breakdown

Economic and Social Crises Keep Deepening: 48 Points That Will Shape the Future

By Shawgi Tell

Not only have the policies of the rich at home and abroad not stopped economic and social decline, the rich are actually taking social irresponsibility to new levels and making things worse worldwide. They are unable and unwilling to solve serious problems plaguing humanity. Opening the path of progress to society is not on their agenda.

Connecting just a few dots in an intelligible way produces a clear picture of the destruction unfolding worldwide. It is no accident that more people are writing about a miserable dystopian future where people will have to develop new creative ways of defending the rights of all. The information below is especially timely given the cheap euphoria displayed recently by the short-sighted rich and their political and media representatives about the “solid” 850,000 jobs the U.S. economy “added” in June 2021.

  1. Inflation is increasing rapidly at home and abroad and the dollar’s purchasing power is still falling.

  2. Globally, supply chains affecting many sectors are not operating smoothly; many are worried about contrived and non-contrived disruptions lasting for months, even years.

  3. Ransomware incidents and major cyberattacks are not diminishing.

  4. Millions of U.S. workers are misclassified as contractors, which means that they do not have (generally weak) protections.

  5.  Thousands of companies at home and abroad are “zombie companies”—i.e., they don’t make a profit after paying down their debts, they just live a dead life.

  6. Student debt in the U.S. keeps soaring.

  7. College tuition in the U.S. and elsewhere keeps climbing.

  8. Marriage rates in the U.S. are at an all-time low.

  9. Birthrates are declining globally.

  10. The U.S. experiences a higher infant mortality rate and a higher prevalence of obesity compared with most OECD member countries.

  11.  The number of Americans who have moved back in with family or friends over the past 18 months is extremely high.

  12. Homelessness is high nationwide and increasing significantly in some major U.S. cities; crime is also up.

  13. Various “reforms” in countless sectors in many countries are superficial, phony, and non-substantive.

  14. Anxiety and depression remain widespread worldwide.

  15. Anti-depressant use remains high.

  16. Mass murders and killings have increased in recent years in the U.S.; so have social and civil unrest.

  17. Everyone everywhere is skeptical of the mainstream media and struggling not to be confused, ambushed, and humiliated every hour.

  18. Around the world hundreds of millions have joined the ranks of the poor over the past 18 months.

  19. Globally, well over ten million business have disappeared permanently and thousands more will disappear in the next five years.

  20.  Leading economic experts and officials have no real solutions for anything and people continually have low levels of trust in “experts” and government; the rich continue to operate with impunity.

  21. There is more polarization, division, and anger in society.

  22. Poverty and inequality keep growing worldwide; wealth concentration is staggering and unprecedented.

  23. Digital addiction and attendant problems won’t stop increasing.

  24. More U.S. college and university administrators, trustees, and leaders are abandoning the intellectual mission of colleges, restricting faculty voice, and turning college into Disney and fun.

  25. Getting simple things done is taking longer and becoming more convoluted and frustrating, especially when dealing with retailers, companies, and various agencies.

  26. Surveillance and police-state arrangements are multiplying rapidly and becoming more diverse and sophisticated at home and abroad.

  27. The media blackout on thousands who continue to experience serious side effects from vaccines continues.

  28. Newly-elected “progressive” politicians in the U.S. and elsewhere are proving to be as ineffective as the “old guard.”

  29. Privatization and deregulation keep increasing and wreaking havoc worldwide.

  30. Anglo-American imperialism thinks that constantly treating China and Russia as bogeymen will keep fooling the gullible and divert attention from deep problems in the Anglo-American world.

  31. The unionization rate of American workers is at a historic low, which is bad for all workers in all sectors.

  32. More than 130 million working Americans can live off their savings for six months or less before going broke.

  33. Mergers and acquisitions continue apace in 2021, concentrating even more wealth in even fewer hands.

  34. Central banks around the world keep printing phantom money while stock market bubbles grow larger.

  35. The U.S labor force participation rate remains low.

  36. The number of long-term unemployed (27 weeks or more) in the U.S. is still increasing.

  37. Millions of Americans have started to lose their jobless benefits.

  38. More than 40% of Black families and Latino families in the U.S. have no access to an employer-sponsored retirement plan.

  39. Black and Latino Americans are experiencing the biggest decline in life expectancy in decades.

  40. In recent years, overall job quality for Americans has deteriorated significantly.

  41. At least thirty million Americans lack access to high-speed internet.

  42. The U.S. opioid overdose crisis, which pharmaceutical companies were recently found guilty of sponsoring, persists.

  43. In Africa, nearly 40% of employed youth are considered poor.

  44. Around the world, nearly one out of ten people experience hunger and the number of undernourished people has grown by millions in recent years.

  45. The official unemployment rate exceeds 10% in at least 12 countries in (Western and Eastern) Europe. Fourteen countries fall into this category for North and South America. The real numbers are higher.

  46. More than 27% of youth in Central Asia and Southern Asia are not in employment, training, or education.

  47. In the past five years more countries have experienced violent conflict, while violent crime across the world has also increased.

  48. Despite endless happy economic news in the mainstream media, economies around the world are far from recovering; many never recovered from the Great Recession of 2008 and mass vaccinations will not solve deep structural economic problems.

The list goes on and on. This is the tip of the iceberg. Numerous problems persist on all continents. The facts above do not paint a picture of a bright and promising future for humanity. Widespread destruction prevails in the obsolete neoliberal world.

But there are also openings and contradictions that people from all walks of life are being compelled to harness in order to advance the public interest and restrict the illegitimate control and authority of major owners of capital. The desire for real progress is palpable and growing; it emerges from the concrete conditions as they present themselves today. The international financial oligarchy cannot provide any solutions to the problems plaguing humanity today, they just have more catastrophes in store for everyone and are blocking the empowerment of the people. None of these serious problems can be solved, however, so long as the people remain marginalized and disempowered. A new direction, orientation, and public authority are urgently needed.

Humanity is entering a new and deeper crisis with qualitatively different and more dangerous features. Crisis is a turning point that contains both peril and opportunity. Crisis is not always just a negative thing; it means things cannot continue in the old way and something significant is going to have to eventually give. It usually takes a serious crisis or trauma to catalyze and propel much-needed change. In this way, crisis overcomes stagnation and complacency and sets the stage for something new. The negation of the negation operates with a greater vengeance in such defining moments, giving rise to a new synthesis, a new equilibrium, which gives rise to yet another dynamic which must assert itself sooner or later. The dialectic lives and cannot be extinguished. What comes next in the complicated here and now is unfolding consciously and spontaneously.

The pace and rate of change today is exhilarating and people’s desire to protect the social and natural environment is growing. The trial of strength between capital-centered forces and human-centered forces is bound to increase because conditions are demanding a new authority that affirms the rights of all. An alternative is necessary and possible. What this will look like is in the hands of the people themselves. Only they can be relied on to usher in a bright future for humanity free of privileged private interests wrecking the social and natural environment.

Shawgi Tell, PhD, is author of the book “Charter School Report Card.” His main research interests include charter schools, neoliberal education policy, privatization and political economy. He can be reached at stell5@naz.edu.

The Multiple Meanings of Marx's Value Theory

By Riccardo Bellofiore

Karl Marx's "critique of political economy" is grounded in his value theory. "Critique" has to be distinguished from criticism: Marx aimed not only to point out the errors of political economy, but also to learn from its scientific results. Here the key names are François Quesnay, Adam Smith, and David Ricardo. Marx was also interested in assessing the conditions and the limits of the knowledge provided by classical political economy. At the same time, he saw the critique of the "science" of political economy as the means to develop a critique of capitalist social relations.

