How corporations are replacing democracy

SILENT COUP: How Corporations Overthrew Democracy by Claire Provost and Matt Kennard (2023)

Everybody knows that corporations influence and manipulate governments behind the scenes. In Silent Coup, two British journalists show ways in which corporations are actually replacing governments.

There are international corporate courts, whose decisions are binding on governments. The world is dotted with enclaves administered by corporations independent of any national laws. Even responsibility for public welfare and national defense is being handed over to corporations.

Few of these things are secret.  They are just ignored.  That is why the coup is a silent coup.

Corporate Courts

I first learned about international corporate courts when the Obama administration proposed the Trans Pacific Partnership Agreement, a free trade agreement binding all the important nations bordering the Pacific except China.

The problem with TTP agreement was in the fine print.  Any time a TPP country’s government adopted a policy that impacted the profits of a foreign company, that company could go to a special arbitration board and demand compensation for lost profits.  

Public outcry prevented U.S. ratification of that agreement, but then I learned that NAFTA also contained an investor-state dispute settlement (ISDS) provision.  In fact, the whole world is covered by a web of ISDS agreements.

They were the brainchild of a German banker called Hermann Abs who had headed Deutsche Bank.  He helped finance the Nazi regime, although he did not belong to the Nazi party itself.  He helped settle allied claims against Germany after the war.  He was highly respected by bankers and industrialists, including in the USA.

In 1957, he made a speech in San Francisco to a group of bankers and industrialists from all over the world, calling for a “capitalist Magna Carta,” a system of international law that would protect global corporations from revolutionaries and nationalists. 

He joined with a British Lord called Lord Shawcross to write a document called the Abs-Shawcross Draft Convention.  It was taken up in the 1960s by the World Bank, which created the International Center for Dispute Settlement (ICDS) and pressured its clients to adopt ISDS rules.

Provost and Kennard came across the ICDS when they went to El Salvador, which was fighting a lawsuit brought by a Canadian-Australian company called OceanaGold, which demanded compensation for environmental regulations that prevent them from digging a gold mine.

Summertime ain’t what it used to be

The following is by my e-mail pen pal Bill Harvey.  He lives in Baltimore.

SUMMERTIME AIN’T WHAT IT USED TO BE.

By Bill Harvey

The climate crisis.  Yep, it’s real bad.

There are many reasons for understanding that “The future ain’t what it used to be” — the increasingly dangerous burden of a declining US imperialism on the world, including its burden on the American people; an economic system that is becoming more and more recognizably set up for profit, not people, foundationed as it is in the everyday practice of alienated labor; the increasing likelihood of scarcity of many nature-provided resources that are essential to what we know as life; the accelerating unraveling of “Our Democracy” (whatever that is or ever was), the instrument that we’re told is the tool by which we can address all of the above bumps in the road.

There’s a lot to be worried about, people!  No sweat — Put all that and more aside for the moment so we can talk climate crisis.  An excellent place to start is in Bernie Sanders’s FOX NEWS op-ed below.  He peels off a number of the basic points in a very useful size-up of the situation. An even more worldly place to start than Bernie’s list of high temperatures — or my perfectly reasonable outburst, above — is to observe the obvious, that “Summertime ain’t what it used to be.”  It’s no longer “when the livin’ is easy,” to be sure.

Put aside, too, the longer term less visible problems like sea level rise and the heating of the oceans.  Solutions to those problems can wait, can’t they?

Consider extreme heat, wildfires, floods. air quality, severe thunderstorms and tornadoes, likely early hurricane seasons — again, no sweat, unless, say, you’re trying to plan a D-Day level operation like a trip to the grocery or taking a walk.

I can’t remember when I started saying “30 or 40 more years of this at this rate and I see no way that people will be able to put a life together” —15 years ago?  The only part I had wrong was the timeline.  It’s here now.  It’s not too far-fetched, I think, to imagine that within a decade millions of Americans will have a hard time finding scarce vital resources like potable drinking water and even food ‚ and not only as a result of the climate crisis.  Some will call this alarmist, whatever.  I call it the trend.

Unless we organize to build power against the capitalist system that’s taking us in this direction.

I’m shocked that Sanders missed the economic boom that a just transition to solar and wind energy would bring.  How many jobs would be created by a project of putting solar panels on the rooftops of every building in the country?  It should be possible to do that in a predictable few years.  After that, all that labor would not be needed for rooftop panels.  What then?  Certainly other climate-related projects.  Then?  A six-hour workday?  Maximum safety and health protections for every worker?…Not likely under capitalism.

An enormous project, a small slice of things:

Climate change is a threat to the planet: We must address it by Bernie Sanders for Fox News.

Biden Betrays Youth With Willow Project—and Breaks His Own Promise by Dejah Powell for In These Times.

Michael Hudson on the clash of capitalisms

THE DESTINY OF CIVILIZATION: Finance Capitalism, Industrial Capitalism or Socialism by Michael Hudson (2022)

When I studied economics as a college undergraduate, I was taught there are three factors of production – land, labor and capital. And three sources of income – the rent of land, the wages of labor and the profit or interest from capital.

Land includes not just the soil itself, but all natural resources.  Labor includes all productive effort, whether of brain or brawn.

Capital, as I was taught, is the force multiplier. It includes everything that increases the productivity of land or labor – farm tractors, railroads, computers, steam engines, electric power plants, research laboratories, anything that increases or improves production.

So the landlord is a parasite, the worker is a contributor to society, but the capitalist supposedly is the driving force for progress.

Here’s the rub.  Financial capital is productive only when it is used to create physical or human capital.

But there’s no law that says financial capital has to be used productively.  In fact, most so-called “investment” consists of buying assets and collecting the income, with no value added. 

