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					            Arturo Yarish

Is Everything Old New Again?
 (Or why we should read Ferdinand Pecora)

                   Is Everything Old New Again?
                  (Or why we should read Ferdinand Pecora1)
                               by Arturo Yarish

                 A New Financial Crisis or the same old Ponzi scheme?
                  New Stock Market Crash for the same old reasons?
         Another Economic Crisis and another Great D…? Oops the
                            “D” word: Panic!

Are old problems arriving in new disguises with new names? Or
           is this the beginning of a Transformation?

    Echoes of George Santayana: Those who cannot remember the
                  past are condemned to repeat it.2

 Ferdinand Pecora Where Is Our Ferdinand Pecora?
Congress should conduct an inquest into the economic crisis. For inspiration, it
can turn to Ferdinand Pecora's questioning in Senate hearings that demystified the
1929 crash.
Ferdinand Pecora
 George Santayana (1863? 1952), U.S. philosopher, poet.
Life of Reason, 'Reason in Common Sense,' ch. 12 (1905-6).

A Cyclical Crisis or a Structural Crisis....................................................... 6
   This is no ordinary Recession. ................................................................ 6
   The prelude: A change in vocabulary does not change reality ............. 10
   Smaller Government is Better Government: they said. ........................ 16
   A Glance at American Economic History, the History of
   Anglo/USAmerican Economic Theory and its application .................. 20
   Beginning in the Earliest Years of the Republic................................... 22
   An Historical Transition ....................................................................... 26
From Banking Reform through a Transition to… a Transformation? ...... 30
   Mortgaging Post-WWII Goodwill in a Power Play for World
   Domination ........................................................................................... 34
   The Cumulative Result ......................................................................... 37
Beyond Conventional Neo-classical Theory: ........................................... 41
   Corporate Capital against democracy ................................................... 41
   The Seeds of One Type of Transformation .......................................... 41
   “Creative Destruction” or simply destruction ....................................... 44
   Militarized Economic aggression has long-term, political-economic,
   cultural consequences ........................................................................... 45
   From inquiry to open criticism ............................................................. 47
Is everything old new again? .................................................................... 50
   Beyond Keynes? ................................................................................... 50
   The Setting ............................................................................................ 51
Economic History Required! .................................................................... 54
   I Ask: G.W. Bush for Herbert Hoover? ................................................ 54
   How could this have happened? Again! ............................................... 56

   The Chimera of Success and the Capitalists’ Inescapable Dilemma .... 61
   The Corporate Enclosure of Consumer Civil Society .......................... 67
   Social Distortions of Perverse Economics are already deeply
   incorporated in the System ................................................................... 76
   Beyond an economic stimulus policy ................................................... 80
   The Political Economy of Creative Destruction................................... 81
   The Attempted Breakout....................................................................... 83
The Moment of Transition or Transformation .......................................... 86
   The Debilitating Role of Debt-Driven, Militarized, Corporate-
   Economic Expansionism ...................................................................... 86
   Beyond the Monetarists, Beyond Keynes, Beyond, Neoliberalism ...... 88
The Neoliberals Mortgaged Our Collective Future and now as in the past
they will try to make us all pay for it. ....................................................... 94
   Militarism Consumes the Domestic economy ...................................... 94
   The Social / Political Price of Military / Economic Domination .......... 99
   Neoliberal-Military, Keynesianism Unravels ..................................... 100
There is No Alternative to the difficult social task ahead. ...................... 104
   The Power of Corporate Politics......................................................... 107
   A Closer Look to the Recent Past ....................................................... 110
   More Necessary Questions ................................................................. 116
What Challenges are we facing?............................................................. 120
   A Repeat of a Tragic National Economic History, a New Depression, a
   Corporate Coup or a Historic Opportunity? ....................................... 120
   The Opportunity within Our Reach .................................................... 121
   Economic Reform to Social Renovation ............................................ 127
   The Class Chauvinism, The Ruling Class Perspective is Unmistakable
   ............................................................................................................ 134

   Nationalization is the only answer. These banks are effectively
   bankrupt. ............................................................................................. 136
An Historic Moment of Opportunity ...................................................... 140
   Capitalism against the People-Nation ................................................. 140
   Corporatism against democracy ......................................................... 140
Beyond Capital…Toward revitalizing peoples’ democracy ................... 144
   WHOSE MILLENNIUM? THEIRS or OURS? Daniel Singer asked in
   We need to ask whose transformation? .............................................. 144
Recommendations for further reading .................................................... 146

A Cyclical Crisis or a Structural Crisis

This is no ordinary Recession.

The present economic crisis and its most prominent symptoms,
generally referred to by the mainstream media, variously as a
liquidity crisis, a financial crisis, a financial meltdown, should be
seen as a crisis of confidence in the entire USAmerican, now
internationalized, financial structure reflecting the deeper crisis of
Capital. Whatever it may be called by conventional commentators,
this full blown economic crisis should be viewed from the
perspective of the long course of its specific historical development.
In order to fully comprehend the formation of the current economic
contraction, its continuing analysis ought to be positioned within
the economic theory and practical business activities that have
informed the political priorities which have guided USAmerican
domestic and foreign policy imperatives through its entire history. I
offer an overview the past hundred years.

As has occurred periodically throughout twentieth century
USAmerican history, three major interconnected points of
economic pressure are again converging to form an intensifying
political/economic conjuncture which merits a much more complete
examination than is presently called for by most economists. These
three internal systemic stress points are summarized in the
breakdown of the system’s ability to successfully complete the vital
production/distribution/circulation cycle necessary to sustain its
normal levels of business profit-making capability. The current
failure of USAmerican Corporate Capitalism to sustain the
conditions necessary for general profitability by adequately
maintaining the distribution of goods and services necessary to meet

customary needs brings it to the latest in a long series of internally
induced paroxysms.

This essay merely attempts to sketch an outline for a more
comprehensive critical analysis of the present economic crisis
focusing on its deep systemic roots. Drawing inspiration and
guidance from some of the most insightful critical analysts of our
time, many of whom are cited in references to this and an earlier
related essay, I find a clear pattern in the past practices of crisis
interventions that point to major political changes influencing the
conventional notions and practices of capitalists. The clear trend of
market interventions by business agents and government officials
developed through the series of crisis over the last hundred years
identified in this study fully illustrates the focus of attention on
markets informed by conventional Anglo/USAmerican mainstream
economics and its failings. This examination includes a historical
overview and an evaluative discussion of the theory and class
priorities informing the earlier ad hoc interventions made by leading
financial figures of the first decade of the twentieth century that
continue to influence the present style of governmental
interventions in the current crisis.
This presentation is set in a broader appraisal of the deepening,
political/economic-financial crises arising out of the historical
USAmerican Capitalist expansionist tendencies that were and
remain essential to sustaining the process of accumulating and
concentrating National wealth and political power among the
Ruling elite, and offers a particular focus on the important
innovations in politically developed market interventions that
became standard practice during the Twentieth Century, now
continuing into the Twenty First.

While the full breadth of a detailed political, cultural-economic
study should embrace the entire trajectory of USAmerican
expansionism along with the accompanying national notions of

“Exceptionalism” and its social consequences, this outline study
strongly suggests that we must fully evaluate the ways conventional
economic perspectives, reflecting the imperatives of Ruling Class
self-preservation, informed both business practice and the
development of economic views throughout the Twentieth Century
condition survival responses that have lead to the style of political
intervention in economic affairs which have been transforming
Capital. Furthermore and very bluntly put we should note that
escalating political/economic administrative measures designed to
cultivate domestic passivity as the political/social foundation
necessary for continuous international economic expansion are now
approaching new internally conditioned obstacles which may be
broadly summed-up as the untenable social-economic costs of

I argue that the Ruling-Class’ strategies and methods of
conditioning social compliance toward its on-going Imperialist
drive throughout the Americas and across the Globe are now
straining National systemic capacities to the breaking point which
first appear at the financial level.. Furthermore, I will show that as
rulers dealt with successive economic and financial crises of the last
hundred years the knowledge and confidence they gained became
standard blinding practice which was refined within the framework
of the standards of conventional economic theory corresponding to
the needs of a Nation constantly expanding its economic/territorial
reach. Moreover, through each succeeding crisis as business men
and women, policy makers and theorists, increasingly recognized
the internal limits of Capitalist growth, their public and private
administrators have consistently used political power to overcome
them. Each succeeding effort to manage or control the recurring
economic cycles of the Twentieth Century have had two profound
educating effects among business leaders and politicians: they
gained more confidence in their managerial skills and became
increasingly frustrated in and disillusioned by each successive
crisis. While publicly proclaiming that there is no alternative to

Capitalism they have been searching for ways to control it or
overcome its internal destructive forces.

I strongly suggest that ample evidence now exists to demonstrate
that the learned behaviors, and conditioned responses of
conventional theorists and policy makers have caused them to feel
that they can control what they see as the mechanics of the
Capitalist mode of production, distribution and circulation. Their
repeated attempts at administratively controlling social and political
consequences of the unremitting, internal systemic imperative of
classic Capitalism to increase profit, have set in circular motion a
powerful interplay of political-economic forces which have been
accelerating corporate cultural trends, now intensifying in a distinct
national, political cultural transformation, toward Corporatism.3
While most conventional analysts frame their comments in terms of
the normal business cycles of capitalist operations,

I think it is increasingly evident that they now recognize but do not
openly admit that the symptoms of the present crisis are deeply
rooted in Capitalism itself. The G.W.Bush administration’s extreme
authoritarian and secretive tactics directed toward managing the
financial crisis are the most prominent indicators of the longer-term
corporate business efforts to use the political levers of power to
expand direct managerial control over the vicissitudes of an
increasing socially destructive system to which the Ruling
elite/class are tied in a Gordian knot of their own survival. I argue
further that the Ruling elite see the current economic limitations of
Capitalism as a crisis of its structure and are pushing harder than
ever to escape the impending collapse by going Beyond Capital4.

    Corporatism, Giovanni Gentile
 Beyond Capital, as I use the term in this essay, is taken from István Mészáros’
Beyond Capital: Towards a Theory of Transition which I also used as a title to a

The prelude: A change in vocabulary does not change reality

Through the post World War Two (WWII) years the word
depression5 was dropped from polite political conversation in favor
of the less fearsome term recession6 but as many learned through
the successive waves of those frequent recessions the real, painful
distinction in either case is whether or not we loose our jobs, our
savings, perhaps our homes, some times our families and often our
good health. From The Great Depression through the seven post
WWII recessions, including the stagflation7 of the mid-1970’s, the
masters of monetary management and the voices of conservative
fiscal policy, with growing confidence, assured us that despite the
occasional personal hardship, their ever more sophisticated
financial administrative procedures and counter-cyclical budgeting
would smooth out the harshest extremes of earlier booms and busts.
Many of us felt reassured that the techno-managers of USAmerican
Capitalism were able to bring the excesses of the business cycles
under their enlightened and broadening managerial control to yield
predictable growth and prosperity. We felt at ease. The post
depression-era, mainstream, USAmerican economists of the
Anglo/American school, divided broadly along the lines of the

companion piece to this essay which I entitled Beyond Capital, beyond
democracy? This essay is
intended as a companion to and an extension of Beyond Capital, beyond
    Recession and

deficit-demand managers long influenced by John Maynard
Keynes8 and the Neo-classical, monetarists9 strongly influenced by
Milton Friedman,10 assured us and the world that they were learning
to tame Capitalist beast.

Whereas the Keynesians focused primarily on the problems of
deficit demand, the Friedmanite monetarists stressed increasing
“supply” by reducing many forms of government incursions into
what they professed to be self-regulating markets. Both Keynesians
and the neo-classical monetarists were convinced that they were
mastering the mechanisms of the increasingly corporate-controlled,
capitalist economic system and through improved fiscal/budgetary
and monetary management methods they both assured us that they
could sustain Capitalist development and growth by overcoming the
obstacles to the system’s inherent tendency to periodically contract
into recessions and depressions.

While the more traditional, neo-classical monetarists point out the
external obstacles to the presumed natural growth tendencies of
Capital, such as those posed by government regulation of
investments; the Keynesians argue that they can overcome the
system’s internal limits and provide for more orderly continuous
growth by managing the broad but delicate balance of supply and
demand through rational regulation of the markets for all goods and
services including investments. Since the end of WWII both groups
of economists have vied to achieve and hold the dominant influence
in guiding the growth and development of post-war Capitalism in

    John Maynard Keynes
  Milton Friedman / Chicago School / Monetarists

the USA and through its most recent world-wide expansion which
is commonly referred to as Globalization..

Although both groups drew knowledge and management techniques
from the other, the Keynesian, fiscal or deficit-demand, managers
were in ascendancy through the New Deal period until they lost
their dominating influence to the neo-classic, monetarists at about
the time Ronald Reagan became President. Focused on the
Depression-era problems of deficit-demand or the lack of sufficient
buying power by workers who produce goods and services, the
early Keynesians, or Social-Keynesians, promoted policies to
increase consumer spending through high rates of employment
sustained by government expenditures on public infrastructure
development projects ranging from road and library construction to
the expansion of all forms of social services including those
providing for basic family needs of good health, medical care and
public education. The neo-classical, principally monetarist
economists by contrast focus their primary attention on what they
see as the social and political obstacles to increasing supplies of
products and services entering the potentially smooth “natural”
operations of unfettered Capitalist markets. Both however, sought
to insure controlled internal management of the inflationary bias
built into the domestic economy and maintain the prevailing
influence of the USAmerican Dollar, (Usad) while extending the
culture of USAmerican business practices in international trade.
Together, though engaging in long theoretical disputes while
seeking positions of policy making authority, Keynesians and neo-
classical monetarists sought to maintain the dominant, post-WWII
international political/military posture of the USA in order to foster
and protect its expanding international economic influence as the
primary method of preserving their domestic economy.

Hence, through the Post WWII years successive Federal
Administrations attempted to maintain a balance between domestic
costs required for internal social/economic stability while

continuing to fund its military/economic foreign policy. During this
entire period, also called the Cold War period, both Democrats and
Republicans broadly agreed to the contours of a fiscal-monetary
plan that sought to balance the costs of its domestic and foreign
policies that were largely based on Keynesian principles of
sustaining domestic demand through national budgetary
management and the general regulation of monetary controls over
banking practice. However, in the wake of the failure of
USAmerican War in Vietnam and the rise in oil prices in the 1970’s
a distinct foreign policy shift in the direction of more aggressive
foreign expansion, accelerated from the Reagan years on,
increasingly tilted domestic budgetary and monetary priorities in
favor of an enhanced projection of USAmerican economic power
world wide.

Beginning with the decoupling of the USAmerican dollar11 (Usad)
from its fixed price in gold into the long years of deregulating the
domestic economy, the earlier balance was more and more slanted
toward the requirements of projecting militarily supported business
expansion. The consequent longer term changes in domestic policy
from the 1970’s on took four major forms: reduction of domestic
wages, shifting the tax burden down the income scale, reducing
social services, and weakening or eliminating business and banking
regulation. This distinct shift in domestic social and economic
policy, often referred to as breaking the Social Contract, skewed the
earlier balance achieved under the Social-Keynesian programs in
favor of budgetary and monetary policies that were to underwrite
foreign direct investment which was to be protected by the growth
of USAmerican military presence abroad.

  Decoupling the USAmerican dollar from gold

It soon became very clear that pushing the cost of economic
expansion down the domestic wage scale alone would not be
sufficient to sustain the cost of an increasingly aggressive
military/economic foreign policy. One additional social and one
economic factor were needed to cultivate public acceptance of the
pronounced policy tilt toward military supported economic
expansion. The well worked fear factor was escalated, while the
comfort factor was simultaneously improved. The fear factor deeply
seated in long cultivated USAmerican xenophobia and cultural
notions of social and racial superiority was relatively easy to excite.
However, the trick of having people feel more comfortable with
lower wages would be more difficult but not impossible to achieve.
Access to increasing amounts of credit was made easier at the same
time as cheap imports were made more available. The Ruling elite
of both parties but, most successfully the Republicans, combined a
sense of popular national pride with a rising sense of increasing
wealth in market rated home values in a social-economic circle that
seemed to validate the economic system. The circular interplay of
cultural notions of exercising one’s individual consumer
sovereignty, reinforced by the rising availability of credit and
catchphrases that regularly included the word freedom – free
markets, freedom of choice – all based on mounting consumer and
public debt appear to have legitimized popular notions of liberties
offered by Capitalism’s manipulated market system.

The accompanying political slogans popularized by the increasingly
influential neo-classical advocates of “pure” or purer, market
capitalism, what they gradually and more proudly, regularly and
boldly called until recently, simply Capitalism, was to “get
government off our backs”, “get government out of the board room”
by reducing or eliminating government spending, regulation,
oversight and other impediments to the promised freedom offered
by self-regulating, market operations which Neoliberal economists
and politicians claimed would release businesses creativity to
maximize its innovative potential for further expansion that would

bring benefits to us all. However, behind the slogans and arguments
for smaller government and less governmental intervention
simultaneously promoting notions of greater individual opportunity
at all levels of corporate economic and financial activities, the neo-
classical monetarists concurrently promoted their plan for complete
privatization of the domestic USAmerican economy. Through their
influence in the organizations such as the International Monetary
Fund (IMF) the World Bank and later the World Trade
Organization, the dominant monetarists of the Chicago-
Friedmanite-School,12 attempted to convince leaders of other
nations to conform to their concept of unrestricted and largely
unregulated international Corporate-Capitalist activities which
found its most extreme expressions in international trade pacts such
as the North American Trade Agreement, NAFTA, linking Canada,
Mexico and the USA in a regional trading block..

Under their proposals for clearing away the political and social
barriers that they claimed constrict the assumed “natural” growth
and creative tendencies of Capitalism, the Neoliberals of both major
Anglo/USAmerican schools argued in favor of approving
international trade agreements they said would provide for the
expansion       of       mutually      beneficial      cross-boarder,
economic/commercial traffic of all types. Stressing the purported,
theoretical self-regulating market benefits of the unencumbered
interplay of supply and demand, these trade agreements were to
provide for the largely unrestricted movement of money, trading in
financial instruments, all forms corporate production, services, sales
and commercial exchange operations throughout the expanded trade
zones comprised of the three largest countries of North American
Continent and eventually across the globe. Operating under
theoretical notions of the benefits to be derived from the

  Chicago School / Friedmanites

unobstructed, cross-border interplay of buyers and sellers,
producers and consumers and, borrowers and lenders, the neo-
classical monetarists and Keynesians have tried to recreate the
USAmerican economic model throughout the widening
international commercial networks.

Smaller Government is Better Government: they said.

In the name of smaller government that was to return control to the
“people”, the neo-classical economists and their Neoliberal political
supporters, both Democrats and Republicans, have consistently
swept away regulatory safeguards that have allowed for the
expansion of corporate economic power and political influence
though out the USA and many parts of the Capitalist trade zones. In
keeping with their political prattle of the theoretical separation of
politics and economics, they in fact used their power and influence
to construct a politically sanctioned regimen of Capitalist economic
expansion administered largely by USAmerican corporate elite
power centers in the USA that have had far reaching effect
throughout the world. (See General References following the End
Notes of this essay for extended reading suggestions. In this case
see Naomi Klein; The Shock Doctrine.)13 Consistently supporting
Corporate-Capitalist growth, Neoliberals of all shadings promoted,
particularly over the past thirty years, the most violently pursued,
rapacious accumulations and concentrations of wealth we have
witnessed since the 1920’s which has now left the vast majority of
the world in desperate poverty, and verging on the deepest
depression since the 1930’s.

