Saturday, December 27, 2008



We Will Do Everything in Our Power to Help

President Bush in an interview just this last week said that on September 28, 2008 his own Secretary of the Treasury came to him in great alarm and said: “the credit markets are frozen! If we do not give them a massive bailout of cash, we may face a depression, a greater depression than the Great Depression.” This was the Phi Beta Kappa, Republican, former head of Wall Street’s Goldman Sachs talking, not some radical Marxist, and it was our first main stream signal that something was drastically wrong with our capitalism. With full support of our entire political and economic leadership, Congress quickly voted $700 Billion and gave $350 Billion to Secretary Paulson to spend immediately. What he did with it, he refuses to say, but the fact that we can all observe is that it did nothing to help us or to help the economy. The additional Billions that were given before and since have not helped either. Millions and millions of us are facing the pain of economic downturn and nothing has helped us. All of us are scared. We wait breathlessly for January 20 when President Obama can do something to help. Today he promises to spend $400 Billion to create 4 million jobs although many more than that have already been laid off.

The entire main stream political and economic establishment including the departing President and the incoming President and his main stream advisors are desperately seeking to get things going as they were before September 2 8, to restore the fragile bubble economy that then existed. Although Obama promises some direct aid to the unemployed, poor and hungry, Obama’s main strategy as suggested by his choice of advisors is to restore our trickle down economic system

Even Paul Krugman wrote in the NYT on December 22:

“The prosperity of a few years ago, such as it was — profits were terrific, wages not so much — depended on a huge bubble in housing, which replaced an earlier huge bubble in stocks. And since the housing bubble isn’t coming back, the spending that sustained the economy in the pre-crisis years isn’t coming back either.”

Even some in the labor movement do not want a new bubble:

NYT columnist Bob Herbert wrote on December 20:

“As Andy Stern, president of the huge Service Employees International Union, told me on Friday: ‘We’ve had a 25-year experience with market-worshipping, deregulating, privatizing, trickle-down policies, and it has ended us up with the greatest economy on earth staggering, and with the greatest amount of inequality since the Great Depression.’”

Our capitalism is not just “staggering.” It has crashed and nobody can rebuild or restore it. It has mutated into its final terminal stage as capitalism. It can further mutate into an authoritarian government joined with a system to benefit the powerful, but not as capitalism.


So far as we can tell, all of the current mainstream advisors, including those that Obama has chosen, are monetarists, being intellectual disciples of Milton Friedman. Monetarism has produced fabulous profits for the very wealthy, but it has served the rest of us poorly even before September 28. Since the crash of capitalism, it will not even serve the very wealthy in terms of keeping capitalism going.

Monetarism has at least 4 basic express ideas:

1. Capitalism is basically a stable economic system that serves all of us rich and poor.
2. The occasional ups and downs of capitalism can be handled by adjusting the interest rate and the money supply.
3. A really serious down turn can be controlled by a massive injection of public money into this stable capitalism, supplied by us taxpayers.
4. There are no structural or systemic defects in capitalism.

There are also some implied assumptions that do not fit the real world:

1. A rising tide lifts all boats with substantial fairness
2. There are no irreconcilable conflicts of interest between the rich and the poor, between capitalism and democracy or between the interest of employers and the interests of employees.

Now that a major crash is upon us, one that threatens to drop us into a “depression worse than the Great Depression,” the Wall Street strategy to avoid this disaster is, guided by the monetarists, to give more an more money to the major banks with the idea that these banks and their subsidiaries will then extend more credit to employers who will create more jobs, paying existing or lower wages, so that after all of this trickle down, employees will have enough purchasing power, augmented by their own new loans and credit cards, to start another bubble. Wall Street loves bubbles. Bubbles make Wall Streeters very rich so long as the bubble works. The main product of Wall Street banks is credit…to fuel the economy with loans bearing interest paid back for the enrichment of Wall Street banks. Hence, Wall Street seeks to restart capitalism with some sort of a new bubble. Due to Wall Street’s massive contribution of dollars to our elected officials, no other strategy is being considered. The trouble is there are no new bubbles on the horizon. We do not want a new housing bubble, a Silicon Valley stock bubble, or a bubble that would have Detroit turning out more massive SUVs. We do not want to increase the already massive disparity of income between the very rich and the rest of us. Another trouble is that the amount of actual purchasing power that trickles down is too little, and too late.

