Anti-Democratic Nature of US Capitalism is Being Exposed

Bretton Woods was the system of global financial management set up at the end of the second World War to ensure the interests of capital did not smother wider social concerns in post-war democracies. It was hated by the US neoliberals - the very people who created the banking crisis writes Noam Chomsky

Published on Friday, October 10, 2008 by The Irish Times

THE SIMULTANEOUS unfolding of the US presidential campaign and unraveling of the financial markets presents one of those occasions where the political and economic systems starkly reveal their nature.

Passion about the campaign may not be universally shared but almost everybody can feel the anxiety from the foreclosure of a million homes, and concerns about jobs, savings and healthcare at risk.

The initial Bush proposals to deal with the crisis so reeked of totalitarianism that they were quickly modified. Under intense lobbyist pressure, they were reshaped as "a clear win for the largest institutions in the system . . . a way of dumping assets without having to fail or close", as described by James Rickards, who negotiated the federal bailout for the hedge fund Long Term Capital Management in 1998, reminding us that we are treading familiar turf. The immediate origins of the current meltdown lie in the collapse of the housing bubble supervised by Federal Reserve chairman Alan Greenspan, which sustained the struggling economy through the Bush years by debt-based consumer spending along with borrowing from abroad. But the roots are deeper. In part they lie in the triumph of financial liberalisation in the past 30 years - that is, freeing the markets as much as possible from government regulation.

These steps predictably increased the frequency and depth of severe reversals, which now threaten to bring about the worst crisis since the Great Depression.

Also predictably, the narrow sectors that reaped enormous profits from liberalisation are calling for massive state intervention to rescue collapsing financial institutions.

Such interventionism is a regular feature of state capitalism, though the scale today is unusual. A study by international economists Winfried Ruigrok and Rob van Tulder 15 years ago found that at least 20 companies in the Fortune 100 would not have survived if they had not been saved by their respective governments, and that many of the rest gained substantially by demanding that governments "socialise their losses," as in today's taxpayer-financed bailout. Such government intervention "has been the rule rather than the exception over the past two centuries", they conclude.

In a functioning democratic society, a political campaign would address such fundamental issues, looking into root causes and cures, and proposing the means by which people suffering the consequences can take effective control.

The financial market "underprices risk" and is "systematically inefficient", as economists John Eatwell and Lance Taylor wrote a decade ago, warning of the extreme dangers of financial liberalisation and reviewing the substantial costs already incurred - and proposing solutions, which have been ignored. One factor is failure to calculate the costs to those who do not participate in transactions. These "externalities" can be huge. Ignoring systemic risk leads to more risk-taking than would take place in an efficient economy, even by the narrowest measures.

The task of financial institutions is to take risks and, if well-managed, to ensure that potential losses to themselves will be covered. The emphasis is on "to themselves". Under state capitalist rules, it is not their business to consider the cost to others - the "externalities" of decent survival - if their practices lead to financial crisis, as they regularly do.

Financial liberalisation has effects well beyond the economy. It has long been understood that it is a powerful weapon against democracy. Free capital movement creates what some have called a "virtual parliament" of investors and lenders, who closely monitor government programmes and "vote" against them if they are considered irrational: for the benefit of people, rather than concentrated private power.

Investors and lenders can "vote" by capital flight, attacks on currencies and other devices offered by financial liberalisation. That is one reason why the Bretton Woods system established by the United States and Britain after the second World War instituted capital controls and regulated currencies.*

The Great Depression and the war had aroused powerful radical democratic currents, ranging from the anti-fascist resistance to working class organisation. These pressures made it necessary to permit social democratic policies. The Bretton Woods system was designed in part to create a space for government action responding to public will - for some measure of democracy.

John Maynard Keynes, the British negotiator, considered the most important achievement of Bretton Woods to be the establishment of the right of governments to restrict capital movement.
In dramatic contrast, in the neoliberal phase after the breakdown of the Bretton Woods system in the 1970s, the US treasury now regards free capital mobility as a "fundamental right", unlike such alleged "rights" as those guaranteed by the Universal Declaration of Human Rights: health, education, decent employment, security and other rights that the Reagan and Bush administrations have dismissed as "letters to Santa Claus", "preposterous", mere "myths".

In earlier years, the public had not been much of a problem. The reasons are reviewed by Barry Eichengreen in his standard scholarly history of the international monetary system. He explains that in the 19th century, governments had not yet been "politicised by universal male suffrage and the rise of trade unionism and parliamentary labour parties". Therefore, the severe costs imposed by the virtual parliament could be transferred to the general population.

But with the radicalisation of the general public during the Great Depression and the anti-fascist war, that luxury was no longer available to private power and wealth. Hence in the Bretton Woods system, "limits on capital mobility substituted for limits on democracy as a source of insulation from market pressures".

