Arthur Schlesinger, Jr. tells the story of FDR approached by people who wanted the U.S. to increase its involvement in confronting Hitler in Europe.  FDR replied to them:

“I agree with you, I want to do it, now make me do it.”

This is how the president tacitly assigned to them the task of bringing their case directly to the U.S. people, at the time hesitant about taking a bigger part in the European conflict.  If the national attitude towards the conflict shifted, FDR would “follow” suit.

If we check our hopes and illusions at the door, it is far from clear at this point the extent to which Obama is truly committed to promoting a progressive agenda in the U.S. and the globe.  The opportunity is definitely there.  But, consider — for example — his choice of economic cabinet.   The people he’s recruited are, to put it mildly, not known as strong reformers.  In the management of the economy, people like Austan Goolsbee, Tim Geithner, Larry Summers, and — in the background — Robert Rubin, people who have advocated the type of policies associated with the lead to the current economic disaster, have been tapped and are actively shaping up Obama’s economic plan.

Others, like Joseph Stiglitz, Paul Krugman, James Galbraith, and Dean Baker, have been largely ignored, in spite of the fact that they were critical of the policy climate that led to the current crisis, and that they have been forceful advocating measures to fight the crisis that place the broader public interest, the interest of working- and middle-class people, at the center of these policies.

In today’s New York Times, Paul Krugman continues to speak his mind about the timidity of Obama’s plans, in stark contrast with the urgency of his words.  Basic arithmetic indicates that, in the current conditions, a less than 1 trillion dollar “stimulus” is insufficient to move a 15-trillion dollar economy and tax cuts (especially tax cuts for large businesses) are largely wasted resources, because their “bang for the buck” is significantly smaller than that of a dollar directly spent.  (Apparently, even strongly pro-establishment Democrats of the Nancy Pelosi type oppose Obama’s intention of not phasing out the tax cuts for the rich that W. Bush passed!)  Yes, there’s uncertainty, but — precisely — the nature of economic uncertainty during a crisis is such that timidity in the response is the greater evil.

The excuse, as Krugman suggests, seems to be political.  Like Krugman, I’m deeply skeptical of Obama’s alleged approach.  It seems, for what we know, that Obama wants to have a large majority behind his actions, including a solid support in Congress, which requires compromising with staunch Republicans.  By temperament — the press has been telling us — Obama prefers a pragmatic focus on solutions, rather than political confrontation.

That is fine as long as the interest of the majority of working- Americans is truly the top priority.  As a tactical stance at this point, there’s nothing wrong in principle with opening the tent to more people.  But, if history is any guide, the special interests that oppose the economic security of working Americans, the reform of our disfunctional health care system, the reform of our foreign policy, etc. won’t be pacified with friendly gestures.

If Obama begins to compromise to them, always at our expense, they will only confirm that stiffening their opposition works.  Just like in economics, tax incidence is avoided by those more willing to walk away from a market deal, and falls on those forced to take it; in politics, the stubborn prevails and the compromising paints himself into a corner.  This is not an argument in favor of partisanship for partisanship’s sake.  It’s an argument in favor of partisanship to advance the public interest.

Ultimately, it is not an ideological disagreement, but the clash of their vested interests against the needs and interests of the majority of Americans which makes the right wingers so stubborn that only the effective derailment of the popular effort that gave Obama his victory, can pacify them.

Obama has said that he’ll listen to the people.  During his campaign, he emphasized that his election was not about him, but about us, rank-and-file Americans.  We need to test his claim continuously, from the get-go.  Let’s press on.  After all, we’re fired up and ready to go.  So, let’s bring the discussion to our relatives, friends, neighbors, coworkers, and everybody willing to engage in a conversation with us.  Let’s use all means at hand to impress upon the new administration that we’re stubborn in demanding satisfaction to our needs as working- and middle-class Americans.

Let’s make him do it!

[UPDATE 1/10/2009: Christina Romer and Jared Bernstein, from Obama's economic team, have estimated the impact of Obama's plan (AARP) on employment.  Since they admit that the impact of the plan as presented is rather underwhelming, they seem to be asking us to make them do more.]

[UPDATE 1/13/2009: John Nichols, a The Nation correspondent, has followed Obama closely.  Here's his view on how to push him to the left: http://www.commondreams.org/view/2009/01/12-9]

Michael Moore offers a plan to deal with the auto industry troubles in ways that would advance the public interest.  I find it well-informed and sensible.

I know that, because he’s Michael Moore, a “controversial” documentary maker, serious economists and journalists — that is, economists and journalists under serious pressure to feign objectivity (objectivity of the type that is in fact impossible in a society as unequal as ours) — would have to find some fault in Moore’s logic or facts, or else.  Well, I couldn’t find anything objectionable in Moore’s plan.  Readers are of course welcome to voice their own objections (or agreement) in the Comments section.