Among Marx's unique contributions was that his value theory is the only one consistently put forward within a monetary analysis: that is, it introduces money in the very initial deduction of value. In fact, Marx's object of inquiry is capital understood as a "social relation of production," defined by two main traits: the exploitation of labor within a monetary commodity-producing economy and an internal tendency to crisis. The connection between money and class exploitation on one side and the endogeneity of crisis on the other is related to the view that, in a capitalist economy, the "value added" (a monetary magnitude) newly produced in a given period has its exclusive source in "abstract labor" as an activity - more precisely, in the living labor of wage workers.

In a nutshell, Marx's reasoning may be considered a macro-monetary theory of capitalist production. In the capitalist labor process, the totality of wage workers reproduce the means of production employed and produce a net product. The net product is expressed on the market as a new money value that is added to the money value attached to the means of production, historically inherited from the past. This value added is the monetary expression of the living labor time that has been objectified by the wage workers in the period. The value of the labor power (for the entire working class), which is exhibited in money wages, is regulated by the labor-time required to reproduce the capacity for labor, and hence by the labor-time required to reproduce the means of subsistence bought on the market. Accordingly, the surplus value(value added less value of labor power) originates from surplus labor, defined as the positive difference between, on the one hand, the whole of living labor spent in producing the total (net) product of capital and, on the other, the share of that living labor which has been necessary to devote to reproducing the wages, which Marx labels "necessary labor."

The Marxian critique of political economy is inseparable from the meaning Marx gave to the "labor theory of value," which in his case was rather a value theory of labor. The issue is how relations of production and circulation are affected by the fact that labor takes the capitalist social form of producing value and surplus value embedded in "things," in commodities. In what follows, I will look at Marx's value theory from five perspectives: (1) as a monetary value theory; (2) as a theory of exploitation; (3) as a macro-monetary theory of capitalist production; (4) as a theory of individual prices; and (5) as a theory of crises.


A Monetary Value Theory

Marx's starting point is that capitalism is an economy wherecommodity circulation occurs throughuniversal monetary exchange. The analysis of exchangeas such is given priority relative to the analysis of capitalist exchange, and money is introduced before capital. In exchange "as such," individual commodity producers are separate and in competition with each other. The labor of these asocial individuals is immediately private and "becomes" mediately social on the market. Socialization of labor goes on indirectly, through the selling of commodities. Each commodity is shown to be equal to the others in certain quantitative ratios. The commodity has a use value, but it also possesses an exchange value: though invisible in the commodity, it is externally exhibited in money as the "universal equivalent."

At this stage of Marx's original argument, money must be a (special) commodity with universal purchasing power, gold, as a result of a historical process of selection and exclusion sanctioned by the state. The equal "validity" of products sold on the market is in fact an a posteriori equalization of the labors producing them. Thus, labor is not social in advance, but only insofar as its true output will be money, a form of "generic" or "abstract" wealth. Individual labor, which is concrete labor producing an object with some utility for some other agent (a social use-value), counts for the producer as its opposite, as abstract labor. Abstract labor is a portion of the total labor exhibited in the money value of output: it is then also a portion of the gold-producing concrete labor, the latter being the unique, immediately social labor. The "value of money" is fixed when gold first enters monetary circulation, in the original exchanges with the other commodities.

Although private labor becomes social labor only through money as a universal equivalent, it is not money that renders the commodities commensurable. On the contrary, commodities possess an exchange value because, even before the final exchange on the commodity market, they have already acquired the ideal property of being universally exchangeable, giving them the form of value. This property, so to speak, grows out of objectified labor as the substance of value: the form of value in the individual commodity is a ghostly entity, but it materializes by taking possession of the body of money as a commodity; the internal duality is now "redoubled" in the external duality of commodity-money. Money is nothing but value made autonomous in exchange, divorced from commodities and existing alongside them, and as the form of value it is the outward necessary exhibition of abstract, indirectly social labor.

This qualitative analysis of exchange-as-such has a quantitative counterpart. The magnitude of value of a commodity is determined by the socially necessary labor-time needed for its production. "Socially necessary labor-time" has two meanings: production must run according to average techniques and intensity (determined by intra-industry competition), but it is also driven by the paying social need (what Marx calls "ordinary demand"). In a particular branch of production, each commodity of a given type and quality is sold at the same money price. Hence, the magnitude of value is ruled not by the "individual" labor-time actually spent by a single producer (i.e., by its individual value) but by the labor-time that has to be expended under "normal" conditions (i.e., by its social, or market, value). The magnitude of value is inversely related to the productive power of labor (the labor time required to produce the commodity, given the prevailing level of intensity). Commodity values are necessarily manifested as money prices. The quantity of money that is produced by one hour of labor in a given country and period may be defined as the monetary expression of labor: the magnitude of value of a commodity multiplied by the monetary expression of labor gives the so-called simple or direct price.

From this perspective, it is always possible to translate the external monetary measure of each commodity's value (ideally anticipated by producers before exchange) into the immanent measure in units oflabor-time. Note, however, that value is not identical with price, with the latter defined as any arbitrary relative ratio between commodity and money fixed on the market. Value instead expresses a necessary relation with the (abstract) labor-time spent in the production of commodities. To be effective in regulating market prices, value implies a coincidence between individual supply and demand. In that case, the spontaneous allocation of the private labors of autonomous producers affirms itself a posteriori on the market as a social division of labor. Price is the money-name taken by commodities, and since individual supplies and demands may well diverge, price may in turn exhibit a labor amount that differs from the socially necessary labor contained in the commodity. The whole mass of newly produced commodities is a homogeneous quantity of value whose monetary expression is necessarily equal to their total money price. The discrepancy between values and prices simply redistributes among producers the total direct labor, i.e., the content hidden behind the money form taken by the net product.

This approach to value theory, where value eventually "comes into being" in money, may be characterized as Marx's monetary value theory. In it, value and money cannot be divorced. It is formulated most clearly in the opening pages of Capital, where Marx moves from exchange value to value, from value to money, and from money to labor. It may be attacked on several grounds. In his famous critique of Capital, the nineteenth-century Austrian economist Eugen Böhm von Bawerk failed to notice the essential monetary side of Marxian value theory, instead looking only at what he saw as a linear deduction in the sequence exchange value-value-abstract labor. Quite reasonably (from this limited reading), he observed that abstracting from specific use-values does not mean abstracting from use value in general. Moreover, an exchange value is also attached to non-produced commodities. It follows, then, that hidden behind the notion of value are the common properties that allow for exchange on the market, namely utility and scarcity.

A more recent criticism stresses that while the backward connection from money to value is convincing, less so is Marx's idea of an absolute or intrinsic value justifying that inverse movement from the inner dimension of value to the outer dimension of money. Marx himself shows that the social equalization among labors is achieved only when commodities are actually sold in circulation: before that, in production, we meet only concrete labors, which are heterogeneous and non-additive.


A Theory of Exploitation

All these positions ignore the fact that for Marx, commodity exchange is universal only when the capitalist mode of production is dominant-that is, only when workers are compelled to sell their labor power to money as capital, as self-valorizing value. Consequently, labor is for him the content of the value-form because of a more fundamental sequence going from money-capital to (living) labor to (surplus) value. The private "individuals" who are distinct and opposed on the commodity market, where they eventually become "social" (in capitalist terms) through the metamorphosis of their products into money, are now to be interpreted as the collective workers organized by particular capitals in mutual competition.