The obvious corollary is that after the dismantling of the postwar system, democracy is restricted. It has therefore become necessary to control and marginalise the public in some fashion, processes particularly evident in the more business-run societies like the United States. The management of electoral extravaganzas by the public relations industry is one illustration.
"Politics is the shadow cast on society by big business," concluded America's leading 20th century social philosopher John Dewey, and will remain so as long as power resides in "business for private profit through private control of banking, land, industry, reinforced by command of the press, press agents and other means of publicity and propaganda".

The United States effectively has a one-party system, the business party, with two factions, Republicans and Democrats. There are differences between them. In his study Unequal Democracy: The Political Economy of the New Gilded Age, Larry Bartels shows that during the past six decades "real incomes of middle-class families have grown twice as fast under Democrats as they have under Republicans, while the real incomes of working-poor families have grown six times as fast under Democrats as they have under Republicans".

Differences can be detected in the current election as well. Voters should consider them, but without illusions about the political parties, and with the recognition that consistently over the centuries, progressive legislation and social welfare have been won by popular struggles, not gifts from above.

Those struggles follow a cycle of success and setback. They must be waged every day, not just once every four years, always with the goal of creating a genuinely responsive democratic society, from the voting booth to the workplace.

* The Bretton Woods system of global financial management was created by 730 delegates from all 44 Allied second World War nations who attended a UN-hosted Monetary and Financial Conference at the Mount Washington Hotel in Bretton Woods in New Hampshire in 1944.

Bretton Woods, which collapsed in 1971, was the system of rules, institutions, and procedures that regulated the international monetary system, under which were set up the International Bank for Reconstruction and Development (IBRD) (now one of five institutions in the World Bank Group) and the International Monetary Fund (IMF), which came into effect in 1945.

The chief feature of Bretton Woods was an obligation for each country to adopt a monetary policy that maintained the exchange rate of its currency within a fixed value.

The system collapsed when the US suspended convertibility from dollars to gold. This created the unique situation whereby the US dollar became the "reserve currency" for the other countries within Bretton Woods.

© 2008 The Irish Times

Noam Chomsky is professor emeritus of linguistics at the Massachusetts Institute of Technology. His writings on linguistics and politics have just been collected in The Essential Chomsky, edited by Anthony Arnove, from the New Press.

Intro to Chomsky SocialistWorker.org

Understanding Power: The Indispensable Chomsky

The Noam Chomsky Website

Common Dreams News & Views

Amy Goodman

Open the Debates

Published on Thursday, October 9, 2008 by TruthDig.com

The reviews are in, and the latest U.S. presidential debate, the "town hall" from Nashville, Tenn., was a snore. One problem is that in a debate it is important for the debaters to actually disagree. Yet Sens. Barack Obama and John McCain substantively agree on many issues. That is one major reason that the debates should be open, and that major third-party or independent candidates should be included.

Take the global financial meltdown. Both senators voted for the controversial bailout bill that first failed in the U.S. House of Representatives. It passed resoundingly in the Senate and, larded with financial favors to woo uncooperative House members, finally passed the House. The news each day suggests that the bailout hasn't solved the problem. Rather, the economic contagion is going global, with European and Asian banks teetering on the brink of collapse. Iceland-not just its banks, but the country-faces financial ruin.

Earlier Tuesday, before the debate, the U.S. Federal Reserve announced that it would for the first time ever begin buying up the debt of private companies to help them meet short-term cash needs for things like payroll. Shortly after the debate ended, major central banks around the world, again for the first time ever, cut their prime lending rates in unison. Yet on the debate floor, there was no sense that the global financial system needed more than a tax cut here, a voucher there. The major thing lacking from the debate was, well, debate.

Bob Barr, the Libertarian Party's presidential candidate, reacted to the debate, writing: "Sen. McCain, Sen. Barack Obama and the other members of Congress who have supported one bailout after another have turned fiscal responsibility into a sucker's game. ... There's no meaningful difference between the two major parties." The independent campaign of Ralph Nader put out a debate-watching e-mail, asking supporters to listen for key words and phrases, among them: "working class," "Taft-Hartley Act," "labor unions," "military-industrial complex," "single-payer health care," "impeachment," "carbon tax" and "corporate power." None of these was mentioned.

Obama supporters noted that McCain did not mention "middle class" once. Yet neither candidate mentioned poverty.

Obama and McCain fought to prove who was more sympathetic to the nuclear-power industry. They each bowed to the coal industry, with its controversial "clean coal" gambit. They split hairs over who would more cagily bomb Pakistan.

At the core of the problem with U.S. presidential debates is that they are run by a private corporation, the Commission on Presidential Debates, founded in 1987 by the Republican and Democratic parties. The CPD took over the debate process from the League of Women Voters. Just once since then has a third-party candidate made it into the debate -- Ross Perot in 1992. After he did well, he was excluded in 1996. The CPD requires contenders to poll at 15 percent before they qualify for any debate.

Nader calls the 15 percent threshold "a Catch-22 level of support that is almost impossible for any third-party candidate to reach without first getting in the debates."

