, a new moment in history. Marx became a comic figure. “The only Marxists live in Berkeley and Albania.”

We forgot the century-long struggle that laid the political foundations for the middle class, a slow low-violence revolution.  That meant we forgot that this was an unnatural state requiring work to maintain. We forgot we were the officers and crew of America, not passengers on the Love Boat.

But not everybody was happy with summer, and the core New Deal and civil rights reforms with made it possible.  They planned a counter-revolution. They had patience, long-vision, and vast resources.

(a)  Starting with Goldwater, the Republican Party’s “Southern Strategy” slowly returned the antebellum ideologies of racial separatism, States Rights, etc — to break the New Deal coalition, forging an instrument to wage the counter-revolution. There was no plan, just a “run to daylight” strategy of exploiting the internal contradictions and discontents that triumphant liberals had allowed to develop in their coalition.

(b) The Powell Memorandum: Sent by Lewis F. Powell, Jr. on 23 August 1971 (2 months before his nomination to Supreme Court) to Eugene B. Sydnor, Jr., Chairman of the Education Committee of the U.S. Chamber of Commerce. Titled Attack On American Free Enterprise System, it outlined a strategy for large corporations to rollback much of the New Deal reforms on business and crush the unions (perhaps the key brick in the New Deal coalition and the middle class structure).

(c) The article creating the mythology of tax-cuts as the magic elixir: “Taxes and a Two-Santa Theory“, Jude Wanniski, National Observer, 6 March 1976

(d) In his 14 July 1978 testimony to Congress (9 years before becoming Fed Chairman), Alan Greenspan first described the “starve the beast” strategy: “Let us remember that the basic purpose of any tax cut program in today’s environment is to reduce the momentum of expenditure growth by restraining the amount of revenue available and trust that there is a political limit to deficit spending.”

The great New Deal coalition built a new America. But the flower children of the boomer generation forgot that they were in a vessel. They thought they were frolicking in a meadow. Their political activism was limited to groups working to benefit themselves — such as ending the draft, opening the work world to women, rights for gays. These are issues the 1%, as a class, don’t care about. Nobody bothered with the boring work of staffing the engine and control rooms, and running the ship.

Continue reading

Let’s reflect on the course of the US economy. Not a pretty picture.

Summary: The monthly employment report provides the opportunity to look at the New America being built on the ruins of the own. While seldom remarked, it clearly appears in the data. Also, we take a moment to reflect on the purpose and operation of the FM website.

Better days are here, for some of us.

“Big industry constantly requires a reserve army of unemployed workers for times of overproduction. The main purpose of the bourgeois in relation to the worker is, of course, to have the commodity labour as cheaply as possible, which is only possible when the supply of this commodity is as large as possible in relation to the demand for it …”
— Marx (1847, unpublished work)

“Taking them as a whole, the general movements of wages are exclusively regulated by the expansion and contraction of the industrial reserve army …”
— Marx, Das Kapital (1867)

One of the goals of the FM website is too provide its readers with a different perspective on events.  We do this by presenting information, reporting expert analysis, and the occasional prediction. Hopefully this helps you see our complex and changing world more clearly than relying solely on mainstream sources.

Looking at the economy shows how this works. For the past 3 years I have shown that the widespread claims that the recession had not ended were false. I predicted that forecasts of an imminent return to post-WW2 average growth were likewise false.

The monthly employment reports show this alternative perspective at work in another way. Each month brings a tide of forecasts.  Boom!  Bust!  And analysis of the report is similarly dramatic. That’s how newspapers are sold and website traffic grows. It is, however, quite fallacious. Each month we duly and dully report that nothing has changed. Just more slow growth. As seen in this graph of monthly percent changes in the number of jobs (YoY, NSA). Steady, slow:

FRED: CES-short


As usual, let’s put this in a longer-term context. Job growth has stabilized at an unusually low level. Also note how the business cycle was tamed after 1982. The magic ingredient: rapid debt growth. Being used today, but most aggressively by the Federal government. Without this fiscal stimulus we probably would look like Europe, and there would be fewer stories about America Ascendent.

Continue reading

Krugman discovers the Robot Revolution!

Summary:  One of the great challenges of the 21st century will be managing the next wave of automation. This rise in productivity can make us richer, create feudal-like inequality, or spark massive social conflict. The result depends on our decisions. The first step, as always is problem recognition. Today we took another small step forward.



An increase in the productivity of labour means nothing more than that the same capital creates the same value with less labour, or that less labour creates the same product with more capital.
— Karl Marx, Notebook IV of A Contribution to the Critique of Political Economy (1857/58)

Slowly more people become aware of the coming Robot Revolution, the next wave of automation. Now it’s Paul Krugman’s turn: “Rise of the Robots“, New York Times, 8 December 2012:

On the other hand, it’s not good news for workers! This is an old concern in economics; it’s “capital-biased technological change”, which tends to shift the distribution of income away from workers to the owners of capital.

Twenty years ago, when I was writing about globalization and inequality, capital bias didn’t look like a big issue; the major changes in income distribution had been among workers (when you include hedge fund managers and CEOs among the workers), rather than between labor and capital. So the academic literature focused almost exclusively on “skill bias”, supposedly explaining the rising college premium.

But the college premium hasn’t risen for a while. What has happened, on the other hand, is a notable shift in income away from labor:

Krugman, NYT, 8 Dec 2012

Krugman, NYT, 8 Dec 2012

Continue reading