Here is Michael Moore’s plan to deal with the auto industry disaster:

http://www.michaelmoore.com/words/message/print.php?messageDate=2008-12-03

Do not miss Salon.com’s interview of Paul Krugman.  A quick comment:

Krugman is good at clarifying for the general public what I regard as Keynes’ main insight in the General Theory, namely that specific disproportions in the economy, e.g. sectoral bubbles, dislocations in particular markets caused by unexpected shocks in technology or policy, etc., can turn into nasty economy-wide crises only because, as a result of widespread, self-reinforcing fears about future business conditions, there’s a sudden, generalized flight to liquidity.

This is a massive coordination problem.  Coordination problems are common to capitalist markets, not only — as in this case — to financial markets.  They are a manifestation of the inherent conflict at the root of every capitalist society between an increasingly interdependent economy and private ownership.  Keynes’ genius was to realize that, like other coordination problems facing the capitalists, the Gordian knot could be cut by the decisive action of the government.

In this interview, Krugman paraphrases Keynes’ “magneto” metaphor in the Great Slump — “If you’ve got electrical problems with your engine, that doesn’t mean you should junk the whole car” (I think Keynes referred to a ‘wagon’).  And then he throws this one-two punch:

It’s true that classical economics says that we should let market forces do the work; but classical economics also says that severe recessions can’t happen.  This idea that we must not intervene is based on a worldview that is refuted by the very fact that the economy is in the mess it’s in.

Insisting on this point is called for, not only because regular people have for long been bombarded with the Austrian view that recessions (and depressions) are necessary to purge or clear the dead wood that has cluttered the system, but also because some people in the left apparently buy into the argument.

Last Thursday, in a panel discussion at New York University, Doug Henwood and Anwar Shaikh offered their views on the ongoing economic crisis.  Their presentations were both excellent and largely complementary.  I hope the organizers of the discussion upload the video on the web for others to watch it directly.  Meanwhile, I will share a few impressions/comments on the issues involved:

[12/8/2008 UPDATE: The audio file is already available at: http://nyusociology.org/blogs/radical/2008/12/08/the-deepening-economic-disaster/]

1. Doug had an understandably skeptical view of the political opportunities opened to the left by the crisis.  One of his remarks, was that an economic crisis — with its sequels of joblessness and insecurity — could tilt people towards solidarity and collective struggle just as well as to the kind of misanthropic despair that strengthened Fascism.  This is a valid warning.  I’d just add the qualification that the very fact that, as a result of a crisis, things might tip from one extreme to the other suggests that the moment is pregnant with political opportunities for the left: the U.S. and global left.  At times like these, the actions of the left — especially actions that are thoughtfully conceived — can have large positive consequences.

2. In his introductory remarks, Doug referred to the discontent among leftists towards Paulson’s bailout plan when it was initially announced.  Doug said that, not taking some sort of action to bail out the banks, even if it involved handing money out to Wall Street, could have triggered even worse consequences to working people than the alternative.  The collapse of banks entailed serious risks for everybody.  Doug aptly alluded to the debate between Bernanke and Friedman/Schwartz on the causes and propagation mechanisms of the Great Depression of the 1930s (Anwar reminded us that we should be specific when we refer to the Great Depression, since the U.S. experienced a few of them in the late 19th century).

3. Bernanke’s reputation as an academic, which in turn led him to the Fed chairmanship, was based on his famous 1983 paper, “Nonmonetary Effects of the Financial Crisis in the Propagation of the Great Depression,” (AER, 73-3).   In his essay, Bernanke questioned prevailing views, because they implicitly assumed perfect (neutral) financial markets.   The banks’ collapse simply echoed the fall in output or — as claimed by Friedman & Schwartz — fed the fall in output as a result of wealth effects or (in tandem with tone-deaf monetary policy moves) via the shrinkage of the money supply.  Instead, Bernanke argued compellingly, bank bankrupticies led to a credit freeze with real output negative effects.

4. At this point, Doug failed to make the crucial distinction between the collapse of banks and the collapse of banking — or the collapse of the banking system as a whole.  Even if we rule out socialism as a feasible alternative in the short run, under capitalism, existing banks and banking are by no means the same thing.  By failing to draw this distinction, Doug leaves unquestioned a key article of faith of the neoliberal doctrine, namely that banking is a business to be left to private interests.