To explain the origin of the value added, and thereby of the surplus value contained in it, Marx begins from two assumptions: supply meets a demand of the same amount, and commodities are sold at prices proportional to the labor required to produce them ("simple" or "direct" prices). The argument is based on a two-step comparison. First, he sketches a hypothetical situation (but one that expresses something very real and significant in capitalism) where the living labor extracted from wage workers is equal to the necessary labor required to produce the historically given subsistence. It is a situation of simple reproduction without surplus value, akin to Joseph Schumpeter's "circular flow," where the rate of profit is absent. In the second step, Marx imagines a (or rather, reveals the actual) prolongation of the working day beyond necessary labor imposed by capitalists. The extension of the working day beyond the necessary labor time creates a surplus labor and its monetary expression, surplus value.

In this argument, some points must be noted. First, Marx does not abstract at all from circulation. Account must be taken, before the capitalist labor process, of the buying and selling of labor power on the labor market, and of the way subsistence is determined. He must also assume that the potential (latent) value within the commodities produced will be confirmed as a "social use value" in circulation: the metamorphosis of the commodities into real money must happen according to sales expectations. Moreover, to make clear that abstract living labor is the only source of value, Marx must abstract from the tendency toward the equalization of the rate of profit between the branches of production. Throughout the first and second volumes of Capital, Marx ignores "static" (Ricardian) competition as the tendency towards the equality of the rate of profit among industries. Already in the first volume, however, he cannot avoid considering "dynamic" (Schumpeterian) competition, the intra-industry struggle to obtain extra surplus value. The diversification and stratification of the conditions of production is determined by innovation and spreads the rate of profit within the sector.

The "generativity" of the surplus is an endogenous variable, influenced by the social form taken by production as production for a surplus value to be realized on the market. With given industrial techniques, and assuming that competition on the labor market establishes a uniform real wage, necessary labor is constant. Surplus value is extracted by lengthening the working day. Marx calls this method of increasing surplus value the production of absolute surplus value. When the length of the working day is limited-whether by law or through workers' resistance-capital may enlarge surplus value by the production of relative surplus value, that is, through technical innovations or by speeding up the pace of production (a greater intensity of labor). Technical change, which increases the productive power of labor, lowers the unit-values of commodities. To the extent that the changing organization of production directly or indirectly affects the firms that produce wage-goods, necessary labor falls, and with it the value of labor power. This makes room for a higher surplus labor, and thus a higher surplus value.

Changes in production techniques yielding relative surplus value are a much more powerful way of controlling worker performance than is the simple personal control needed to obtain absolute surplus value. Moving from "cooperation" to the "manufacturing division of labor" to the "machine and big industry" stage, a specifically capitalist mode of production is developed. Here labor is no longer under a formal subsumption to capital (with surplus value extraction occurring within the technological framework historically inherited by capital) but it is under a real subsumption to capital (enforced by "technology," i.e., a capitalistically designed system of production). Workers (the human bearers of labor power) become mere "appendages" of the means of production, a means of "absorption" of labor power in motion (living labor). The concrete "qualities" possessed by laborers spring from a structure of production incessantly revolutionized from within and designed to command living labor. At this point in the argument, labor does not only "count" but really "is" purely abstract, indifferent to its particular form (which is dictated by capital), in the very moment of activity, where it has lost the nature of the active element and become the passive object of capitalist manipulation in the search for profit. This stripping away from labor of all its qualitative determinateness and its reduction to mere quantity encompasses both the historically dominant tendency to de-skilling and the periodically recurring phases of partial re-skilling.

A moment of reflection is needed to appreciate the special features of this unique social reality where labor is made abstract already in production. Profit-making springs from an "exploitation" of workers in a double sense. There is, first, exploitation through the division of the social working day, with laborers giving more (living) labor in exchange for less (necessary) labor. The perspective here is that of the traditional notion of exploitation, which considers the sharing-out of the quantity of social labor contained in the new value, added within the period. Its measure is surplus labor over and above necessary labor. This, however, is the outcome of a second, more basic exploitation of workers, in the form of the use of workers' labor power. Capitalist wealth is created only on the condition of this "consumption" of workers' bodies and minds, which perverts the nature of labor. The quantitative measure of this "productive" notion of exploitation, which refers to the formation rather than the distribution of the fresh "value added," is the social working day in its entirety. From this second perspective, exploitation becomes identified with the whole working day, and with the abstract (living) labor of wage workers. This is the ultimate reason for tracing back value to labor, because of the value form taken by labor.

Marx shows that abstract labor reflects an inversion of subject and object (what philosophers would call a "real hypostatization"), which is deepened in the theoretical movement back from the commodity-output market to the labor market and the production process. Within commodity exchange, objectified labor is made abstract because the products of human working activity, as long as they are commodities, manifest themselves as an independent and estranged reality, divorced from their origin in living labor. The consequent "alienation" of individuals is coupled by "reification" and "fetishism": reification because in a commodity-capitalist economy production-work relations among people necessarily take the form of an exchange among "things," and fetishism because, as a consequence, the products of labor seem endowed with social properties, as if these were bestowed upon them by nature. These characteristics reappear in the other two moments of the capitalist circuit. On the labor market, human beings become the personification of the commodity they sell, labor power (or "potential" labor). Within production, living labor (or labor "in becoming") is shaped by capital as abstract labor, and embedded in a definite technique and organization specifically designed to enforce the extraction of surplus value. Abstract labor in motion (as the activity producing value and money as its result) is the true subject of which the real individual workers performing it are the predicates. In this way, Marx's capital as self-valorizing value is akin to Hegel's Absolute Idea, seeking to actualize itself and reproducing its own conditions of existence; but it is potentially limited by workers' resistance to their "incorporation" as internal moments of capital.

At this point, it is possible to understand that behind the anarchic "social division of labor"-carried out by private producers independently of one another and effected a posteriori via the market-a different "technical division of labor" within production is taking place. In the latter, inasmuch as it is subjected to the drive of valorization, an a priori despotic planning by capitalist firms leads to a technological equalization and social pre-commensuration of the expenditure of human labor power, tentatively anticipating final validation on the commodity market. This process imposes on labor-already within direct production and before exchange-the quantitative and qualitative properties of being abstract labor spent in the socially necessary measure. Even though capitalist production is completely actualized only in exchange-and therefore single capitals in competition are not guaranteed to find an outlet for their production-individual workers are immediately socialized in production.

Capitalist production is the paradox of dissociated firms whose production is "in common," but which have yet to appear as part of total social labor in the eventual validation on the commodity market. This pre-commensuration of labor and socialization within production, in its turn, is conditional on a monetary ante-validation expressed by the finance for production that money-capitalists grant to industrial capitalists. For Marx, once capitalism has reached its full maturity in large-scale industry, the subjection of wage workers to capital, with the consequent (ex ante) abstraction of living labor already in production, and hence the theory of exploitation, must be seen as the foundation of the monetary value theory.


A Macro-Monetary Theory of Capitalist Production

I have heretofore surveyed two interpretations of Marx's value theory: as a monetary theory of value and as a theory of capitalist exploitation. Here I will summarize a contemporary analysis that may link these two: an approach to the value theory as a macro-monetary theory of capitalist production. This interpretation was put forward by the Italian economist Augusto Graziani, as part of his version of the theory of the "monetary circuit," and it has the advantage of revealing a hidden Marxian current in the work of the "bourgeois" monetary heretics of neoclassical theory (Knut Wicksell, Schumpeter, D. H. Robertson, the Keynes of the Treatise on Money).