The mainstream monetarists are very bright. The problem is neither lack of intelligence nor stupidity by mainstream advisors. Robert Rubin, Ben Bernanke, and Henry Paulson are each members of Phi Beta Kappa. The mainstream economic advisors have chosen to use their intelligence to keep existing capitalism going and to make themselves rich by devoting their lives to serving the interests of the very rich. They have chosen to deny the existence of structural defects in capitalism.


Capitalism has always had this fatal flaw that some are now calling a “systemic defect.” This is the defect noted by capitalist Henry Ford in the 1920’s and first enunciated 150 years ago by Karl Marx. Capitalists do not pay their employees enough salaries and wages so that employees can buy the products that they produce. Capitalism is thus inherently unstable. The necessary purchasing power can be maintained temporarily by foreign investment, government purchases for defense, wars, and Homeland Security, by borrowing and credit card financing, but we have reached the limit. Neither we, nor corporate businesses can borrow more. We cannot pay higher taxes so as to further fund a fragile capitalism that has died for want of purchasing power.

The main stream has applied every possible “band-aid” to capitalism, and it is still trying find other props. Most of us have supported those efforts. Most of us knew of no alternative. The difficult truth is that the inner dynamic of capitalism in its mature mutation, has caused its terminal illness, its final crash. Neither All the King’s men in “Humpty Dumpty,” nor President Obama will be able to put it together again. The reason is that nobody in the political and economic main stream has yet publicly acknowledged this systemic defect. Nobody is publicly dealing with it, or even hinting at its existence. Everybody recognizes that our capitalism depends for its survival on consumer purchasing power, but few want to face up to the systemic defect that causes the absence of purchasing power. Painful and disagreeable though it may be we must face up to and deal with this systemic defect.

Capitalism, our “mother” also has much influence on us now. It feeds all of us. Every one of us is dependent on capitalism for our survival. We think we have no other choice. Whether we are employees of business, non-profits, the media or universities, we are fed by this “mother.” Even if we are self-employed, we are dependent on the income of employees for our income. We are not and can never again be hunter-gatherers, or self-sufficient farmers. We are as dependent on the current mutation of capitalism as a new born baby is on its mother. When our “mother” no longer nurtures us, we become very scared. We become so scared that some of us deny that anything is wrong; some of us assume that it is our own fault, and some of us emphasize other causes like crooked businessmen, crooked politicians, or false advertising; and some assign blame to inner psychology, even to a Jungian collective unconscious. We turn to anything and everything to avoid facing the real problem. Just as we desperately need and want the love of our real mothers, we similarly cling to our capitalism, and we find it very difficult to analyze or criticize either one. Those who hugely profit from capitalism naturally encourage us not to blame capitalism. Their media treats discussion of capitalism’s defects as a taboo subject. They reinforce our own dependent reluctance.

There is more and it is related to the vast disparity of incomes between the capitalist class, employers and those who invest with employers, and the rest of us. By its dynamic of paying employees as little as possible, and seizing as much as possible of the increase in wealth our work produces, the capitalist class has accumulated a staggering almost unimaginable stash of wealth. The capitalists have used this wealth to purchase a controlling share of our political power. Wall Street Banks have so far bought off the Democrats, who then lie and tell us that they are trying to enact reforms for our benefit. They just never get around to doing it. As Lou Dobbs reported on December 20 on CNN, Democrat Senator Chris Dodd, Chairman of the Senate Banking Committee has his own reform bill and another competing reform bill pending in his Committee. This powerful Democratic Chairman simply cannot find the necessary support to bring either bill up to the full Senate. Senator Dodd received $4 million dollars in his last election from the Wall Street banks he says he would like to regulate. Similarly, VP Biden representing the credit card issuers fostered a draconian Bankruptcy Bill that haunts us now. Ironically, President Obama on Saturday before departing for Hawaii appointed this same VP Biden to head a task force to try to meet the needs of the middle class. Do you suppose that Biden will recommend the cancellation of his recently sponsored awful Bankruptcy Bill? We must enlighten Senator Dodd, Vice President Biden and the other Democratic elected officials who receive money from Wall Street.