George Farah directs Open Debates, a group that works "to ensure that the presidential debates serve the American people first." He told me that "historically, it has been third parties, not the major parties, that have supported and are responsible for the abolition of slavery, women's suffrage, public schools, public power, unemployment compensation, minimum wage, child labor laws. The list goes on and on. The two parties fail to address a particular issue; a third party rises up, and it's supported by tens of millions of Americans, forcing the Republican and Democratic parties to co-opt that issue, or the third party rises and succeeds, which is why the Republican Party jumped from being a third party to being a major party of the United States of America."

There is a move to organize a third-party debate, in New York City, a day or so after the final McCain-Obama debate on Oct. 15. The CPD could still liven its last debate, and serve the electorate and history, by opening up that debate to all candidates who have at least obtained significant ballot access. Both Ralph Nader and Bob Barr are on the ballot in close to 45 states, Cynthia McKinney of the Green Party is on the ballot in 30 states, and Constitution Party candidate Chuck Baldwin is on in more than 35 states. Let's open the debates and have a vigorous and honest discussion about where this country needs to go. It will not only make for better television, it will make for better democracy.

© 2008 Amy Goodman

Amy Goodman is the host of "Democracy Now!" a daily international TV/radio news hour airing on more than 700 stations in North America. She has been awarded the 2008 Right Livelihood Award, dubbed the "Alternative Nobel" prize, and will receive the award in the Swedish Parliament in December.Denis Moynihan contributed research to this column.

Common Dreams News & Views

Thousands of Troops Are Deployed

on U.S. Streets Ready to Carry Out "Crowd Control"
By Naomi Wolf, AlterNet.
Posted October 8, 2008.

Background: the First Brigade of the Third Infantry Division, three to four thousand soldiers, has been deployed in the United States as of October 1. Their stated mission is the form of crowd control they practiced in Iraq, subduing "unruly individuals," and the management of a national emergency. I am in Seattle and heard from the brother of one of the soldiers that they are engaged in exercises now. Amy Goodman reported that an Army spokesperson confirmed that they will have access to lethal and non lethal crowd control technologies and tanks.

George Bush struck down Posse Comitatus, thus making it legal for military to patrol the U.S. He has also legally established that in the "War on Terror," the U.S. is at war around the globe and thus the whole world is a battlefield. Thus the U.S. is also a battlefield.

He also led change to the 1807 Insurrection Act to give him far broader powers in the event of a loosely defined "insurrection" or many other "conditions" he has the power to identify. The Constitution allows the suspension of habeas corpus -- habeas corpus prevents us from being seized by the state and held without trial -- in the event of an "insurrection." With his own army force now, his power to call a group of protesters or angry voters "insurgents" staging an "insurrection" is strengthened.

U.S. Rep. Brad Sherman of California said to Congress, captured on C-Span and viewable on YouTube, that individual members of the House were threatened with martial law within a week if they did not pass the bailout bill:

"The only way they can pass this bill is by creating and sustaining a panic atmosphere. … Many of us were told in private conversations that if we voted against this bill on Monday that the sky would fall, the market would drop two or three thousand points the first day and a couple of thousand on the second day, and a few members were even told that there would be martial law in America if we voted no."
Read more

A Futile Bailout As Darkness Falls

On America
By Paul Craig Roberts
08 October, 2008
Counterpunch

America has become a pretty discouraging place. Americans, for the most part, will never know what happened to them, because they no longer have a free and responsible press. They have Big Brother’s press. For example, on September 28, 2008, a New York Times editorial blamed the current financial crisis on “antiregulation disciples of the Reagan Revolution.”

What utter nonsense. Every example of deregulation that the New York Times editorial provides is located in the Clinton Administration and the George W. Bush administration. I was a member of the Reagan administration. We most certainly did not deregulate the financial system.

The repeal of the Glass-Steagall Act, which separated commercial from investment banking, was the achievement of the Democratic Clinton Administration. It happened in 1999, over a decade after Reagan left office.

It was in 2000 that derivatives and credit default swaps were excluded from regulation.

The greatest mistake was made in 2004, the year that Reagan died. That year the current Secretary of the Treasury, Henry M. Paulson Jr, was head of the investment bank Goldman Sachs. In the spring of 2004, the investment banks, led by Paulson, met with the Securities and Exchange Commission. At this meeting with the New Deal regulatory agency tasked with regulating the US financial system, Paulson convinced the SEC Commissioners to exempt the investment banks from maintaining reserves to cover losses on investments. The exemption granted by the SEC allowed the investment banks to leverage financial instruments beyond any bounds of prudence.

In place of time-proven standards of prudence, computer models engineered by hot shots determined acceptable risk. As one result Bear Stearns, for example, pushed its leverage ratio to 33 to 1. For every one dollar in equity, the investment bank had $33 of debt!

It was computer models that led to the failure of Long-Term Capital Management in 1998, the first systemic threat to the financial system. Why the SEC went along with Paulson and set aside capital requirements after the scare of Long-Term Capital Management is inexplicable.