According to both the Marxian view and these monetary heretics, the capitalist "cycle," or circuit, is logically split into a sequence of successive phases: first, the initial buying and selling of labor power on the labor market (where money wages are bargained); then, immediate production, where labor power is used; and eventually, the final selling of commodities in the moment of circulation (where real wages are eventually fixed), leading to the reconstitution of the money capital which has been advanced. If we distinguish money-capitalists from capitalist-entrepreneurs, this series follows the tripartite separation of Graziani's macro-agents in the most basic abstract picture of the monetary circuit: financial capital, industrial capital, and the working class. Means of production circulate only within the firm-sector, out of reach of wage-workers, whose purchasing power can only materialize in buying the means of consumption that the capitalist class makes available to them.

The defining features of Marx's value theory can be characterized as follows. It is, first of all, a class macroscopic analysis, which leads directly to a description of the capitalist economic process as a monetary circuit. In the cycle of money capital, money is initial finance from the banking system, allowing the firm-sector as a whole to purchase labor power from the working class. Money, before being the universal equivalent in circulation (the "social relation" in circulation), is what puts capitalists in a specific "social relation" with workers in production. The possibility of crisis arises when money is hoarded, because of the pessimistic prospects of capitalist-entrepreneurs or money-capitalists, and brings with it unsold commodities and involuntary unemployment. Crisis is a "break" in the circuit-a point which encompasses both Keynes's view of crisis as the result of a rise in liquidity preference (failure to "close" the circuit), and circuitists' view of crisis as an outcome of capitalist-entrepreneurs' reluctance to invest (failure to "open" the circuit).

"Valorization" means an enlargement of abstract wealth. In a truly macro-monetary perspective, no exchange internal to the firm-sector can contribute to valorization. If we assume Marx's macrosocial, monetary, and class point of view, it is clear that surplus value (gross profits) cannot originate in internal exchanges within the capitalist class: inter-firm transactions could only give way to "profit upon alienation" (or "profit upon expropriation"), cancelled out at the level of the firm-sector as a whole. The genesis of surplus value can be found instead in the only external "exchange" for capital as a whole, the one between capitalist firms (financed by banks) and the living bearers of labor power. Following Michał Kalecki's revision of Rosa Luxemburg's argument, the level, composition, and distribution of output can be easily determined. The "autonomous" capitalists' expenses for investment and their own consumption fix the amount of their profits, their market power (expressed in the "degree of monopoly") defines the profit share on income, and from here it is straightforward to derive the level of output, income and employment. In this view, in a capitalist economy, the totality of the means of production must go to capitalist-entrepreneurs. Thus, the entrepreneurs must be able to buy all the new means of production which have been produced. The profit margin must be set at a level such that the mass of profits is equal to realized investments.

It is noteworthy that in this reconstruction of Marxian theory what the working class actually receives are the consumption goods that firms put on the market for them, even if there are household savings. Financial wealth allows individuals to modify their consumption stream over time, but it is irrelevant for the aggregate. A reduction in saving is followed by higher real consumption by workers only if the firm sector autonomously decides to increase the supply of wage goods. Even shares represent a fictitious ownership, as long as decisions over real production are out of workers' control. This does not mean that distribution is immutable. However, workers exert influence on firms' or government's decisions about the real composition of output through non-market actions: conflict in production, or struggles in society, or political interventions.

On the Marxian theory of money, Graziani also offers some original insights. We must distinguish "money" (Geld in Marx's original German) from "currency" (Münze). The former represents abstract "wealth in general," while the latter is the universally accepted intermediary of exchange, and is one among many representatives of wealth in general. If we accept this distinction, the valorization process is defined as money-commodity-more money, or M-C-M´, while the monetary circuit enabling its reproduction is defined as currency-commodity-currency. It follows that the specific goal of the capitalist is to acquire money in the sense of abstract wealth, not to accumulate money as currency. When Marx discusses the nature of gross profit, he makes clear that it is acquired by capitalists solely in the form of commodities.

While Marx stresses that currency as "means of circulation" in commodity markets is itself a commodity, currency representing money as a form of capital must be a form of credit, and more specifically bank credit ex nihilo. The role of currency as bank credit ex nihilo is not made explicit in Capital because, when Marx writes of money and currency, especially in volume 3, he does not present a "pure" theory of the monetary circuit, but only an inquiry into what we today call the practice of money markets. Moreover, he assumes an open economy and the presence of the state. It has been suggested that the assumption that money is a sign (like that made by the monetary heretics) threatens to undermine Marx's theory of exploitation, since money as capital may seem to be valueless. This is not so. The problem of the value of money as capital is reduced to the problem of determining wages, because in a class macro-monetary approach the only purchasing power of the advanced currency is the number of workers hired: following the general principle of the theory of value, the value of the real wages of workers is equal to the given (subsistence) real wage .


A Theory of Individual Prices

The macro-monetary reconstruction, like the other perspectives on Marx's value theory I have presented, deflates the theoretical drama which has been going on for a century or more about the so-called transformation problem. This debate centers on Marx's value theory as a theory of the determination of (relative) prices: the conclusion many drew from the discussion was that Marx failed to transform the "simple" or "direct" prices (proportional to the labor contained in the commodities exchanged, sometimes labelled "labor-values") into the "prices of production" (containing an equal rate of profit, and systematically diverging from simple prices).

The reason is easy to understand. In volume 1 of Capital, Marx focuses on the rate of surplus value (identical to the rate of exploitation)-that is, the surplus value divided by the money capital spent in buying labor power (what Marx calls variable capital). This ratio is identical to that between surplus labor and necessary labor. The rate of surplus value is positively related to the length and intensity of the working day. It also rises with increases in the productive power of labor, which is positively affected by the capital composition: the ratio between the money capital advanced to buy means of production (labelled by Marx constant capital) and variable capital. Surplus value springs only from the use of labor power bought with variable capital, and not from the means of production bought with constant capital-hence, their respective names.

The rate of surplus value explains the origin of gross profits for total capital, confronted with the working class as a whole. Total capital extracts the new value, as exhibited in money, of the living labor of the working class, and pays back the value of labor power, as exhibited in the necessary labor. However, for the individual capital, the success of an investment is rather measured by the rate of profit: the ratio between total surplus value and total capital (the sum of variable capital and constant capital). Because of inter-industry, "static" competition, the rate of profit tends to be equal among branches of production.

Here the problem is said to emerge. The rate of profit is positively related to the rate of surplus value, and negatively related to capital composition. The rate of surplus value tends to be equal in every industry, but there is no reason for capital composition to equalize across industries. Commodities, including the elements of constant and variable capital, cannot be evaluated at labor-values when inter-industry competition is introduced-hence the need to transform the labor-values in prices of production, with the rate of profit helping to determine the elements of variable and constant capital.