  Naomi Klein The Shock Doctrine

A review of few rough comparative facts may help to illustrate the
present disparities of wealth and income that have been facilitated
by Neoliberal policies and practices over the past thirty years which
have now reached the extremes of 1929. As Jack Rasmus14 reported
in his article published by Z Magazine in February 2007 “The
wealthiest 1(one) percent …of USAmerican …households
…receive between 19-21.5 percent of the annual gross domestic
product …which nearly equals… the roughly 22 percent share of
national income the top 1 percent received in 1928 just prior to the
stock market crash of 1929…” Accenting this inequality, within the
USA, we should also note that today less that five hundred
billionaires have a total income that equals half of the world’s
population or three billion people. The net worth of the ten
wealthiest people in the world equals the total yearly income of all
the people living in all the developing countries. In the USA the
richest one percent of the people owns 53 percent of stocks while
the richest ten percent own 88%. The so-called middle class own
the remaining eleven percent. These differences of wealth set the
stage for the present economic crisis.

Although publicly arguing that small government is better
government, the Neoliberals of both parties of Capital facilitated the
increased concentration of wealth in few hands while shifting
political economic power to private corporate control. The current,
financial crisis, now more clearly revealing the weakness of the
economic system, has a long National and international history
reflected in the concentration of wealth, income and its attendant
political weight which is not only dissolving the myths of
USAmerican Capitalism, as it rapidly brings into disrepute the

  Jack Rasmus

dominating image of USAmerican style of Corporate practice, it is
simultaneously discrediting its political advocates.

The political/economic gamble made at the end of WWII to
maintain and increase USAmerican military and economic
domination created an untenable domestic/foreign policy practice
that is now unraveling in a full blown political/economic crisis of
USAmerican Corporate-Capitalism which is showing itself to be
beyond the control of the National Corporate-state. When the
decision was made to base the internal stability of the USAmerican
National political-economic structure on the projection of military
and economic power abroad, the resulting circular interdependence
of military spending to sustain domestic consumption as the source
of increasing corporate profit, lead to the former consuming the
later in a cycle of self-destruction. While the use of military
spending to increasingly sustain domestic economic and social
stability, temporarily masked underlying systemic imbalances, for a
long time it appeared to be a magic formula for political economic
growth resulting in a remarkable extension of both military and
economic power. Seemingly based on a theoretical concept of
unrestricted market expansion, the interplay of the costly elements
of military power and less and less regulated authoritarian corporate
practice was forming a sphere of internal political influence that
was swiftly enclosing government within the corporate structure
while, limiting the power of both. In tragically comical display of
helplessness we now are witnessing the absurd political theater of
corporate representatives, for example the automobile industry and
banking executives, begging the help of Government that represent
their own failed corporate practices.

Today in yet another desperate effort to overcome the repetitive
boom/bust cycles of Capitalism in one country and now throughout
the interconnected Neoliberal Zones, those who argued in favor of
the changes that that helped to accelerate the formation of the
present financial crisis, brought on in part by deregulation,

increasingly seek public trust to manage the multiplying symptoms
of the economic crises that has resulted from their customary
business practices. It was indeed enlightening to observe Henry
Paulson, CEO of Goldman Sachs in the role as recent Secretary of
the Treasury, applying the same failed practices to stanch the
problems at National level that brought on the failure at corporate

Convinced that financial crises are the causes and not the telling
symptoms of the underlying economic problems, the monetarists
continue to lower interest rates and pump money into financial
markets with little or no effect. To their utter befuddled
consternation, as the traditional monetary tools failed utterly to
perform as anticipated to simulate lending, they still focused on the
credit freeze as the central cause of the break down of the entire
economy. While the Keynesians of all stripes, the more traditional
and the newly converted, look at the breakdown of markets from
the viewpoint of inadequate purchasing power, the neo-classical
monetarists, propose to promote bank lending and increase the
availability of money at the moment banks will not lend, while
business are not inclined to borrow nor can consumers borrow
more. When viewed carefully, we should recognize that the
conventional remedial actions proposed by Neoliberals are in fact
the measures that brought on the present economic crisis: increase
public and private borrowing to stimulate more debt based

Having failed again to encourage borrowing as their only monetary
stimulus goal, as market values continue to sink further and
National economic indicators drop deeply, the Treasury and the Fed
power-pump more money into the financial system, buying
valueless paper, at the tax payers expense in a desperate
conventional effort to stimulate an economy mired in a self-
debilitating cycle of debt driven militarized corporate expansion.

There is obviously something seriously wrong with this deeply
entrenched, standard economic process. We should look more
carefully but before leaping ahead to the most recent initiatives of
the new Democratic Administration, let’s review the longer
economic historical Record.

A Glance at American Economic History, the History of
Anglo/USAmerican Economic Theory and its application

Since at least the end of the Second World War up to the first
decade of this century many institutional and cultural characteristics
of USAmerican economic model, its methods and business
practices have been admired or envied by many like-minded leaders
through out the world who have increasingly imitated and attempted
to replicate this particular National Capitalist model with varying
degrees of success and increasing failures occurring most notably in
the last three decades of the Twentieth Century. We need look no
farther than the disastrous consequences of its recurring failures
throughout Latin America and the Caribbean, over the same period,
during which the dominating influence of USAmerican economic
notions and business practices have been most intensely applied.
Following a long series of disastrous results ranging from Haiti to
Chile, under the tutelage of USAmerican dominated international
institutions such as the IMF and World Bank and more recently the
World Trade Organization, Latin American voters throughout that
Other America have begun expanding the search for alternatives to
the USAmerican model.

Until lately each failure of the USAmerican economic model, often
forcefully implanted abroad, (See Naomi Klein15) was blamed on
the ineptitude of local leaders who had not faithfully applied the
proven practices handed down from the Temple-Citadel of sacred,
flawless and unassailable theory. Ignoring for the moment the
personalities of regional leaders who were schooled and trained in
USAmerican educational and military institutions, we should focus
on the systemic reasons for the long chain of failures within the

To better understand the many international failures of the exported
model, we should examine the extensive and repetitive breakdowns
of the system at the core of its American Continental development.
In order to critically evaluate the certified, consecrated,
USAmerican approved economic model we should carefully look at
the accumulating evidence of its many internal breakdowns as a
logical reference for the recurring crashes recorded in the USA and
the long, historic and ferocious chain of its failures throughout Latin
America now spreading rapidly across the globe. We should look
very closely at the USAmerican Economic History, for the internal
systemic causes for crises and examine the particular reasons for its
repeated recoveries which continue to encourage conventional ideas
for reform of economic theory and practice.

For a deeper insight into the causes and consequences of the
present, expanding world-wide political-economic crisis, the
expanding crisis of Capitalism, we must look at the model from the
perspective of a nation constantly expanding its territorial reach
over its full history since its independence from British colonial
  Naomi Klein: The Borderline Illegal Deals Behind the $700 Billion Bailout The bailout is a parting gift to the
people that George Bush once referred to jokingly as "my base." See also
Obama's Chicago Boys and
Public Revolt Builds Against Rip-off Rescue Plans for the Economy

rule. If the other admiring, world leaders had looked more carefully
into the peculiarities of the USAmerican economic/social history of
its imperialist expansion, they would have more easily foretold their
own recent disasters.

While history does not repeat itself in neat measurable cycles, the
present political-economic crisis resonates with too many eerie
echoes of a not-too-distant past, the formation of which emanate
from the USAmerican interpretation of Classic Anglo theory
applied under expanding conditions that are not easily replicated.
Even a superficial but realistic look at the Economic History of the
USA would have revealed the specific reasons for unusual growth
leading into a long list of reoccurring financial disasters repeatedly
introduced by the imbalances of over-production of an avariciously
expanding economy, time and again, coupled with the build-up of
military forces.

Beginning in the Earliest Years of the Republic

One might argue that USAmerican Capitalism devoured its physical
Continental setting. As it ravenously consumed the Continent’s
original natural resources and nearly exterminated its pre-
Colombian inhabitants, it continually concentrated wealth into
fewer hands. Through each phase the rising power of the few, from
slave owners to the present concentration of billionaires and
powerful corporations, the vital link between the cycle of
production and consumption was repeatedly strained and with each
breakdown a financial crisis ensued.

From 1797 to the present the USAmerican Capitalist mode of
production has resulted in eighteen recessions and depressions
lasting from one to twenty three years.16 Its first early industrial-era
depression lasted for 23 three years from 1873 to 1896. From the
end of that “Long Depression” of 1873/96 to the beginning of the
Great Depression of 1929-39, there were two major financial panics
that made an indelible imprint on the thinking of most mainstream
USAmerican economists and financiers. The Panic of 1893 toward
the end of the Long Depression, also a period of economic
expansion culminating in the major banking and financial Panic of
1907, sharpened the economists’ thinking and their analytical focus
on the “causes” which they saw as the interruption of the flow of
funds through the financial network, that today we similarly call
problems of financial liquidity meaning banks were and are afraid
to lend..

While we may view the economic/financial cycles and resulting
crises of the first hundred years of the Nation’s history as problems
of an expanding agricultural society, the crises of the last quarter of
the Nineteenth Century and right through the Twentieth Century
became the mounting crises of the emerging and expanding
Industrial Capitalist society.

Since 1836 when the Charter of the Second Bank of the United
State was not extended, the country no longer had a central banking
system. Privately owned Banks in New York along with a few
powerful regional banks constituted a loose network of independent
owner-operated financial institutions that conducted banking and
investment activities in their own interests and those of their equally
powerful rising corporate clients.

  List of Recessions and Depressions in the History of the USA

Following the near total freeze of banking operations in 1907, the
financiers and economists focused their attention more tightly on
the problem of liquidity in the private banking network as the
primary cause choking economic activity leading to depressions.
Admittedly the banking and investment needs of the expanding and
diversifying sectors of the national economy had different and at
times competing financial requirements. As many representatives of
government and financial institutions such as Henry Paulson and
Ben Bernanke state today, in the earlier period financial magnets
such as J. P. Morgan also argued in their time, that the primary
cause of the repeated and intensifying financial panics was the lack
of confidence among the lending institutions and reflecting that
history of financial panics, many still call the liquidity and credit
crises, crises of confidence. Viewing the glaring, immediate and
undeniable symptoms of the financial crises as the most important
cause leading to economic contractions, historically the banker-
financiers naturally looked for and continue to search for, from their
institutional perspective, remedies that might smooth the flow of
funds in and out of various markets. In other words sustain
profitable lending.

After the Panic of 1907 and following about five years of
investigations by the National Monetary Commission, bank
regulatory legislation, the Federal Reserve Act, was finally passed
by the National Congress in 1913. After a lapse of nearly three
quarters of a century, The USA again had a Central Bank, a
manager of the National funds-flow and a lender of last resort. In a
modest break with the national political-economic policy, the
legislation that authorized the formation of the Federal Reserve
System produced a hybrid, public-private, National Central Banking
Institution, the Federal Reserve Bank, The Fed,17 which basically
left the bankers in charge of National banking policy and monetary
management. In keeping with the prevailing theoretical, economic

     The Fed

notions of the separation of economic activities from politics and
consistent with seeking private solutions to public systemic
problems, the control the Central Banking System of The USA was
left largely in the hands of individuals whose appointments to office
were made by the President of the Country and confirmed by the
National Senate. While National legislation was required to form
the Federal Reserve Bank, its management and operation was left
under the control of private bankers.

An Historical Transition

Despite the long delay in forming the Federal Reserve System, the
USA finally had re-established a National Banking structure with
broad money management powers necessary to respond to the
banking needs of a growing and increasingly complex industrial
society. The rapid economic transformation during the post Civil
War period through last quarter of the Nineteenth Century had
clearly shown the inadequacies of the regional banking
arrangement. The regional banks dominated by the big New York
City banks could not simultaneously meet the credit needs of the
agricultural cycles and the more varied intricate requirements of
expanding industry and commerce. Economists, banker/financiers,
and the “Captains of Industry” all hoped the new Central Bank’s
coordinators and managers of the national money supply would
have the capacity to move funds in and out of production sectors as
were required by the seasonal needs of agriculture and at the same
time meet the more wide-ranging cash-flow requirements of the
growing and complex needs of an increasing assortment of
emerging industries.

Because the Nineteenth Century economists and increasing
numbers of financiers saw that banking and financial panics were
precipitated by seasonal, regional and international fund flows, and
the ever- active Wall Street speculators, that had periodically
convulsed the Nation’s banking systems since its inception, the
advocates of Federal Reserve Bank sought to remedy the problem
of “confidence” through more efficient internal institutional
management of the Nation’s financial system. Viewing the
reoccurring financial crises to be primarily caused by insufficient
institutional coordination of the national money flow through the
financial institutions, the Central Bank advocates attempted to

overcome inherent market barriers through system-wide,
coordinated management methods of using institutionally controlled
extra-market tools for national monetary regulation. Thus the Fed
was given the responsibility of applying, on a national scale, the
standard monetary control tools such as inter-bank lending, interest
rate adjustments, lending directly to banks and managing the overall
national money supply. The Fed thus became the supra-market
manager forcing compliance of member banks through its powers
over the national financial markets.

The purpose, organization and the power vested in The Fed in 1913
reflected the banker/broker/ investor view that efficient money
management techniques would reduce or eliminate the recurring
liquidity problems that they perceived as the primary causes of the
periodic crises of confidence in the National financial system. From
the time of the formation of the Federal Reserve System up to the
Great Depression most mainstream, classical, USAmerican
economists generally held the opinion that economic crises were
brought on by problems of national money flows: therefore they felt
money had to be directed in a timely fashion where and when need.
Thus the occurrences of economic crises were seen as avoidable
through the informed management of the market mechanisms of the
financial system.

Up until the recent “Liquidity Crisis” and ensuing “Crisis of
Confidence”, brought to National attention by the “Sub-prime
mortgage” crisis, which has been unraveling with increasingly
dramatic effects since mid 2007, the prevailing strategy of the
Federal Reserve Bank has been to restore confidence in the
banking/investment networks through the classic money
management techniques of adjusting interest rates, pumping money
into the system by purchasing USA Treasury instruments in the
Open Market. These, among a few other techniques which are
reviewed in the citations in the End Notes given for The Fed, are the

money management procedures approved               and theoretically
supported by the monetarist of various schools.

Except for the period of the Great Depression through the mid
1970’s, the major thrust of economic and financial management
was primarily through monetary controls available to the managers
of the Federal Reserve Bank using the tools provided for in the
Federal Reserve Act. Very simply stated, the neo-classical
monetarists would raise interest rates to slow the National economy
or lower them to stimulate economic activity. They might also
increase or lower the money supply and lend more or less funds to
the member banks. Through the Post WWII period the debate raged
between those who would rely primarily on the monetary control
methods of financial and economic management, the so-called
Monetarists, and the Keynesians who stressed the balanced
approach of both budgetary pump-priming or economic stimulation
through deficit spending, combined and coordinated with a prudent
use of the traditional monetary instruments such as interest rate
adjustments and the Open Market Operations of The Fed. The
stated goal of both groups of economists was to control inflation
consistent with economic growth. Note the stress is on controlling
inflation not eliminating the inflationary bias built into the National
economy. The looming threat of deflation in severe economic
down-turns was and remains a constant fear in the minds of the
post-Depression regulators.

This wide ranging, sometimes acrimonious debate has a long
history emerging out of the Great Depression of the 1930’ and
continuing into to the present with many Republican politicians and
their neo-con monetarist economists now arguing that Depression-
era economic stimulus policies and New Deal regulations and
controls did not work and in a true fundamentalist neo-classical
fashion they further argue that the market should be left to its
natural self-cleansing process to seek a new balance between supply
and demand for goods and services. However, the haunting fear of

deflation resulting from the unrestrained operation of the invisible
hand remains an unvarying anxiety which tends to contain the
exuberance of the most extreme market fundamentalists for a
complete return to the chaotic era of pre-Keynesian Capitalism.

From Banking Reform through a Transition to… a

While the voices of market fundamentalism are again attempting to
mount a critique of the emerging consensus among most
mainstream Neoliberal economists who have been acknowledging
an urgent need for re-regulation and direct intervention by the
Federal Government to contain the accumulating economic damage
of the presently unfolding crisis, we should pause to recognize that
the history of their practical economic education acquired through
the long series of crises of the Twentieth Century has deeply
ingrained a patterned response. Although the Neoclassical
monetarists may debate the Neo-Keynesians, both have clearly
learned from each other and most of them seem to find common
ground at the moment that they must save the system from its
increasingly evident “natural” tendency toward catastrophe.

Through each economic crisis of the Twentieth Century, when the
market’s presumed “natural self-correcting mechanisms” repeatedly
failed, Neo-classical monetarists and the Keynesians refined their
methods. From the mad scramble of the Wall Street Tycoons to
control the “liquidity crisis” during the Panic of 1907 into the
formation of a National central banking network in 1913, through
the challenges of The Great Depression and the managed economy
of the World War Two years, the mainstream economists of both
schools deepened their analysis of the symptoms of economic crises
and adjusted their schematic remedial techniques to respond ever
more precisely to the proximate or immediate causes of each
successive post WWII economic contraction, now called recessions.
It should be made very clear that both schools of economists were
concerned with reforming the economic system in order to preserve
it. However, through the post-WWII year’s monetarists more

stridently claimed that the Keynesian social priorities and their
insistence on regulation formed unwarranted obstacles to the freer
flow of investments necessary for further growth and expansion.

We should also pause to recall the anti-socialist / anti-communist
political sentiment in the USA prevailing throughout the Twentieth
Century strongly conditioned the views on the range of possible
alternative remedial choices that would be considered by the Ruling
elite of USAmerican Capitalism. It is important to remember that
during the Great Depression Franklin D. Roosevelt was regularly
labeled by the Right, as is President Obama today, as a socialist and
communist. Despite the vilifications, the earlier reformers
consciously and earnestly tried to improve the operations of
Capitalism without eliminating its essential process of private
accumulation of profit.

Later Operating in a most unusual, perhaps unique, post WWII
political/economic environment of fairly steady economic growth,
superior military power and predominant political influence, the
USAmerican National policy makers and managers functioned from
within a sheltered, largely unthreatened national perspective on an
expanded terrain of relatively safe and growing international field
of political/economic authority. Since the days of the Bretton
Woods Agreement18 to the formation of the World Trade
Organization, the underlying National economic assumptions and
criteria for world-wide economic expansion were the guiding
concern of USAmerican Rulers.

   Bretton Woods

After World War Two the Ruling elite, their political/economic
advisors, monetarist and Keynesians, consistently viewed the
various international market barriers to the unrestricted movement
of money, resources and products as the main impediment to their
national economic growth. Having resolved the internal National
debate on the earlier twentieth century issue of isolationism, the
remaining question was how to maintain its international influence
and power. They all basically agreed that some measure and style of
international economic expansion was necessary for national
economic stability. Reflecting their thoughts on the negative effects
of the pre-depression, protectionist trade practices, while also
projecting their increasing National needs for internal political-
economic stability as the basis for projecting international power to
insure continuing accesses to international product and resource
markets world-wide, and fearing the loss of economic and political
world domination, at the end of the Second World War
USAmerican National policy was directed toward maintaining
international supremacy. George Kennan's pronouncement in the
1948 State Department Policy Planning Study 23, makes clear this
core USAmerican Nationalist objective when he stated that in order
for the United States of America to continue holding "…50% of the
world's wealth… [Our] real task in the coming period is to devise a
pattern of relationships which will permit us to maintain this
position of disparity…" Throughout the post WWII period, the
overall aim of USAmerican foreign policy has been to preserve its
position of power, privilege and dominant influence as the "leader"
of the Capitalist zones and expand those zones of influence for its
own material ends.