The blame is headed toward SEC chairman Christopher Cox. This is more of Big Brother’s disinformation. Cox, like so many others, was a victim of a free market ideology, itself a reaction to over-regulation, that was boosted by academic economic opinion, rewarded with Nobel prizes, that the market “always knows best.”

The 20th century proves that the market is likely to know better than a central planning bureau. It was Soviet Communism that collapsed, not American capitalism. However, the market has to be protected from greed. It was greed, not the market, that was unleashed by deregulation during the Clinton and George W. Bush regimes.
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Source Watch
Dr. Paul Craig Roberts is the John M. Olin fellow at the Institute for Political Economy and a research fellow at the Independent Institute.

Roberts has held numerous academic appointments. He was a Distinguished Fellow at the Cato Institute from 1993 to 1996. He held the William E. Simon Chair in Political Economy at the Center for Strategic and International Studies, Georgetown University, from 1982 through 1993. He was a Senior Research Fellow, Hoover Institution on War, Revolution and Peace, Stanford University.

Roberts was Assistant Secretary of the Treasury for Economic Policy (1981-82) in the Ronald Reagan administration. "President Reagan and Treasury Secretary Regan credited him with a major role in the Economic Recovery Tax Act of 1981, and he was awarded the Treasury Department’s Meritorious Service Award for 'his outstanding contributions to the formulation of United States economic policy.' From 1975 to 1978, Dr. Roberts served on the congressional staff where he drafted the Kemp-Roth bill and played a leading role in developing bipartisan support for a supply-side economic policy."

He was Associate Editor of the Wall Street Journal editorial page and Contributing Editor of National Review, and a columnist for Business Week and the Scripps Howard News Service. Roberts's columns are released weekly by Creators Syndicate, Inc.

Predictable Poverty:

The Inevitable Legacy of a Neo-Liberal Europe

A contribution to “The fight against poverty” civil society project conference 2008

Susan George

The Jean Monnet Centre Of Excellence, University Of Malta, 8 October 2008

The requirements for reducing or eliminating poverty, in Europe and world-wide, are known and the money is there, but the weight of the financial lobby is such that political will at present seems non-existent.

‘All for ourselves and nothing for other people’ seems, in every age of the world, to have been the vile maxim of the masters of mankind. As soon, therefore, as [the great proprietors] could find a method of consuming the whole value of their rents themselves, they had no disposition to share them with any other persons. For a pair of diamond buckles, perhaps, or for something as frivolous and useless, they exchanged the maintenance, or what is the same thing, the price of the maintenance of a thousand men for a year. Adam Smith, The Wealth of Nations, 1776.(1)

Introduction

In the early twenty-first century, poverty on a world -wide, massive-scale is not merely unnecessary but inexcusable. This is indeed its most striking feature. One could argue, following Adam Smith [who considered himself a “moral philosopher" not an economist] that it was equally avoidable in the Great Britain of 1776, but that is a matter for historians. Here we shall stay in our own century while keeping Adam Smith’s words of indictment in mind. The “vile maxim of the masters of mankind" is, alas, alive and well; the masters are still trying to keep all for themselves and allow nothing for other people. Whenever they can, which is most of the time, they organise public policy in such a way that their goals can be met.

In contemporary Europe we are living in such a time. Europe could eliminate poverty on its own soil, reliably estimated in 2006 to strike 72 million people, around 15 percent of its total population. .(2) It could also contribute hugely to eradicating poverty in the world, taking the lead in the OECD countries in that regard. It has the wealth and the [unused] policy space to do both. Like other OECD countries, however, Europe refuses to confront the obvious solutions which would involve very small changes in the lifestyles of the rich, and a few, somewhat larger ones, for banks and transnational corporations. So it seems to me that the first duty of a participant in a conference concerning “the fight against poverty" is to examine wealth.

Whatever might have been possible, politically speaking, in the eighteenth century had people been obliged to share more equally, it was still a time when genuine crop failures could take place; trade was expensive and sometimes the necessities of life were in short supply. Here I shall argue that today, for the first time in human history, poverty retains not a shred of mystery nor of inevitability; one need no longer ask if, technologically and materially speaking, it could be eradicated. The answer is simple and straightforward: yes, it could . Politically, however, as I shall also argue, the European Union, with the complicity of its Member States, is doing whatever lies in its considerable power to prevent this happening both in Europe itself and in the world. This will be the second focus of my contribution. .(3)

I. Wealth and inequality

Now, nearly two and a half centuries after the opening quote from Adam Smith, the father of modern capitalist theory, let us hear the stylistically less well-crafted but nonetheless heartfelt cry of the “Lowtax Network Editorial Team":

There is such a lot of money!Despite a presumably temporary dip in asset values as a result of shell-shocked markets post sub-prime, HedgeFund.net said recently that total hedge fund assets stood at USD2.848tn at the end of March 2008. .(4)
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Participatory democracy at the crossroads

Eurotopia No. 523

September 2008

Abstract

‘Citizens’ participation’ is a fashionable political concept, but one that increasingly means all things to all people. It is time to reclaim ‘participation’ from those who would use it simply to legitimise existing political institutions. This issue of Eurotopia explores different models of participatory democracy in Europe.