Michael Hudson, in his brilliant new book, The Destiny of Civilization, says that’s what’s happening in the U.S. specifically and also the broader world today.  Industrial capitalism, which, for all its faults, is productive, is being replaced by finance capitalism, which is parasitic.   

So much of the world’s resources go to paying off debts—government debt, business debt, mortgage debt, student debt—that too little is left over to provide for the wants and needs of ordinary people.  

So much of the world’s income goes to holders of debt that too little is left for those who do the actual work of society.

According to Hudson, the classical economists, from Adam Smith to John Maynard Keynes and including Karl Marx, thought that the chief economic problem was the rentier – the person who draws income from ownership of assets, without producing anything of value themselves.

The French economist Thomas Piketty has written massive tomes that show how the income from ownership of assets – whether land, government bonds, corporate stocks or something else – over time exceeds the rate of economic growth.

This leads to an ever-growing concentration of wealth, which ends only when some event – usually revolution, war or an economic crash – wipes out the value of the assets. This is the process that the Austrian economist Joseph Schumpeter called “creative destruction.”

In the United States and countries that follow its lead, classical economics has been replaced by the so-called neoliberal economics.  Its guiding principle is that financial capital must be preserved at all costs.

This is why, just as one example, the Obama administration bailed out the banks following the 2008 financial crisis, but did not use authority granted by Congress to help the struggling mortgage-holders.

Karl Marx was fascinated by industrial capitalism’s power to increase productivity and increase wealth.  This form of capitalism, as he saw it, laid the foundation for a future utopian worker-ruled socialist state.  Finance capitalism, in Hudson’s view, leads nowhere.

Hudson says that today civilization is today at a fork in the road: 

• one path leading to a neoliberal neo-feudalism dominated by a rentier oligarchy ruling over the indebted many.
• the alternative path is broadly mixed-economy industrial capitalism leading to socialism.

1971 – the year the USA started going downhill

I’ve posted versions of the chart above several times before.  It shows how American wages once grew along with growth in productivity, and how, around 1971 or so, wage-earners stopped benefitting from being more productive.  This fact about the U.S. economy explains a lot.

I saw an Internet post yesterday consisting of charts showing how many more kinds of things changed for the worse in 1971.  Economic inequality, the cost of living, inflation-adjusted wages—all got worse.

There are too many for me to copy and re-post, but here is a sample.

What happened in 1971?  The only major event I can think of is the Nixon administration’s decision to go off the gold standard.  From then, the U.S. dollar was redeemable not for gold or some other precious metal, but for U.S. Treasury bonds – in other words, IOUs.

Economist Michael Hudson has written books about how this decision allowed financiers and bankers to flourish and the U.S. military to finance its wars while the U.S. manufacturing economy faded away and living standards declined.

As much as I respect Hudson, it’s hard for me to believe that this one thing could have caused changes in so many different things so quickly.  Maybe it’s a tipping point caused by a lot of different things coming together at once.

War threat’s purpose is to keep U.S. allies in line

Click to enlarge.

U.S. policy for the past 10 or so years has been hard for me to understand. Our government has driven Russia, the world’s largest nuclear weapons power, into the arms of China, the world’s largest or second largest industrial power.

Since 2014, our leaders have talked about the threat of a Russian invasion of Ukraine, but, as Scott Ritter has pointed out, they never tried to create a military force in or near Ukraine capable of resisting a Russian invasion.

The economist Michael Hudson has an answer.  U.S. war policy is not primarily about Ukraine or Russia.  Rather it is about the need for a war threat to keep U.S. allies in line.

Economic sanctions are not being imposed for strategic reasons, Hudson wrote recently. Rather the geopolitical struggle is an excuse for cutting off U.S. allies from trade with Russia, China and other designated U.S. enemies.

The U.S. is not pressuring Germany to stop Nord Stream 2 in order to block Russia in Ukraine.  It is whipping up war fever over Ukraine in order to block Nord Stream 2.

Here’s how he put it:

What worries American diplomats is that Germany, other NATO nations and countries along the Belt and Road route understand the gains that can be made by opening up peaceful trade and investment.

If there is no Russian or Chinese plan to invade or bomb them, what is the need for NATO?  And if there is no inherently adversarial relationship, why do foreign countries need to sacrifice their own trade and financial interests by relying exclusively on U.S. exporters and investors?

These are the concerns that have prompted French Prime Minister Macron to call forth the ghost of Charles de Gaulle and urge Europe to turn away from what he calls NATO’s “brain-dead” Cold War and beak with the pro-U.S. trade arrangements that are imposing rising costs on Europe while denying it potential gains from trade with Eurasia.

Even Germany is balking at demands that it freeze by this coming March by going without Russian gas.

Instead of a real military threat from Russia and China, the problem for American strategists is the absence of such a threat.

All countries have come to realize that the world has reached a point at which no industrial economy has the manpower and political ability to mobilize a standing army of the size that would be needed to invade or even wage a major battle with a significant adversary.

That political cost makes it uneconomic for Russia to retaliate against NATO adventurism prodding at its western border trying to incite a military response. It’s just not worth taking over Ukraine.

Imprisonment for debt, and other injustices

When Medical Debt Collectors Decide Who Gets Arrested by Lizzie Presser for ProPublica.  “Welcome to Coffeyville, Kansas, where the judge has no law degree, debt collectors get a cut of the bail and Americans are watching their lives—and liberty—disappear in the pursuit of medical debt collection.”