I will not go into the intricacies of this debate. The point is that, whatever the opinions on the technical details of the transformation, the problem simply cannot exist as such: it is a pseudo-problem. If the core of Marx's value theory is taken to be the a posteriori socialization of labor on the market against the universal equivalent, the argument may be put forward that there are no actual "labor-values" before the eventual validation on the final market . There is only a single system of prices, and the assumption of simple or direct prices is just a "law of exchange," to be removed at a lower level of abstraction. The vision of Marx's value theory as a theory of capitalist exploitation, tracing back surplus value to the extraction of living labor from human beings as bearers of labor power, is even more radical: the point there is that valorization arises from the social relation of capital and workers in the capitalist labor process as a contested terrain, through class struggle in production. Accordingly, the extraction of living labor meets specific social difficulties for the buyers, because the labor power sold by workers (and hence the living labor to be extracted from them) are attached to the sellers, who in capitalism are supposed to be "free" and "equal" individuals. Thus the new value produced in the period cannot but be the monetary expression of living labor alone: whatever the "rule of prices," the ratios by which commodities exchange cannot but redistribute the new value. By definition, gross profits appropriate a share of workers' living labor.

The macro-monetary theory of capitalist production complements this argument, assigning a more fundamental role to the labor-values hidden behind simple or direct prices as a price rule. In fact, it is maintained that in the macro-social argument, in the first volume of Capital, the relevant price between class macro-agents is the rate of surplus value, adequately expressed through simple or direct prices. The reason is easy to see. The new value added by current production is identical to the monetary expression of living labor, and the value of labor power is the monetary expression of the labor contained in the real wage of the working class. All this occurs independently of saving behavior, and, we may add, it remains true whatever the ruling price system. As Graziani argues, in a quite extreme but effective fashion, Marx's theory of value has nothing to say directly about the phenomenon of the prices in final commodity-circulation, since valorization has been accounted for in the macroscopic class analysis, which includes the buying and selling of labor power and immediate production.

The macroeconomic inquiry into valorization is prior to the microeconomic determination of individual prices. At stake in the latter are not the relations between total capital and working class, but the exchange-relations of single firms. The determination of prices of production may well give way to a disparity between the labor commanded (in exchange) by gross profits and the labor contained (in production) within surplus value, and between the labor commanded (in exchange) by the money wage bill and the labor contained (in production) within the real wage for the working class. However, this "unequal exchange" can only obscure the process of valorization, not erase it. The new value (and then the living labor extracted by total capital from workers) and the value of labor power (and then the necessary labor required to produce the given real wage of the working class) remain the same.

Both the Marxists, and their neo-Ricardian or neoclassical critics-who dealt with the determination of prices of production within a simultaneous exchanges perspective-were unfaithful to Marx, because they overlooked the process that constitutes the equilibrium position. In fact, Marx's value theory as it has been depicted here is a non-equilibrium theory. This is something intrinsic to all the foregoing accounts of Marx's value theory: that value eventually comes into being with money as its phenomenal form (the monetary value theory); that class struggle and intra-capitalist competition affect the extraction of living labor (the theory of exploitation); as well as in the view of the essential monetary ante-validation of labor power as potential labor through the financing of production (the macro-monetary theory of capitalist production). "Non-equilibrium" refers to the constitution of the economic magnitudes, allowing us to distinguish, afterward, between equilibrium and disequilibrium. This is not a "temporal" but a "logical" re-reading of Marx's value theory. In my understanding, this duality of value theory (an out-of-equilibrium perspective, embodying both an equilibrium and a non-equilibrium) is at the core of David Harvey's notion of "anti-value," which has eluded many commentators.


A Theory of Crises

Another controversial area in Marxian political economy is the theory of crises. According to Marx, accumulation-i.e., the conversion of some portion of surplus value into additional (constant and variable) capital, to produce more surplus value-is a contradictory process. Crises are at once necessary explosions of the contradictions, and temporary solutions to them.

Capitalism's tendency toward instability is already evident in its structure as a monetary economy, where commodity-exchange is universalized. For some of the separate and autonomous firms, the anarchy in capitalist social division of labor may easily lead to an incomplete "realization" in circulation of the value potentially produced in immediate production. The presence of money dissociates sales from subsequent expenditures, so that hoarding may disrupt the smooth sequence of supply finding its own outlet on the market as incomes are spent. Most of Marx's inquiry in the three volumes of Capital, however, rests on the assumption that commodities are sold on the market at their "social values" (in volumes 1 and 2) or at "prices of production" (in volume 3)-something akin to Keynes's basic model in the General Theory of fulfilment of short-term expectations.

In volume 2 of Capital, drawing on an original insight by Quesnay, Marx constructs his schemes of reproduction, which show that a balanced growth path, independent of the level of consumption demand, is a theoretical possibility. Marx divided social output into two departments, the first producing capital goods and the second consumption goods (which may be subdivided into wage-goods and luxury-goods). The value output of both sectors is seen as the sum of its three constituent parts, i.e., constant capital, variable capital, and surplus value. In simple reproduction, capitalists unproductively consume the entire surplus value, resulting in zero growth. In enlarged reproduction, they more or less completely invest surplus value in new constant and variable capital, allowing for accumulation. What the scheme clarifies is that each value component of the output is also a component of demand for its own or the other sector. Equilibrium, which is always possible, depends on some balance among intersectoral trades. Against Malthus and Sismondi, Marx affirms that capital may expand over time without meeting a barrier in effective demand, because it is the mainspring of its own demand. Nevertheless, against Ricardo and Say, Marx also states that, since equilibrium needs exchange in definite, "correct" proportions-and not only in value, but also in use value and money terms-a balanced long-run accumulation is not a guaranteed outcome, but rather materializes by "accident" (a point taken up again in the Harrod-Domar growth models).

The likelihood of departures from equilibrium because of this absence of planning simply reflects the possibility of crises occurring in a market environment. Marx instead seeks to explain the necessity of crises arising from the capitalist class relation itself. In his view, failures of effective demand issue from a fall in investments, which itself proceeds from a profitability crisis. Thus, the question becomes one of understanding the systemic, recurring causes of profit shortfalls. A first argument is described in the "general law of capital accumulation" at the end of volume 1 of Capital: assuming a constant composition of capital, a sufficiently rapid growth in the value invested exhausts the supply of labor power and tightens the labor market. Wage increases outpace the rise in the productive power of living labor, the rate of profit starts falling, and consequently, accumulation and the demand for labor slow down. A more lasting solution to this difficulty, located in distributive struggles over the partition of the new value added, is the introduction of labor-saving, capital-intensive methods of production. For a given capital, mechanization reduces the share of variable capital, and thereby the demand for labor, to produce the same output: it displaces workers, replacing them with machines.

Theoretically, a rise in the rate of accumulation may enhance or reduce employment, according to the relative weight of the two forces, the increase in the size of capital and the change in its composition. Through the cycle, the pace and structure of the accumulation of capital (the independent variable) constantly vary to reproduce an industrial reserve army of potential workers ready to be included in the valorization process, exerting a downward pressure on wages-the dependent variable. A permanent downward pressure on the real wage, i.e., an "absolute" impoverishment of the workers, is among the possible outcomes. All the same, the normal situation is very different. Capitalist accumulation is propelled by the production of relative surplus value, which presupposes a positive dynamics of the productive power of labor. The real wage, then, has room for improvement (without impeding the tendency for a greater share of the surplus value in the new value added to go to the capitalist class), as long as the increased level of workers' consumption is expressed in a lower value of labor power. This is what Luxemburg called the tendency toward a fall in the relative wage, i.e., a contraction in wages as a proportion of national income-a relative, not an absolute, impoverishment. On the other hand, with the rise of trade unions and a more militant working class, wage struggles can become partially independent from the labor market, break the tendential fall in the "relative" wage, and develop into an independent cause of capitalist crises.