5. As I’ve written previously on this blog, it is entirely feasible — within the confines of the U.S. capitalist economy — to dampen the effects of the credit freeze on the economy by providing direct relief to mortgage debtors.  That can be duly complemented  with alternative ways to get credit flowing into the economy, e.g. by nationalizing at least some banks (buying a controlling interest and, using the current laxity in monetary policy to expand credit to well directed social goals).  My back-of-the-envelope estimations tell me this approach would be significantly more economical and effective than the favored ones.  (In all fairness to Doug, a questioner moved him to entertain the possibility of credit unions, development banks, and other forms of banking under greater public control, but he made these remarks with due skepticism.)

6.  This leads me back to the issue above. In fluid times, when its inherent instability and antagonisms sow doubts in people’s minds on the social efficiency and equity, rationality and desirability of capitalism, Marx’s famous epigram becomes more operational than under normal conditions: Ideas become a material force when they grip the minds of the masses.   How can the proposals of the left grip the minds of the masses if we don’t even dare to entertain them publicly in the first place?  The first task of the left is to articulate the needs of people, frame them in ways compelling enough to enligthen their actions when they set themselves in political motion.  The realm of political feasibility is being expanded by the crisis.  When the reigning economic ideology (e.g. neoliberalism) has exhausted itself, people otherwise impermeable to the ideas of the left are more ready to regard them.

7. In his closing statement, Anwar remarked that we shouldn’t view the ongoing crisis as a U.S. crisis, but as a crisis of capitalism.   Today’s capitalism continues to be largely an alienated phenomenon, without a central manned direction, subject to its own inherent, spontaneous laws above and beyond the control of the so-called “Masters of the Universe.” I don’t disagree with his statement as a general methodological, abstract proposition.  In fact, just the other day, I was going to write critical comment to a recent paper by Samir Amin using an argument similar to Anwar’s.   If it weren’t for views as those espoused by Amin and others, I’d have said that Anwar’s statement was unnecessary.

8. Having said that,  there’s clearly a dimension in which this is a crisis of national hegemony — a crisis of U.S. imperialism.  The view that global capitalism is driven by spontaneous social laws doesn’t have to exclude the recognition that, on a more concrete level, some nations, states, classes, groups, and individuals wield a much greater amount of social power than the rest of the human race — and that they use it to exploit others less fortunate.    (In fairness to Anwar, he also said in his reply to a questioner that he didn’t deny that national policies significantly altered the operation of the “pure” laws of capitalism, although the latter would wind up asserting themselves, usually in the form of sudden crises.)  This asymmetry of power is at the root of capitalism and imperialism.  The issue of international hegemony is a real political dimension that the left has to ponder.  Although no given nation state exercises absolute global social control or can impunely violate the laws of motion of capitalism, the U.S. continues to dominate the world economically and politically.   As I’ve tried to argue elsewhere, imperialism is nowadays the weakest link of the capitalist chain.  Imperialism, as a form of forceful extra-economic appropriation of the social labor of poor countries for the benefit of rich countries, is in a terminal crisis.

Krugman or Mankiw?  Mankiw or Krugman?

I say Krugman.  And here’s my argument (awaiting moderation as a comment on Krugman’s NYT blog):

With all due respect, what did Greg Mankiw and Glenn Hubbard accomplish under Bush, not for them personally, but for society? What’s the economic record of the Bush administration measured in social welfare terms? Isn’t economics ultimately about optimizing the welfare of society? Shouldn’t that criterion trump citations, publications, or “academic accomplishments” as determined by fellow economists? I can list two remarkable accomplishments by Paul Krugman off the top of my head that, in welfare terms, go much longer than any increasing-returns trade or urban economics story. Krugman opposed the invasion of Iraq. And Krugman opposed the tax cuts for the rich.

UPDATED: 12/1/2008

I’m getting a few readers linked from Greg Mankiw’s blog.  For their sake, I’ll expand on my argument just a little.

Assume arguendo that the economists’ talent is a resource with a positive value.  Since their productivity is not infinite (which, in conventional economics translates as, the economists’ talent is a scarce resource), then it is incumbent upon the economists — as the public guardians of social efficiency — to see to it that their talent is allocated to its best possible use.

(This is, by the way, an idea that Robert E. Lucas made famous with his remark on why macro economists should spend more of their thinking time on growth economics and less on business cycles.)

Which was — by far — a better way to spend the scarce talent of the economists in question, say, in the last 8 years?  Was it better to spend it promoting or opposing the war, the tax cuts for the rich, the deregulation of financial markets, the dismantling of the social safety net, etc.?

According to Stiglitz and Bilmes, the war is costing us $2 trillion plus.  That’s the conservative estimate.  To the extent the deregulation of financial markets is a factor leading to the current mess, that’s to be added to a problem that is requiring an emergency public injection of $.7 trillion plus.   I don’t have handy figures for the total cost (on social welfare) of the increase in social inequality caused by the tax cuts for the rich, social insecurity, etc. but I am sure it’s not zero.