>Download the whole issue as a single PDF file (4.2 MB)

Contents

Participatory democracy in EuropeJax Jacobsen

Interview with Jeronimo Fernandez CortesParticipation in ItalyAnna Pizzo

If participative democracy is the answer, what is the question?Joan Subirats

Managing water through participative processes: the case of CataloniaJordi Pacheco i Canals

Facing the problems, learning the lessonsHilary Wainwright

Participatory Democracy in 6 StepsTomás Rodríguez Villasante

Transnational Institute

Development redefined:

How the market met Its match

By Robin Broad and John Cavanagh

August 2008

Abstract

Rejecting the “flat worldism” of the globalists as well as the peaks and valleys of trade and aid policies over the years, Robin Broad and John Cavanagh guide us through the raging debate over the best route to development for the poorer nations of Africa, Asia, and Latin America.

This book takes readers on a journey through the rise and fall of the one-size-fits-all model of development that richer nations began imposing on poorer ones three decades ago. That model—called the “Washington Consensus” by its backers and “neoliberalism” or “market fundamentalism” by its critics—placed enormous power in markets to solve the problems of the poor.

The authors have stood at the epicenter of these debates from their perches in the United Nations, the U.S. government, academia, and civil society. They guide us back in time to understand why the Washington Consensus dominated for so long, and how it devastated workers, the environment, and the poor. At the same time, they chart the rise of an “alter-globalization” movement of those adversely affected by market fundamentalism. Today, this movement is putting alternatives into action across the globe, and what constitutes development is being redefined.

As the authors present this dramatic confrontation of paradigms, they bring into question the entire conventional notion of “development,” and offer readers a new lens through which to view the way forward for poorer nations and poorer people.

This brief history of development connects an arcane world with contemporary forces of globalization, environmental degradation, and the violation of perhaps the essential human right: to be considered individually, equally, in an economically viable world and way.

Read the excerpt

Robin Broad is Professor of International Development at the School of International Service at American University.

John Cavanagh directs the Institute for Policy Studies. This husband and wife team traveled from Geneva to the rural Philippines to Washington D.C., to write this book as well as their award-winning Plundering Paradise: The Struggle for the Environment in the Philippines.

“Development Redefined offers an invaluable rethinking of development theory and practice by two of the world’s most respected scholars/citizens. Their experience, insight, knowledge, activist commitment, and engaging style make this book indispensable reading for anyone concerned with global economic justice and making the world a better place.”

—Richard Falk, professor at Princeton University and the University of California—Santa Barbara, a prolific author in international studies

“The gripping story of the big lies, the sly co-optations and the backroom deals that disguised a fierce contest as a fake consensus. This is a people’s history of the rise of corporate rule and there could be no more trusted or surefooted guides than Robin Broad and John Cavanagh.”

—Naomi Klein, author of The Shock Doctrine

“To end poverty, it is critical to understand its roots. Broad and Cavanagh dig deep to uncover the origins of poverty and they offer paths to a better future.... A terrific antidote to the popular misconceptions spread by Thomas Friedman and Jeffrey Sachs.”

—Vandana Shiva, founder of the Research Foundation for Science, Technology, and Ecology in India, and author of numerous books, including Water Wars and Earth Democracy

“A hard-hitting chronicle of the rise and fall of the Washington Consensus, followed by a fascinating discussion of a dazzling array of alternatives to a failed doctrine.”

—Walden Bello, award-winning author of over a dozen books on globalization and professor at the University of the Philippines

To order go to Paradigm Publishers

Transnational Institute

JOHN TIRMAN is the executive director and a principal research scientist at MIT's Center for International Studies.

A political scientist, Tirman is author, or coauthor and editor, of ten books on international affairs, including The Fallacy of Star Wars (1984), the first important critique of strategic defense, and Spoils of War: The Human Cost of America's Arms Trade (1997). In addition, he has published more than 100 articles in periodicals such as the New York Times, Washington Post, World Policy Journal, The Nation, Wall Street Journal, and International Herald Tribune. (For a list and archive of articles, see http://www.johntirman.com/.) Before coming to MIT in 2004, he was program director of the Social Science Research Council. From 1986 to 1999, Tirman was executive director of the Winston Foundation for World Peace, a leading funder of work to prevent nuclear war and promote non-violent resolution of conflict. In 1999-2000, Tirman was Fulbright Senior Scholar in Cyprus and produced an educational Web site on the conflict (http://www.cyprus-conflict.net/).

Here you can find, chapter-by-chapter, the references, commentary, and updates for 100 WAYS.
Most chapters have citations, recommended reading, elaborations,
and links to organizations that are working on the problems I discuss.
Chapters 1-10

Chapters 11-19

Chapters 20-35

Chapters 36-50

Chapters 51-60

Chapters 61-70

Chapters 71-100

Reviews and Comment

The Reading Room

Wrecking,

Wrecking, Wrecked

By Thomas Frank

Thomas Frank » Home

Posted September 29, 2008 on The Huffington Post

The great fear that hung over the business community in the 1970s was death by regulation, and the great goal of the conservative movement, as it rose to triumph in the 1980s, was to remove that threat--to keep OSHA, the EPA, and the FTC from choking off entrepreneurship with their infernal meddling in the marketplace.