Mechanization of production is also an autonomous drive for capital to control living labor and to remove workers from the point of production. If mechanization is a powerful lever to regulate both the exchange value and the use value of labor power, it nevertheless creates a further difficulty. The rise in what Marx calls the technical composition of capital - the "physical" ratio of the number of means of production to the number of workers employed-contributes to the expulsion of workers from the productive process; but workers' living labor, we know, is the exclusive source of value and surplus value. According to Marx, the consequent rise in the composition of capital expressed in value terms yields a tendency of the rate of profit to fall. It must be noted, however, that Marx expresses the "law" with reference to the rise in what he calls the "organic" composition of capital (in which the elements of constant and variable capital are evaluated at the prices before the diffusion of innovation), and not in the value composition of capital (in which these elements are evaluated at the prices after such diffusion). The latter definition fully reflects the revolution in the evaluation of constant and variable capital produced by mechanization, whereas the former measures inputs at their original prices. The "organic" composition follows the increase in the "technical" composition, but the trend in the profit rate depends on the "value" composition. The clarification of the distinction between physical, value, and organic composition of capital was a fundamental contribution made by Ben Fine and Laurence Harris in the late 1970s, and developed more recently by Alfredo Saad-Filho.

Some authors have interpreted the tendency of the rate of profit to fall not only as a cause of cyclical crises, but also of capitalism's long waves, and others have considered it the reason for a secular downward trend in profitability. There is some justification for this view. The application of greater quantities of constant (and especially, fixed) capital per unit of output is the most effective means to propel surplus value extraction from workers. Marx thought that the increase in the rate of surplus value could not compensate in the long run for the negative influence on the rate of profit of the higher (value) composition of capital, and so he downgraded it as a mere counter-tendency. Marx's strongest argument in favor of the "law" is an appeal to an absolute limit to the surplus labor that may be pumped out of a given working population.

To understand what is involved here, it is best to view the composition of capital as an index of the ratio between, on the one hand, the dead labor contained in the means of production and, on the other, the living labor expended in the period-that is, to represent it as the ratio between constant capital and the sum of variable capital and surplus value. Assuming that variable capital is tending toward zero, and thus that the whole social working day is objectifying itself as surplus value, the (value) composition of capital becomes the reciprocal of themaximum rate of profit. This latter can be seen as the ceiling for the upper movements of the actual rate of profit. Marx suggests that the numerator of the maximum rate of profit meets a "natural" constraint in the amount of living labor that can be extracted from workers, while, on the contrary, its denominator is free to grow without limits. At the ruling social values, individual capitalists are willing or forced to introduce more capital-intensive methods of production. In this way, they lower unit costs to gain excess temporary profits, but the longer-run effects of their behavior force a reduction of the social values of commodities and depress the average rate of profit.

Nevertheless, to deduce a necessary fall in the rate of profit would be unjustified, because progress in the productive power of labor, accelerated by mechanization, ends up reducing the values (i.e., prices) of all commodities, and thereby also those of the means of production. It cannot be excluded a priori that the devaluation of constant capital might even be strong enough to raise the maximum rate of profit, removing the barrier to the actual rate of profit. The latter is both a positive function of the rate of surplus value and a negative function of the composition of capital. Another criticism is thus that there is no reason to exclude the possibility that the rise in the rate of surplus value can offset the (possible, not necessary) rise in the value composition of capital.

It is interesting to observe that the higher the rate of surplus value soars, and thereby the more the tendency for the rate of profit to fall is repressed, the more likely the system is to run into a third type of crisis, that of realization. Some Marxists have indeed suggested that the rate of profit falls because actual (or expected) effective demand is insufficient for the system as a whole to buy commodities at their full value (including the average rate of profit). Two conflicting positions have been dominant in this group of theories. One approach (that of Hilferding, for example) stressed that disproportionalities-i.e., sectoral imbalances between supply and demand-were intrinsic to a spontaneous, chaotic market economy. If excess supply persistently affects important branches of production, this can spread to other sectors and easily degenerate into a general glut of commodities. This kind of difficulty, however, depends on the speed of price-and-quantity adjustment to disequilibrium, and may disappear in a more "organized" form of capitalism. Some of its proponents (such as Mikhail Tugan-Baranovski) even ended up endorsing the view that, being "production for production's sake," capitalism encounters no true barrier in effective demand, and in principle sustain a balanced growth path with declining consumption. The other approach (associated with Luxemburg and others) is sometime wrongly labelled "underconsumptionist," though in fact it stresses under-investment. It maintains that net investment could not compensate for insufficient consumption forever, since the long-term profitability of new machine-goods depends on future outlets, and these latter are less and less predictable with a decreasing share of consumption in total demand. The same reproduction schemas prove that the inter-sectoral trade proportions required for expanded reproduction are precarious and unsteady. An increasing extraction of relative surplus value-which is needed to overcome the tendency for the rate of profit to fall, and which strengthens the tendency for the relative wage to fall-shifts them continuously, making them unlikely to be met for long.

For some of these theorists, such forms of realization crisis are of increasing severity and lead to a final breakdown, when the "external" factors mitigating them (such as the net exports to non-capitalist areas) are exhausted. Other writers in the same tradition, as Kalecki, objected that the insufficiency of effective demand may be solved by what he dubbed "domestic exports," i.e., governments' budget deficits financed by the injection of new money; indeed, Luxemburg already hinted at something of this kind in her original argument, under the heading of military expenditures on armaments. A similar role may be played by unproductive consumption by "third persons," drawing their incomes from deductions from total surplus value. To be compatible with a stable accumulation of capital, these "solutions" call for continued pressure on living labor. This confirms the role of the rate of surplus value as the pillar of capitalist development, and of the outcome of the class struggle within the capitalist labor process as the crucial determinant of its dynamics.

A re-reading of Marx's theory of crisis looks at the tendential fall in the rate of profit as a meta-theory of crises, incorporating the different kinds of crises which can be derived from Marx, and extending them to a historical narrative of the evolution of capitalism. From this point of view, the tendential fall in the rate of profits due to a rising value composition of capital was confirmed during the Long Depression of the late nineteenth century. The increasing rate of exploitation needed to overcome the tendency was implemented by Fordism and Taylorism, which jointly strengthened the tendency for the relative wage to fall. The rise in the rate of surplus value, however, created the conditions of a realization crisis, the Great Crash of the 1930s. The so-called golden age of capitalism after the Second World War was predicated on a higher pressure on productive workers, to obtain enough living labor and gain ever higher surplus labor. This in turn opened the way to a social crisis of accumulation, because of the struggles within the immediate valorization process-a key factor in the stagflation of the 1970s.

From this point of view, the so-called Great Moderation, leading to the recent Great Recession (if not Lesser Depression), must be interpreted as capital's reaction to a crisis originating from a rupture in the same capital-labor "social relation" within production. "Great Moderation," of course, was a misnomer, coined by Ben Bernanke in 2004 and founded on the delusion that finance and business cycles were at last under control. Neoliberalism is best captured as a real subsumption of labor to finance and debt within a Minskyian "money manager capitalism": the subordinated integration of households into the stock exchange market, and their descent into bank indebtedness. As I have argued several times with Joseph Halevi, even before Minsky the tendency to household private indebtedness was captured by Paul Sweezy and Harry Magdoff as a powerful countertendency, and Sweezy developed a reading of the new phase of capitalism in terms of "financial dominance." The other side of the coin was the "deconstruction" of labor in the new phase of capitalist accumulation, characterized by new styles of corporate governance leading to a centralization without concentration, and then to a weakening of workers in the labor market and in the labor process. This form of capitalism was based on a capital market inflation, which, though it stabilized the system for a time, has proven unsustainable.