Plainly the long-term National plan of the USAmerican Ruling elite
was and evidently, judging from its continuing brutal efforts to
dominate the Middle East resources and east/west petrol pipeline
routes, remains to secure the National-Imperialist Corporate-State
Center by expanding political, economic and military influence
among similar Capitalist industrial nations, while simultaneously

attempting to dominate all rivals or eliminate them. That long costly
National Corporate/militarist strategy, pursued with particular
ferocity over the past eight years, pushed to the point of failure, has
been weakening the nucleus of USAmerican political/economic
society and its foreign policy position. While the historic flaws of
Classic Anglo/ USAmerican Capitalism are rapidly reappearing in
the current economic crisis and intensified under the added stress of
Corporate/Military expansion, the leading propagandists of present-
day Corporate Capitalism and their political supporters are
feverishly maneuvering to take Capital through or beyond its
structural limitations. As the conventional or mainstream
economists and their business counterparts strive to preserve a form
of Capitalism, through their authoritarian technocratic style,
intentionally or unintentionally, they are mutating the system in
practice to preserve their power and wealth.

As the USAmerican political elite make the present transition from
the Republican Party to the Democratic Party leadership, we can
anticipate that the overarching need to preserve and expand its
National political-economic position and posture in the world will
continue to shape its domestic and international policies. However,
in our analysis, we must note strongly that the political-economic
conditions which allowed for post WWII domestic stability,
underpinning its continuing influence, supporting USAmerican
international status, are today far more limiting. The Nation that
emerged victorious from WWII faced pent-up demand for its
products at home and abroad and enjoyed an uncommon measure of
international forbearance. At present confronting an economic crisis
classically characterized by declining demand and excess plant
capacity, a national financial crisis with broad international
ramifications and looming repercussions forming the backdrop to a
political crisis of trust at home and abroad, the rulers’ options are
restricted and narrowing.

Mortgaging Post-WWII Goodwill in a Power Play for World


Operating on the reasonable assumption that a nationally unified
core could hold as the solid economic and political/moral hub of the
Post WWII alliances that would tolerate economic imbalances; the
USAmerican Ruling elite of both parties made a costly political
gamble, the cumulative effects of which has resulted in the present
political/economic conjuncture, recently accented by the financial
crisis. By consistently exploiting its international prestige and
abusing its political/economic power to insure its economic
dominance, the National Ruling elite mortgaged the Nation’s
collective future. Hence forth when we speak of the debt crisis or
the crisis of confidence we should correctly identify the “crisis” as a
calamity of the entire political, cultural-economic system, an
extreme failure of Capitalism.

Assuming a posture of moral superiority and impudently projecting
its military, economic supremacy, the USAmerican ruling elite
regularly convinced its allies, as it consistently attempted to co-opt
or coerce its rivals, to accept lopsided political/economic relations
of temporary mutual interest. With a long term view to domination,
the mounting moral and economic cost of these asymmetrical
relations formed an intricate web of dependency relations that
formed the conditions of the turn in the present economic crisis.
Through a combined strategy of reward and punishment the
USAmerican Ruling Elite of both major parties, used its domestic
resources and exploited prevailing, popular cultural sentiments to
support a precariously balanced circular, dual strategy of internal
development through increasing domestic consumption of the
world’s resources to sustain its National drive to dominate
international economic relations. In a persistent push to control
international labor, resource and product markets to satisfy

domestic demand, the USAmerican expansionists increasingly
shifted from National Social-Keynesianism to an aggressive, debt-
driven foreign policy of National Corporate expansion predicated
on the expensive projection of military power to secure
international import and export routes and markets crucial to
underwrite its National capitalist standing and international power.
Rewards to allies and the co-opted were access to USAmerican
markets and the punishment for the skeptical, the resisters and the
non-cooperators was various forms of coercion ranging from
blockades to outright invasions. Through the entire Post WWII
period this expensive expansionist strategy of debt-financed,
military aggression abroad supplemented by debt-driven
consumerism at home, has now drawn the Nation into the deepest
economic-financial crisis since the 1930’s.

The USAmerican, Neoliberal gamble to dominate all economic and
political rivals has left it prostrate. Having squandered its Post
WWII, international good will and having flagrantly spent its
material wealth, it has entangled itself in a downward
political/economic spiral formed out of an unsustainable imperialist
drive. Having gone from the World’s banker of last resort through
being the World’s consumer of last resort, the USA has now taken
on the terrifyingly dangerous status of being the world’s most
heavily armed, debtor nation. The broad USAmerican strategy of
world domination, through intimidation, military coercion and
financial domination via the unprecedented expansion of debt has
brought it and many of its client states to the brink of economic

The effort to buy its way to prosperity and coerce its way to World
supremacy through the continuous growth of public and private
debt, has brought about a world-wide liquidity crisis leading to a
massive crisis of political, moral and economic confidence within
the Nation and internationally. The tactics of debt expansion
through international and domestic predatory lending and business

expansion, through its posture of cultural and economic
imperialism, backed by military threat and direct aggression not
only revealed the inherent weakness of the USAmerican National
Corporate-Capitalist methods, it has drained the ethical-political
content of its cultural-political message as it publicly debased its
own inflated self-image. The challenge to the new administration is
fare greater than economic recovery.

Since the mid 1980’s both parties of the National-Imperialist
Corporate-State calculated that other, capitalist industrialized
nations of the world were sufficiently dependent upon the
USAmerican Military for protection, the USAmerican Dollar
(Usad) as the world exchange currency and the expanding
USAmerican consumer markets as the insatiable buyer of products
produced throughout the expanding Neoliberal globalizing network
of growers and manufacturers of everything from flowers to
furniture and automobiles to televisions. Those assumptions of
international political-economic relations are now increasingly
questioned broadly.

After the fall of the Soviet Union, the Neoliberals thought that they
had the near potential of creating a closed, militarily controlled
cycle of unending national prosperity based on three pillars of Post
WWII National ascendancy: USAmerican dollar dominance, power
of debt creation with both underwriting militarily-backed, economic
and financial aggression. Later having gained the cooperation of the
Peoples Republic of China in trade relations thus feeling
increasingly confident that the liberalized world-wide markets
would continue to accept an unending flow of Usad’s as payment of
all USAmerican trade and financial obligations, and assuming
further that its trading partners would remain dependent on the
USAmerican domestic consumer market for their expanding
production as the basis for their economic salvation, the USA more
self-confidently positioned itself as both the world’s glutton and
overweight international bully. Consuming approximately 45 to 50

percent of the world’s wealth and projecting the power of the most
costly military apparatus in modern history, the Ruling Neoliberal
elite thought it could spend its way to world domination in the
expanding circular flow of the USAmerican-dollarized,
international economy.

The Cumulative Result

Having embarked on yet another, more aggressive phase of its long
Post WWII expansion, launched at the beginning of the first
recession of the Twenty First Century, following the disastrous
events of September 11 2001, the USAmerican Ruling, Neoliberal
consortium gambled further that it could again use a well tested
Cold War formula to stimulate its domestic economy by mobilizing
the wide-spread national domestic fears to sustain their imperialist
project. Based on the continuing cultivation of deeply seeded
domestic fears of outsiders, which was brought to a fever pitch
following the international tragedy of the crashes in to the World
Trade Center, the Neoliberal Right, the Neocons, with the nearly
total support of the Neoliberal Democrats, initiated the most wide-
ranging military mobilization since they expanded the war on the
Vietnamese people.

The new style war-time mobilization and manner of exciting
patriotic verve in preparation for the invasion of Iraq, marked a new
war-footing, economic social-control strategy that inverted the
typical appeals for sacrifices on the home front to support the troops
on the war front. In a novel interpretation of a Guns and Butter
policy, patriotism itself was reinterpreted as the citizen’s right and
responsibility to consume. While the Federal government expanded
public debt to go on a shopping spree for war supplies, the

USAmerican people were encouraged to go shopping on credit. As
the post 2000-election economic contraction came into view at the
beginning of the first G.W. Bush administration, the neo-cons
launched a war-based, national economic stimulus plan with an
exaggerated domestic consumer component. At the same time as
the Federal government re-channeled funds from social programs to
military procurement, real popular anxieties were successfully re-
channeled in a distracting orgy of debt-driven, over-consumption.
Assuaging real public fear by encouraging debt-powered, self-
indulgence, the Ruling elite, for a while, effectively diverted the
attention of National population from its right to know by
promoting its right to consume. Successfully substituting over-
consumption for political involvement, simultaneously the National
mainstream media promoted the notion of a necessary war-time
trade-off between Security and Liberty.

The Right, Ruling elite used the existing uncertainties and, now we
know, they created wide, varied and exaggerated deceptions to
condition the public’s acceptance of a need for secrecy19 that would
     Business Secrecy

Secrecy Where'd the Bailout Money Go? Shhhh, It's a Secret
Matt Apuzzo, The Associated Press: "It's something any bank would demand to
know before handing out a loan: Where's the money going? But after receiving
billions in aid from U.S. taxpayers, the nation's largest banks say they can't track
exactly how they're spending the money or they simply refuse to discuss it.
'We've lent some of it. We've not lent some of it. We've not given any accounting
of, "Here's how we're doing it,"' said Thomas Kelly, a spokesman for JPMorgan
Chase, which received $25 billion in emergency bailout money. 'We have not
disclosed that to the public. We're declining to.'"
Secrecy The Bailout: How Capitalism Killed
Democracy We now face market
forces uninhibited by democratic governance. The bailout is an aggressive
attempt to trade democracy for autocracy.

Secrecy Fed Defies Transparency in $2 Trillion Loans

dilute the content of democratic decision-making thus opening a
wider path to give unquestioned license to crony war profiteers,
market manipulators and financial speculators to enrich themselves
through unregulated preferential, business contracts and financial
dealings that would further corrupt both markets and the minimum
principles of representative democracy. The Neo-cons, temporarily
manipulated genuine fears at home in a domestic political power
play for an expanded empire abroad that would help to further
integrate the secretive military style of command with secretive
business practices and blend them with the authoritarian proclivity
of the Right Ruling elite. Thus the strident official insistence on
political secrecy to pursue war-time objectives served as an excuse
and justification for the deepening secrecy of business dealings
which fed each other in an opaque loop of deceitful demagoguery
forming the political-cultural foreground of the present economic

Mark Pittman, Bob Ivry and Alison Fitzgerald, Bloomberg: "The Federal Reserve
is refusing to identify the recipients of almost $2 trillion of emergency loans from
American taxpayers or the troubled assets the central bank is accepting as
collateral. Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson
said in September they would comply with congressional demands for
transparency in a $700 billion bailout of the banking system. Two months later,
as the Fed lends far more than that in separate rescue programs that didn't require
approval by Congress, Americans have no idea where their money is going or
what securities the banks are pledging in return."

Secrecy Government Rescue Spending: Clear or Cloudy?
by Alice Gomstyn How much will the AIG bailout ultimately cost? What are the
banks applying for the government's $250 billion capital purchase plan? Who is
the Federal Reserve lending to and how can taxpayers be assured they'll get their
money back?

Secrecy Free Fall Bush Secretly Gave Banks $140 Billion Tax Windfall

Secrecy Memos Reveal Scope of the Power Bush Sought March 03, 2009
By Neil A. Lewis, The secret legal opinions were issued by Bush administration
lawyers after the Sept. 11 attacks.

Beyond Conventional Neo-classical Theory:

The self-proclaimed conservatives corrupted both
conservative political culture and conventional
economics to show themselves to be nothing more than

Corporate Capital against democracy

In the frenzy of increasingly mystifying, debt-financed public and
private spending that further fueled rampant financial speculation,
the heavy-weight giant, that only remaining, increasingly enfeebled
superpower, had gravely wounded itself. It was not brought to its
knees by a powerful foreign force, its Right, Ruling elite
accelerated the system’s innate tendency toward cyclical and
structural crisis now resulting in the financial bust and economic
quaking. In the name of conserving the principles and practices of
Capitalism, the Neocons aggravated political/cultural tendencies
that undermined both politics and the economic system.
Domestically and internationally their political-economic gamble
reduced its ability to maneuver economically, financially and
militarily, and in the process it created a new, expanded global
crisis of confidence in its Capitalist disorder while publicly
degrading its own version of democracy at home and abroad.

The Seeds of One Type of Transformation

Herein lay the crucially dangerous interrelated elements of a veiled
transition that has drained the economy, corrupted politics and
draws the Nation and perhaps the world into a depression. The
studied dilution of the content of National-popular, cultural notions
of minimum democratic controls over the economy were being
advanced over the same period that successive Federal
administrations were giving expanded license to corporate
executive discretion that, with the G. W. Bush administration, was
accelerated as they became officially expressed in the increasing
demand for secretive, authoritarian administrative practices that
may be summarized and were most notably demonstrated by
administration’s leading advocates of the concept of the Unitary or
Imperial Presidency20. The political/cultural congruency between
corporate authoritarian management methods and the assumption of
the unquestionable power by the USAmerican President cannot be
overlooked in this analysis because it is this cross pollination of
executive notion of public and private secrecy that contributed to
the conditions of both the economic-financial crisis and the crisis of
democracy all manifest in the present Crisis of Confidence.

In a moment of deliberate public deception that reflected its
arrogant delusion of grandeur, The Right, Ruling elite consciously
used world-wide sympathy following the tragedy of September 11,
2001, to launch a war that simultaneously undermines its economic
power and the political authoritarian order it promoted. In the
process the broader Ruling Neoliberal elite has discredited is own
political propaganda by breaking the bond between its nationalist
Capitalist economic goals and the deep national-popular, cultural
sentiments favoring a minimum democratic political processes. In

  Unitary Presidency
Imperial Presidency

the course of imposing its limited version of democracy at the point
of a bayonet and a hot check on many other countries, from Puerto
Rico to Iraq it has caused people throughout the world and at home
to question its political sincerity.

By promoting military-backed, corporate-financed assaults on the
world’s product, resource and financial markets the USAmerican
Right Ruling elite has discredited the theories of “free trade” it
publicly espoused while revealing itself as the major threat to
popular democracy. The most extreme secrecy of its administrative
controls, manipulation of information and outright deception
exercised with particular deliberation over the past eight years, has
clearly shown the inherent antagonism between Corporate-State
Capitalism and all the popularly held notions of democracy of any
type. From its demand for insulating secrecy in the National
Executive Office to the Corporate CEO’s office, the neo-cons
officially endorsed an underlying cultural trend of the capitalist
leadership that embraces and insists upon secrecy as an essential
mode of the operations of Corporatism. The Right ruling elite has
shown itself as lawless state leaders in a world seeking an orderly
reorganization out of the chaos its neo-con-artist aggressors have
created. Manipulating all types of data in official reports on threats
to national security to the integrity of scientific research, the need
for secrecy became the cover for incompetence.

The extreme secrecy demanded by the neo-con advocates of the
Unitary Presidency, reflects and gives official support to those
corporate agents who argue the need for business secrets and
authoritarian administrative methods. This elitist corporate culture21
finds its destructive reflection and validation in similar anti-

  Formation of Corporate Culture in the USA

democratic, Executive Office demands to insulate itself from public
scrutiny. Like the corporate capitalist operators who have concocted
a private labyrinthine web of financial schemes that have advanced
the Crisis of Confidence in the financial system, the authoritarian
governmental practices of the Neocon right were tearing apart the
public’s confidence in its political structure. The Political-Right
leadership has used the slogans of individualism, democracy and
classical market economics to destroy the minimum political
safeguards against uncontrolled corporate-capitalist aggression
within the Nation and throughout the world. Secrecy, to cover
deception, to avoid close public scrutiny of a long chain of
accumulating political and economic failures became the self-
entangling rationale of neo-con-artists’ administrative tactics for
attempting to conceal the broadening internal destructive tendencies
of Capitalism and its own administrative failures.

 “Creative Destruction” or simply destruction

Since the USA was routed from Vietnam, the Neoliberals have
cunningly and deceptively elevated Joseph Schumpeter’s ideas of
Capitalist creative destruction22 to terrifying height of
economic/cultural absurdity. Making “Creative Destruction” an
integral component of national economic growth which is
summarized in the glaring reality of repeated costly bombing to
build for the benefit of corporate expansion; it exposes the system’s
end point. From destroying the productive base of its domestic
economy to attempting to destroy the sovereignty of any nation that
opposes its political will and economic dictates, USAmerican
  Joseph Schumpeter and Creative Destruction and

Imperialists of both wings of Corporate Capitalism demonstrated
their contempt for their espoused principals and practices of “free”
market capitalism and the fundamentals of political democracy. By
arrogantly assuming that it could use its Nation’s massive
economic/military power to convince its major trading partners to
acquiesce to its will, the National, Ruling Corporate-elite coerced
those they could not buy or cajole and in the process of
undermining the operations of Classical Market Capitalism,
Neoliberal corporate “globalizes”, the Imperialists, have crippled
themselves by crippling the National economy through their own
corrupt authoritarian practices thus creating many enemies and
many more skeptics. Schumpeter’s observation about Capital’s
power of creative destruction now guided by the Neoliberal
corporate elite suggests a frightful dual meaning as it destroys its
former political and economic culture on the road to creating the
National Corporate-State.

Militarized Economic aggression has long-term, political-
economic, cultural consequences

Through their protracted drive for world-wide political and
economic domination, the USAmerican National, corporate
imperialists also lost sight of the fact that they were creating and
expanding a more integrated circle of their most formidable
economic challengers. In their latest drive to control Middle East
oil, as both the lubricant of modern production and major revenue
base of international financial manipulation, they miscalculated in
both spheres. As the USAmerican Neoliberal elite’s push for world
Military/Economic dominance became clearer since 2001/2003, the
members of the coalition of the willing became increasingly
concerned who among them might be targeted next for some
transgression of USAmerican made rules of their Corporate World

Order and many began to position themselves defensively and
developed alternatives.

As Former skeptics of and blind adherents to USAmerican
imperialist policies opened their eyes and minds to the destructive
consequences of expanding USAmerican, Neoliberal, National-
militarized economic aggression, they along with critics and
growing numbers of victims of USAmerican Imperialism, began
searching for alternative economic relations within and outside of
the Capitalist order. While the Peoples Republic of China seek out
resources and additional trading partners throughout the world, the
people of Latin America vote socialists and populists into office,
and attempt to form regional currencies,23 banks and markets. All,
including the Russians and Europeans are actively seeking
alternatives relations that will reduce their dependence on
USAmerican financial methods and its self-serving institutions as
they try to cushion their economies against the impact of the
USAmerican spawned economic disaster. As in the Napoleonic era
when the French expansion through Europe inspired the formation
of new nation-states and ignited the royalist reaction of Metternich,
the current Nationalist Corporate-Imperialist State aggression may
be signaling the formation of alternative national coalitions forming
both economic and political resistance to USAmerican
Military/Economic thrust for world domination which in turn
intensifies the internal economic crisis of USAmerican Capitalism.