Student Loan Horror Stories: Borrowed $79,000. Paid $190,000.  Now Owes? $236,000 by Matt Taibbi for TK News.  “At 59, Chris pleaded for a renegotiation.  ‘My life expectancy is 15 more years.  At this rate, you’re not going to get very much … ‘  Their response was, ‘So?'”

Public Defender Tales: Innocent, But Fined by Matt Taibbi for TK News.  “The state of Iowa collects millions of dollars from people whose charges were dismissed.  There’s also a Catch-22: financially, you’re better off guilty.”

Lawmakers Unify to Give Corporate Donors a License to Kill You by David Sirota and Julia Rock for The Daily Poster.

I Was a Useful Idiot for Capitalism by Kurt Andersen for The Atlantic.  “How I got co-opted into helping the rich prevail at the expense of everyone else.”

Kirkpatrick Sale’s bet on the world of 2020

The Luddites in action

Back in 1995, Kevin Kelly, the editor of Wired magazine, made a bet with Kirkpatrick Sale, the critic of technology.  The bet was that, by the year 2020, technology would have produced a much better world.

Kevin Kelly believed then and still believes that technological progress will automatically produce a better world.  Kirkpatrick Sale believed the opposite.  He thought then and still believes that the world has been on the wrong course since Columbus’s voyages in 1492.

My old friend in Texas called my attention to a 2019 article, in which Sale described the bet and told how he foresaw the world going wrong:

First, an economic collapse. I posited that it might take the form of a worldwide currency devaluation, in which the dollar loses its standing as the world’s reserve currency and becomes effectively worthless even in this country, and a global stock-market crash and depression.

Second, a political collapse, with upheavals both within nation-states and between. I saw the collapsed economy leading to maybe the bottom fifth of society in the developed world, no longer bought off with alcohol and drugs and celebrity and consumerism, rising up in rebellion and creating havoc and disarray throughout; at the same time a similar rebellion of the poor nations, no longer content to take the crumbs from the table of the rich, and simultaneously fighting violent guerrilla wars and flooding into the developed nations to escape their misery.

And finally, perhaps over-arching, an environmental collapse, in which global warming and ozone depletion, for example, made some areas like Australia and Africa unlivable and caused ice packs to melt, and old diseases, released from melting ice and deforested swamplands, mixed with new and spread deadly infections to all continents.

Source: CounterPunch.org

Kirkpatrick Sale’s predictions haven’t come true, at least not completely, but they seem much more probable than Kevin Kelly’s faith in inevitable technological progress.

I have to say, though, that, in 1995, I would have bet on Kelly’s side.

Is green technology a mirage?

If a problem cannot be solved, it may not be a problem, but a fact.  [Attributed to Donald Rumsfeld]

It is possible to ignore reality, but it is not possible to ignore the consequences of ignoring reality.  [Attributed to Ayn Rand]

A new Michael Moore movie, “Planet of the Humans,” is an attack on the renewable energy movement.  Environmentalists by and large are outraged, and some demanded the movie be suppressed.

It actually was taken down from YouTube for 11 days, but it’s back up now.  If it is taken down again, you can view it on the Planet of the Humans Home page.

It runs for 100 minutes, which is a long time to watch something on a computer screen.  But it held my interest, and maybe it would hold yours, too.

In the first part of the movie, director Jeff Gibbs shows that solar panels and windmills are built through energy-intensive industrial processes and that they are made of materials such as high-grade quartz and rare earths that are scarce and non-renewable.

Solar panels and windmills wear out and have to be replaced.  In one scene, he visits Daggett, California, which pioneered in the development of solar and wind energy.  He sees a wasteland of dilapidated panels and windmills, because the pioneers couldn’t afford to keep them up.

And they don’t even fully replace fossil fuels.  Because of variability of sun and wind, backup electrical generators have to keep spinning, and the ones that aren’t hydroelectric use coal, gas and nuclear fuel.

In the second part, he looks at the environmental destruction caused by biomass energy.  There is no gain from freeing yourself from dependence on coal companies and embracing logging companies.

He makes a big point of pointing out the corporate ties of environmental organizations such as the Sierra Club and of environmentalists such as Al Gore, Robert F. Kennedy Jr., Richard Branson and even Bill McKibben.

He questions the whole premise, promoted by advocates such as Al Gore, that it is possible for middle-class Americans to enjoy our current material standard of living simply by adopting a new technology.

Fossil fuels made possible a world with an exponentially increasing population with the average individual using an ever-increasing amount of fuel and raw materials, Gibbs said.  Such a world isn’t sustainable, he said.

Piketty’s new book on economic inequality

The French economist Thomas Piketty made a big splash with Capital in the 21st Century (published 2013, translated into English 2014).  He showed why, all other things being equal, the rich will get richer and the rest of us will get less.

In different countries in different historical periods, the rate of return on income-producing property exceeded the rate of economic growth.  This was true whether the income-producing property was real estate, government bonds, corporate stocks or something else.

What this meant was that, in the absence of revolution, war or something else that wiped out the value of their assets, the rich would get richer and everybody else would be left behind.

Piketty’s new book, CAPITAL AND IDEOLOGY  (published 2019, translated 2020), is more ambitious and complicated.  He thinks it is an even better book that its predecessor and I agree.  It is a great work.

He looked at all the forms that economic inequality has taken in the past few centuries and all the different ways that inequality has been rationalized.  While his earlier book was based mainly on data from France, Great Britain and the United States, the new book tries to be global in scope.

He said it is important to understand not only the forms of economic inequality, but the reasons why people accept them.

His book covers several kinds of “inequality regimes”:

• “Ternary” societies in which most wealth is controlled by hereditary kings and aristocrats and an established church or religious institution.
• “Ownership” societies in which property ownership is regarded as a sacred right, superseding everything else.
• Slave and colonial societies.
• “Social democratic” societies, which limit the rights of property owners.
• The hyper-capitalism of today, which is a backlash against social democracy and Communism.