I’m not saying that Mankiw alone did all that.  He contributed to it, willingly and knowingly.

I’m not saying that Krugman alone managed to reverse all that.  But he contributed to it with his well argued opinion.

Krugman served the public interest with his critique of the way things were mismanaged by Bush.  Mankiw, on the other hand, did a big disservice to the public by throwing his academic and intellectual weight to the sad task of propping up Bush.

Conclusion: To the extent they owe anything to society (since they both for sure stand on the shoulders of giants), we got an excellent return on Krugman.  Mankiw, on the other hand, has been a toxic asset on our balance sheet.  Let’s hope that Paulson buys it — and keeps it.

On 10, 11, and 12 October 2008, the Centro Internacional Miranda organized a conference in Caracas to discuss the erupting financial crisis, with a focus on the opportunities and challenges it posed to countries in the South.  On 10 October, in one of the meetings, Michael Lebowitz formulated a few thought-provoking questions.  I quickly jotted down some tentative answers to his questions.  I hoped then to refine my thoughts further, but other pressing needs made it impossible.  My remarks are rather general, but they remain relevant.  Slightly edited, this is what I wrote then:

Michael Lebowitz said:

I have three short questions to introduce into our discussion which have been provoked by the presentations we’ve just heard. These questions are based on two assumptions: (one) capitalism does not collapse by itself and (two) in the absence of agents, subjects, popular forces, capital will sooner or later exit the crisis restructured.  My first question is how exactly can capitalism restructure itself successfully? I stress here that I’m not asking you to act as advisers for the capitalist system. Rather, I think it is important to understand the strength of the capitalist system; in other words, it’s important to respect the enemy tactically.

This capitalist crisis is not terminal, precisely because of what Michael suggests above: The active subject required to overthrow capitalism and build socialism, a united, self-educated, and coordinated global working class is yet to emerge.  Internationally, the degree of development of this collective subject is very unequal.

U.S. imperialism is something else.  U.S. imperialism is likely to be in a terminal crisis, regardless of how long it may still last.  By imperialism I mean the exploitation of poor countries by rich countries using extra-economic forms of appropriation of wealth.  We know since Hilferding and Lenin that the modern type of imperialism is turbo charged by the power of modern capitalist production.  Thus, it will remain extremely dangerous until the end, but it is also in irreversible decay, without a trace left of historical justification if it ever had one (as Marx claimed in his writings on India), with its global legitimacy exhausted.

Let alone the standpoint of the struggle for socialism, even from the standpoint of the needs of global capitalist production, imperialism under U.S. hegemony has become cost ineffective, passé.  It is in a terminal crisis.  The ultimate basis of U.S. imperialism is, of course, international inequality.  More precisely, it is the tremendous disparity in the size of the economies of the U.S. and its Western allies vis-a-vis the rest of the world.  If those differences narrow down beyond a point, the scheme stops working.

Michael is right in pointing out that global capitalism will re-structure itself if no global subject impedes the re-structuring.  The confusion, hesitation, and lack of coordination exhibited by the governments of the rich countries as the crisis erupted was temporary.

The logic of capital is dual.  On the one hand, there is competition among capitals, divisions, conflict, etc.  On the other hand, there’s the need for capitalism to reproduce itself, which in this case appears as the need for capitalism to re-structure itself.  In the face of a crisis, especially one so grave and pregnant with political opportunities for the class adversary as this one, the need of capitalism to ensure basic conditions for its re-structuring is likely to assert itself sooner rather than later.

Ideology is the easiest thing to jettison.  In fact, to the extent the doctrine of so-called “neoliberalism” is in the way of this need of capitalism to re-structure itself, the doctrine is likely to be abandoned.  That is why neoliberalism, as a doctrine that postulates “free” markets (as opposed to direct forms of collective agency), as the panacea to social problems always and everywhere (except in the production of legal and political conditions underpinning private ownership rights), is in shambles.

Some version of Keynesianism is likely to be restored, because there are not many other obvious ways for global capitalism to pull itself out of the crisis in a reasonable time frame.  I’m not talking Keynesian monetary policy, which is showing its limits, but Keynesian fiscal policy (and the Keynesian vision behind the original Bretton Woods’ plan), like the nationalization of big chunks of the banking system now in process, global economic governance, (regulated) trade of goods and financial assets at a global scale.

To me, handing the Nobel to Krugman is a symptom of this need asserting itself ideologically.  (I don’t mean that I’m not glad that Krugman, a fundamentally decent person with demonstrated sympathy to the interest of working people, got it, instead of a right winger.)  Other symptoms of this ideological re-adjustment have been visible for a while already.