Presently the maneuvering takes the form of alternative resource
market development, adjustments of trade relations and the search
for viable, optional, financial methods of clearing markets. The
search for substitute currencies and market clearing strategies will

  Regional currencies: The Sucre

certainly test the feasibility of new, more reliable currency packages
and barter procedures that overall will tend to reduce the influence
of the Usad through the coming years. The combined effect of all
these alternative, regional and global, marketing and financing
experiments will reduce the value of the Usad and cause the
National Corporations to modify their expansionist business
strategies based on the earlier unrestricted circulation of Usad’s as
the international market clearing currency.

From inquiry to open criticism

As the social/economic consequences of the spreading crisis
become increasingly clear, growing concerns are being more
forcefully expressed in Major Neoliberal, international trade and
financial gatherings. The early inquiries emerging first as polite
diplomatically phrased questions by increasing numbers of leaders
from Capitalist counties are more frequently expressed in loud notes
of skepticism tending to open criticism about the spreading effects
of the rapidly rising USAmerican debt24 and its fast growing money
supply. Among many recent statements of concern articulated by
various prominent leaders representing major trading partners of the
USA none was more poignantly and pointedly made than by former
Mexican President Ernesto Zedillo who, speaking candidly and
sharply in Davos in February, expressed the deep anxieties of many
free trade advocates. Reporting from Singapore Edmund Ng noted
Zedillo said:

  The USA one of the most dangerously indebted Nation among the top
Ten Total USamerican Debt Total Public Debt of the USA on 19 November 2008
Usad’s in Circulation USAmerican Total Money Supply estimated at

“The U.S. needs to show some proof they have a plan to get out of
the fiscal problem…We, as developing countries, need to know we
won’t be crowded out of the capital markets, which is already
happening.” Mr. Zedillo said that Washington, unlike most other
countries, had the option of simply printing more money, because
the dollar was a reserve currency for the rest of the world.25

Further commenting on the anticipated strain on world capital and
debt markets posed by additional USAmerican borrowing that will
be required to fund the Democrat’s proposed economic stimulus
plan the New York Times of 2 February this year also reported:

Ernesto Zedillo, the former president of Mexico who helped steer
his country through a financial crisis in 1994, said developing
countries were already having a hard time finding the capital they
needed without competing with increased borrowing by the United
States. And his country does not have the option of printing money,
he said, because the Mexican peso is not a reserve currency like the

Following in rather quick succession two alarm bells were sounded
for the future status and international exchange value of the
Usadollar. On 14 March the New York Times reported that Chinese
Prime Minister Wen Jiabao expressing his fears about the value of
his country’s holdings of one trillion dollars of USAmerican
Treasury obligations said sharply: “We have lent a huge amount of

  Ernesto Zedillo
 Ernesto Zedillo

money to the U.S. Of course we are concerned about the safety of
our assets. To be honest, I am definitely a little worried.”

Following The Chinese Prime Ministers terse comments by four
days, Reuters reported:

 Currency specialist Avinash Persaud, a member of …a United
Nations Panel on Financial Reform27, …said that … the panel
would discuss a … proposal … to create something like the old Ecu,
or European currency unit, that was a hard-traded, weighted
basket. Persaud, chairman of consultants Intelligence Capital and a
former currency chief at JPMorgan, said the recommendation
would be one of a number delivered to the United Nations on
March 25 by the U.N. Commission of Experts on International
Financial Reform. "It is a good moment to move to a shared reserve
currency," he said.

In the politically charged atmosphere heighten by rising fears of
USAmerican protectionism and the problems posed by its increased
borrowing now more assertively and openly expressed by the
USA’s closest Neoliberal trading partners in major international
meetings and under the mounting strains of a deepening economic
meltdown, we must ask:

   United Nations Panel on Financial Reform
China's Leader Says He Is 'Worried' Over U.S. Treasuries, March 14, 2009
By Michael Wines, Keith Bradsher and Mark Landler, The Chinese premier, Wen
Jiabao, expressed concern on Friday about China's $1 trillion investment in U.S.
government debt.

Is everything old new again?

Are we at the door of a global economic reorientation,
renewed international capitalist rivalry or perhaps a

Two Doors: Both lead Beyond Capital one beyond
democracy, the other to its popular revitalization.

Beyond Keynes?

The More Distant Past Revisited - Is this 1907 / 08 combined with
1929/ 30 but now forming on a wider, global scale?

Are the similarities of these three major economic crises of
Capitalism, sufficient to help us learn from the full sweep of the
experience? Or, must we, as George Santayana warned, be forced to
repeat our errors and I add: if we cannot learn from our past, we
will repeat the errors with similar, frightfully intensifying

Before introducing a summary review of the circumstances of The
Panic of 1907 it will be helpful to first review the sweep of dramatic
historic events of the entire period from the first decade of the
Twentieth Century through to the conditions leading into the Great
Depression. For I will argue that in the context of the changing

world’s relations of forces then an now, the USAmerican historical
settings of both events and the solutions applied are intimately
related and that the practical economic knowledge gained from the
first industrial era crisis of the last century, seemingly ignored at the
formation of the second, continues to inform the style and methods
presently used by USAmerican government officials as they attempt
to contain the present economic contraction.

The Panic of 1907 marked the beginning of a new type of financial
breakdown at the apogee of the First USAmerican Industrial
Revolution and the beginning of the Second. The many economic
and financial miscalculations, errors, moments of personal greed
and political myopia in that period conditioned the circumstances
the Long World War (My term, AY) which unfolded in two phases
from 1914 to 1945 bracketing the cataclysmic economic hiatus of
Great Depression, falling not accidentally, between the First and
Second War periods. Furthermore the specific national approaches
to resolving the economic crisis of the 1930’s informed the
prevailing theories, rationale and practices of government
intervention today.

The Setting

Capitalism was then mutating as it is now. Through that Long War
period the transition from an agricultural base to a firming industrial
economy had been established in the USA, Germany and Japan.
The new industrial powers were challenging England’s long
established imperialist stature. The intensifying inter-capitalist
rivalry was further made more acute by revolutions in Mexico,
China, and Russia accompanied by similar but unsuccessful post
WWI out-breaks in Italy and Germany: all were enclosing

capitalism and conditioning the second phase of the Long World
War. The gravitational center of the world industrial order was also
shifting, mutating and being challenged from rival, imperialist-
capitalist powers and revolutionaries. The world’s sterling financial
base was being eroded and as the industrial strength of the USA
grew and its gold reserves increased the gravitational attraction of
the Usad became stronger. By the mid ’20’s world trade and power
relations had shifted dramatically. The USAmerican and British
Capitalists saw themselves increasingly challenged by both Fascism
and Communism. By the end of World War II the relations, range
and sphere of Capitalist trade had been dramatically altered.

The economic and social trauma resulting from the Great
Depression had earlier called forth various forms of state
intervention in national economies. In Italy and in Germany it
carried the titles Fascism and Nazism. While Fascism and Nazism
found prominent admirers and supporters among the Ruling elite in
the USA, it was the Democrats’ New Deal that expressed a
popularly driven, more democratic style of intervention in the many
Federal legislated programs such as WPA and the CCC. Whereas
the Italian and German programs relied heavily on military
production as the principal motor of economic stimulus, the
USAmerican Federal and local governments initiated economic
stimulus programs that were focused more on social needs such as
rural electrification, urban infrastructural development projects, and
income support programs provided by the new Social Security
Administration. Banking and Financial regulatory legislation was
passed; Bank Holidays or closings were declared, after which
reorganized banks were reopened under new more prudent
operating rules set out in the Glass Steagall Act of 1933. Deposits
were insured and new rules for stock, gambling Wall-Streeters and
commodity pit speculators were promulgated. Legislating many of
the social economic ideas of John Maynard Keynes and other
creative, progressive thinkers of the time such as John Kenneth
Galbraith, Franklin D. Roosevelt’s administration moved quickly to

save National capitalists from their own excesses. At the end of that
long economic contraction, recovery and war, Marriner S. Eccles
the Chairman of the Federal Reserve Bank through the Depression
years and WWII, reflecting on the full course of events leading up
to the Great Depression wrote in his memoirs:

As mass production has to be accompanied by mass consumption, mass
consumption, in turn, implies a distribution of wealth-- not of existing
wealth, but of wealth as it is currently produced-- to provide men with
buying power equal to the amount of goods and services offered by the
nation’s economic machinery.

Instead of achieving that kind of distribution, a giant suction pump had by
1929-30 drawn into a few hands an increasing portion of currently
produced wealth. This served them as capital accumulations. But by
taking purchasing power out of the hands of mass consumers, the savers
denied to themselves the kind of effective demand for their products that
would justify a reinvestment of their capital accumulations in new plants.
In consequence, as in a poker game where the chips were concentrated in
fewer and fewer hands, the other fellows could stay in the game only by
borrowing. When their credit ran out, the game stopped.

That is what happened to us in the twenties. We sustained high levels of
employment in that period with the aid of an exceptional expansion of
debt outside of the banking system. (Emphasis mine AGY) This debt was
provided by the large growth of business savings as well as savings by
individuals, particularly in the upper- income groups where taxes were
relatively low. Private debt outside of the banking system increased about
fifty percent. This debt, which was at high interest rates, largely took the
form of mortgage debt on housing, office, and hotel structures, consumer
installment debt, brokers’ loans and foreign debt. The stimulation to
spend by debt-creation of this sort was short-lived and could not be
counted on to sustain high levels of employment for long periods of time.
… The time came when there were no more Poker chips to be loaned on

Economic History Required!

Hegel remarks somewhere that all facts and personages of great
importance in world history occur …twice. … [The] first time
as tragedy, the second as farce. The 18th Brumaire of Luis
Bonaparte by Karl Marx

I Ask: G.W. Bush for Herbert Hoover?

Marriner Eccles’ reflection on the causes of the Great Depression
reads like a review of many of the best and most penetrating
analytical articles written over the past two or three years, some of
which are appended to this essay for further reading and may be
found after the End Notes. While names of financial dealings,
instruments and investment tactics have changed since the Eccles
was Chairman of the Federal Reserve Bank, the current strategies of
financial speculation through debt creation are still premised on the
same wistful notions of the unlimited growth potential of business
operations through methods of expanding debt or financial
leveraging28, where bye speculators use a very small amount of
personal investment funds to borrow the major part of the full price
of a stock or other financial instrument to make larger investments.
(See Meltdown 10129) In the stock markets this method of debt
financing has been long known as buying on margin30.

     Financial leveraging
  Financial Meltdown 101
Everything you ever wanted to know about the biggest economic meltdown since
the Great Depression but were afraid to ask.

Continuous borrowing of money to buy or make investments,
followed by borrowing to buy some more, has its day of reckoning.
The incentive to borrow in the current Capitalist economy is built
into the system through the maintenance of the inflationary trend
which was consciously developed as a result of Keynesian debt
stimulated spending during the New Deal period. That inflationary
bias, which The Fed attempts to control within an acceptable range,
encourages workers and corporations to contract debt because they
all assume that the debt will be paid with cheaper currency in the
future. Thus, whether borrowing to buy stocks on margin which is a
loan from a bank or a brokerage company, or borrowing from a
bank to buy a house with a low down-payment, implicitly the
borrower assumes a double gamble: first that the price of the
purchase, stock or house, will rise and secondly that some source of
his or her income will also rise. If those two variables do not move
in the direction anticipated and the borrower has no other funds to
pay back the loan, the contract will most likely fall into default. The
property, in the case of the home owner, is reclaimed or the stock
owner must sell the stock at a lower price to meet the lender’s
demand for payment of the amount originally lent or the “margin”.
In ether the case of stock purchase or the required mortgage
payment for a house or a car, the property is lost by the original
owner. Furthermore if selling becomes general in markets for
houses, cars or stock, the broad-spectrum of price levels will fall. If
no additional buyers enter the markets, prices fall faster and further.

Since the middle of 2007 a massive, now mounting failure to pay
many debts, for all the reasons described by Eccles in his memoirs,
is currently revealing the underlying causes of the new, rapidly
intensifying economic contraction that most are calling a recession

  Margin or buying on margin

and some a depression. Again, as in the 1930’s, the crisis in our
time expands for similar reasons that can be reduced at the financial
level to the one phrase used to by Hyman Minsky who described
extreme debt leveraging, borrowing to borrow more or pyramiding
as a Ponzi Scheme.31 We can think of the Pyramiding of debt or the
Ponzi scheme as a plan by lenders and borrowers to accumulate
debt, to multiply it by borrowing more, with the hope that earlier
obligations will be paid later by selling the mortgaged property or
collateral such as stock or a house, or by borrowing more in the

Generating debt to pay back debt is a fundamental assumption of
the present style of banking and investing. As practiced by nearly
all financial institutions, under the names risk reduction and risk
management, the addicted borrower supposes that he or she can pay
back an earlier debt with a sale at a higher price of inflated currency
or through additional borrowing. Today, through more elaborate
internationalized financing innovations in recycling debt, loans of
various types and quality are packaged as equities and sold on the
open market. These debt spreading and multiplying strategies are
also based on what was once called the greater fools theory through
which sellers take for granted that there is always a bigger fool in
the market who will buy at a higher price and thus the seller, who
may be equally as big a fool, hopes to sell to the later, greater fool.

How could this have happened? Again!

     Ponzi Scheme

Let’s revisit and update Eccles’ reflections on the causes of the
Great Depression. Eccles made six major points which we should
re-examine in terms of the realities of our time.

      Mass production requires mass consumption and mass
       consumption…, implies a distribution of wealth…as it is
       currently produced …to provide (workers) with …buying
       power. Jack Rasmus and others point out that over the past
       thirty years from about the mid 1970’s to the present,
       workers wages have been stagnant to declining. Over the
       same period about a Trillion USAmerican Dollars a year
       have been systematically transferred from the low and
       middle income USAmerican working families to the richest
       one percent of the population.

      A giant suction pump had by 1929 drawn into a few hands
       an increasing portion of currently produced wealth. A
       similarly powerful drain of income and wealth out of
       workers salaries and savings for the last quarter of a century
       is now having the same effect. (See Rasmus and many
       others cited in the Selected Reading section.)

      Capital accumulation concentrates increasing wealth into
       the hands of the few. Since the Reagan administration lower
       tax rates for the super rich combined with rising worker
       productivity rates and stagnant wages, have left working
       families with significantly less buying power to meet their
       rising costs of living.

      Exceptional expansion of debt out side of the Banking
       system (My emphasis)…mortgage debt, consumer
       installment debt, brokers’ loans, and foreign debt. With
       workers wages stagnant for the past thirty years, the saving

         rate falling to zero and occasionally into the negative range,
         workers’ families have been trying to sustain their life styles
         by borrowing on their homes through home equity loans and
         by contracting reverse mortgages, and borrowing on their
         credit cards. Simultaneously the Federal and local
         governments of the USA were increasing public debt by
         borrowing nationally and internationally while the Federal
         Government expanded budget deficits, sustained increasing
         trade deficits, increased military spending and the overall
         rate of printing money. (See Joseph Stiglitz)32 Furthermore,
         off shore banking havens formed outside of the control of
         the USAmerican bank regulators have put huge financial
         transactions beyond the control of the Fed.

        The time came when there were no more poker chips to be
         loaned on credit. Debtors thereupon were forced to curtail
         their consumption. That statement could have been written
         today as banks simply refuse to lend and consumers can no
         longer borrow. Unemployment further decreased the
         consumption of goods, which further increased
         unemployment. The current rate of unemployment is the
         highest since 1983 and currently growing at the rate of about
         a half a million a month, is expected to rise above ten
         percent this year.

With little difference in vocabulary and syntax, Eccles’s major
points summarize the broad sequence of events marking the
additional steps leading to the economic crisis now swiftly
expanding and deepening in the USA and spreading outward along
the international lines of Neoliberal trade and finance networks.
  Joseph Stiglitz, Vanity Fair. December 2008

Strangely, the publicly acclaimed masters of finance, from the self-
excusing, penitential Alan Greenspan,33 long time Chairman of the
Fed, to Ben Bernanke current Fed chairman highly praised student
of the Great Depression, to the last head of The Treasury
Department of the USA, Henry Paulson former chairman of
Goldman Sachs, and now even Robert Rubin all seem to have been
taken by surprise. Apart from Ben Bernanke, perhaps they were all
influenced by Henry Ford’s proclamation that history is bunk but
perhaps, they just overlooked Eccles’ memoirs, which were
published in 1951.

Apparently many in the leadership circles of high finance have
ignored, misread or hold different interpretations of the broader
sweep of economic history. Evidently focusing on the narrower
history of financial market crises, they confidently thought they had
escaped the limitations of older Classic, Capitalist theory and its
inherent inescapable realities. Their cumulative and collective
knowledge of the market mechanisms; the surety they feel in their
economic computer models and the statistics they pump into them;
the refinements they had developed in risk prediction, risk
management and risk reduction strategies, were all incorrectly
based on the false assumptions of their narrowed, religious-like
belief in a fundamentally flawed notion that eliminating market

   Alan Greenspan Greenspan Concedes Error on Regulation By Edmund L.
Alan Greenspan, the former Federal Reserve chairman, said he “made a mistake”
in trusting that free markets could regulate themselves. See also David M. Kotz,
Shocked Disbelief,
David M. Kotz, Truthout: "Former Chairman of the Federal Reserve Alan
Greenspan found himself 'in a state of shocked disbelief' at the failure of
individual self-interest to protect our banking system. What really ought to
provoke shocked disbelief is that a person who held such views was placed in
charge of regulating the American financial system, a position he held from 1987
to 2006."

obstacles can some how in itself overcome the innate problems of
the Capitalist mode of social/economic reproduction and
distribution which Eccles made very clear in his memoirs.

Whereas        Eccles    methodically summarized          the     major
economic/financial problems resulting in the most massive, world-
wide economic contraction of the last century, it seems as if the
present Neoliberals, Republicans and Democrats, were sure that the
new, world-wide trading and financial relations that they were
fostering and forcing on the world economy, warranted renewed
confidence that history and theory itself could be superseded.
TINA, the Neoliberals’ triumphant slogan, There Is No Alternative
to Capitalism combined with the pronouncement of End of History
now stand as the neo-con’s self-condemning testimony to their own
delusions accompanying their equally ludicrous notions of a post-
industrial, weightless economy. However, in the real world, beyond
the elitists’ illusions, more working people all over the world seek
relief from the grinding misery of their real, long hours of heavy
physical labor that enriches the few. Again, but on a broader
international scale, the capacity of the Capitalist system and its need
to increase profit at the cost of crushing poverty has stalled the
financial re-investment process thus leading to a freezing of the
financing process.

Ignoring or minimizing the Keynesian admonishments to maintain
some reasonable relation between the growing labor productivity
rates and the current distribution of income, the Neoliberal
monetarists, especially those grouped in the Chicago-Friedmanite
School seem to have lost sight of, or simply ignored, the vital
connection between productive capacity and the ability of the
worker-producers to buy the products they made. Further assuming
that Corporate Capitalists could sell products and services
successfully into expanding world-wide markets, they deliberately
drove down domestic wages that consequently further reduced the
USAmerican workers’ buying power. In effect the Neoliberal

globalizing imperialists were abandoning their domestic population
for cheaper labor and their hopes of opening wider markets abroad.
Early in the game many astute Union worker-leaders labeled this
Neoliberal plan as a “race to the bottom” of the world-wide
economic barrel. We may not have yet hit the bottom.