This piece originally appeared at MROnline . It is a revised version of a paper presented at the Union for Radical Political Economics session of the Allied Social Sciences Association Conference in Philadelphia in January 2018, and previously presented at the Historical Materialism Conference in London in November 2017.

Riccardo Bellofiore is a professor of economics at the University of Bergamo.

Capitalism's Depleted Reserves: Recognizing and Preparing for Systemic Breakdown

By Ben Peck

The capitalist crisis of 2008 was rescued by an enormous transfusion of public money into the banks. The system has been on life-support ever since.

Despite this, the bourgeois see little prospects of a recovery for their system. Rather, they wring their hands and impotently grimace in anticipation of another slump. Many consider this now a question of "when", not "if".

An organism in crisis will begin to burn off its reserves of fat in order to survive. Austerity has been capitalism's economic equivalent of this process. The system has eaten deeply into its reserves, particularly in the advanced capitalist countries. All the accumulated reforms conquered by the working class in the preceding historical period; relatively decent wages, the welfare state, pensions, etc; in order to pay for a system in crisis have been, or are in the process of being, burned away.

One particularly rich reserve has been Chinese capitalism, which has been heavily depleted. In the wake of the crisis the Chinese pumped half a trillion dollars into their economy. It was one of the greatest Keynesian interventions the world has ever seen. Rather than merely propping up the banks, the intervention contributed markedly to the real economy. According to the former US treasury secretary Larry Summers, between 2010 and 2013 China poured more cement than America did in the whole of the twentieth century! Up until last summer a city the size of Rome was being built in China every two weeks. This intervention gave a clear impulse to the Chinese and world economy.

However, the Chinese reserve is now near exhaustion and the effects of the stimulus are turning into their opposite. Debt has ballooned from $7trn to $28trn - 282% of GDP. Imports and exports are falling. The massive economic stimulus has ended up in a massive crisis of overproduction, provoking a world-wide crisis of steel. In Redcar and Port Talbot in Britain steel works are closing, destroying communities. On the other side of the world, the same course is being taken in China itself.


Political reserves

The depletion of these "economic reserves" has had a corresponding effect on capitalism's "political reserves", which are also being burned away. The old political arrangements are falling apart, including many of the traditional workers' parties. According to a report in The Economist recently, the social democracies in Europe stand at their lowest level of support for seventy years.

The classic example is PASOK, which commanded forty-five percent of the electorate in Greece prior to the crisis. On the basis of its complete capitulation to the Troika and the collapse of the Greek economy it has been reduced to a mere four percent. PASOK is now hanging on to a place in parliament by its fingernails.

In Europe in 2015 the social democrats lost power in Denmark and recorded their worst ever results in Poland, Spain, Finland and also came very close in Britain.

In France the so-called Socialist President, Francois Hollande, is the most unpopular leader in seventy years. By attacking the labour laws his government has provoked a mass movement, which on March 31st carried out a general strike involving 1.2m French workers united against the socialist government.

The strike involved a significant participation of French youth, who now compose a very class conscious vanguard of the struggle. These youth did not go home, but stayed out in an occupation of the squares, the "Nuit Debout" movement, which is reminiscent of the Syntagma and Indignados movement in Greece and Spain. These movements were the basis for the rise of parties which have since supplanted the social democracies. It is not difficult to imagine the same process developing in France.

People are turning away from the social democrats in their droves everywhere, laments The Economist. The explanation is not complicated. Where the social democrats offer no alternative to austerity, but instead work hand-in-glove with the bosses to implement it, they completely undermine their reason for existence in the eyes of the working class.

Even in Britain, the two-hundred thousand-strong movement behind Corbyn is not necessarily enamoured with the Labour Party. In Greece, support for Syriza has collapsed to sixteen percent following its betrayal of the OXI movement and its resumption of the austerity programme of its predecessors.

This crisis of Social Democracy is part of the general crisis of bourgeois democracy, which is fast expending its political capital. This is a dangerous development for the ruling class, as noted by the Financial Times' Martin Wolf on February 2nd in an article entitled "Bring our elites closer to the people":

"...we already face the danger that the gulf between economic and technocratic elites on the one hand, and the mass of the people on the other, becomes too vast to be bridged. At the limit, trust might break down altogether. Thereupon, the electorate will turn to outsiders to clean up the system. We are seeing such a shift towards trust in outsiders not only in the US but also in many European countries."

The reference is to the Trump-Sanders phenomenon in the US, which was anticipated in Europe by the rise of Syriza, Podemos, the SNP and Corbyn on the left, and also the French NF and, more recently, the AfD in Germany, on the right. Class polarisation is tearing at the seams of capitalism's political veneer.

Consciously or unconsciously, when the bourgeois start to worrying about "outsiders" interfering in their system, what they actually express is the fear of the working class taking an interest in the way society is run, and interfering in their affairs.

When the next global downturn arrives, the period between that crisis and 2008 will mark a watershed period in the history of the capitalist system. It will be characterised as one in which the system, far from developing, burned away many of the reserve layers at its disposal, economically, socially and politically, which had acted as "cushioning" in 2008.

This will give the class struggles of the not-too distant future a far sharper character. The struggle on the part of the bourgeois will be far more desperate. The struggle on the part of the working class will take place after a period in which sick and enfeebled capitalism has been able to do nothing to solve its fundamental problems. Illusions that previously existed have been burned away, many defenders of the old system discredited. This is something we must prepare for, and intervene in, to build the forces of Marxism.



Originally published at In Defence of Marxism.

The Breakdown of The Rule of Law: America's Descent Into Authoritarianism

By Devon Bowers

From early in one's life, an American is taught the law and American institutions of justice are great equalizers within our society, ensuring that everyone is treated the same, no matter one's class, race, or ethnicity. Yet, what has been happening quite recently, especially within the past decade or so, is that we have been seeing an increasing breakdown in the rule of law and the use of the justice system to enforce injustices.

President Obama rode in on a high horse in the 2008 presidential elections, specifically on his slogan of hope and change. He rightly criticized the Bush administration on a number of issues, from the economy to the wars abroad, as well as the use of drones.[1] Yet, Obama subsequently went and not only increased the use of drones, but used them to kill Anwar Al-Awlaki, a member of Al Qaeda who was still legally an American citizen at the time of his death.[2] However, the story gets even more shocking as not only does such as act create a legal precedent where the President can kill any US citizen that he deems a terrorist[3], but the Obama administration's attorney general argued that such assassinations of American citizens on US soil "would be legal and justified in an extraordinary circumstance.'"[4] Some would argue that Attorney General Eric Holder cleared the entire domestic drone debacle when he sent a letter to Senator Rand Paul which read:

It has come to my attention that you have now asked an additional question: "Does the President have the authority to use a weaponized drone to kill an American not engaged in combat on American soil?" The answer to that question is no.[5]

However, the problem with that answer is the vagueness of the phrase "engaged in combat." While it may seem obvious to someone what that phrase means, it becomes murky when one sees that the Defense Department has labeled protests as a form of low-level terrorism[6] and that environmental activists are being prosecuted as terrorists.[7] Does this means that protesters and environmental activists are "engaged in combat on American soil" and thus it is OK to attack them with armed drones?

This is deeply problematic as it essentially nullifies the due process clause of the Fifth Amendment and paves the way for future Presidents to potentially label their political opponents as terrorists or an enemy combatant (both have vague definitions), assassinate them with a drone, and hide the evidence under the guise of national security.