Not only the ideology of neoliberalism, but the practice of U.S. imperialism as well conflicts with the need of capitalism to re-structure itself under existing global conditions.  I can list a few factors pushing U.S. imperialism into a corner:

1) the anti-imperialist rebellion in the South, with historical roots in the anti-colonial struggle, a part of which is a process of consciously building socialism, another part of which is simply a nationalist impulse with no aspirations beyond the capitalist horizon (with no impermeable membrane separating one from the other in practice);

2) the erosion of the modicum of domestic consensus required for U.S. imperialism to exist, as a result of the failures in Iraq and Afghanistan and the persistent internal opposition to the war (part of which stems from a shift to the left in the social consciousness of Americans, part the result of Americans not wanting to pay the human and financial sacrifice);

3) the U.S. debt, not only public, but also private, whose counterpart is the financial and global strategic position of China and other Asian and oil-producing countries; and

4) the current financial and economic crisis, which accelerates the reckoning due to the three factors above.

The main way capitalism can re-structure itself is via fiscal Keynesianism.  In particular, the nationalization of large chunks of the financial system, e.g. banks, and the plugging of the holes created by a the decline in private consumption and investment with public spending.

But, where are the resources necessary to fund fiscal Keynesianism?  The U.S. is already indebted and, as its economy shrinks, its debt looks scarier.  At a global scale, the only way to fund an expansion in other forms of global spending is by expanding global savings (i.e. limiting global consumption).  Reducing the consumption of Americans sufficiently has political limits and defeats the effect of public spending.  At a global scale, the creation of debt money can only depreciate the currency, which in the absence of higher interest rates would only stimulate more consumption.  Hence, the kind of fiscal Keynesianism required to re-structure global capitalism is global in nature.  I call it “global Keynesianism.”  In other words, the resources held by China and the oil producing countries are effectively the re-structuring fund.

Who in the history of capitalism has funded an enterprise without claiming dividends?  Not the merchants and money capitalists that propped up the Bourbons in XVIII century France?  Not the U.S. in WWI? Etc.

So, this poses the thorniest of all issues, which is of course the distribution of the costs/benefits of the re-structuring among nations and social classes.  That depends on political strength, which depends on (broadly understood) economic strength.  Global money is a social power.  In this case, global power.

But is U.S. imperialism without a hand to play?  Certainly not.  It has military power, which counts for something.  More importantly, it still has a huge economy with enormous long-run productive potential.  This is what the creditors are pondering precisely.  It explains the fact that the flight to safe financial assets temporarily strengthens the U.S. dollar.  However, the U.S. doesn’t have the upper hand.  In theory, the U.S. could try to blackmail the rest of the world using military threats.  To paraphrase Marie Jana Korbelová (a.k.a. Madeleine K. Albright), What’s the point of having a big military if not to use it?

Well, that strategy would fail miserably.  The only upside of the U.S. debacle in Iraq is that it exposed clearly to the world (and to Americans) the miserly limits of U.S. military power.  The U.S. has more nuclear weapons than the rest of the world together, but how could it effectively blackmail China or Russia militarily with a sputtering economy and people fed up with militarism abroad and at home?  It’d destroy much more resources that it’d intend to appropriate.  That’s why the strategy would not work.  (I’m not saying it’s impossible.  Stupid people in power can do stupid things.  My point is that it would not accomplish its intended goal.)

The other available method is, of course, the depreciation of the U.S. dollar, trying to impose an inflationary tax on the rest of the world.  That would be akin to the U.S. taking itself hostage, pointing a gun to its temple, and threatening to pull the trigger.  That could work partially.  It’s been working, since China and Brazil (and Russia?) have already promised to help.  But they are going to help the re-structuring from a position of relative strength.  I cannot envision the BRICs propping up global capitalism without demanding a bigger role in global economic governance and the effective dismantling of U.S. imperialism as we’ve known it.  The strategy of depreciating the U.S. dollar would lead to the most rapid evaporation of U.S. power I can think of.

The global character of today’s financial markets cuts both ways.  The U.S. cannot dissolve them unilaterally at a massive scale without hurting itself badly.  In the 1980s, the reason why many countries in South America refused to renege on the debt unilaterally was that they’d be effectively cutting themselves out of the world market.  That’s what ties the U.S. to its liabilities today.  Global money is a global power.  Under existing conditions, who’d lose more if the U.S. severed its links with the BRICS?

The BRICS are now on the creditor side of the re-structuring.  They are exposed and they have power.  They have strong nationalist impulses.  They are not building socialism now.  But, from a historical, global viewpoint, the nationalism of the BRICS is today a progressive force.  Of course, the nationalism of the BRICS is only progressive, only historically justified, to the extent its impulse effectively contributes to reducing international inequality, the most fundamental basis of imperialism and global capitalism.

