The July/August Issue Is Out!


The July/August issue of Dollars & Sense is out! We fell a bit behind because of our recent office move. But the issue has now been sent out to e-subscribers and the print edition is at the printers.

We have posted three articles from the issue online already:  Josean Laguarta Ramírez’s Enforcement of Puerto Rico’s Colonial Debt Pushes Out Young Workers, John Miller’s A Clintonomics Sequel, and Alejandro Reuss’s An Historical Perspective on  Brexit.

(Alejandro’s take on Brexit, along with the two-part article the first part of which is our current cover story, have some similarity in perspective to a piece by Dani Rodrik that is making a splash recently, The Abdication of the Left, from Project Syndicate.)

Here is the editorial note from the July/August issue, with a review of the contents:

Out of the Frying Pan …

Life in capitalist society, in “ordinary” times, is no picnic. It’s more like a fish fry—and we’re the ones in the pan.

Rob Larson, in the second part of his study of the economics of information, shows the relentlessness of capitalist corporations in controlling the information we see about them, in a range of arenas: from advertising, to corporate public relations, to influence over the organizations—mass media and credit rating agencies—that are supposed to render independent judgment of them.

Suzanne Schroeder continues along those lines, arguing that the problems of private credit rating run deeper than the conflicts of interest laid bare by the recent financial crisis (for example, the outrageous granting of top “AAA” ratings to mortgage-backed securities and the like). Rather, the problem is that the standard methods of credit rating rely on the assumptions of an inherently stable and self-correcting capitalist economy. A solution, Schroeder argues, requires not only an alternative approach to credit rating, but also a reorientation of government policy to “stabilize an unstable economy.”

Of course, these are not ordinary times, and all of the contradictions and outrages of capitalist society are amplified.

José A. Laguarta Ramírez’s article about Puerto Rico’s debt crisis points to its roots in colonialism. Subordinate to the U.S. government politically and to U.S. corporations economically, Puerto Rico is now mired in “odious debt”—neither incurred freely by its people nor used for their benefit. Meanwhile, legislation just passed by the U.S. government will impose harsh austerity and an undemocratic “oversight” board. Laguarta Ramírez suggests that the solution to the crisis lies in the direction of repudiating the debt, which in turn points in the direction of political independence.

D&S co-editor Alejandro Reuss looks at the eurozone crisis. The structure of the monetary union deprived member countries of the means to respond individually, and did not institutionalize ways to respond collectively (like automatic fiscal transfers to the hardest-hit areas). This faulty structure, Reuss argues, was not just an accident, but a result of the long-range neoliberal turn of economic policymaking in Europe—in which the mainstream social democratic parties are seriously implicated. The most recent twist, the UK’s “Brexit” referendum, is a nationalist and nativist reaction to the crisis of internationalized capitalism—to which the left must answer with a new socialist internationalism.

Arthur MacEwan addresses the question of whether we’re staring into an abyss of long-term economic stagnation. There are good reasons, he notes, to think of economic stagnation as an inherent problem in capitalist economies, rooted in “over-accumulation”: Profit-making in one period gives capitalist enterprises the means invest in expanded plant and equipment, and the expanded capacity means more goods and services can be produced—sometimes more than people are able and willing to buy. MacEwan, however, also points to more particular causes of the current stagnation, and argues that a solution requires government policies to reduce inequality, maintain demand and employment, and invest in new infrastructure.

With each new piece of news—the Puerto Rico debt crisis, the Brexit vote, the victories of the right in Latin America and Europe—it seems like we’re going from the frying pan into the fire. But consider each of the problems described above—the chronic and the acute. For each, there are solutions, and it comes to us to organize and fight for them.

Yes, we’re going into the fire. But what will emerge from the flames?

Understanding the Corbyn Phenomenon

By John Weeks

Labour Party Rebellion of 2016

Cross-country political comparisons mislead by creating an illusion of insight.  The attempt to compare Bernie Sanders and Jeremy Corbyn provides a clear example.  While both rose to prominence through a wave of popular rebellion, the political context and constraints each faces are substantially different.

Passing from the misleading to the bizarre are comparisons of Corbyn to Trump because each represents a rebellion against his party’s establishment.  Though true, this basis for comparison is substantially less valid than equating cats and cows because they both are quadrupeds.

Trump came to the Republican primaries very much the arriviste, advocating a mixed bag of policies that while consistently reactionary in sum, in their detail shift and bend with the momentary political wind.  By stark contrast, within the Labour Party Jeremy Corbyn for over thirty years has consistently advocated domestic policies within the British and broader European social democratic tradition.

Corbyn the Extremist?

Could it be that Trump and Corbyn share a fatal flaw, that ultimate political sin in electoral democracies of extremism?  The answer to that question depends on what we mean by “political extremism”, which I define as 1) advocating political actions that break social consensus about acceptable discourse, and 2) supporting non-legal methods to achieve those outcomes.

Discriminating against people by racial, ethnic or religious attacks and sanctioning violence to achieve that discrimination would qualify as extremist.  Advocating unpopular positions and actions, actions supported by a small portion of the population, is not extremism.  As Thomas Carlyle famously wrote, “Every new opinion, at its starting, is precisely in a minority of one”.

By the above two-part definition Trump is an extremist and Corbyn is not.  First, Corbyn’s domestic policies come from solid social democratic principles.  Anti-austerity stands as the center piece of this economic policies, shared with the Scottish National Party, the Green Party and the National Party of Wales (Plaid Genedlaethol Cymru), as well as Podemos Unidos in Spain.

At the program level, Corbyn favors re-nationalization of the railroads, reversing piecemeal privatization of the National Health Service, and strict regulation of the financial sector.  While radical in the British context (and in the United States), these do not qualify as extreme policies.  They are bed-rock social democratic.