It looks as if USAmerican Corporate-Capitalists, their advisors and
their elitist imitators in other countries, had by the 1980’s become
so thoroughly convinced they already achieved such an indomitable
pinnacle of political-economic influence, broad adherence and
cooperation, Hegemony34, as Antonio Gramsci would have called it,
they felt they could operate securely in an increasingly self-
managed system of expanded transnational Capital Accumulation
which could be financially directed and boldly manipulated within
the bubble-like boundaries of Neo-classical, militarily-protected,
monetarist theory.

The Chimera of Success and the Capitalists’ Inescapable

Evidently the Capitalist have and continue to fully understand that
Capitalism must expand its range and rate of exploitation in order to
increase profits endlessly or it will cease to exist. As Marx
accurately pointed just over one hundred and sixty years ago, in the
Communist Manifesto,35 the capitalist is driven to all corners of the

  Antonio Gramsci: hegemony
  The Communist Manifesto “The need of a
constantly expanding market for its products chases the bourgeoisie over the

world in the relentless pursuit of increasing the opportunities to
make profit in order to continue accumulating wealth needed for
additional investment. However, it is the capitalists’ accumulation
of profit and its increasing augmentation and concentration of
productive capacity that in fact eventually chokes the system. In the
unrelenting, system-driven pursuit of wealth, the actual profit-
seeking capitalist uses all the available economic and political
powers necessary to overcome the exiting limits to profit-making
potentials by simultaneously striving to insure the predictability of
profit-making conditions for its business by attempting to dominate
markets and at the same time expand its own economic fortune. The
neat theoretical assumptions of a closed, mechanically self-clearing
markets constantly moving toward salubrious equilibrium dose not
correspond to the reality of Capitalism’s history: sustained market
equilibrium would sound the death knell of Capitalist accumulation.
The greatest fear of real profit seeking capitalists is the economic
Steady State because such a stable state means a stagnant, no-
growth economic stasis which would stop capitalist accumulation
and kill the system. Constantly confronting this recurring and
inescapable internal contradiction of the system, actual capitalists
continually strive to overcome it by going beyond it. To avoid the
steady state, Capitalists have been historically compelled by the
system’s necessity for constant growth to incessantly strive to
overcome the internal and external market limitations to expansion.
Wherever and whenever faced with physical or political barriers
that limit the range of their economic growth, Capitalists have used
all the options available in each historic period to clear away
obstacles to their incessant pursuit of profit. This internal
systemically motivated drive is exactly the reason for Capitalism’s
ravenous, long-term destructiveness.

entire surface of the globe. It must nestle everywhere, settle everywhere, establish
connections everywhere.”

From England’s old Enclosure Acts to the New Enclosures today
facilitated by the capitalists’ formulated regulations of the World
Trade Organization through which corporations use the force of
their rules backed by their military might to own and control the
fundamental natural conditions of human existence such as public
water reserves and systems, Corporate Capitalists attempt to draw
into the web of their private institutional control every phase of
production, financing and sales-distribution activities. Their
ceaseless search for private institutional control over marketplace
variables has in fact subverted theoretical and actual market
operations throughout the history of capitalist business activity. The
search for predictability through private, internal controls has taken
many forms in corporate capitalist history. Some of the most well
known methods pass into the popular and business vocabulary with
names such as monopoly, oligopoly, vertical integration, horizontal
integration, conglomerate integration and cornering markets. The
systemic necessity that drives each “individual”, now impersonal,
giant corporation together and individually, to pursue their
particular advantage reveals all the flaws and myths of both
capitalist economic theory easily observable in actual corporate

Succinctly put Capitalists must override or control the threateningly
destructive conditions of competition to insure continuous
accumulation necessary to survive and in the process they form the
obstacles to future growth. In the incessant pursuit of profit they
pile up their accumulated wealth on one side of the social ledger
while leaving want and unfulfilled human need on the other. Eccles
from his view of inadequate distribution of current income
generated by increasing productive capacity was on target.
Capitalism’s tendency toward building up excess capacity leads to
overproduction and as wages fall working people cannot afford the
goods and services they produce. It is not that the workers do not
need or want the products of their labor; they cannot buy them.
Thus human needs accumulate on one side of Capitalist market

while huge quantities of products lay out of reach workers limited
buying power on the other. As in the present economic crisis this
myth of market equilibrium’s beneficial balance between supply
and demand is revealed. What is not supposed to happen according
to mainstream economic theory does in reality: markets do not
automatically find a new balance. Whether we look at the markets
for business investment, consumer borrowing or the markets where
products and services are bought and sold, the markets do not
automatically clear themselves because of the underlying
disjuncture between the wealth that workers produce and the
smaller portion they receive in wages. At certain times the
imbalances result in those severe contractions in financial and
product markets which we call crises.

Capitalism is fundamentally a self-destructive system. Its profit
driven creative power at a certain systemically defined moment’s
turns on itself, to consume itself in a cannibalistic like frenzy of
internecine destruction, which in addition to leaving markets piled
with unsellalble products, also takes many forms of corporate
consolidations such as mergers and buy-outs that have the effect of
eliminating competition through take-overs that destroy other
competitors. In each of the periods we are examining the business
concentration of wealth and hence economic power has been one of
the methods for limiting the destructive tendencies of panics,
depressions and recessions. From the depression and panics of the
last quarter of the Nineteenth Century to the bank mergers being
encouraged today by both the USAmerican Treasury Department
and The Fed, corporate concentration has been a prime method of
eliminating or evading the destructive conditions of Capitalist
competition which then further limits the supposed self-regulating
functions of market. It is openly admitted by powerful capitalists
and their political supporters that one agreed upon method of
restoring the general systemic conditions necessary to sustain
profitability is to have few stronger corporations take over weaker

Now fearing more than ever those domestic or international players,
whose cooperation they cannot gain, the Corporate Capitalists today
are striving toward greater control by overcoming the assumed
limits of equal market negotiations through various forms of
economic, political power and military coercive force. In the
present crisis viewing the potential challenges from other national
and international Corporate-Capitalists the USAmerican
Corporatists are using the current contraction to consolidate their
National economic power for future expansion. Short of open
generalized war as in the first half of the Twentieth Century, current
capitalist maneuvering among the leading industrial cooperating
states, takes the form of corporate consolidation.

The notion of a closed self-regulating, economic mechanism is the
point where Capitalist theory is contradicted by the history of
Capitalist practice. Capitalism cannot accept its own enclosure: it
must break through all limits to its growth which means the
enclosure of all competitors in a shrinking but more powerfully
concentrated corporate sphere. The persistent corporate
determination to control all market variables systemically weakens
market mechanisms in reality. While mainstream, classic theorists
from Adam Smith on have argued that Capitalism is based upon the
equality of informed buyers and sellers voluntarily entering
unrestricted markets, individual and corporate efforts to control
market conditions contradict theory through the practices of real,
on-going capitalist efforts to achieve various degrees of control
through consolidations which have been changing the
social/economic, cultural relations of Capital.

Apparently having learned the profit strangling effect of product
and service clogged markets, frequently recurring all through the
long convulsive history of Capitalism’s economic contractions, the
Keynesians and the Monetarists of the Friedmanite or Chicago

School recognized that they could not ignore the problems of
glutted markets. Thus they all set out to clear markets through
external market methods. In the face of corporate concentration of
wealth and economic/political power, and the recurring market
imbalances between supply and demand, the mainstream
economists appear to have only two solutions: stimulate demand
and restore some former level of competition or to aid corporate
concentration. While the broad Keynesian approach has been to
stimulate demand primarily through government fiscal-budgetary
procedures, the neo-classic monetarists characteristically relied on
money supply management and creating the least restrictive
business environment by legislating away market regulations and
facilitating business mergers and acquisitions. Whereas the
Keynesian market regulators tried to manage business mergers with
the view of sustaining competition through the regulation of
business acquisitions, the neo-classists tended to facilitate them.
However, the essential goal of the reforms and counter reforms of
both groups through the last half of the Twentieth Century into the
present economic calamity has been to maintain the general
economic conditions conducive to sustaining high rates of
profitability necessary to encourage high levels of business
investment and consumer spending in order to mitigate effects of
what they all recognized as the reoccurring contractions of the
“normal” business cycles. Nevertheless as we are again witnessing,
these market interventions tend over time to accelerate and intensify
the systemic tendencies toward supply/demand imbalances that
continually reappear to choke the system

Herein lays the confounding dilemma for the capitalists who are
repeatedly presented with the insurmountable internal systemic
barriers to continuous economic growth. While Keynesian reforms
postpone the day of social/economic reckoning, the neo-classical
Market-fundamentalist approach regularly lead to the more extreme
systemic imbalances that have precipitated the most dramatic
economic stoppages we know as depressions.

The Corporate Enclosure of Consumer Civil Society

While the proponents of each approach to smoothing out the
recurring business cycles, blame the others for aggravating the
conditions leading to each recession or depression, neither group
can eliminate the economic contractions. Despite their debates and
acrimonious criticism throughout the first three decades following
WWII, both groups of economists were trying to manage macro-
economic conditions or the broad political-economic environment
of a relatively closed or at least insulated national market. In effect
they were trying to insure that the National product and growing
service markets would not be glutted but constantly cleared through
domestic consumption. A broad consensus on maintaining domestic
workers spending power was seen as a socially stabilizing variable
that insured reasonable economic conditions sustaining corporate
profitability. By the crisis years of the mid-1970’s it became
increasing clear, especially following those years of “stagflation”,
that the costs of domestic capitalist production and the market
clearing capacity of both consumers purchasing power and through
the power of government spending plus business investment in
plant and equipment could not be sustained on the basis of a pay-as-
you-go or buy-as-you-earn alone. Stagflation signaled to the
National Ruling elite the insuperably horrifying, unacceptable
conditions of an economic steady state which for the capitalist
signals the end or the decline of the general conditions supporting
profit accumulation.

In a concerted effort to break the market clogging condition of the
stagnant state of the domestic economy in the 1970’s, a determined
political effort was made to put downward pressure on National
wage scale, increase worker productivity through output enhancers

such as worker speed-up, intimidation and attacks on unions, while
simultaneously increasing incentives for USAmerican companies to
seek out low-wage production zones in various parts of the
Americas and throughout the world. This three part policy decision
advanced during the Reagan presidency and continued by Neo-
liberals of both major USAmerican parties of Corporate Capital, set
the course of the international race to the bottom of world economic

The general plan was to break out of the confining stagnation in the
domestic economy by expanding into new cheaper production
zones while simultaneously enlarging domestic and international
sales markets. Using the penetrating power of the overflowing
surplus of repatriated USAmerican petro-dollars, Direct Foreign
Investment by USAmerican corporations was officially encouraged,
protected in law, supported by government subsidies and sheltered
through the expansion of national military power.

As each phase of USAmerican Corporate expansion encountered
new obstacles on the international frontiers and new economic
contractions in the National domestic markets through the 1980’
and ‘90’s, fresh investment opportunities were opened and secured
with National military backing. In the name of containing
communism, securing free markets and protecting human rights, the
world was being made safe for swelling USAmerican corporate
expansion. One need only reflect on the rolling series of escalating
covert and overt wars launched against the people of The Caribbean
Islands, Central and South America throughout the long Cold War
period that gave vivid expression to the meaning of expanding
Military-Keynesianism. At each moment that a nation would assert
control over its National economy, whether tiny Haiti or smaller
Granada, the financial and military tactics necessary to force open
markets to USAmerican investment and trade were set in motion.
The frequently asked question: did flag follow business or did
business follow the flag was made mute by the growing

economic/political symbiosis of the “Military, Financial - Industrial
Complex”. Thus as the ruling USAmerican Corporate elites
attempted to break through the “obstacles” to National capitalist
expansion by non-economic means, in their bipartisan decisions,
they expressed full recognition of the emerging limits to national
domestic growth and concurrently fully embraced the very
expensive historic national imperialist plan of continuous economic
expansion dating back to the earliest days of National

Steadily arguing against big government, the emerging voice of the
Neo-conservative Republicans, amplified by their New-Democrat
Neoliberal counterparts, began to shape the Big Corporate control
of the State via the pathway of economic-political ties of the
Military-Corporate-Industrial complex.
Claiming purist links to Classical Capitalist economic theory and
arguing in the most perverse way, against the Social Keynesians,
the Neoliberal monetarists, aggressively promoted the idea that
government administrative regulation of national economies created
the barriers to the market’s theoretical normal tendencies toward its
natural and socially beneficial operations. Promising broad social
benefits and expanded individual freedom, while publicly arguing
further that private business practices are more efficient than
government regulations, the neo-classical economists of various
Neoliberal stripes, propounded the idea of increasing market driven
efficiencies of production and distribution through deregulation of
business investment, financing and production practices. Arguing
further against the Social Keynesians, by advocating drastic
reductions of public funding of social costs of government and at
the same time increasing military spending, ironically the practical
political effect of the Neoliberals, smaller-government propaganda,
was to clear the political corridor to substitute the increasing power
of authoritarian private corporate control over the National and the
broader segments of international economic activities.

While publicly touting Nineteenth Century, Anglo/ USAmerican
classical economic theory to buttress their arguments for
unrestricted individual market freedom under the banner of the
sovereignty of the consumer, Neoliberals helped dismantle
government regulation thus opening a wide opportunity toward the
dominance of corporate power at almost every level of economic
activity. The ongoing dilution of government regulations was
accomplished with parallel arguments in favor of corporate self-
regulation that further widened the pathway to corporate
governance. Furthermore, by reducing national popular ideas of an
individual’s democratic role to the notion of consumer sovereignty
and equality in market relations, the Neoliberals helped to make the
consumer a complete appendage of corporate capitalist controlled
production and distribution. By driving down wages and at the same
time reducing government services, while encouraging consumer
debt accumulation, a process was set in motion that created a new
debt-indentured working class. Having reduced the working
producers to consumers gradually bound through debt to every
phase of corporate capital accumulation, formerly independent
workers have been steadily confined to the narrow dual economic
status of debt-locked servitude in the privatized fiefdom of
Corporate Capital. Dependent upon the corporations for
employment and increasingly dependent on corporate provided
services such as privatized, for-profit healthcare and financial
services, the corporations began enclosing the new non-unionized,
serf-like-worker into a neo-feudal reliance enclosed within the
circle of low wages, and debt-dependence.

Workers, politicians and many in the circle of the Ruling elite seem
not to recognize that Capitalism itself was changing, in that the
central motivation and organizing concept of modern corporate
management, as it strives for internal production controls,
increasingly informs its impulse to enfold and direct the larger
political-economic environment in which it operates. The
management experiences of business leaders, politicians and

economists in government and in the private economic sphere
gradually opened the political conduit to increasing corporate
administrative power over the National economy. In the process of
continually using military expenditures to balance and even
stimulate the economy through corporate contracts, wider sectors of
the working class became dependent on military production for
their employment. Further, through the increasing practice of
bringing experts from businesses into governmental management
positions throughout the Cold War years and linking internal
economic stability to military spending, corporate leaders
repeatedly passed through the revolving door between government
and corporate offices. In the process, as the corporatists learned the
practical results of governmental management they more clearly
identified the limitations of neo-classical theory and, with the aid of
politically powerful ideological supporters in government providing
business tax subsidies, diluting worker rights and passing favorable
tax legislation they successfully came to dominate government
management of corporate-state relations of economic activities.

From their rotating positions as both government administrators and
corporate directors, planners and business leaders cultivated the
power of politics in guiding the priorities and patterns of economic
development. As they identified the limits to systemic economic
growth imposed by the ensuing periodic disjunctures of traditional
Capitalist markets, the Corporate-Capitalists of the post WWII
period, more than ever before, tried to control the political
conditions of the business environment for themselves.
Consequently since WWII, the corporatists actively sought the
protection and the support of state political and financial aid to
shield their businesses from the vicissitudes of markets. Through
fiscal stimulus packages, tax shelters, cost-plus contracts, protection
from lawsuits, the support of direct and indirect financial subsidies,
through tax reductions of many types, managers of Capitalist
institutions attempted to use the levelers of political influence to
expand corporate power in a vain attempt to surmount the rising

obstacles to growth within Capitalism. The gradually interweaving
ties between corporate economic powers with governmental
political power eventually formed a cultural bond through which the
authoritarian styles of corporate management steadily penetrated
and then dominated the democratic decision making processes of
government at many levels. Consistently arguing that democratic
decision making processes were cumbersome, slow and inefficient,
the Right Ruling corporatists when in government consciously
pushed to increase the power of the Executive Branch in the style of
corporate rule in an effort to replicate in government their
authoritarian corporate business, management style.

Frustrated by both the historic problems of unregulated markets and
depression-era regulation the prominent post-war corporate leaders
consistently pressed for the full representation of business views
including its top-down management practice in governments in
order to channel Federal and State financial support more directly to
corporate profit making activities. Rising to the pinnacles of state
power both Keynesians and Monetarists increasingly imposed
corporate styles of dictatorial administrative controls on a National
and onto an expanding international economic scale. With mounting
stress Neoliberal economists argued for more direct
political/financial support of corporate business activities which
until the present crisis took three broad forms: corporate self-
regulation, tax policies that would encourage borrowing to stimulate
private domestic and international investment, social policies that
would force more people into the labor force and to dilute the rights
of labor, while increasing military spending.

Thus the lessons learned by the corporatist and their political and
academic supporters since the Great Depression, have lead them to
assume that corporate/military authoritarian management styles,
applying collected data to social-behavioral and market based
studies would provide them with both the technical knowledge and
power to mechanistically direct National and international

economic activity. Combining quantified measures of human
behaviors in an economic environment of assumed calculable
mechanistic responses to managed social/economic conditions, the
corporatists of all types, in academia and in government, assumed
they could “scientifically” predict the behaviors of their
economically conditioned homoeconomensis, the economic-wo-
man of the originating myth of Capitalist theory grounded in the
assumed human tendency to truck barter and trade, and thus
manipulate human behavior in a political/economic, ever more
controlled, Skinnerian maze that would yield the required
conditioned human responses necessary to sustain Capitalist
accumulation of profit.