I should add here that the momentary tactical advantage the South (the BRICs in particular) currently enjoy can only be turned into a permanent strategic advantage if and only if 1) these countries continue to succeed in expanding their economies, and with increasing social efficiency, necessary condition for it to build sustainable popular support, and 2) if they increase their unity, move to negotiate their interest in greater collective accord.  It’s easy to see how this connects with the struggles of socialists in these countries.

If they drop out of the sphere of influence of capitalism and try to consciously build socialism, the game changes.  If they just limit themselves to protecting their industrial development and narrowing the gaps in average productivity and standards of consumption with respect to the rich countries (whether or not this is the intention or merely an unintended byproduct of the plan to assist domestic private accumulation), they will cooperate in the re-structuring for the reasons suggested above.

What seems clear to me is that global capitalism needs to jettison U.S. imperialism, at the very least its most extreme form (unilateralism, extra-legal aggression), if not altogether.  The complete dismantling of imperialism in all its forms is of course unlikely without a stronger rebellion from below, i.e. one, two, three many Venezuelas.

My second question is how can agents and subjects act to prevent a capitalist restructuring? And who are those agents?

In the background of Michael’s questions is the reticence of Brazil and Argentina to embrace the type of economic integration proposed by Venezuela.  In the case of the U.S., I would not accept the premise, namely that U.S. workers should struggle to prevent a capitalist re-structuring.

Clearly, for workers in the U.S., the political horizon is not socialism, but a rapid way out of the crisis, i.e. a rapid capitalist re-structuring of the economy so that they end up with jobs and increased economic security.  Given political conditions, the longer it takes for the crisis to end, the worse for them.  The working people in the U.S. can only get crushed, more fragmented, politically weaker (and more susceptible to extreme right-wing ideology) under a longer crisis.

My third question is can capitalist states prevent capitalist restructuring or do they serve as agents of capitalist restructuring?

With Brazil and Argentina as the backdrop, this seems fair.  However, as I reflect on the question, it seems to me that the question begs its answer.  To the extent Brazil’s and Argentina’s states are capitalist states, they can’t go beyond the horizon of helping, taking part in, or at least allowing the re-structuring of capitalism, not only externally (something that even Venezuela can’t avoid), but domestically.

But if we remove the adjective “capitalist” (since things are in some flux in South America), the answer is, It depends on the political conditions.  If Brazilian and Argentinian workers manage to revolutionize their state, then they are enabling themselves to go beyond merely re-structuring capitalism.

I think the distinction that we have to make is to recognize that there are two paths.  The first is a capitalist path, the restructuring of capitalism. The second is a socialist path, one which creates conditions for building socialism; and one of the most significant of those conditions is creating conditions in which there is mobilization of subjective forces, masses, the accumulation of popular forces.

Once again, with Brazil and Argentina as the backdrop, this sounds fair to me.  But I’d argue here that, under some conditions (e.g. in the U.S.), the accumulation of popular forces requires not a strategy of obstructing the re-structuring of capitalism, but ensuring better conditions for the further unity, organization, and education of workers in the longer run.

Now, can U.S. workers educate themselves if they don’t struggle against the capitalist re-structuring?  Sure.  Actually, I’d argue that they cannot educate themselves if their immediate goal is the direct struggle against the capitalist re-structuring, because they can only educate themselves through struggles they actually wage.  As far as I can see, they may passively resist the re-structuring, but as individuals, not as members of a class in political motion.

As David Barkin says, the rest of the world, or Latin America in particular cannot wait until the U.S. gets its act together, meaning until it decides to reform itself and abolish imperialism.  I don’t disagree with that.  But I’d argue that the U.S. is shifting, and that this shift creates the opportunity for getting our act together.

People in the U.S. can struggle against the redistribution of the cost of the re-structuring at their expense.  That’d be the most immediate task, I’d say.  Who knows where that struggle may lead.  Ultimately, of course, the workers’ struggle to prevent the dumping of the cost of the re-structuring on their shoulders will succeed only to the extent they threaten to derail the re-structuring itself.  But we can similarly say that not even the mildest economic struggle can ever succeed in its own terms if workers don’t threaten with a bigger disruption of capitalist reproduction.  So, the argument is silly.  The point is that posing at the outset the struggle against the re-structuring as an immediate goal is wrongheaded, an empty propagandistic gesture.  It tends to lead to (what I call) sectarian responses — political reactions divorced from the immediate needs of working people.

The first path relies upon the capitalist state and reproduces illusions in capitalism; it reinforces the idea of capitalism as practical. The second path creates consciousness of the nature of capitalism; it recognizes that crisis is an opportunity, an opportunity to intensify the battle of ideas.