The degree of inequality in any nation or society is not the result of impersonal economic law, he wrote; it is the result of choices that could have been different.  History does not consist of class struggles; it consists of a struggle of ideas and a struggle for justice.

To understand inequality, he wrote, it is necessary to understand the reasons for choices at various “switch points” of history—the French Revolution, the British constitutional crisis of 1911, privatization in Russia after the fall of Communism.

Neoliberalism’s failure in a time of pandemic

Rev. Dr. William J. Barber II on Twitter

The United States is unprepared to deal with the coronavirus pandemic—short of hospital beds, short of test kits, short of ventilators and other medical supplies.

This is not merely because of the negligence of a few individuals.  It is the result of acceptance of the philosophy of neoliberalism.

Neoliberalism teaches that business corporations should be structured so as to keep costs as low as possible and revenues as high as possible, and that all institutions should be like business corporations.

It also teaches that accumulation of wealth by individuals and corporations is a good thing because private investment is the source of progress and economic growth.

What’s wrong with that? you may ask.

What’s wrong is what we see now—national needs neglected and the whole society put at risk.

Hospitals and other health care providers are told they must operate with maximum efficiency.  All resources must be fully utilized all the time—no empty beds, no unused equipment, no moments to relax for nurses and other staff.

This means there is no slack in the system.  It is hard to provide for the ebb and flow of illness and injury even in normal times.  In an emergency, such as this one, the health care system is overwhelmed.

Also, hospitals and other health care providers must obtain their supplies from the lowest priced source, even if that source is a sweatshop on the other side of the planet.

This means that the United States depends on China and other foreign countries for medical supplies.  If the leaders of these countries decide to limit shipments to the U.S. in order to guarantee supplies for their own people, what can we Americans do about it?

The new age of surveillance capitalism

There are two categories of Americans who are under constant surveillance.  One consists of paroled convicts and criminal defendants on bail who are under court order to wear electronic ankle bracelets.  The other consists of everybody.

That is what I took away from reading THE AGE OF SURVEILLANCE CAPITALISM: The Fight for a Human Future at the New Frontier of Power by Shoshana Zuboff, which came out earlier this year.

It’s about the prevalence of the new business of collecting information about people, usually without their knowledge, and using that information to shape their behavior.

If you have a Roomba robot vacuum cleaner, it’s making floor plans of your house.  If you have an OnStar GPS system in your car, it’s taking notes on your driving habits.  If you have a Next thermostat, it’s recording your energy use patterns.  If your children play with Genesis toys, they’re recording your children’s behavior.

Technical experts in Canada, France and the Netherlands found that the Google Street View trucks were not only taking photographs, but using Wi-Fi to collect telephone numbers, credit information, passwords, e-mails, records of on-line dating, pornography, browsing behavior, medical information and video and audio files.

All this information has economic value.  In fact, according to Zuboff, it often has more value to the provider than the fee for the service itself.  What she calls “market capitalism,” where a business makes money by selling a product or a service, is being replaced by what she calls “surveillance capitalism,” where a business makes money by collecting, processing and using data to shape human behavior.

It’s been said that people who use social media and other Internet services, especially free ones, are the product, not the customer.  Zuboff said that, in fact, the users are not even the product; they are the raw material.   The product is the model of their behavior  derived from the data they provide.

Click to enlarge.

The frontier of surveillance capitalism is gathering up seemingly meaningless information—what is called “data exhaust” or “digital breadcrumbs”—and using machine intelligence to correlate this information with human emotion and behavior.

Machine intelligences are not sentient, they have no understanding of the human mind.  They don’t need to. All they need to be able to do is look for correlations, and test them.  They are using the behavioristic psychology developed by B.F. Skinner.  He taught that it isn’t necessary to understand how individual people think and feel.  All that is necessary is to know what stimulus evokes what response.

How often you click on a “like” button on Facebook, how hard you step on the gas when accelerating your car, your willingness to answer questions about your politics and religion—all these things can be used to create a model of your behavior, which then can be tested.

Who would want such a model?  Advertisers,  Insurance companies.  Employers.  Lenders.  Credit rating companies.  Landlords.  And, of course, politicians.

Jaron Lanier wrote about some of these issues in Ten Reasons for Deleting Your Social Media Accounts Right Now,  His explanations were more brief, more readable and more clear than Zuboff’s 525-page tome (plus 124 pages of end notes).

But Lanier thought that the problem is limited to two companies, Google and Facebook, and could be easily fixed by changing their business models from advertising to fee-for-service.  If you read Zuboff’s book, you will understand that Google, Facebook and their imitators can no more give up collecting, processing and selling personal information than Starbucks can give up brewing strong coffee.  It is is not an aberration.  It is the core of their business model.

Oldest mountain chain ‘turned into rubble’

Hat tip to Lambert Strether.

“We took the oldest mountain chain in the world and turned it into rubble.”

Tarence Ray and Tom Sexton, known as The Trillbillies, or the Trillbilly Workers Party, are musicians and activists based in Whitesburg, Kentucky.

They talk about how mountaintop removal, a method of extracting coal in use since strip mining was outlawed about 30 years ago, completely destroys the land and makes it useless for any other purpose.

It has gone on under Democratic and Republican administrations alike, they said.

They said that since the coal industry started using mountaintop removal, coal production has increased 400 percent, but coal industry jobs have continued to decline.

LINKS

Whitesburg-based Trillbilly Workers’s Party podcast takes a left-wing view of Appalachian life by Cheryl Truman for the Lexington (KY) Herald-Leader.