Defunding those agencies was one way to stop the killer bureaucrats; another was to stuff them full of business-friendly personnel who would go easy on regulated. The signature conservative regulatory idea became "voluntary enforcement", because everyone now knew that efficient markets regulated themselves. Bad practices or tainted products drove away consumers; therefore firms had an incentive to behave, an incentive far more powerful than some top-down scheme in which big brother told them what to do.

Whether people ever truly believed this nonsense or not, its application over the years makes up the basic story of conservative governance as I tell it in my book, The Wrecking Crew. This is the philosophy by which conservatives gutted the EPA and the Labor Department, turned over the Interior Department and the FDA to the industries they were supposed to regulate, let the CEO of Enron advise the vice president on energy policy, and generally came to regard business, not the public, as government's "customer" (a word that crops up with disturbing frequency in conservative regulatory history).

But it is only now, as we watch the financial system crumble around us, that we can really see the devastating consequences of this folly. It turns out the Securities and Exchange Commission (SEC), which was responsible for regulating investment banks, did a significant part of its job through a voluntary program which firms could participate in or not as they saw fit. As the New York Times told the story on Saturday, this system had--of course--been pushed for by the investment banks themselves, who wanted it in order to avoid the stricter rules from European governments that they would otherwise have had to obey.

And now, as a consequence, the SEC has almost no industry left to regulate. Bear Stearns, Merrill Lynch, Lehman Brothers, Goldman Sachs, Morgan Stanley: All of them are gone or restructured. At business's urging, business was left up to its own devices; its own devices turned out to be precisely the things that our grandparents set up regulatory agencies to guard against: euphoria that leads to panic; perverse incentives that lead to fraud; boom that leads to bust.

As you watch the world crumble, try taking your Armageddon with this sprinkling of irony: Over the last three decades, business has got virtually everything it wanted, and its doomsday scenario from the 1970s has come true because of it. The regulators have indeed killed the regulated--not by intrusive meddling but by doing nothing, by taking a nap while the financial sector puffed up the bubble and blew itself to pieces.

Gut Check Time:

Will Congress Stand up to Wall Street?
By Robert L. Borosage (The Huffington Post)
Posted September 23, 2008

It's gut check time.

The attempt by Treasury Secretary Paulson to put a gun to the head of Congress and terrify them into forking over a $700 billion blank check to the Bush administration in 48 hours has failed. Now what?

Most Americans would just as soon the Masters of the Universe were allowed to sink in their own folly. They had the party; let them clean up the mess. But, looking at sinking housing values and shaken retirement accounts, most Americans know something has to get done.

Banks and investment houses carry weapons of financial mass destruction. Last week, they looked into the abyss. If nothing is done, the chances for a deep and long depression are very great. So stocks skied around the world when Paulson announced his support for a massive bailout of Wall Street. And stocks and the dollar plummeted, and oil and gold soared when it became clear on Monday that the Congress wouldn't simply salute and go along. Doing nothing is not an option.

Leaders from unions, consumer and citizen groups have weighed in, demanding strict conditions on any bailout. On Monday, Sen. Chris Dodd put forth a draft bill that called for an independent board to run the bailout, required that taxpayers get partial ownership in any firm bailed out, and mandated steps to forestall foreclosures and work out mortgages, helping to keep people in their homes. House Speaker Nancy Pelosi demands a kickstart for the real economy - extension of unemployment benefits, aid to states and localities, investment in green jobs and basic infrastructure. (But at only $50 billion, a relative pittance for the real economy compared to the sums demanded to rescue Wall Street). Rep. Barney Frank insists on limits on the compensation of executives of any firm that gets bailed out. Together, these conditions begin to make some sense out of a bad fix.
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Whose Freedom?

The Battle Over America’s Most Important Idea
By George Lakoff

Introduction to Whose Freedom?
Ideas matter. Perhaps no idea has mattered more in American history than the idea of freedom. The central thesis of this book is simple. There are two very different views of freedom in America today, arising from two very different moral and political worldviews dividing the country. The traditional idea of freedom is progressive. One can see traditional values most clearly in the direction of change that has been demanded and applauded over two centuries. America has been a nation of activists, consistently expanding its most treasured freedoms:

• The expansion of citizen participation and voting rights from white male property owners to non-property owners, to former slaves, to women, to those excluded by prejudice, to younger voters
  
• The expansion of opportunity, good jobs, better working conditions, and benefits to more and more Americans, from men to women, from white to nonwhite, from native born to foreign born, from English speaking to non-English speaking


• The expansion of worker rightsÑfreedom from inhumane working conditions–through unionization: from slave labor to the eight-hour day, the five-day week, worker compensation, sick leave, overtime pay, paid vacations, pregnancy leave, and so on