On foreign policy abandoning nuclear weapons represents Corbyn’s outstanding break with the past.  Far from extreme, Britain “going non-nuclear” is completely sensible: the necessary and urgently necessary refurbishing of this military program (“Trident”) would be staggeringly expensive and make no contribution to national security (as Tony Blair states in his autobiography).  In practice the “British nuclear option” is not British, because it could not be used without prior agreement from the US government.

The Corbyn foreign policies that might most strike Americans as “extreme” are probably 1) his opposition to NATO, and 2) his strong support for Palestinian rights.  The first qualifies for Carlyle’s judgment about new opinions.  The Eisenhower government created the North Atlantic Treaty Organization to block Soviet influence in Western Europe, closely linked to rejection of the Soviet proposal in 1954 for a united and neutral Germany.

Twenty-five years after the collapse of the Soviet Union NATO is little more than an anti-Russian alliance dominated by US national interests.  The proposed EU defense force is the obvious 21st century vehicle for European security.  The continuation of NATO blocks progress for a common EU military force.

On Middle East policy Corbyn has abandoned his support for  Hamas and Hezbollah, while remaining a severe critic of the Israel government.  This combination moves him into the spectrum of mainstream opinion in Europe on the Middle East and consistent with official EU policy.

Corbyn like Bernie Sanders has focused on domestic not international policy.  To the extent that Corbyn has addressed foreign policy issues he has taken consistently progressive, event radical positions that are not extreme.

A Very Blairite [Bungled] Coup

In Britain, or more accurately in England, Jeremy Corbyn faces relentless criticism especially from Labour Party members of the House of Commons (the Parliamentary Labour Party, PLP).  Last week in an ad hoc gathering of the PLP, three-quarters of the MPs voted for Corbyn to resign (172-40).

The only thing surprising about this apparently overwhelming rejection of Corbyn is that the anti-Corbyn MPs took so long to screw up their courage to act.  A purge of left wing MPs began in the 1980s under Labour Party leader Neil Kinnock and was continued with gusto by Tony Blair.  When Ed Miliband became leader in 2010 the PLP was solidly neoliberal, “Blairite”.

Miliband introduced a reform of the process to select the party leader that eliminated the power of the PLP.  Before the reform the Labour Party operated with something akin to an electoral college in which the PLP held one-third of the vote.  The Miliband reform created a strict one-person-one-vote, passing power to the party membership.  Little did the party establishment realize the consequences of the rule change.

The Labour Party suffered a devastating defeat in the 2010 general election after which Ed Miliband resigned and set in process a contest for his replacement.  To stand as candidate for leader an MP required 17 nominations from the PLP.  Corbyn made it literally in the last minute before the deadline with the minimum number of pledges.

The rest, as the cliché goes, is history.  The opportunity to vote for a social democrat rather than one of three exceedingly dull neoliberals set loose a massive wave of grassroots enthusiasm that led to Corbyn sweeping up almost 60% of the votes in the first round.  When in September 2015 Jeremy Corbyn assumed leadership of the party, the overwhelmingly neoliberal PLP reeled with horror.

And they immediately began a campaign, often shambolic and always devious and without principle, to overthrow the choice of the party membership.

During September 2015 through April 2016 the PLP Blairites engaged in constant undermining of the new leader and his shadow cabinet.  They would not attempt a formal challenge for the leadership because of their weakness at the grassroots.  As pointed out by the Financial Times, the Blairite establishment had for two decades consciously distanced itself from the party base.

Thus, the Blairite old guard required some deus ex machine development to facilitate a Corbyn coup.  They Blairites on the local elections in early May 2016 to do their dirty work.  Erstwhile Labour grandees warned that the party faced disaster, in imminent danger of Conservative gains across England.

In the event the electoral gods did not favor them. With over 2500 seat contested, the Labour Party lost 18 (for a total of 1326).  The Conservatives dropped 48, falling to a total of 842.  In addition, the elections brought victory to the Labour candidate for mayor of London after eight years of misrule by Tory Boris Johnson.  Try as they might neither the Blairite MPs nor their sympathizers in the media could spin the electoral outcomes as summing to a disaster.

To add to the gloom of the anti-Corbyn plotters, the Labour Party candidate to replace Khan in the House of Commons increased the winning majority, from Khan’s 2842 votes to 6357, a remarkable result for a “bye election”.  Corbyn may indeed be “unelectable” as his enemies alleged, but it has not manifested itself in the vote counts.

Neoliberalism vs. Social Democracy

Now into July the central dilemma of the PLP Blairites persists.  They desperately want to regain control of the party after losing it to the grassroots, but to achieve that goal they must have the support of the grassroots to defeat Corbyn.  While many assert that Corbyn has lost support across the party base, the Blairite plotters appear loath to take a chance on it.

Until a few days ago their preferred choice to challenge for leadership was Angela Eagle, former member of Corbyn’s shadow cabinet.  Her changes of success, slim a week ago, are now close to zero.  Just a few days ago a long gestating report on the conflict in Iraq delivered a devastating critique of the Blair government, and Eagle was among those Labour MPs that voted in favor of the war.

As of early July Corbyn’s PLP enemies find themselves lacking a candidate to replace him and lacking the support to elect that candidate if they find one.  At stake is not competence or electability.  The fight is over who will control the Labour Party and for what purpose.

The Blairites seek the removal of Corbyn in order to reestablish late 20th century neoliberalism as the political philosophy of the party.  Corbyn and his supporters would move the party forward to social democracy for the 21st century.

Neoliberalism versus social democracy, it really is that simple as I will elaborate in my next article.