The Trillbilly Workers Party by Lia Russell for Scalawag.  Free Listening on SoundCloud.

Get Real: What liberals like Paul Krugman still don’t understand about rural America by the Trillbillies’ Tarence Ray for The Baffler.

A growing China reboots totalitarianism

Source: Dissident.

My great fear during the Cold War was that the totalitarian USSR would outlast the democratic USA.  I was afraid that a dictatorship would be able to take a longer view than a democracy, and would be better able to prioritize military and diplomatic power.

The philosopher Bertrand Russell, for one, scoffed at these fears.  He said that a democracy would always be able to outlast a dictatorship because dictators insulate themselves from bad news, while, in a democracy, contested elections and a free press provide a reality check.  The fall of Communism in Europe in 1989-1991 appeared to prove him right.

Now the Chinese government has created a new and more effective totalitarianism.  It uses social media and other new techniques to control the population more effectively than Mao ever dreamed of—while keeping the old Communist police state as backup.

When China joined the World Trade Organization in 2001, Western leaders hoped that as China made economic progress, it would become more liberal and democratic.

China has made enormous economic progress.  Hundreds of millions of Chinese have been raised from poverty.  China is a major manufacturing nation.

Economic historian Adam Tooze said Chinese economic expansion was the main force pulling the world out of recession after 2008 and today contributes as much to world economic growth as the USA and Europe put together.

The Chinese Belt and Road Initiative, aka the New Silk Road, involves investing more than $1 trillion over the next 10 years to create a railroad, highway, pipeline and electrical grid extending over the whole of the interior of Eurasia, creating an integrated economy centering on China.

But if there was a possibility that this would make China more liberal and democratic, President Xi Jinping has moved to head it off.  Since 2013, China has been cracking down not only on corruption, but also on human rights lawyers, religious believers and critics o the government.

Xi Jinping has abolished the term limits that bound his predecessors and encouraged a Mao-style cult of personality.  There are even Institutes for the Study of Xi Jinping Thought.

Social media in China are monitored, and the Chinese government is in the process of implementing a scheme by which every Chinese citizen will be given a social credit score, based on an algorithm that takes into account credit history and good citizenship, but also opinions and associations, which can determine access to education, health care, credit and even public transportation.  This is powerful, because there is no individual against whom you can protest or to whom you can appeal.

In Xinjiang, members of the native Muslim Uighur population can be sent to Mao-style reeducation camps for the least little thing, even wearing a beard.  Surveillance cameras using facial recognition technology are everywhere.

China’s leaders have found a way to harness capitalism to the service of a capitalist government—much as Lenin tried to do with his New Economic Policy in the 1920s, allowing limited private business but maintaining ultimate control.  Maybe the USSR would have become like today’s China if not for Stalin’s forced collectivization drives.

There is a possibility that much of the rest of the world may come to regard China as a better example to follow than the United States.  Unless things change, the Chinese totalitarian model may prevail not through subversion or military force, but by force of successful example and as a price of doing business with China.

Addiction as a successful business model

The problem is not just pornography.   Promoting addictiveness is a widespread business model.

A venture capitalist named Paul Graham, writing in 2010, said it is the nature of free market capitalism to make products addictive.

He wasn’t speaking of pornography in particular, but of everything from tobacco to gambling to compulsive viewing of the Internet.

The logic of the marketplace is that the person who makes the most addictive product wins the largest market share.

More recent Jaron Lanier, a famous virtual reality pioneer, wrote a book giving 10 Arguments for Deleting Your Social Media Accounts Right Now, which is about addictive social media companies.  The business model for companies such as Facebook is behavior modification, he wrote; they cannot give that model up and stay in business.

Their artificial intelligence systems use personal information, social science information and psychology to create “engagement” — which laymen would call “addiction” — by means of advertising and propaganda.  The systems are constantly at work to increase the power of their algorithms.

Stanford University has a Persuasive Technology Laboratory, which learns how to design interactive technology to alter human thoughts and behavior in the interests of advertisers and politicians, not the individuals targeted.

Richard Freed wrote about B.J. Fogg, the head of the laboratory, and how psychological research is used not to liberate people from addictive and compulsive behavior, but the opposite.

Click to enlarge

The “Fogg Behavior Model” is a well-tested method to change behavior and, in its simplified form, involves three primary factors: motivation, ability, and triggers.

Describing how his formula is effective at getting people to use a social network, the psychologist says in an academic paper that a key motivator is users’ desire for “social acceptance,” although he says an even more powerful motivator is the desire “to avoid being socially rejected.”

Regarding ability, Fogg suggests that digital products should be made so that users don’t have to “think hard.”  Hence, social networks are designed for ease of use.

Finally, Fogg says that potential users need to be triggered to use a site.  This is accomplished by a myriad of digital tricks, including the sending of incessant notifications urging users to view friends’ pictures, telling them they are missing out while not on the social network, or suggesting that they check — yet again — to see if anyone liked their post or photo.

Is a non-BS economy even possible?

What would the U.S. unemployment rate be if all useless or harmful jobs were eliminated?

It would probably be equivalent to the Great Depression of the 1930s.

Barack Obama, in an interview in 2006, stated the problem:

“I don’t think in ideological terms. I never have. … Everybody who supports single-payer healthcare says, ‘Look at all this money we would be saving from insurance and paperwork.’  That represents 1 million, 2 million, 3 million jobs of people who are working at Blue Cross Blue Shield or Kaiser or other places.  What are we doing with them?  Where are we employing them?”