• The expansion of public education from grade school to high school to college to postgraduate education


• The expansion of knowledge through science from isolated figures like Benjamin Franklin to scientific institutions in the great universities and governmental institutions like the National Science Foundation and the National Institutes of Health


• The expansion of public health and life expectancy


• The expansion of consumer protection through more effective government regulation of immoral or irresponsible corporations and class action suits within the civil justice system


• The expansion of diverse media and free speech from small newspapers to the vast media/Internet possibilities of today


• The expansion of access to capital from wealthy landholders and bankers to all the ways ordinary people–more and more of them–can borrow money today


• The expansion, throughout the world, of freedom from colonial rule– for the most part with the backing of American foreign policy.

Read the full introduction »

Global Lies

Propaganda, the UN and World Order

By Mark D. Alleyne
Palgrave Macmillan

About the Book
Mark D. Alleyne explains why the UN has run a propaganda program, why it has been defensive about it, and the role that project plays in international relations. Through the use of critical theory, the book makes a fascinating connection between a range of seemingly unconnected international phenomena, such as the Olympic Games, the celebration of Human Rights Day, UN peacekeeping, Hollywood movies, the campaign to free Nelson Mandela, and soccer’s World Cup. Alleyne’s incisive analysis is the needed tool for understanding how modern international relations is as much about the manipulation of symbols and ideas as about war.

About the Author

Mark D. Alleyne is Assistant Director in charge of Research at the Ralph J. Bunche Center for African-American Studies, UCLA. He has taught at a number of universities, including The University of Illinois, The University of Lagos, and the American University, Washington DC. Previous publications include International Power and International Communication and News Revolution.

Table of Contents

Introduction * Propaganda for Peace? * Global Information Machine * Polishing the Tarnished Image * Good Propaganda, Bad Propaganda * Lubricating the Wheels * Using the Tool * UN Ideological Work and International Change * Appendices * Bibliography

'American Theocracy,' by Kevin Phillips

Clear and Present Dangers

The New York Times Book Review, March 19, 2006
by Alan Brinkley

Four decades ago, Kevin Phillips, a young political strategist for the Republican Party, began work on what became a remarkable book. In writing "The Emerging Republican Majority" (published in 1969), he asked a very big question about American politics: How would the demographic and economic changes of postwar America shape the long-term future of the two major parties? His answer, startling at the time but now largely unquestioned, is that the movement of people and resources from the old Northern industrial states into the South and the West (an area he enduringly labeled the "Sun Belt") would produce a new and more conservative Republican majority that would dominate American politics for decades. Phillips viewed the changes he predicted with optimism. A stronger Republican Party, he believed, would restore stability and order to a society experiencing disorienting and at times violent change. Shortly before publishing his book, he joined the Nixon administration to help advance the changes he had foreseen.
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American Theocracy Homepage

Carlyle Group May Buy Major CIA Contractor: Booz Allen Hamilton

Cartoon by Khalil Bendib

by Tim Shorrock , Special to CorpWatch March 8th, 2008

The Carlyle Group, one of the world’s largest private equity funds, may soon acquire the $2 billion government contracting business of consulting giant Booz Allen Hamilton, one of the biggest suppliers of technology and personnel to the U.S. government’s spy agencies. Carlyle manages more than $75 billion in assets and has bought and sold a long string of military contractors since the early 1990s. But in recent years it has significantly reduced its investments
in that industry. If it goes ahead with the widely reported plan to buy Booz Allen, it will re-emerge as the owner of one of America’s largest private intelligence armies.

Reports of a potential Carlyle acquisition of Booz Allen’s government unit began circulating among U.S. military contractors in December 2007, after Booz Allen’s senior partners and board members – a group of 300 vice presidents who own the privately-held firm – gathered at company headquarters in McLean, Virginia, for an extraordinary two-day meeting.

According to a December 15 letter to Booz Allen employees from CEO Ralph W. Shrader that was released by the firm, the vice presidents signed off on a “new strategic direction” that would involve separating the company’s commercial and government units and operating them as separate companies. That was widely seen, both inside and outside the company, as a sign that a sale of one or both of the units was imminent. Shrader said the company hoped to come to a resolution of the issues involved by March 31, 2008.

In January 2008, major newspapers – each quoting unnamed people close to the situation – reported that discussions between Booz Allen and Carlyle about the sale of the government unit were underway. According to the Wall Street Journal, the deal will be “centered on Booz Allen’s influence in defense and intelligence contracting. If an agreement is reached the sale price will likely be around $2 billion.”

Christopher Ullman, Carlyle’s chief spokesman, could neither confirm nor deny that a deal was in the works, and declined to comment to CorpWatch about the reports. Because of Carlyle’s long experience in the defense sector, he added, such companies “would be a priority for us when the price is right and it’s the right fit for us.” George Farrar, a Booz Allen spokesman, said his company “has refused to discuss particulars of any ongoing discussions” and would not comment beyond what Shrader wrote in his December 15 missive to Booz Allen’s workforce.