I guess, under some interpretation, the struggle against the redistribution of the costs of re-structuring global capitalism at their expense can be viewed as moving along the socialist path.  However, I’d just insist that it shouldn’t necessarily imply opposing the re-structuring as an immediate task always and everywhere.

The first path, the capitalist path, is the path of Mercosur and a Bank of the South that reproduces the character of  existing international agencies. The second path is the path of Alba and of a Bank of the South based on new relations building upon solidarity.

Again, I’m trying to look at things from the point of view of the U.S. workers’ interest.

I’ve been silent for a while.  Meanwhile, Barack Hussein Obama became the president elect of the United States of America.  This offers a big opportunity for this nation.  But let me address the problems that are in the way of redeeming the promise of change that Obama made.  Ultimately, as he has admitted, the reason why we voted him president is to actually implement change for us.  So, let’s talk about the economy.

Paul Krugman’s column today, in the New York Times, is a good way to introduce the topic.  Paul alludes to the ominous economic effects of the presidential transition.  The credit markets are still frozen.  We learn that Paulson’s Treasury has not yet effectively used its mandate to shore up the debacle of the financial system.  Apparently, Paulson is leaving at least half of the $700 billion bailout fund for the next administration to deploy.  Meanwhile, Detroit’s car makers — squeezed between the rock of low car sales and the hard place of low financial returns — come to Washington, hat in hand, to ask for public help.[*]  The danger is, of course, the multiplied effects that their bankruptcies would generate, regionally, nationally, and (of much less concern to U.S. politicians) globally.  No money is being offered to them yet.  The economy is in a tailspin.

What would I do, if I were Obama?

Well, if I were Obama, I probably wouldn’t have been the president elect, because — aside from other flaws I may have had as a candidate — my agenda would have been substantively different.  For example, I’d have committed myself to entirely scrapping our foreign policy and replacing it with a new one.  Not just out of Iraq with a number of ifs and buts, but out of Iraq now, or for as long as it takes an obedient military to carry out the orders of their commander in chief.  And not only a return to our old Clintonian foreign policy.  No.  I’d have offered to discard the very premises of our foreign policy since World War I or even before, because they have exhaustively proven to be contrary to the interest of regular, working- and middle-class Americans, not to mention contrary to the interest of the rest of the world.

My foreign policy would be based on the recognition of the obvious fact that the world is shrinking very rapidly, as a result of the decreasing costs of international communications and transportation.  We all know that a truly global society and culture is emerging rapidly, and that the existing, fragmented, system of national states with a thin layer of international jurisprudence is the wrong tool for the new tasks the world must execute.  Many serious problems today are truly global in scope.  Of course, environmental problems like global warming and natural resource management, but also economic and social problems, let alone migration and crime.  But stay with the economic problems, the current financial meltdown and the forces that created it (e.g. trade imbalances) are essentially global phenomena.

In the foreign policy front, I’d have proposed for our nation to try and lead a global democratic process aimed to setting up a global legal framework that would help us, citizens of the world, to collectively and properly deal with the global consequences that flow from our national lives.  The particular ways in which this global democratic process would be implemented is — of course — key, but I’d leave that to each given nation to work out, in accordance with their own conditions, needs, and priorities.  And, the U.S. being the leader of that process, I’d ensure that, while respectful of other nations, we set a high example for the rest of the world to follow.  The essential thing is that the process is democratic — as in demos=people and cratos=power, i.e. the power of the people — so that the legal framework thus emerging enjoys true global legitimacy.  If the emerging legal system doesn’t have global legitimacy, then it won’t work well in the long run, and we’ll be back to the drawing board, with worse problems, sooner rather than later.

I am convinced that the U.S. is in a good position to lead the globe in this process.  But that requires an entirely new approach to foreign policy.  The globe would have to see clearly, not by our words, but by the nature of our actions, that we are truly abandoning any and all imperialistic impulse.  I know that is a tall order, given our history.  But I have no doubt it is necessary for this nation and the world to move forward.  In other words, we would have to prove unilaterally to the rest of the world that we are not using the instruments of our foreign policy (including our economic and military weight) as a means to advance the exclusive economic interest of a narrow sliver of the business class (e.g. oil companies, military contractors, etc.) at a terrible cost, in lives and other resources, to most Americans and to the rest of the world.  Yet in other words, we would have to show the rest of the world that we are serious about global cooperation for the common good.