Source: The Nation

David Graeber, in his new book, Bullshit Jobs: a Theory, quoted public opinion polls that found 37 percent of UK employees and 40 percent in the Netherlands thought their jobs made no meaningful contribution to the world.

Now maybe that is exaggerated.  Maybe some of them think they make a contribution, but that it’s not “meaningful.”

Offsetting this, the inherent bias of people is to think we are accomplishing more than other people think we do or the objective facts indicate.

For example, public relations, advertising, lobbying, consulting and even speculation on financial and commodities markets have their uses.  It is just that they play more of a role in the economy than they should.

I myself think the U.S. military and intelligence services are much greater than necessary to protect the homeland from attack.  Of course, if the mission is to make the United States the world’s only superpower, no number could be great enough.

The question is: What would happen if all these people were thrown on the job market, all at once?

It would be a catastrophe, unless there were some sort of basic income guarantee (which Graeber advocates) or basic job guarantee.

BS jobs, sh*t jobs and moral envy

• Huge swaths of people spend their days performing tasks they secretly believe do not really need to be performed.
• It’s as if someone were out there making up pointless jobs for the sake of keeping us all working.
• The moral and spiritual damage that comes from this situation is profound.  It is a scar across our collective soul.  Yet noone talks about it.
• How can one even begin to speak of dignity in labor when one secretly feels one’s job should not exist? 
• David Graeber: On the Phenomenon of Bullshit Jobs (2013)

David Graeber, in his new book, Bullshit Jobs: a Theory, describes the frustrations of people doing jobs that they know are useless or even harmful, because the meaningful jobs are either unavailable or low-paid.

He said that forcing people to engage on tedious activities that serve no useful purpose, or, worse still, pretending to work when they actually aren’t, constitutes a kind of spiritual violence.

Not all useless or harmful jobs are BS jobs. Graeber defines a BS job as one you know is useless, but you have to pretend is necessary.

I think many of the people who invent BS jobs, or invent useless tasks for the useful workers, are under the impression they are making a positive contribution.  Graeber said his strongest critics are business owners who deny the possibility that they could be paying anybody to do anything useless.

A certain number of people think the world is divided into predators and prey, and pride themselves on being successful predators.  An example would be the bankers and financiers who, prior to the 2008 financial crash, made subprime mortgage loans to suckers who could never pay them off, then collateralized the mortgages and sold them to other suckers.

What all these jobs—hedge fund managers, telemarketers, diversity consultants, receptionists who never get phone calls, consultants whose advice is never heeded, supervisors with nothing to supervise—is that, if they went on strike, nobody would notice.

What Graeber calls the sh•t jobs are just the opposite.  Food service workers, health care workers, trash collectors, janitors and cleaners—all these workers labor under worse conditions and for lower pay than in BS jobs, and, contrary to reason and justice, they get less respect.

Coincidentally or not, the sh•t jobs are disproportionately done by black people, Hispanics and immigrants.

∞∞∞

Graeber said many of us have come to accept the idea that work consists of following somebody’s order to do something we dislike.  It follows, then, that if you want good pay, job security and benefits, you are lacking in moral character.  He calls this rights scolding.

It takes two forms.  Among right-wingers, if you think you are entitled to anything that working people in the time of Charles Dickens didn’t have, you are a fragile snowflake.  Among left-wingers, if you think you are entitled to anything that the most oppressed person alive today has, you are told to check your privilege.

It also follows that people whose jobs are fulfilling, such as school teachers, are not really working.  The idea is: You get to do work that is pleasurable, useful and respected.  How dare you want good pay and job security in addition?  Graeber calls this moral envy.

Managerial feudalism and BS jobs

BULLSHIT JOB: A form of paid employment that is so completely pointless, unnecessary or pernicious that even the employee cannot justify its existence even though, as part of the condition of employment, the employee fells obliged to pretend that this is not the issue.  [David Graeber]

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Huge numbers of people work in jobs that they themselves think are completely unnecessary.  Many of them would prefer to do something useful, but useful jobs on average pay less.  Sometimes they quit and take a lower-paying useful job anyway.

Some five years ago, David Graeber, an American who teaches anthropology at the London School of Economics, wrote an essay for an obscure left-wing magazine called Strike!, about the phenomenon of bullshit jobs.

The article struck a nerve.  It got more than a million hits on the Internet, crashed the Strike! web site several times and was translated into more than 10 languages.

A YouGov poll soon after found that 37 percent of full-time employees in the United Kingdom thought their work made no meaningful contribution to the world.  A survey in the Netherlands put the number as high as 40 percent.  I imagine a survey in the United States would be much different.

Graeber himself communicated with hundreds of unhappy, useless employees via e-mail.

The result is his new book, Bullshit Jobs: a Theory.

He learned about a museum guard whose job was to report if a certain empty room ever caught on fire; a military sub-contractor who drove more than a hundred miles in order to give a German soldier permission to move a piece of equipment from one room to another; a receptionist who, to fill her time, was tasked with jobs such as sorting paperclips by color.

But most of his reports are about people who worked in offices—making studies that were never read, making proposals that were never acted on or not doing anything at all, but doing their best to look busy.

How can there be so many admittedly useless jobs?  We live in a time of austerity and layoffs.  Full-time jobs are being replaced by temporary jobs.  That is true of government as well as the private sector.

One thing that free-enterprise advocates and Marxists agree on is that competitive capitalism produces economic efficiency.  Free-marketers think everybody benefits and Marxists think that only the capitalists benefit, but they agree on the drive of business to maximize profit.

Maybe this is wrong.  Maybe competitive capitalism is a myth.  Maybe we live under what Graeber calls managerial feudalism.