Both the Keynesians and Monetarist fundamentalists knew that the
conditions required to elicit the necessary mechanistic human
responses to the economic model had to be shaped. The
“individual”, the economic-wo-man, had to be made to stand naked
and defenseless before the market grinder. As during the Enclosures
of the English country side, today the worker has to be forcibly
“freed” of all his or her collective and independent social supports
in order to condition him or her to make the computable human
responses to corporate structured and politically administered
market setting. Risk management methods are based on the
probabilities of human responses under certain measurable

In the flow of political economic events traversing the hundred
years since the Panic of 1907, the Capitalist gradually gained a
shaky but increasing confidence in the management of market
relations exhibited among the conditioned adherents. Their theory
reflects their perception of the behaviors of the most thoroughly
well conditioned actors, those who exchange the universal
commodity, money and near money instruments such as stock and
bonds. Often ignoring the inextricable relation, between the
fantastic realm of finance and the real world of production, the

financiers and their classical monetarist supporters increasingly
gained a dominating theoretical and practical influence in economic
theory and management. In each period that financial/investment
activity seemed to gain supremecy over productive economic
activity as in the 1920’s, the illusion of the dominating influence of
finance controlling the movement of circulating funds seemed to
confirm the centrality of circulation as the vital pivot of Capitalist
economic activity. Today, as in the early days of the Panic of 1907
and in the lead-up to the Great Depression, the breakdown of the
economy appeared to be introduced by the crisis of circulation in
the financial sector. Subsequently in each period of recovery in the
real productive economic sphere, the mainstream economists
perceive that their interventions in financial investment activity
seem to provide the new stimulus. If we listen to the keywords of
almost all the leading financial voices today, we hear repeated the
urgent need to restart lending and borrowing. The argument goes
that once the crisis of confidence in the investment process is
overcome, the investment paths are cleared to resume a renewed
profitable flow of funds necessary to reactivate the production of
goods and services which again may be successfully sold and

This logical theoretical inversion of economic reality, the prevailing
view held by most mainstream economists, is based on the assumed
near purity of the financial market operations and the long
conditioned responses of financial players, motivated by the profit
incentive. No, loans will not be made unless they can be placed
profitably: yes every player will seek some trading advantage based
up the controlled variables such as interest rate and money supply
changes in the financial market. The Changing conditions in the
financial markets taken out of the context of the total reproductive
system of Capital, appears to the mainstream analyst, particularly
the monetarists as the most pristine summary of all economic
activity. Because it is the most easily observable, measurable, and
most accurately calculated sphere of Capitalist activity, financial

movements become the quintessential model of market
mechanisms. The recognizable, highly conditioned responses of the
players in the financial market have given theoreticians and
practitioners, the confidence in the monetary management methods
which we again see failing abysmally. However, this enduring
confidence, now perhaps shaken, results form two profound,
interrelated errors in Anglo/USAmerican economic perspectives:
the dominance of markets along with their supposed mechanistic
movements and, despite the rising power and influence of Finance
Capital, its seeming independent ethereal movements above the
base of productive economy. To more fully understand the recent
and continuing pattern of interventions by the Central Bank and the
Treasury Department of the USA and its expanding failure, we
should reflect upon their earlier sense of success right up to the
Greenspan period along with a sobering reflection on their blind
truncated notion of homoeconomensis as a real and the unvarying
essence of humanity.

However, we should go a step further to recognize that it has
recently become increasingly clear that neither economists nor the
business elite retain much confidence in either the constructed
economic-wo-man or the earlier styles of political/economic
methods of economic corrections. While the Right corporatists have
moved more openly to toward authoritarian social and economic
control methods, the Democrats posturing themselves as neo-Social
Keynesians already show clear signs of a techno-elitism in their
style of top-down managed recovery plan. Through all the recovery
tactics of both out-going Republicans and the in-coming Democrats,
we can observe the tight theoretical focus they give to on the central
importance of the financial sector. By their practical efforts to
restart lending through the most aggressive methods, they clearly
demonstrate their conditioned view that the when banks begin to
lend they will reactivate investment leading to renew productive
activity. Risking the international collapse of the usad and an
explosive financial inflation both political wings of the Capitalist

State are again in the process of attempting to refine earlier styles of
intervention which have helped to resuscitate the system in the past
but now both sides are demonstrating that while they continue past
practices with greater determination and little effect, they are
increasingly willing to break on to new ground of administrative
controls that will eventually override capital and go beyond it.

The opposing groups among the Anglo/ USAmerican
political/economists have evidently learned the destructive
potentials of Classical unfettered Capitalism and are arriving at a
new level of mutual understanding, if not a loose consensus, on
trying to control its extreme tendencies. Both the more rational
Monetarists and the Neo-Keynesians now blending strategies are
pursuing some of the most aggressive state interventions in the
economy that have not been seen since the 1930’s and may go
beyond them. While, we are in the early phases of the incoming
Administration and all political actors are testing each other across
a rapidly changing political/economic terrain, all but the most
extreme rightwing Republicans, with reluctance, appear to
recognize similarities of the Democratic methods with their own
and increasingly accept them. While the concrete economic
conditions are shifting the alignment of political forces, the
prevailing view of the elite players is to salvage the existing system
through some type of reform. The more rational, centrist
Republicans seem to recognize that the Democratic path will not
threaten the life of National Corporate Capital. Unless constructive
alternatives can be developed, the destructive tendencies will also
accelerate under the banner of Reform. Recent reform Programs
and policies are not encouraging.

Social Distortions of Perverse Economics are already deeply
incorporated in the System

Evidently focusing with increasing interest on Joseph Schumpeter’s
notion of creative destruction, since the end of WWII
Anglo/USAmerican economists and business elite, throughout the
second half of the Twentieth Century, steadily attempted to
overcome Capitalism’s tendency toward both market-choking
equilibrium and depressions, through their increasing use of a
variety of additionally destructive methods which now take us onto
a new threshold in economic and environmental devastation.
Bringing forward innovative proposals for demand-creation they set
policies, passed laws and formulated administrative rules that they
thought would augment existing business practices to clear clogged
product and service markets. Historically we can accurately account
for a few major business activities that were designed to creatively
expand domestic consumer demand: product improvement and
marketing techniques including increasing advertising and
expanding consumer credit are notable. However, concomitantly
with business efforts to increase market-clearing, domestic-
consumer demand, two other methods of destruction were
consistently developed, refined, and fully integrated into business
practice in the same period: military spending remained high and
built-in obsolescence became a regular part of destructive planning.
Under the political influence of both schools of economic thought
these two methods of demand creation and supply stimulation
within the Capitalist mode of production took on distinctly wasteful
social and environmental management practices that had,
nevertheless, demonstrated income-boosting and profit enhancing
results. During this period Schumpeter’s questionable ideas of
creative destruction were taken to their logically absurd extremes.
Increasingly, through the Post WWII years the link between
capitalist creativity and destruction took on a perversely reversed
meaning: destroying in order to produce more replacements. This
blatantly wasteful process of deliberately destroying to create space
for new products not only systematized and accelerated the long
historical process of rapacious consumption of the Nation’s natural
environmental endowment, it represented logical direction of

thought within the confines of Capitalist economic theory and its
specific USAmerican History.

Throughout the Post WWII period, under the strong political
influence of its expanding industrial capacity and because of the
well-grounded Keynesian fears of another post-war depression,
creative destruction became integral to National expansion required
to satisfy the systemic need for constant accumulation. Since the
end of the Second World War both Democrat and Republican
Administrations passed legislation sustaining high levels of
“defense spending” and the tax incentives necessary to sustain high
rates of planned destruction such as continuously planned
obsolescence which was supported through changes in tax rules for
accelerated depreciation. It is at the point of tax rule changes
allowing more rapid depreciation of assets that the approved
accounting rules created a financial bias in favor of short term profit
gains over long term investments. Corporate Capitalists of all types
then became increasingly concerned with the quarterly profit
statements that would determine market prices of company’s stocks.
Thus, short term business decisions, supported and further
encouraged legally, tended to set a short-term accounting measures
of profitability which accelerated wasteful production for higher
profits, reported in shorter periods.

Further accelerating the overt destructive tendencies within
Capitalism were the mounting arguments for protecting expanding
National Interests, through which politicians of both major political
parties regularly voted for military budgets to increase the National
armed power of destruction in the name of enhancing National
security. As the prevailing notion of National Security was more
tightly linked to the security of USAmerican corporate investments
abroad, the accompanying costs of military protectionism became
an integral component of business expansion. Thus the machinery
of consciously planned destruction was built in to National,

economic stimulus programs. Evidently Capitalism requires
destruction to survive.

Throughout the entire Post-WWII period military spending became
a fixed component of fiscal planning that created prolonged
opportunities for USAmerican corporate investment in the
increasingly powerful instruments of war. Thus war, constant war,
and the huge federal expenditures for preparation for war became
increasingly influential in National economic decision making.
While the Monetarists, especially the more fundamentalist
Friedmanites, have repeatedly demonstrated an increasing
willingness to directly use force internationally and police state
methods of social control domestically, the neo-Keynesians offer a
more subtle domestically oriented approach to rehabilitating
Corporate-State managed Capital which may open on to more
democratically based initiatives that could break free of these most
perverse social distortions of Corporatism. However, it is
imperative to stress that as long as the domestic social/economic
stability remains dependent on corporate expansionism, the
domestic economy will be drained for the benefit of the few by the
military costs of sustain economic aggression at home in the form
of privatization social service and abroad through on-going private
economic penetration of other national economies.

Beyond an economic stimulus policy

The lessons learned throughout post WWII rebuilding and the Cold
War years were not lost on the on the Neoliberal Corporate
Imperialists of both major parties. All unmistakably learned that
planned destruction whether in war or through planned
obsolescence creates the future opportunities for investment.
Broken automobiles or bombed shattered buildings eventually must
be replaced and. from profit point of view, the sooner the better. In
that historical moment Corporate-Capitalists stood staring at the
system’s ultimate absurdity and happily embraced the perversity of
its profit sustaining logic. Capitalist renewal plainly required
destruction in ever extending forms.

For modern Corporate Capitalists the limits of profit making
activities are also defined by the system’s increasing capacity to
produce better, higher quality, longer lasting products thus running
the risk of saturating markets and thus approaching an economic
steady state. The satisfied consumer will just stop buying. Ideally
the self-interested capitalist wants always to enjoy sustainable, high
consumer demand. Once human needs approach levels of
satisfaction, buying would slow; production would drop, hence
reducing the capitalist ability to continue selling at a profit. At a
point where general consumer satisfaction would quickly lead to
market saturation, the Capitalist has few remaining options within
the paradigm of market equilibrium. The classical capitalist
entrepreneur might have lowered prices, cut production; lowered
production costs, improved the products or changed product line.
However, if the demand could be stimulated by having products
wear out sooner, through planned obsolescence, made uninteresting
through style changes or simply destroyed outright in war, then
production continues and profit accumulation is sustained; well at

least for the winners. If all of these profit enhancing activities were
to stop in a given closed market, the entrepreneur sees the end game
but must go on.

Thus Capitalists, plainly viewing the systemic dilemma but facing
the constant need to expand profit producing activities to survive in
our historical dangerous moment, face a very limited number of
escapes routes. Simply put, it can expand into new markets or more
cleverly and efficiently exploit existing markets. Both broad options
put the lie to any notions of capitalist stability and reveal its
profound tendency toward self-destruction.

Historically we find capitalist employing many inventive strategies
to overcome profit-making limitations. However, as the sphere of
competitive production and sales are restricted by other players, the
range of profit making opportunities again contract until new
production, sales and investment outlets are opened. The Capitalist
does not have to read Marx to understand the systemically imposed
need to create new products, find new consumers and to search for
new markets, but recognizing that the world is a finite sphere, under
the present constraints of corporate capitalist-state production, it
finds it must destroy to build again. Hence the temptation to use its
immense, high-priced military power is very alluring in the mind of
the National Corporate Imperialist. The Ruling elite do not pay for
the profitable opportunities fought for by the Soldier.

The Political Economy of Creative Destruction

Since the Economic Crisis of the Seventies, USAmerican corporate-
capitalists found themselves confronted again by all the historic

competitive international market constraints that regularly limited
profits. Through out the entire Cold War period corporate capitalists
and their Neoliberal ideological supporters boldly pushed back the
domestic and international barriers to business expansion: they were
intent upon not repeating past errors.

Having learned that rehabilitated enemies can become allied,
economic rivals, the successive USAmerican National
administrations of the post Vietnam era were resolute in their effort
to make certain that the expanding variety of presumed and
concocted enemies would not become future economic challengers.
The two-fold political/economic purpose of the present endless war
on all non-cooperators and additional raids into any sovereign
territory is to stimulate the USAmerican economy through
continuous military led expansion: to control, through intimidation
or direct military intervention, the vital liquidity of international,
corporate industrial power, Finance.

The goal of shaping a world capitalist economic order to meet a
National need for hegemony or, if possible, the complete
domination by the USA is to form the closed, controlled corporate
system in order to continue profit accumulation. Consequently the
practical drive of all capitalists to prevail over the limitations of
National and internationalized competition presented by other big
domestic corporate players or other foreign state-corporate entities
has and will continue to lead to other major market choking
episodes that punctuate the entire history of Industrial Capitalism.

The increasing corporate efforts to extend militarily supported,
political control over domestic and international economic
conditions, whether through production, destruction, or the vicious
effects of debt-leveraged financial speculation, will continue to
form the economic basis for successive crises of the financial sector
because the Capitalist drive for expanding profit will not tolerate

external or internal limits. Yet, each corporate effort to escape the
consequences of existing market relations by imposing new controls
on the process of Capitalist accumulation will again form the
limiting conditions of a more tightly closed now increasingly fragile
system. At each broader range of expanded more integrated, higher
level of sophisticated institutional controls, all the Capitalists
players are forced to complete in a 360 degree enclosure of a
corporate induced stagnating state in which the socially irrational
system of Capitalist accumulation reveals its inherent destructive
nature. Thus the continuing capitalist effort to overcome the
destructive character of generalized capitalist competition through
institutionalized corporate or governmental regulation will enmesh
now consolidating Corporatism in the classic Capitalist dilemma
and force it find a way out. As Fascists have demonstrated, police-
state controls at home to pursue foreign imperialist wars are the
Corporatists’ escape routes from the capitalist impasse.

The Attempted Breakout

The most recent, brazen imperialist venture of the Right, Corporate
Ruling elite to expand and extend National Corporate penetration of
all world markets, with or without client state support, is failing on
a number of levels that are revealing all the practical and theoretical
weaknesses of the two major Neoliberal economic schools of
thought. The latest military adventures have clearly demonstrated
the domestic limitations of the foremost military power in the
world. First, we are witnessing the most horrific destruction since
WWII with the rising total cost of endless war draining the human,
natural and financial reserves of the USA and many other nations.
The current USAmerican War, on all the unwilling, is draining the
domestic economy, straining budgets as it weakens and distorts
world financial relations. As its political effects condition the rise of

anti-democratic corporatism in the USA, it further undermines
popular democracy every where. Consuming people by shortening
and directly destroying their lives, the blowback effect of the debt-
driven, military expansion in the pursuit of economic/financial
domination are in the process of unraveling at a furious pace. On a
social, economic and world political plane, the cost of projecting
national corporate, military force across the globe to protect the
economic/financial interests of the National Corporate Capitalist
elite has been more rapidly consuming the National domestic
economy and undermining the remaining institutions of National
and international democracy.

Moreover, when the Neoliberal application of Schumpeter’s idea of
creative destruction is applied domestically or internationally, the
perverse irrationality of the system fully reveals, in human terms, its
complete logical and practical absurdity to the entire world. Both
major modes of creative destruction, built-in obsolescence and out-
right military destruction, define present limits of Corporate
Capitalist exploitation of humanity and the natural environment.
Increasingly the people of the world recognize that neither the
promises of theory nor the practices of Capitalism can improve their
lives. With increasing clarity and growing opposition, growing
segments of the world’s population see the false promise of
Corporate Capitalist propaganda and turn away. They increasingly
notice that if the USA, the World’s most dangerously powerful
country, with only six percent of the world population cannot avoid
a depression while continuing to consume nearly fifty percent of the
world’s resources, the rest of the world’s population recognize its
failure and seek alternatives.

The domestic and international economic consequences of the costs
of projecting military power to protect USAmerican, foreign
corporate investment cannot be sustained. As the economic
conditions of ninety percent of the people within Fortress Corporate
State of the USA have been eroded through out the period of

Neoliberal global expansion along with the conditions of people
world-wide, alternatives are now being more carefully explored.
Within the Capitalist framework past reforms are being retested as
new banking reforms, including nationalization36 are being
discussed. However, short of a complete Fascist like domination of
the domestic economy of the USA, the military project of political-
power projection cannot be sustained under the normal operations
of the present conditions of Corporate-State, capitalist rivalry. The
political consequences of USAmerican Corporate-State power
projection are now becoming abundantly clear: rivals are
repositioning themselves to circumvent or challenge the
USAmerican thrust for economic, political and cultural hegemony.
The new Democrat’s administration will be forced by the
deterioration of its domestic economy and the rapidly advancing
realignment of world political forces to modify its National
Imperialist strategies and goals.

  Joseph Stiglitz: Nationalized Banks Are "Only Answer"
Deutsche Welle: "Nationalized banks are the 'only answer,' economist Stiglitz
says. In an interview with Deutsche Welle, Nobel-winning economist Joseph
Stiglitz talks about nationalizing banks, the outlook for developing countries, and
the need for an international financial regulator." See also: Nationalizing the
Bank US Wants to Keep Banks Private in New Rescue Plan

The Moment of Transition or Transformation

The Debilitating Role of Debt-Driven, Militarized, Corporate-
Economic Expansionism

To more fully assess the impact of the present economic conditions
on the USA, in context of the changing relations of international
forces, we should more fully reflect on Eccles’s soundly grounded
views on the reasons for the USAmerican slide into The Great
Depression and then we must add the specific variables of our
perilous time which may be summarized in few indispensable
observations of the relative position of the USA in a world of rivals.

First we should stress that the USA is no longer in complete control
of its internal financial affairs. The internationalization of its private
and public debt, including usad’s held by other governments and
individuals around the world pose internationally determined limits
on the domestic financial policy decisions. As potential Capitalist
rivals throughout the world more openly signal their apprehensions
about the international ramifications of expanding USAmerican
debt as a core tactic of a domestic recovery plan, one can be certain
that they will reduce their risk of holding Usad’s in the future.

The Unites States of America is now one of the world’s most
dangerously indebted industrialized nations, owing 10.6 trillion
usad’s the combined accumulation of domestic private and public
debt held at home and abroad is running at about 65.5% of GDP

and rising. While USAmerican officials point out that there are
other industrialized countries with higher Debt to GDP ratios, they
fail to fully acknowledge the weighted influence of the far more
massive volume of USAmerican debt obligations in the world
financial markets and its concentration in particular countries such
as China. Although USAmerican economists and officials may
make a tenuous point, they must also be very much attuned to the
practical effects of the world’s increasing reluctance to accept and
hold the rising relative volume USAmerican debt. Furthermore, we
should take into account that National debt-financed military
spending; consuming fifty percent of the USAmerican Federal
budget is also affecting the long-term potential growth of the real,
domestic productive economy within the Nation for two additional
reasons. The budgetary requirements for sustaining a large, far lung
military machine competes directly for funds internally available
for the domestic economic stimulus plan, while the debt financing
of military costs compete for available investment funds in all
markets and thus will tend to force interest rates higher
internationally and domestically. Other Capitalist countries now
fear that the influence of increasing USAmerican borrowing will
push international interest rates higher thus choking a broader world
wide economic recovery.

The international float or circulation of usad’s abroad cannot be
redeemed. The Usad’s in circulation, now standing at
approximately 13.8 trillion combined with the rapidly expanding
domestic debt can be anticipated to grow as more fiat money is
printed in greater volume. These factors combined with expanding
bankruptcies and an the rising bank failures in the USA are taking
the control of the financial crisis beyond the reach of the National
financial managers at The Fed and the USAmerican Treasury.