The breakdown of the rule of law has been furthered in the economic sphere as the wealthy elites are able to crash the economy and receive no jail time whatsoever, even though crimes were committed.[8] These economic elites are so powerful that even "the Department of Justice fears bringing criminal charges against them because of the possible repercussions such proceedings would have on the greater economy."[9] The fact that these corporate fatcats can crash the economy without fear of prosecution is only a testament to their political and economic clout. They have established institutions that are so firmly entrenched within the American economy that even the Department of Justice fears the effects of bringing them to court.

These corporations have cheated the government out of what they owe by using tax havens or shell companies, as was the case with Apple.[10] This corporate tax evasion does not only send money overseas, but these corporations can tap that money at will by "simply by taking out loans and using foreign cash as collateral."[11] Activity such as this reveals our two-tiered justice system where individuals get prison time for tax evasion, while bankers run free.[12]

A final- and perhaps the most disturbing of all of these examples- in the breakdown of the rule of law in America is that those who reveal injustices are harshly punished. Bradley Manning revealed information of US war crimes and was demonized as a traitor even though he had a legal duty to tell of these war crimes as "in the US Army Subject Schedule No. 27-1 is 'the obligation to report all violations of the law of war.'"[13] Manning was treated with such harshness that the UN Torture Chief classified Manning's treatment as being in "violation of his right to physical and psychological integrity as well as of his presumption of innocence."[14] More recently, Edward Snowden released information that the US has been spying on its citizens and he has been deemed a traitor even though

Treason is the only crime specified in the Constitution, and here is what our founding document says about it, from Article Three, Section Three:

Treason against the United States, shall consist only in levying War against them, or in adhering to their Enemies, giving them Aid and Comfort.

The Supreme Court has interpreted this to mean that no one can commit treason unless it's with a country against whom our Congress has declared war. This means that neither the Vietnam War nor the Korean War nor the War on Terror can yield treasonous Americans, as none of these wars were declared by Congress. [15] (emphasis added)

The actual law is being ignored in order to demonize and prosecute those who go against the state.

Yet, what does this the breakdown of the rule of law mean for the United States? For one it means that the US is a nation where "There are two sets of laws: one set for the government and the corporations, and another set for you and me,"[16] yet on a deeper level it signals that the US is becoming more and more of an authoritarian state. There are many characteristics of authoritarianism that the US is currently engaged in or has shown since the dawn of the 21st century. They include

  • Constraints on political institutions (Think the political constraints on third parties[17])

  • Constraints on the mass public

  • Ill-defined executive power[18]

The descent of the US to an authoritarian nation signals the destruction of the rule of law. Yet, there is hope. We the people can reverse this situation, but we will have to work outside the system. We are our only hope.



Endnotes

1. Tom Curry, "Obama Continues, Expands Some Bush Terrorism Policies," NBC News, June 6, 2013 (http://nbcpolitics.nbcnews.com/_news/2013/06/06/18804146-obama-continues-extends-some-bush-terrorism-policies?lite)

2. Joshua Keating, "Was Anwar Al-Awlaki Still A US Citizen?" Foreign Policy, September 30, 2011 (http://blog.foreignpolicy.com/posts/2011/09/30/was_anwar_al_awlaki_still_a_us_citizen)f

3. Adam Serwer, "Obama's Dangerous Awlaki Precedent," Mother Jones, September 30, 2011 (http://www.motherjones.com/mojo/2011/09/al-awlakis-innocence-beside-point#13725235717251&action=collapse_widget&id=3279092)

4. Jon Swaine, "Barack Obama 'has authority to use drone strikes to kill Americans on US soil," The Telegraph, March 6, 2013 (http://www.telegraph.co.uk/news/worldnews/barackobama/9913615/Barack-Obama-has-authority-to-use-drone-strikes-to-kill-Americans-on-US-soil.html)

5. Amy Davidson, "Rand Paul Gets A Letter From Eric Holder," The New Yorker, March 7, 2013 (http://www.newyorker.com/online/blogs/closeread/2013/03/rand-paul-gets-a-letter-from-eric-holder.html)

6. American Civil Liberties Union, ACLU Challenges Defense Department Personnel Policy To Regard Lawful Protests as "Low-Level Terrorism," http://www.aclu.org/national-security/aclu-challenges-defense-department-personnel-policy-regard-lawful-protests-%E2%80%9Clow-le, June 10, 2009

7. Kevin Gosztola, Environmental Activist, Prosecuted as If He Was Terrorist, Was Held in Isolation for Political Speech, Firedoglake, http://dissenter.firedoglake.com/2013/04/01/environmental-activist-prosecuted-as-if-he-was-terrorist-was-held-in-isolation-for-political-speech/ (April 1, 2013)

8. All Gov, Why No Prison for Banksters Who Caused Financial Crisis…Yet?, http://www.allgov.com/news/top-stories/why-no-prison-for-banksters-who-caused-financial-crisisyet?news=842515, April 15, 2011

9. Halah Touryalai, "The Real Reason Wall Street Always Escapes Criminal Charges? The Justice Dept Fears The Aftermath," Forbes, June 3, 2013 (http://www.forbes.com/sites/halahtouryalai/2013/03/06/the-real-reason-wall-street-always-escapes-criminal-charges-the-justice-dept-fears-the-aftermath/)

10. Brendan Sasso, "Senate report: Apple using shell companies to dodge taxes," The Hill, May 20, 2013 (http://thehill.com/blogs/hillicon-valley/technology/300791-senate-report-accuses-apple-of-using-shell-companies-to-dodge-taxes)

11. Christopher Matthews, "The Next Big Thing In Corporate-Tax Avoidance," Time, April 3, 2013 (http://business.time.com/2013/04/03/the-next-big-thing-in-corporate-tax-avoidance/)

12. Jamie Satterfield, Ex-lawyer Sentenced to Prison For Tax Evasion," Knoxnews, June 24, 2013 (http://www.knoxnews.com/news/2013/jun/24/ex-lawyer-sentenced-to-prison-for-tax-evasion/)

13. Marjorie Cohn, "Bradley Manning's Legal Duty to Expose War Crimes," Truthout, June 3, 2013 (http://www.truth-out.org/news/item/16731-bradley-mannings-legal-duty-to-expose-war-crimes)

14. Kim Zetter, "UN Torture Chief: Bradley Manning Treatment Was Cruel, Inhuman," Wired, March 12, 2012 (http://www.wired.com/threatlevel/2012/03/manning-treatment-inhuman/)

15. Evan Puschak, "Lawrence O'Donnell: Why Edward Snowden Cannot Be A Traitor,"MSNBC, June 25, 2013 (http://tv.msnbc.com/2013/06/25/why-edward-snowden-cannot-be-a-traitor/)

16. John W. Whitehead, The Age of Neo-Feudalism: A Government of the Rich, by the Rich, and for the Corporations, The Rutherford Institute, https://www.rutherford.org/publications_resources/john_whiteheads_commentary/the_age_of_neo_feudalism_a_government_of_the_rich_by_the_rich_and_for_the_c, January 28, 2013

17. Roy L. Behr, Edward H. Lazarus, Steven J. Rosenstone, Third Parties in America 2nd edition (Princeton, NJ: Princeton University Press, 1984), Chapter Two "Constraints on Third Parties"

18. Gretchen Casper, Fragile Democracies: The Legacies of Authoritarian Rule (Pittsburgh, PA: University of Pittsburgh Press, 1995), pg 40