Who Is Booz Allen Hamilton?
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Zinn: US 'In Need of Rebellion'

Howard Zinn is the author of, most notably, "A People's History of the United States", a National-Book-Award-nominated text that investigates US history from the standpoint of the oppressed.
Other books by Zinn include "Declarations of Independence: Cross-Examining American Ideology" and his 1995 autobiography, "You Can't be Neutral on a Moving Train".

Published on Tuesday, September 9, 2008 by Al Jazeera

Al Jazeera speaks to Howard Zinn, the author, American historian, social critic and activist, about how the Iraq war damaged attitudes towards the US and why the US "empire" is close to collapse.

Q: Where is the United States heading in terms of world power and influence?

HZ: America has been heading - for some time, and is heading right now - toward less and less world power, less and less influence.

Obviously, since the war in Iraq, the rest of the world has fallen away from the United States, and if American foreign policy continues in the way it has been - that is aggressive and violent and uncaring about the feelings and thoughts of other people - then the influence of the United States is going to decline more and more.

This is an empire which is on the one hand the most powerful empire that ever existed; on the other hand an empire that is crumbling - an empire that has no future ... because the rest of the world is alienated and simply because this empire is top-heavy with military commitments, with bases around the world, with the exhaustion of its own resources at home.

[This is] leading to more and more discontent and home, so I think the American empire will go the way of other empires and I think it is on its way now.
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Reflections on the Politics of Culture by Michael Parenti

In the academic social sciences, students are taught to think of culture as representing the customs and mores of a society, including its language, art, laws, and religion. Such a definition has a nice neutral sound to it, but culture is anything but neutral. Much of what is thought to be our common culture is the selective transmission of class-dominated values. Antonio Gramsci understood this when he spoke of class hegemony, noting that the state is only the "outer ditch behind which there [stands] a powerful system of fortresses and earthworks," a network of cultural values and institutions not normally thought of as political.1 What we call "our culture" is largely reflective of existing hegemonic arrangements within the social order, strongly favoring some interests over others.
A society built upon slave labor, for instance, swiftly develops a racist culture, replete with its own peculiar laws, science, and mythology, along with mechanisms of repression directed against both slaves and the critics of slavery. After slavery is abolished, racism continues to fortify the inequitable social relations—which is what Engels meant when he said that slavery leaves its "poisonous sting" long after it passes into history.
Culture, then, is not an abstract force that floats around in space and settles upon us—though given the seemingly subliminal ways it influences us, it can feel like a disembodied, ubiquitous entity. In fact, culture is mediated through a social structure. We get our culture from a network of social relations involving other people: primary groups such as family, peers, and other informal associations within the community or, as is increasingly the case, from more formally articulated and legally chartered institutions such as schools, media, churches, government agencies, corporations, and the military.
Linked by purchase and persuasion to dominant ruling-class interests, such social institutions are regularly misrepresented as politically neutral, especially by those who occupy command positions within them or are otherwise advantaged by them. What Gramsci said about the military might apply to most other institutions in capitalist society: their "so-called neutrality only means support for the reactionary side."
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The Earth Imperative

Human civilization finds itself at a terrifying crossroads. The list of dangers is appallingly long. Would it make things a little less scary to group our challenges into main categories?

3) Environmental Crisis (including the ideas of "overpopulation and necessary "limits to growth") 2) Economic Stagnation (a chronic problem that takes many forms, including recessions, arrested development and debt crises).1) What's number one? We might forget it sometimes, amid the shouting over the Next Big Calamity, but it is at the root of all the others: Poverty.

Until we solve that problem, all the other ones will keep getting worse. Until we solve the problem of poverty, we can only place band-aids over ever-deepening wounds and, somehow, hope for the best.

But is there a solution? Various programs have been tried. The solution of a planned economy which would banish competition failed, spectacularly. The "liberal mixed economy" under various guises of "social democracy" aided by "labor unions" has led to today's "race to the bottom." The ideology of "laissez faire" -- a market free of regulation, if not actually a free market -- is causing suffering and havoc around the world. That's what we're told, anyway. But in truth: when abundant labor is compelled to seek scarce employment, there will always be a race to the bottom. Technological progress, free trade and improved education simply steepen the slope.

Henry George claimed, very persuasively, to have identified the root cause of poverty, and the fundamental solution. Perhaps he was wrong. But if he was right? Then we shouldn't waste another minute, should we? Let's briefly examine what Georgist theory says about the fundamental cause of poverty.

Standard Explanations for Poverty

Henry George begins by evaluating the standard explanations for the persistence of poverty amid increasing progress and plenty. Could it be a lack of capital? Does the need to pay wages cut into our ability to store up the tools and equipment we need to move the economy forward? This is a pressing question for development policy: nation after nation has gone into unpayable debt in the attempt to "build a manufacturing base" and "develop export industries" -- only to wind up poorer and deeper in debt.
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