Beyond the Monetarists, Beyond Keynes, Beyond,

Financial managers agree that conventional money management
controls are not working as anticipated. The danger now that the
Fed lowered interest rates to zero and continues to expand total debt
and the money supply to simulate the economy by promoting
lending and borrowing, is that the value of the usad may soon
resume its recent decline with the effect that the ensuing
inflationary explosion will cause The Fed to raise interest rates and
hence deepen the forming depression. Make no mistake: the
phenomenon “Flight to Security” which has been recently raising
the relative value of the usad and the prices of the usad
denominated Treasury debt-instruments is a product of fear. The
present flight to security now is a measure of investor desperation
not confidence in the usad or its shriveling economy. As investors
liquidate equities positions and repatriate usad’s held outside the
country to cut losses by purchasing USAmerican Treasury
obligations at premium prices, individuals are basically saying it is
better to hold shaky Government debt obligations of the USA with
assured negative returns than hold investments in the plunging stock
and commodity markets. It is simply a loss-cutting strategy. The
remaining question is: how will the Federal Treasury debt
obligations be paid. Since tax levies on those with the most wealth
and highest incomes have been reduced over the past thirty years
and, as a consequence, tax revenues can be projected to fall
dramatically in the forming depression we must ask; where will the
funds be generated to pay public debts? Short of praying that
usadollar dumping does not increase, the ruling elite can pray a
little more fervently with each turn of the printing press.

The internationalization of the usad as the world trading currency
has now made the USAmerican Central Bank, The Fed, nearly as
helpless in the present crisis as the New York City Banks were in
relation to the National financial Panic of 1907.While the network
of commercial banking has grown internationally, banking and
finance regulatory procedures have remained national which means
that the present and future USAmerican Federal administrators will
not have the financial directorial flexibility their earlier counterparts
enjoyed during the New Deal period. While it is evident that the
USA, dispensing the most widely used trading currency, will not
voluntarily yield to international control of its domestic economy,
their former control and influence is now being eroded by the very
volume of usad’s held abroad.

Furthermore, the long series of Federal tax reduction laws passed
though most of the Neoliberal period of the last thirty years now
seriously limits the internal fiscal management power of the Federal
Government. While the efficacy of USAmerican National money
management is defined nowadays by the extent of cooperation by
the international holders of usadollars and as the fiscal management
levers with the USA are further proscribed by the drop in tax
revenues, we can easily project that the present economic
contraction will continue because the National tactics now being
deployed are merely a more aggressive form of earlier counter-
cyclical practices which are less effect in the context of the
changing relations of economic forces conditioned by USAmerican
Neoliberal expansionist strategies through out the post Vietnam era.

Accounting rule changes and tax reductions, steadily secured by
capitalists since the Reagan presidency, which were designed to
shield Corporate and high-level individual income from taxes, will
limit necessary increases in tax revenues now needed for counter-
cyclical, economic pump-priming and paying present and future
National debt obligations. For example, tax accounting rules that
were changed with the effect of lowering tax liabilities on the

richest one percent of USAmerican families and increasing their net
profits through faster depreciation rates on plant and equipment,
accompanied by direct income tax rate reductions, drastically
reduced taxes on high level corporate and individual income and
property that now will cut income tax revenues more dramatically.
Unless new tax increases on the upper income groups are quickly
passed by the new National Congress, which is highly unlikely
because the conventional thought is tending toward economic
stimulation through additional tax reductions, there remain only two
extremely dangerous methods, within conventional economic
thinking to stimulate the National economy: print more money or
create more debt: then go back to praying. The first two have been
used since the summer of 2007 with little effect.

Although public borrowing or adding to the National debt continues
at a stunning pace, private borrowing has temporarily reached
institutional limits, as have families’ capacities to carry more debt.
While private lenders are afraid to make loans, working families are
afraid to borrow more. With sixty-plus-percent of the domestic
USAmerican economy dependent on debt-driven, domestic
consumer spending, and the economy stalling and falling rapidly,
the present infusion of approximate three trillion of additional
usad’s into economy may have explosive international
consequences. The three trillion usad comprised of the seven
hundred billion-plus usad’s in Bailout funds legislated by the
Federal Congress in September is now dwarfed by the Fed’s
massive purchase of all types of corporate debt of questionable
value. This gigantic expansion of the Federal Government’s
obligations to pay, soon to be expanded by nearly a Trillion more
usad’s by the incoming administration begs the question: how will
the debt be paid and by who?. As International usadollar holders
and traders ask more critically and skeptically how will the promise
to pay be kept, in fact it’s becoming increasing clear that the now
expanding debt deck is merely being reshuffled and then slipped of
on the working families tax liabilities. As the Fed buys so-called

toxic or unpayable private debt37 and issues more usad’s, it is
becoming abundantly clear that private debt is reappearing as public
debt with the responsibility to pay falling on the family, worker-

The patent absurdity of continuing these approaches is defined by
limiting effects to growth by National and world-wide excess plant
capacity, and the present level of now unpayable debts at every
level of USAmerican society. At the point of each successive crisis
of production, if profit accumulation stalls, short of deliberate
additional destruction, the production process slows to a stop and at
that point the modern Corporate Capitalists theorists and
practitioners are familiar with three options and attempt to play
them out. The two conventional options touched on in this essay are
the Keynesian economic stimulation strategies of deficit spending
and the neo-classical monetarist approach to money managing, both
of which we have been able to measure over the past eight years in
the increases in military spending since 2003 and the more recent
application of Bailout funds. Before including the effects of the
Democrats’ economic stimulus spending plan, we should note a
third option and its effects not yet fully opened for discussion in this
essay but made very clear in Paulson / Bernanke counter-cyclical
administrative style, and now taken up by the new administration, is
the direct placement of National public funds and the absorption of
trillions dollars of shaky debt by the Fed. These decisions, made in
a audacious pattern of executive fiat action up to the end of the
G.W. Bush administration were taking us all well beyond
capitalism’s traditional market functions as we currently recognize

   Treasury Presses Ahead With Plan for Toxic Assets
David Cho, The Washington Post: "The Treasury Department will unveil the next
step in its financial rescue efforts tomorrow, announcing that it intends to create a
government body, called the Public Investment Corp., to finance the purchase of
as much as $1 trillion in soured loans and toxic assets from ailing banks,
according to sources."

them and judging from the early public comments of the incoming
economic team of administrators, we should expect more of the

As these public administrators strive again, as in the 1930’s, to
control the volatility in financial markets produced by speculation,
their interventions have two profound, related effects: by overriding
market mechanisms they mutate Capitalism’s historical operational
and culture character. Whether or not one may agree with their
approach, we all should recognize that their actions are
transforming the system. As the Monetarists now push the
Keynesian style of managed Capitalism to a new level of political
interventions, their attempts to administer the process, are
transforming the operations of capitalist markets

Few among the conventional economists, monetarists or neo-
Keynesians now taking national administrative positions, will ask
what in the nature of the Capitalist mode of production and
distribution distort market functions. Most are blocked from this
broader, deeper view, because their purpose is, at best, to try to
make the system function as they think it should, as they have been
trained to think it can. While the Friedmanite monetarist approach
of Paulson / Bernanke harkened back to the early private remedies
attempted by Morgan et al following the Panic of 1907, later
generally codified in the passage of The Federal Reserve Act in
1913, the neo-Keynesian administrative interventions can be
projected to reform the expanding corporate structure of Capitalism
by continuing to focus on the symptoms of Capitalism mode of
distribution and its problems of the circulation of money through
the mobilization of investments. It is almost as if, the managers and
practitioners of financial activities in the USA and in many other
parts of the Capitalist zones have been fixated by their educational
views and experiences on the most superficial causes of market
breakdowns. However, in the recent quick management fiat actions
of The Fed and Treasury Departments’ leading administrators, we

also should notice an historic turning point marked by the character
and purpose of their authoritarian moves to supersede the markets
mechanisms by facilitating mergers and thus concentrating
Capital’s power. While on one political-economic level the
administrative interventions reflect the continuing focus on
breaking down market obstacles in ways that will restart banking
and investment operations, the authoritarian style of imposing
controls on the markets points to a complete, subversion of

While there is a fourth voice of Capitalist fundamentalism that
argues for a classic market shake-out, calling for a type of
economic, social cannibalism that will allow the weaker to perish it
presently appears as if the Neoliberal monetarists and Keynesians
are forming the dominate consensus opening the political pathway
to massive government interventions in the National and perhaps
international Crisis of Capitalism.

We all passing or being dragged, some unconsciously, into another
phase of tightly administered economics. Although not sufficient to
meet the new requirements of internationalized Capital and at the
same time significantly limiting the USAmerican options to direct
the decisions of rivals in the future, the current administrative
maneuvering represents a desperate Ruling Class effort to rescue
themselves from rapidly unfolding, cumulative consequences of
their post-war military supported Neoliberal expansion and pass the
costs of their colossal errors on to ordinary domestic working
families for generations to come.

The Neoliberals Mortgaged Our Collective Future and
now as in the past they will try to make us all pay for

Militarism Consumes the Domestic economy

The Neo-Classical, Friedmanite monetarists in league with their
Military-Keynesian supporters have reduced their future range of
National fiscal and financial flexibility in the process of reducing
Schumpeter to one word of his notion of creative destruction to
simply destruction: economic and social desolation of nations,
governments and families. Ironically the Neoliberals’ grand plan for
a new global Corporate-Capitalist order lead to political/economic
disorder at its center. The expansionist plans of Neoliberal
leadership had set in motion the cumulative negative effects
resulting in the economic imbalances and systemic disjunctures that
are destroying the National economic base and destabilizing the
entire global reach of National Corporatism. Through their wildly
accelerated, debt-financed, military adventure intended to destroy
rivals abroad and reorganize them in their own Neoliberal image
while planning to dominate them to prevent them from re-emerging
as economic challengers as happened with Japan and Germany after
WWII, the USAmerican Neoliberal Imperialists strained the
domestic economy leading to the breaking point. In their attempt to
use the power of the sword to defend USAmerican dollar
investments abroad, the globalizers gravely damaged two cultural
pillars of national popular pride: the notion of economic and
political freedom.

There will come a moment when the most urgent threats posed by
the credit crisis have eased and the larger task before us will be to
chart a direction for the economic steps ahead. This will be a
dangerous moment. Behind the debates over future policy is a
debate over history -- a debate over the causes of our current
situation. The battle for the past will determine the battle for the
present. So it's crucial to get the history straight. Joseph Stiglitz
writing in the December 2008 issue of Vanity Fair
While Stiglitz’ call “…to get the history straight.” should be fully
embraced by all serious analysts, the overwhelming influence
among the analysts guiding their research and influencing their
interpretations will be the broad cultural, political/economic
perspectives they hold. It is said that victors write history. Now that
the Neo-Keynesians critics of monetarist’ political/economic
foreign policies feel vindicated, their analysis, at best, may return to
deficit-demand stimulus plan and the attendant reforms reminiscent
of the New Deal era. If conventional analysts continue to assume
that the paradigm of the of Capitalist mode of production is
basically sound and only in need of technical adjustments to perfect
its process of social-economic reproduction, then they will resume
the search for stabilizing reforms as in the 1930’s and attempt to
enhance them. However, as I argue throughout this essay, the
efforts of economists of both schools of mainstream
Anglo/USAmerican theorists will take two directions: one to
overtly and directly fit Capitalism to the corporate managerial mold
and the other will be to augment governmental administrative
powers by attempting to impose legislative reforms on the Capitalist
process of production, distribution and circulation. Both strategies
of the Ruling elite will lead to the consolidation of Corporatism.
The social/economic shake-out proposed by the Capitalist
Fundamentalist will be managed and facilitated in a more orderly
fashion within the emerging centrist Neoliberal, Republican-
Democratic Reform consensus.

While the immediate focus of nearly all Neoliberal economists
remains fixed on the most superficially observable, domestic
consequences of the institutional breakdown of the National
financial system and its ripple effects throughout the broader
usadollarized, world-financial markets, an alternative critical
analysis must be directed to revealing and explaining the underlying
cumulative, systemic economic reasons for the freezing of the
financial system. While those necessary unconventional analyses
are being clearly articulated and some most important examples are
presented in the Short Selection Further Reading following the End
Notes to this essay, it is the conventional voice of the
Anglo/USAmerican mainstream that currently dominates the media.
As the mainstream social, political and economic analysts of all
persuasions focus their attention on every conceivable human error
from implicating bad guys in bad moves, to good guys in bad
moods, we must recognize that the problems go beyond
manipulation, speculation, errors, oversights, deliberate deceit and
bad timing. Therefore, a comprehensive analysis of the financial
crisis must be clearly placed in the full political-economic context
of the incestuous, self-consuming, National Corporate Neoliberal,
militarized strategy for world political/economic domination that
has its deep roots in the exigencies of Nationalist Capitalist
expansion and the continuing search for means and methods to
preserve the process.

The Neoliberal monetarist style of market intervention is instructive
for two additional reasons. Above all it clearly shows the Class
centered nature of their efforts. First, for example, it is important to
note that while financial institutions are given trillions on top of
flowing billions USAmerican dollars, to secure privately own bank
assets, the secured owners and high manages of financial institution,
as those at those at Bank of America, have announced laying-off
thousands of workers and while the CEO’s of the major Automobile
corporations plead in National Congress for help, autoworkers are
told that they must make concessions requiring that they accept

salary and benefit reductions. Secondly, we should note with equal
emphasis that while the monetarists’ mode of interventions reflects
their very narrow financial focus on the economic crisis and their
continuing stress on overcoming perceived market obstacles, the
neo-Keynesian approach, as it is taking shape under the new
Democratic leadership, is not much different. Their combined
efforts reflect their continuing theoretical notions that blockages of
the market mechanisms due to manipulations and excesses must be
cleared to restore their “naturally” efficient functions. In the classic
Keynesian approach, the new administrative economic group has
already secured the public financing to stimulate economic activity
through an increase of almost one trillion in deficit spending and as
they continue to use the standard tools of monetary management
with as little effect as their Republican predecessors, they too will
continue to focus primarily on the break down of the financial

I stress, as Stiglitz points out, it will be most important to get “the
history straight”. A study that does not include a penetrating
historical analysis of the political economy of the present transition
to Corporate-State-Capitalism arising out of internal systemic needs
of Capitalism will merely result in another series of reforms that
that will not take us beyond the political creativity of the New Deal
era Keynesians. The failures of the New Deal strategists were not
necessarily the failures of the intellect; they were the result of their
adherence to the inherent requirements of the system, which they
thought they could reform, and their broad defense of Ruling class
interests that had to be preserved. Trapped in the systemic paradigm
of profit accumulation as a necessary motor of its mode of social
reproduction, we can anticipate that the most sincere conventional
Neo-Keynesian analysts are not likely to go outside remedies that
they think may provide for a greater measure of equity within the
existing social relations of the present system. For them there is no
alternative. At the same time we must not loose sight of the fact that
the Right Ruling elite, while in power, had clearly demonstrated

their distrust for the mechanisms of the existing system and how
they intended to end the influence of its confounding capriciousness
by increasing corporate freedom to dominate the economy. Now
having publicly announced their opposition to the reforms being
proposed by the Democrats, we must ask if the neo-con-artists have
been reading Vilfredo Pareto38 and Giovanni Gentile39 more
carefully than the neo-social Keynesians read Marx.

While Social-Keynesian economic stimulus strategies boosted by
expanding war economy, from the Second World War through to
Vietnam, sustained USAmerican economic expansion, the
cumulative effects of Military-Keynesianism right in to this century
is now revealing the limits of militarized Capitalism in its classical
and corporate form. The earlier achievements of the social
Keynesian reforms including their high levels of military spending
have masked the internal deterioration of the USAmerican
Capitalist system which renders it less and less capable of
responding to crisis situations and far less able to meet the needs of
the majority people anywhere. Yet The Ruling elite, the social
sector most invested in and culturally dependent on the system in its
present corporate form, dare not risk the lost of their economic
power, social position and political influence through radical
experimentation. Therefore, we can anticipate that two interrelated
imperatives will guide the conventional economists’ analyses of the
present economic crisis. The first is defined by class position: The
Ruling elite depend on the Capitalist mode of destruction for their
source of profit and social position. Secondly, and intimately related
to the first, is the growing confidence among the mainstream
economists and business practitioners that corrections and reforms
within the structure of Capital can give new life to the system as
was done in the 1930’s. However, the chimera of limitless growth

     Vilfredo Frederico Damaso Pareto
     Giovanni Gentile

through reform is now being dispelled by the system’s internal
realities marked by its concentrating choke points: the continuous
accumulation and concentration of profit. They are all the prisoners
of their own constructed enclosure within expanding Corporatism40
but the rest of us are being made its victims. Those who have noted
the walled-in, prison-state character of expanding corporate
capitalism have not yet look fully into the feudal like enclosures of
all-encompassing Corporatism.

Our alternative methods of analysis, informing actions leading to an
escape from Corporatism must focus on the systemic needs and
tendencies driving the elites’ plans for maximum authoritarian
control to dominate strategic areas holding vital reserves of raw
materials, down trodden labor and markets. Therefore, we must
successfully accomplish the demanding task of fully understanding
the fundamental internal needs of Capital as the essential step
toward finding socially sound, alternative economic pathways out
of this cultural/economic debacle in order to go beyond
Corporatism. It is on the given ground of the present state of
Corporate-Capitalism that we must create the socially desirable
alternatives to meet our collective human needs.

The Social / Political Price of Military / Economic Domination

We should clearly recognize that the Keynesian rescue of emerging
Corporate Capitalism in the 1930’s formed a new pattern of

  Corporatism David Brooks Establishment; progressive corporatism!
September 23, 2008 Op-Ed Columnist: The Establishment Lives!
The Paulson plan announced last week is a pure establishment play. It would
assign nearly unlimited authority to a small coterie of policy makers.

economic-stimulus, management methods which now inform both
schools of conventional economic thought. Institutional economic
management is not the question: the question for those in the
mainstream, ruling political/economic circles has been and will
continue to be which social elite sector of National economic-
cultural life would rule and hence shape the process; the social-
economic liberal elite or the Right corporate elite. The Working
Class has been left out of the discussion. The Ruling elite of both
wings of Corporate-Capitalism have formed a general National and
partial international consensus on social controls and economic
policies to insure their international power. Through the
controversies and practical trials and errors of their high level
process, the Ruling elite formed a consensus which we identify as
the National Neoliberal agreement on world domination based upon
the assumption of a generally pacified national population as a base
for the projection of National power abroad. Firmly grounded in its
exceptionally powerful position at the end of WWII, the two wings
of USAmerican Corporate-Capitalist Imperialism confronted each
other on the issue of the best way to enhance prosperity as both a
national symbol and a foundation for the international expansion of
its economic and political influence. Accepting the Keynesian
stimulus paradigm as an effective economic balancing method, the
remaining question was who would control it and how it would be
directed. We, the majority of all Americans, throughout the
Americas, were and are still seen by the elites as the pawns in their
game to dominate the world. As workers or soldiers, the rulers
continue to think that we are the instruments of their expanding

Neoliberal-Military, Keynesianism Unravels

As the USAmerican Post WWII role of the world’s “Policeman”
steadily morphed into the world’s most prominent criminal state, a
most bellicose Rogue-State, the political and economic costs
escalated. At the same time as the Right Ruling elite increasingly
flaunted international convention and law, it lost moral standing at
home and abroad. Increasingly its role as the world’s most
profligate, debt-leveraged, spender undermined its extravagant and
unsustainable role as consumer of last resort, unraveling its
internationalized Ponzi Scheme, it began to fully disclose its status
as world’s largest and most dangerous debtor nation. Arrogantly
contravening both its espoused economic principals and democratic
ideals, it discredited itself. Although the USA unquestionably has
the power to destroy more and more people throughout the world,
more people increasingly question whether it still has the political
will or the incentive to create. While the delicate shell of democracy
was cracked by the dictatorial policies of Ruling Right wing of
National Corporate Imperialism, the hollow shell of its Nationalist
predatory Capitalist methods was exploded internally in an
embarrassing public display of collapsing financial pyramiding
schemes caused by no-holds-barred, debt-driven speculation and
financial manipulation. Within eight years of Right wing rule, the
cumulative damage of thirty years of Neoliberal social economic
policies was laid bare. The impossibility of generalizing the
Nationalist Neoliberal social economic policies was made clear to
an increasing impoverished population within the USA and the rest
of the world.