Perhaps the only upside of what happened to us in the last eight years (e.g. 9/11 and the fiasco in Iraq) is that, my foreign policy vision now appears more “realistic” to many more people than it would have 12 years ago (when I first shared it with a few friends and relatives).  We have seen the hard limits of going-alone, of the richest and most armed nation in the world trying to impose its interest on other countries by force, of thinking of itself in narrowly nationalistic terms.  And we have also witnessed why global markets are entirely inadequate to dealing with global externalities, that we really need global governance — democratic, because nondemocratic governance (e.g. a la IMF, World Bank, WTO, G7, or even G20) won’t cut it.

Although much better in his approach to foreign policy than Bush, I don’t think Obama is anywhere near what I envision, which — I believe — is entirely feasible, “realistic,” and — just as important — absolutely urgent.  I understand though that the okay is not necessarily the enemy of the good.  So, I appreciate what Obama represents in terms of social progress, but I believe we won’t get more than symbolic progress if we don’t keep pushing.

As far as domestic policy, I would have committed myself as a candidate to a more vigorous fight for the economic security and interest of the majority of Americans — including publicly-funded, single-payer universal health care.  This is simply another way to say that I’d have committed myself to taking decisive steps to eliminate poverty in the U.S. and drastically reduce the inequality of opportunities that plagues our social life, particularly the forms of inequality unrelated (i.e. most of them) to individual merit.  I understand that this vows would put me at odds with the interest of big money, which would have made my candidacy less likely to prevail.  But that’s because the interest of big money, on the one hand, and the interest of regular people in the U.S. and in the world, on the other hand, are at odds.

Facing the current financial meltdown, I’d have no hesitation about the need to nationalize the troubled banks, and to use them directly to expand credit (rather than just begging the banks to please pretty please loan their resources).  I’d be set to unleash public spending (no bridges to nowhere, but tightly managed investment projects with a clear, positive social return), rebuild and in many cases replace the existing infrastructure with a greener, more socially-inclusive one (yes, Virginia, social inclusion, social cohesion, etc. are also essential goods, essential public goods that markets undersupply), and rehab public education.  And that’s, not because I don’t understand that public institutions fail (just like markets fail), but because I understand that there are conditions under which the social costs of government failure (e.g. corruption, waste, etc.) are much less than the social costs of market failure (e.g. waste, corruption, unemployment, etc.).

Where would the resources for so much public spending come from?  From whomever may have them, e.g. the rich and foreigners.  Plus (large) efficiencies that would result from these very changes.  To get resources from the rich here, I’d use fiscal policy.  If the rich truly value the benefits of living in a workable society, they would have to cough up more in taxes.  In order to induce foreigners to support our economy in a manner consistent with what I wrote above, we’d have to show them how they would also benefit from our prosperity.  We’d go global Keynesian, to put it in those terms.  We’d have to reconfigure the international monetary and financial system accordingly.  But I’ll leave that topic to another day.

Again, I understand that with such an agenda, Obama would have stood little chance as a candidate.  A campaign cannot change overnight centuries of ideological brainwashing of Americans, by media, think tanks, and academia, which in turn owe themselves to big money.

So, if I were Obama… and I had to face the current transitional paralysis, likely to leave a bigger economic mess for me to handle in January, what would I do?

I would continue to talk softly, calling everybody to unite around my agenda (obviously the best for the country, as per the nation’s own vote), but I’d also be sharpening my knives.  Perhaps not me personally, but I’d be telling my chief of staff and other lieutenants, my enforcers, the muscle behind my policy push, to sharpen theirs.

Most definitely, and hopefully without having to spell it out publicly, I would make the Republicans and a few Democrats offers they could not refuse.  As subtly as I could manage, I would make clear to everybody currently in power that I am committed to using the full legal power of the U.S. to sternly prosecute any serious wrongdoing (and wrongdoing is the way of life of the political class), specially if they exhibit negligence or obstructionism in dealing with the current economic emergency.

People with large vested interests to defend, especially those who have built up their wealth and privilege with due contempt for others not as fortunate — i.e. most of them — are not really moved by the Kumbaya approach.  We, regular people, may be, but they are not.  For them, it’s not personal.  It’s business.  And so should be for Obama.  So far okay, but let’s hope that he has the heart in the right place, and that he also has it in him whatever it takes to win these battles for the good of the nation and the world.

[*] Doug Henwood recently reminded us on his listserv (LBO-Talk) that Detroit’s car makers had managed to survive this far in spite of lousy car sales, thanks to their financial dealings, mainly sales financing.  Their financial wings were effectively operating as banks.  While banking was good business, they were able to offset loses in sales.  The credit freeze is the second whammy.

The audio of López Obrador’s speech at Mexico’s lower parliamentary chamber (in Spanish).

Venezuela and Ecuador take some steps in the formation of the Bank of the South and the introduction of a common regional currency. Here’s the press conference that presidents Hugo Chávez and Rafael Correa held yesterday (in Spanish).