Our strategy is founded on this: Our widespread recognition that capitalism has died and cannot be revived will necessarily cause President Obama, Senators, Blue Dog Democrats, academic advisors, Wall Streeters of honest good will, and everyone except those who seek to survive by theft, to deal with our real human needs and stop using our money in a vain attempt to restart a dead capitalism. Therefore our most important task is to understand that multinational capitalism has died, why it has died, why it cannot be restarted, and to communicate that truth to everyone we know.

This is not to say that our way forward will be easy or pain free. We have to deal with capitalism’s terminal gasps that may lead some frightened persons turn to fascism. We have to face the ferocious, possibly violent reaction of those who have immensely profited from bubble capitalism as they seek to defend and preserve their wealth. The truth is that a great depression, greater than the Great Depression, may come upon us very soon. A bright European observer, Franck Biancheri speaking on the archived KPFA program “Guns and Butter” that aired on December 10 predicted this disastrous and painful crash at the multinational level by July 2009.

Reflect for a moment on what we could face as early as next summer:

• The nation’s food delivery truck fleet shut down for want of profit making opportunity.

• Empty food stores

• Wal Mart and other big box stores shut down because China stopped shipping stuff to the US and decided instead to improve conditions for the Chinese

• 30 million people out of work and hungry

• Hospital emergency rooms flooded with sick and injured people

• Charitable soup kitchens and charitable food suppliers overwhelmed and non-functional

• No food to buy with the dollars that we have..

So maybe, just maybe Franck Biancheri is wrong. This may not happen by next summer. It may not come until 2010. The point is that this greater than the Great Depression will soon happen unless we all face up to and correct the systemic defect in our political economy. It is inevitable. The advent of fascism will not stop the pain that is coming.

To survive the immediate pain, we would all be well advised to put in a store of emergency food. We should also persuade the new Secretary of Agriculture Tom Vilsack to stop making ethanol from corn and accumulate an emergency supply of corn and wheat.

We can each resolve to avoid panic, selfish choices, and false solutions.

We humans working together in our human community can solve this systemic defect and meet our reasonable needs. Multinational capitalism, the Federal Reserve Bank, Wall Street and their investment banks, money and credit schemes will not survive, and should not. We have the following advantages to meet the crisis and to create a new political economy:

We have needs, we each have skills and abilities to meet needs of others, and we are all willing to work.

The business capitalism in our local communities, our banks, car dealers, hardware stores, and food stores and clothing stores need not be much affected. Our local lives will go on, but much better than before when Wall Street siphoned off the lions share of our productive wealth for the very rich.

We now realize that all of us humans are interdependent and interconnected in our common needs for affordable housing, public health, clean water, adequate food, and medical care.

We each have the capacity to care for others and the capacity to receive the caring of others.

We have vast national resources.

We have a fallen global market economy with formerly arrogant, aggressive, defiant gung ho capitalists now on their knees, dispirited and begging for our help.

We have a new President with a towering intellect, oratorical skills, leadership skills, a strong will and a compassionate heart, who promises to act pragmatically.

• We can use the experience from WWII and set up something like the War Production Board, staffed by bright pragmatic people, to guide us in what should be produced to meet our needs and what should not be produced.

• We can set up a new Federal Loan Bank and create a new currency using the Constitutional power given to Congress “To coin money, regulate the value thereof, and of foreign coin.” We may choose to support the American Monetary Act now being introduced by Congressman Dennis Kucinich and supported by Professor Michael Hudson.

• We can demand that our government be our employer of last resort, supplying as many jobs as may be necessary. We can demand that public expenditures be made for our direct and immediate public benefit and not for Wall Street or its investment banks.

• We can demand that Congress make “all laws which shall be necessary and proper…in order to from a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty for ourselves and our posterity…”

• We may not be able to afford wars in Iraq and Afghanistan, and we may have to bring our troops home.

We are in the most exciting times since 1776 when the fall of multinational capitalism compels and allows us to organize new ways of working together to meet our needs founded on caring for each instead of fearfully exploiting and competing with each other.

Dated: December 27, 2008

Doug Page


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