[Marxism] (Re: "going through the experience" of Obama Diss

[Matthew Russo]

(original post below truncated)  While not a whole lot to dispute in
context with the particulars presented by Louis and Anthony, I think
it is mistaken to make positive comparisons with the New Deal era, for
the situation of the U.S. at present not only greatly differs (as has
been pointed out) but in key aspects is quite the opposite of the
situation from the 1920s-40s:

1) Finance: Of course this is currently the key aspect, and it is
entirely the opposite of that of the New Deal.  Then, while the U.S.
had emerged from WWI as the world's chief financial creditor, it was
not yet deploying this advantage in any structured systematic way that
could exercise a global seniorage for the benefit of the U.S.
Therefore the effects of the post-1929 collapse were localized to the
U.S., much as the effects of the burst of the 1989 Japan bubble were
largely contained to that country.  And in both cases the state
capital of Japan or the U.S. as creditor countries was sufficient to
put a "bottom" in on the crisis without outside assistance. It was not
until after WW2 that a seniorage structure was permanently secured at
Bretton Woods.

Now, it is precisely this financial seniorage structure that is at
stake in the present crisis, putting into question the capacity of the
U.S. to bolster the "real" economy, a capacity dependent upon the
ability to continue skimming from the global surplus via the seniorage
itself.  It is already clear that the Obama gov't. fully intends to
continue Paulson's work to prop up the structure of financialization
at all costs.  The dilemma posed is that even as it draws in overseas
capital investment into the U.S., finance itself siphons off an
increasing share of total U.S. profits, either as a percentage of U.S.
GDP - rising from 1% to 3% of GDP since 1983 according to the Economic
Report of the President: 2007, or to 40% of total profits according to
the Economic Report of the President, 2008, see
http://www.monthlyreview.org/080401foster.php .  Hence to continue to
prop up this sector is to also continue to siphon away investment -
including any prospect of state investment - from productive capital
and therefore to continue to depress the overall wage rate.

This is quite different from the Roosevelt gov't which shut down and
took over banks while it also broke the power of the Morgan interest.
The financial sector simply was not as important then as it is now.

2) Military:  This is the other key unproductive sector that stands in
the way of any meaningful New Deal style restructuring of the U.S.
political economy.  It also siphons away profits and therefore
investment in expanded reproduction since unlike finance, military
industry actually produces commodities, not capital as a commodity,
but commodities that cannot be reincorporated as components of
productive capital in subsequent cycles, as these are means of
destruction.  But like finance, it is a key profit center for U.S.
capitalist class and as the main component of U.S. state capital,
exercises paramount political influence in Washington D.C.  Again
here, the Obama gov't and the Congressional Democratic Party as it is
shaping up shows little inclination to enact any profound structural
changes in the weight of military industry.  The best that can be
hoped for is likely a temporary stagnation in military expenditures,
despite Obama's promise to considerably boost the number of boots on
the ground, as opposed to big ticket naval and air force expenditures,
so we can expect some interservice infighting here.

In any case, the situation is virtually the opposite that of the
1930's where generals such as Billy Mitchell had to fight tooth and
nail for the development of U.S. air and naval power, and where a
demonstration of 40,000 WWI veterans of the Bonus Army - urged on by
retired U.S.M.C. Maj. Gen. Smedley Butler of "War is a Racket" fame -
could be ruthlessly attacked and suppressed in the heart of
Washington, D.C. by units of the active Army led by Gen. Douglas
MacArthur in June of 1932, an event that no doubt was a key
contributer to Roosevelt's landslide victory that year.  As with
finance, U.S. military dominance was not to be secured until during
and after WW2.  And as with finance, what was once a prime means of
that dominance has - no doubt dialectically :-) - has become a prime
impediment to its continuation.

But most of all, finance and military are deeply interrelated, for
without the international financial seniorage, the U.S. cannot
continue funding this gargantuan military apparatus - the only real
advantage the U.S. continues to exercise on the global scene.  Perhaps
this is why it may be no coincidence that Obama's Treasury nominee,
Timothy Geithner - probably the sharpest tool in Obama's shed -
specialized in East Asian studies at Dartmouth and happens to be
conversant in the languages of the U.S. Gov'ts two prime creditors:
China and Japan.  After all - and here I have to differ with Anthony's
'printing press' view - where is all the money going to come from?
Note that the positions of foreign creditors as part bondholder-owners
of the U.S. Treasury acts, and has acted, as a limit on the capacity
of the U.S. Gov't to willy-nilly try to print its way out of the
crisis.  One of the prime reasons for the crash in stocks and equities
in general has been the fact that the Fed has NOT generally monetized
either its own or the Treasury's bailouts, instead relying on further
borrowings on the global capital markets as evidenced in the enormous
bubble in U.S. Treasury bill valuations which together with the
countercyclical rise of the USD (except against Yen & Yuan) should
keep Chinese, Japanese and Persian Gulf investors reasonably happy.
Dare the Fed to prick that bubble with a printing press!

That is it for now.  I will continue in a subsequent post on to 3)
Domestic U.S. economic measures and 4) Political entertainment for the
liberal and progressive left, & the question of working class
movement.

mata ato de -Matt

Message: 4
Date: Wed, 26 Nov 2008 12:07:54 -0500
From: "Anthony Boynton" <anthony.boynton at gmail.com>
Subject: [Marxism] (Re: "going through the experience" of Obama
       disillusionment
To: marxism at lists.econ.utah.edu


I agree with all of Louis Projects observations about the differences
between today and the context of the 1930's, but would add a few things.



(Re: [Marxism] "going through the experience" of Obama disillusionment

* From: Louis Proyect <lnp3 at panix.com>    * Date: Tue, 25 Nov 2008 18:58:47
-0500)