Back in the days before the French Revolution, the peasants, who were the main producers of wealth, paid so much in taxes and rent they could barely live.  They supported an aristocracy, who, in turn, supported an economic class of coachmen, door keepers, lace makers, dancing masters, gardeners and the like, who were generally better paid than the peasants.

Just like the aristocrats of old, the prestige of managers in organizations is based on the number of people they have working for them.  Prestige is not based on whether they are useful or not.  In fact, employees whose work is essential are a threat.  They have the power to quit or go on strike or to unexpectedly reveal they know more than the boss.

So the incentive is to diminish the role and power of those who do necessary work while inventing new jobs whose existence depends on the discretion of the job creators.

A large number of new jobs are administrative staff.  They are different from administrators who make actual decisions.  Their job is collect quantitative information about the work of the useful employees on the principle that “you can’t manage what you can’t measure.”

Book note: The Making of Global Capitalism

International financial organizations such as the International Monetary Fund and the World Trade Organization have come to be a kind of world government, dictating policy to supposedly sovereign governments.

I recently read a book, The Making of Global Capitalism (2012) by two Canadian leftists named Leo Panitch and Sam Gindin, on how this came about.   I thank my friend Tim Mullins for recommending it.

It’s quite a story.  It is not well understood.

The first part of the story is the U.S. New Deal.   President Franklin Roosevelt and the Democratic Congress gave the U.S. Treasury Department and the Federal Reserve System the authority they needed to stabilize the crumbling U.S. financial and banking system.

The second part is the 30 years following World War Two.   Under the leadership of the U.S. Treasury and Federal Reserve, international financial institutions were created that duplicated the U.S. system.  They presided over the era of greatest peace and prosperity that North Americans and Europeans had ever since.

The third part is what happened after that.  The world’s financial system endures a series of ever-greater financial crises.   To deal with them, international financial  institutions demand the surrender of gains made by American and European workers and the middle class in the earlier era.

The irony is that a financial governing structure created by American power is now stronger than ever, while the actual American economy is rotting away beneath it.

Panitch and Gindin described in great detail how this happened, step-by-step,.

An SF writer’s diagnosis and cure for capitalism

In the opening of Kim Stanley Robinson’s new SF novel, New York 2140, two unemployed financial software engineers known as Mutt and Jeff—unemployed because they refuse to design a possibly illegal program for high-speed trading—contemplate a flooded lower Manhattan from atop the former Metropolitan Life building.

One of them says he has figured out what’s wrong with capitalism.

The basic problem with capitalism, he says, is that the forces of the market forces producers to sell products below cost.

How can you sell below cost and survive?  By offloading your costs onto someone else—onto customers, onto neighbors, onto taxpayers, onto the wider community and onto future generations.

This enables an individual enterprise to survive (sometimes), but, in the long run, leads human society into bankruptcy.

In the novel, global warming has taken place, sea levels have risen and lower Manhattan is under water.  Skyscrapers such as the Met Life building are still survive amid a kind of new Venice.  Uptown Manhattan is 50 feet higher in elevation, and is dry.  In the middle is a tidal zone, where the poor and homeless congregate.

Some environmental problems have been solved, or at least are being coped with.  Gasoline, jet fuel and other fossil fuels no longer exist.  Air travel is by dirigible, ocean travel is by sailing ship and land vehicles are electric.   But the financial structure and distribution of income are more or less like they are now.

New skyscrapers—”superscrapers”—in uptown are owned by the world’s wealthy elite, as investments or as one of multiple homes, and are often vacant.

A hurricane late in the novel leaves many homeless.  They try to storm the vacant uptown towers, and are turned back by private security forces, who outgun the New York Police Department.

Rather than attempt a violent revolutionary overthrow, the common people attempt a political and economic jujitsu.

They join in a nationwide debt strike.  On a given day, they stop paying their mortgages, student loans and credit card balances.  The financial system is go highly leveraged with debt upon debt that it comes crashing down, just as in 2008.   So the financiers go to Washington for another bailout, just as they did then.

But this time, the President and Federal Reserve Chairman, who are in on the plan, act differently.  They tell the banks and investment companies that they would be bailed out only on one condition—that the government be given stock of equal value to the bailout, as was done in the bailout of General Motors.   Those who refuse this deal are allowed to fail.

Now the federal government has the authority to force the banks to act as public utilities.  And the huge profits that once flowed to the financial elite now flow to Washington, which makes it possible to adequately fund public education, infrastructure improvement, scientific research and all the other things the country needs.

And so the American people live happily—not ever after and not completely, but for a while.

Neoliberalism and Its Discontents (1)

What follows is notes for the first part of a talk for the Rochester Russell Forum scheduled at Writers & Books Literary Center, 740 University Ave., Rochester, NY, at 7 p.m. Thursday, April 13, 2017

Neoliberalism is the philosophy that economic freedom is the primary freedom, economic growth is the primary goal of society and the for-profit corporation is the ideal form of organization.

It is the justification for privatization, deregulation and the economic austerity currently being imposed on governments by lenders.

Neoliberalism has its roots in classical liberalism, which arose in the 18th and 19th centuries.  Classic liberals said that the purpose of government is to protect human rights, including religious, intellectual, political and economic freedom.   They fought the absolute power of kings and the privileges of aristocrats and demanded the right of individuals to determine their own fates.

Classical liberalism came to be supplanted in the early 20th century by a belief that government regulation and welfare could, if well thought out, enhance human freedom by giving individuals more choices.   A graduate of a public school or university, for example, has more options than a person unable to afford an education, so taxing the public to pay for public schools and universities would be a form of liberation.

Neoliberalism is a backlash against social liberalism.  Neoliberalism affirms that freedom of enterprise is the only important freedom.   Its well-known adherents include Friedrich Hayek, Ludwig von Mises and Milton Friedman.

It came into widespread acceptance in the 1980s, as a reaction against the manifest failures of central economic planning and as a way to break the political gridlock of the welfare state.  Ronald Reagan and Margaret Thatcher were both strongly influenced by the neoliberals.

Neoliberalism’s strongest adherents are to be found among economists, journalists, financiers, Silicon Valley executives and right-of-center parties in the English-speaking world and western Europe, and in international institutions such as the International Monetary Fund, World Bank and European Central Bank, which enforce neoliberal policies on debtor countries.

It is more of an implicit philosophy than a credo, a series of assumptions that has come to permeate our society.

What follows is my attempt to understand the logic behind these assumptions.

Questions to be answered

I think that the United States and other Western countries are in a political and economic crisis.

I think that political leaders in the Western world must answer these questions.

Does the economic and political crisis mean that the system has failed?

If the system has failed, is this a failure of capitalism, a failure of democracy or both?

If the failure is a failure of capitalism, can the capitalistic system be fixed, or must it be replaced?

If the failure is a failure of democracy, can the democratic system be fixed, or is it doomed?

I don’t expect these questions to be addressed this year or the next, but I don’t think they can be evaded indefinitely.  I think there will be some sort of resolution, for good or for ill, within the next 10 years.

The return of right-wing populism

During the Great Depression of the 1930s, many people in Europe and North America turned to populist radical and left-wing parties, while many others turned to populist nationalist and racist parties.

The first group blamed their troubles on the wealthy elite and a failed capitalist system.  The second group blamed their troubles on foreigners, minorities and a failed democratic system.

There were exceptions and overlaps, but I think these broad distinctions apply.  Nationalism and racism are a way of diverting public discontent away from bankers and landlords.

We have the same two kinds of populism today.  In Europe, we see Jeremy Corbyn in Great Britain, Podemos in Spain and Syriza in Greece, and, on the other hand, the United Kingdom Independence Party, the National Front in France and Viktor Orban in Hungary.

The assumptions and logic of neoliberalism

There is no such thing as society.  There are only individuals, and their families.      ==Margaret Thatcher

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Neoliberalism is the philosophy that economic freedom is the primary freedom, economic growth is society’s primary goal and the for-profit corporation is the ideal form of organization.

It is the justification for privatization, deregulation and the economic austerity being imposed on governments by lending institutions.

What follows is my attempt to understand the thinking behind neoliberalism.  I welcome comments, especially from those who think I am wrong or unfair.

Government is by definition coercive.  All governmental authority is ultimately backed by armed force.  The role of government should be limited to protection of life and property and enforcement of contracts.   

Private enterprise is by definition free choice.  Privatization by definition increases freedom.  All income deriving from the private sector, and not involving force or fraud, is earned income.

Most people are good judges of their individual self-interest and bad judges of the common good.   People generally make good decisions as consumers and poor decisions as voters.  Consumer choice is more meaningful than the right to vote.

Free markets, though the law of supply and demand, coordinate individual choices without the direction of any particular people or group of people.  The free market is more impartial and just than any system of planning or regulation could be.

A capitalist dictatorship that protects property rights is better than a socialist democracy that attacks property rights.

Economic growth is the key to increasing economic well-being.  Growth is produced by capital—that is, by investment in machines, factories and other human-made goods that generate new wealth.  

In a free enterprise economy, capital is invested by private individuals based on the law of supply and demand.  Whatever diminishes the ability of individuals to accumulate wealth or respond to the signals of the free market diminishes capital and retards economic growth.

Money spent on welfare and charity may temporarily alleviate distress, but it will not cure poverty.  Only capital investment and economic growth will do that. 

Capital investment and economic growth should take precedence over public education, public health, the environment and other so-called pubic goods, because they are the means of generating the wealth that pays for the public goods.

Banks, investment firms and financial markets are the key institutions of society.  They must be preserved in order to support investment and economic growth.

Monetary obligations are absolute.  Any person, organization or government that borrows money has an absolute obligation to pay it back, no matter what the sacrifice.  People who don’t repay their debts or fulfill their contracts are parasites on the system.

Inequality is a good thing.  To break up accumulations of wealth that have been acquired by legitimate means is not only unjust because it destroys the just reward for achievement.  It destroys the capital by which new jobs and wealth are created.

The international record of neoliberalism

My economic philosophy in a nutshell

When, lo, these many years ago, I studied economics in college, I learned that capital was the most important factor in a prosperous economy.

I still think this is true.  But that doesn’t mean that owners of financial assets are the most valuable members of society.

Standard economics teaches that three  are factors of production—land, labor and capital.  “Land” means all natural resources—everything of value not created by human beings.  “Labor” means all human effort, physical or mental.

“Capital” is the most important of the three.  It means everything that increases the productivity of land and labor—railroads, machine tools, computers.  It is the force multiplier for land and labor.  It is what makes economic growth possible.

The problem is that “capital” also means also the financial resources available (but not necessarily used) to create these tangible resources.

Landlords who receive rents contribute nothing to the wealth of nations.  Laborers who earn wages contribute a fixed amount.  Capitalists who make profits have—so I was taught—an incentive to direct their capital in a way that created the most value, and thus increase the total wealth of society.

Late in life I have come to read Karl Marx’s rebuttal.  Physical and intellectual capital is not created by capitalists, he noted.  Every railroad, every machine tool, every computer was created not by money, but by the mental and physical effort of human beings.

The increase in human wealth that physical capital generates does not go to those who created it.  It goes to those who own it.

Marx denied that the owners of capital are job creators.  He asserted that workers are capital creators.