Self-importantly linking the USAmerican style of economics to the
public prestige of its cultural mode of life and restricted form of
democracy, the Neoliberal corporate elite methodically weaken
them all. While publicly celebrating democracy at home but
demagogically calibrating its authoritarian business style at home
and abroad, the corporate elite of both major parties successfully
used the catchphrases of democracy linked to popularized notions
of the benefits of opening markets abroad to expand its rationalized

brand of corporate controlled economics and finance. In their effort
to also contain or defeat all types of invented enemies, in the name
of spreading democracy, since the end of WWII, the Neoliberals of
both major parties have strained international good will toward the
USA and wasted National treasure that led to the latest financial
collapse and the rapidly spreading economic crisis.

Thus, in wake of the forming economic/financial crisis, the task at
hand is to prepare a precise critical, historical analysis of how and
why we he have arrived at this political/economic conjuncture, in
order to accurately estimate its future development and to use our
newly acquired knowledge to decrease or eliminate the long
wasteful National-Corporate-Imperialist thrust for world
domination with its mounting cost in human life, wasted world
resources and environmental destruction. The necessary changes
will have to be made by popular forces from within the National
centers of the prime promoters of the Corporate-State-Capitalism.

While the mainstream media pump out a steady flow of negative
economic news, they assiduously attempt to keep their explanations
for the “financial crisis” focused on peripheral topics which
carefully avoid raising questions that might expose fundamental
systemic problems. Stressing the human errors and frailties of
ignorance, miscalculations, manipulations and the greed of Wall
Street players, little light is shown on the irreconcilable internal
systemic pressures compelling the necessary, incessant, destructive
search for profit, its compulsive individual accumulation and the
related, accumulating social consequences. Adam Smith was wrong
in his assumption that that the relentless pursuit of private profit
would result in a general social good. Under the continuing
influence of its National-Imperialist, Military-Keynesian economic
strategies, the obvious trend is toward increasing mutual
destruction. Writing in The Monthly Review of October 2008, John
Bellamy Foster, Hannah Holleman, and Robert W. McChesney

A society that supports its global position and social order through
$1 trillion a year in military spending, most likely far exceeding
that of all the other countries in the world put together- unleashing
untold destruction on the world, while faced with intractable
problems of inequality, economic stagnation, financial crisis,
poverty, waste and environmental decline at home – is a society
that is ripe for change.41

 John Bellamy Foster, Hannah Holleman, & Robert W. McChesney, The
Military / Industrial / Media Triangle

There is No Alternative to the difficult social task

We have no choice but to return to the disciplined detailed study of
Capitalism’s social metabolic mode of reproduction as a starting
point to elaborate a comprehensive analysis of its rapidly advancing
corporate form and its future tendencies. Any effort short of a
deeply probing comprehensive study of the Corporate-capitalist
historic and present mode of destruction, following the tradition of
the great critical analysts, will again lead to back to self-assured

Corporate-Capitalists, as with their more classic predecessors, see
no alternative to the inescapable endless search for increasing profit
in the necessary quest for constant growth at the expense of all
rivals. The need to continue the process of profit accumulation leads
to the concentration of both wealth and power allowing only the
survival of fewer corporations. In the necessary pursuit of constant
growth and its control all other national and international
competitors become threatening adversaries to be dominated,
absorbed or eliminated. The need to consolidate political economic
power to meet the challenges of all rivals in order to protect one’s
own accumulating wealth becomes an internally, self- destructive
systemic requirement.

The increasing interplay between the power of wealth and its
elaborated relation within the centers of political influence form the
present, necessary circumstances of expanding control that now has
become a matter of survival of the corporate entities of the
expansionist State-Capitalist System. We merely need to reference
the style of the expanding Federal Government Bailout of the

financial institutions to grasp the power of politics in shaping the
expanding Corporate-State. All players in the present Corporate-
Capitalist pursuit of power, like their earlier counterparts a hundred
years ago, fully understand that as soon as the growth stalls, the
result will be general economic contraction leading to wide-spread
corporate failure.

When the normal process of economic expansion through
production of goods and services is curtailed in a recession or
stalled in a depression, the Capitalist process of accumulation is
stalled, stopped and some times reversed. When workers can no
longer buy the goods and services they produce there remain three
broad options for the capitalists and workers. Traditionally the
capitalists immediately seek out other profitable uses for the money
they can no longer invest in the typical productive business
activities and the workers must find new ways of continuing to eat
and pay bills. The Capitalist searches for other profitable
investments and working families try to survive in three additional
ways: sending more family members to search for jobs; borrow
money to meet their family needs and finally, as their credit runs
out and they can no long pay their debts, they consume less. Often
generalizing their broad systemic requirements to restart the profit
making process, the rulers skillfully join their particular institutional
needs to broader human needs of society in an effort to find
common ground to salvage the system. In the 1930’s the more
astute National capitalists saw the domestic population as the source
of spending power to complete the production distribution circuit
which would reinvigorate the profit making cycle. Prior to the
present crisis, however, the National Corporate capitalists had
already seriously undermined the national working class purchasing
power by reducing wages at home and sending jobs abroad. While
the irrationally social destructive sequence that I sketch retraces
Marriane Eccles valuable points, it dose not go far enough to
explain additional reasons for the extreme severity of the present
crisis and its potentially grave social consequences.

The Power of Corporate Politics

In a nutshell and at the risk of over simplification, we must
recognize, as an analytical focal point, that over the past forty years
the Ruling elite created serious imbalances throughout the domestic
economy by consistently shifting the social costs and the financial
burden of its aggressive plan of military- economic expansion on to
working families.

This destructive National-imperialist drive toward world
domination, pursued more uncompromisingly by USAmerican
political leaders of both parties since the Reagan presidency had set
in motion many interrelated, untenable fiscal and monetary policy
measures, the cumulative effects of which over the past three
decades have undermined the National productive base;
overextended national debt and encouraged the personal
indebtedness that has now broken the vital national link between
production and income distribution.

As it became increasing difficult to sell products to the Nation’s
workers whose wages were and are continuing to fall, the corporate
capitalists more insistently sought out lower wage workers world-
wide. Their mounting debt-based investments in more plants and
equipment increased production capacity with fewer workers
making increasing numbers and types unsold products that began
piling up in stores, in the warehouses and on loading docks. As
workers purchasing power fell, borrowing by capitalists to increase
plant capacity soared and more unsold products accumulated. With
credit maxing out at almost every, business and consumer level,
borrowing slowed down, buying dropped off, economic growth
dipped, and the economy sputtered to a halt.

The long wave of Neoliberal policy decisions to “outsource” and
“off shore” domestic production to lower paying non-unionized
corporations within Nation and “off-shored”, sent abroad, to
corporations that had closed plants in the USA and reopened them,
with tax-payer subsidies, in low-wage zones all over the world from
the Caribbean Islands to Mexico and to more distant Asian
countries including China, increased lay-offs and accelerated the
downward wage spiral that is now winding out in a rising rate of
bankruptcies and increasing rate of mortgage foreclosures. That
expanding corporate search for higher profits at lower wages broke
the essential links in the production distribution cycle that later
engendered the typical, successive waves of financial speculation
which, in tandem, are now stalling Capitalism throughout the
Neoliberal trade zones.

The danger of situating an analysis within the mainstream
conceptual framework of preserving the system by again trying to
eliminate the potential for its most crippling abuses without fully
assessing the encouragement given to speculation by the profit
motive will surely lead us into another internally generated
catastrophe. Evidently as profit from production becomes more
difficult, the propensity toward financial speculation is encouraged
by the opportunity for some to pursue higher than normal rates of
profit in the financial sphere. When productive investment options
become less profitable speculation tends to rise. The inclination
toward financial speculation is a logically recurring investment
option for those financial players who see it as a way of
maneuvering above the real economy. Capitalists and their most
creative reformed minded supporters have had at least two hundred
years, when we include the English experiences since the early
1800’s, to reform their system with each remedial moment leading
to well documented successive break downs.

We must clearly demonstrate why Capitalism cannot be reformed
and fully explain why its destructive tendencies will be repeated if
the systemic sources of break downs are not eliminated from the
social reproductive cycle. As is now being plainly revealed, the
deregulation of banking and investment practices combined with
the direct and sustained attack on workers organizations, public
community services and family support programs over the last
thirty years have reproduced historic patterns that undercut the
social-economic stabilizing programs that provided minimum levels
of security for the many domestic working families.

The current wave of accumulating social costs of thirty years of
pillaging the wealth of the USAmerican Workers along with the
wealth of the rest of the world’s workers brings us to the precipice
of another massively destructive period of economic contractions.
Through each economic crisis of the last third of the Twentieth
Century the rapidly accumulating social costs of over-production
and the counterbalancing economic stimulating effects of debt-
fueled expansion, logically accompanied by increasing and
intensifying financial speculation, merely postponed the day of
reckoning which first revealed itself in the sub-prime mortgage
crisis or liquidity crisis of 2007.

The recently developed risk-spreading or risk-diffusing financial
techniques organized by the wizards of Wall Street merely linked
debt to more debt, payable debt to unpayable debt and then sold the
repackaged shaky debt as equities or securities to a wider array of
ready speculators. (See Meltdown 101 in the End Notes) The
financiers’ risk reduction strategies of attempting to spread financial
hazards as broadly as possible through the financial networks to
cushion the effects of accumulating unpayable debt reflects both
their motivation to increase profit and the systemic need to reduce
the concentration of unstable debt. Increasingly rewarded for their
ingenuity the managers of over-leveraged financial institutions
knowingly circulated increasingly unstable debt in a circular

process to pay for more debt, guaranteed by insurance companies
that could not fulfill their contracts until the entire financial charade
became evident.

Swiftly spreading through the entire financial system the predatory,
sub-prime lending tactics suddenly revealed many of the
irresponsible financial policy myths that lead to the present crisis of
confidence. As the inverted debt pyramid teetered on its apex and
began to crumble, and financiers grumbled, the profound problems
encouraging the profit driven speculative frenzy that undermined
the entire financial structure of USAmerican Capitalism were laid
bare. This is the restricted field of focus on the problem that will
occupy the attention of the majority of mainstream economic
analysts which will lead to another round of corrective political
reforms. As a matter of fact the corrective measures of socializing
the “bad debt” of private bankers, is merely an extension of Wall
Streets risk reduction strategies that will now push the private losses
of speculators on to the expanding public debt.

Although each series of uncollectible debt defaults revealed the next
layer of unpayable contracts that precipitated the liquidity crisis
which accelerated into the present crisis of confidence in the
financial institutions, few have looked or will look to the
interrelated problems emanating from the base of the real
productive economy. However, now as in the ‘30’s the financial
crisis merely stands as a pointer toward the more fundamental
contradictions of Capitalism itself. (See Rick Wolff’s Video linked
in this essay for an introduction to the Fundamentals of Capitalism.)

A Closer Look to the Recent Past

Let’s pause a little longer to briefly re-examine the social/economic
sequences of recent events shaping the currently deepening
economic contraction. Starting in the Crisis of mid-seventies,
working families, as is recurring today, were increasingly forced to
pay for rapidly accumulating social consequences of the Neoliberals
economic restructuring plan by absorbing lay-offs, lower wages and
higher costs of living. Then through each successive crisis of the
eighties, nineties and in to the long simmering crisis of the first
years of this century, as the real productive base of the domestic
economy was further eroded through the long period of sending
USAmerican production abroad, the same dangerous low-wage,
debt-driven, military-spending, economic stimulus strategy was
repeated in each successive “recession”. As each subsequent debt-
spurred, no-growth or slow growth recovery was engineered in a
shrinking real economy, the increasing debt of each succeeding
fragile recovery brought us to the abyss of what may be the first full
blown depression of the Twenty First Century.

The long series of Post WWII recoveries accomplished in the set
patterns of the USAmerican conventional market theory, had
repeatedly led the Neoliberals in to a false sense of security
grounded in their continuing political power and the confidence
developed by their past practices of meticulously examining the
financial symptoms of deepening systemic economic problems.
While ignoring or not accurately identifying the broad sweep of the
inescapable evidence of internal systemic limitations repeatedly
tightening due to the structural changes in the domestic economy
brought about by the exportation of production, characteristically
the mainstream economists increasingly focused on superficial
financial problems of the recurring economic contractions, a
practice which seemed to be repeatedly validated by momentarily
effective remedies developed through advanced financial
management techniques propped up by the unusual ability of the
USA to convince its trading partners to absorb additional National
debt. Furthermore, as financial profits began to overtake profits

gained from production, the Neoliberal political economic analysts
felt increasing secure in focusing on the seeming success of the
financial sector and further planned to protect and expand that
apparent success. Taking pride in the rising profits of the financial
sector as vindication of their restructuring policies, the mainstream
economists, particularly the monetarists, appeared to be mesmerized
by the inflated market prices and profits that seem to have no cap.
As a result the Neoliberal economic recovery strategies remained
generally unchanged. In an effort to further stimulate the financial
sector’s soaring disconnection from the real productive economic
base, Neoliberals continued to expand tax supported corporate
subsidies; cut employment to cut wages in order to preserve Capital
for further investment and sustain its profit making capacity. The
three part economic restructuring strategies of the Neoliberal policy
makers of shifting employment from production to lower wage
services and further reducing general employment levels in
recessions in order to preserve profit flow, reflects the inherent class
bias toward preserving the process of profit accumulation by
periodically shifting the burden of Capitalists errors on to working
families. As financial sector profits increased as a percentage of
GDP, the overall wage scale continued to decline, thus further
reducing the spending power of working families and economic
contractions deepened.

Despite the mainstream economists’ growing, detailed knowledge
of the minutiae of finance they seemed not to take notice that the
growing profitability of the financial sector was loosing its
connection to the real profitability of the base economy. As
financial speculation increasing detached stock prices from real
earnings (Price/Earnings ratios or P/E ratios), most financial leaders
seem unconcerned. Yet, conventional fiscal and monetary solutions
to mounting economic problems repeatedly appear to be prejudiced
by their class needs, motivated by their sense of class preservation
and an unreal expectation that they, as a class, would escape the

consequences destroying the productive base of the National
economy through the rise in speculative financial profits.

Through all the remedial recovery approaches mentioned in this
essay and in the references presented in the selected readings
offered, the economic policy strategies and business tactics
practiced resulted repeated bouts of financial speculation,
accompanied by reductions to social spending, and increasing lay-
offs that forced workers to absorb the social costs of a system less
and less directed to meeting human needs. With less than one
percent of the USAmerican population now controlling
approximately 20% of the National Gross Domestic Product (See
Jack Rasmus) it is not surprising that that Ruling elite will find
ways to make the rest of us continue to pay the cost of their errors.

We now know, though painfully learned lessons that they all
miscalculated on many levels. Their “Arrogance of Power” revealed
their profound ignorance of their own system. One can only assume
that the Neoliberals collectively thought and probably continue to
think that ultimately through military-protected, foreign investment,
continuing expansion into a world economy would save them from
the contractions their policies were conditioning in the National
domestic level and through some magical means, profitable
domestic consumption could also continue to rise as domestic
production declined.

Undoubtedly the Imperialist Ruling Class’ imperative of preserving
the fifty percent of the world’s wealth under its domain, as outlined
by George Keenan42 in 1948, is the core influence in their practices
and their rationalizations. If they could just somehow continue to
convince the rest of the Capitalist world to accept rising debt and

     George Keenan

the shrinking Usad in payment for the balance of trade deficits, the
domestic consumption of cheap imports might continue to pacify
domestic worker’s whose family wages will continue to decline.

Their long cultivated distortion of Classical economic theory, in
their own terms, can only be explained with reference to the rising
economic importance of the Military variable in the corporate
strategy and the systemic need to preserve that frequently used
instrument of expansion. However, on closer examination we
should also recognize that the seeming success with well-learned,
administrative techniques has had less to do with theory and more
to do with the economic position of the USA at the end of WWII
underpinned by the admittedly clever, class-guided manipulations
of world views necessary to condition popular support for the
National Corporate political drive for social control at home that
allows the Ruling elite to project militarized economic power

Although it may seem difficult to make too many mistakes while
controlling nearly fifty percent of the world’s wealth, big mistakes
were and are being made. Basically both the parties of USAmerican
Imperialism miscalculated domestic and international tolerance for
its reckless financial policies and increasingly belligerent
military/economic aggression. However, through the pre-crisis
period, the Ruling elite had successfully used National debt
expansion to cushion the domestic population from the most severe
social costs of its aggression abroad. Through the process of
encouraging the accumulation of personal debt, the Ruling
Neoliberal elites displaced the most sever domestic consequences of
war economies as they simultaneously created an enclosure of
working class, in debt dependency that binds workers to the
corporate-capitalist process of wealth accumulation and
concentration. There is no clearer indicator of Ruling Class efforts
to enclose workers in a corporate debt corral than the recent
legislation that reduced the opportunities for debt relief through

orderly bankruptcy proceedings. While claiming to get government
off our backs, the Neo-conartists were gradually enclosing us in the
walled-in prison state of rising corporate controls.

We, who must make the necessary independent analysis that should
help us to chart alternative pathways out of this crisis, ought to
recognize that the present form of USAmerican, post-WWII
Capitalism has been durable enough to sustain at least sixty years of
cyclical gyrations before reaching the new point of extreme
political/economic convulsions now threatening its future. With
sober reflection on such resiliency, our analysis must be informed
by a healthy recognition that the Ruling elite control sufficient
resources and power necessary and perhaps at sufficient levels to
effect a more complete Corporatist transformation. However, in the
same historical instant, the conditions that now weaken capital,
offer potentials to strengthen the working class call for change and
the necessary actions to bring them about.

Despite the economic and police state power concentrated under the
control of the USAmerican Ruling elite, we should also give full
weight in our analysis to the ways they have undermined their
power, influence and prestige at home and abroad and its
consequences for their future. Certainly the unusual post WWII
international political posture of the USA, which continued through
most of the early Cold War period, allowed the Ruling class to use
its prestige to leverage its economic position thus enabling it to
accumulate debt necessary to support its Imperialist drive to expand
its economic influence: that political/economic position has now
been severely weakened domestically and internationally. We
should also fully recognize that in the process of international
economic expansion the rulers also learned to effectively use the
material and cultural-ideological tools to insure domestic passivity
through almost the entire period which further allowed the elite of
both major political parties to gain time to dilute classical economic
theory through authoritarian corporate administrative practice in a

drive to concentrate its power at home in an ongoing effort to more
thoroughly control world resources and markets. They bought
themselves time at our expense. Yet, within the framework of the
two major interpretations of the Keynesian paradigm, in its military
and social forms, the growing excesses of increasingly costly
military/economic aggression, especially through the last quarter of
the Twentieth Century based on expanding debt financing, are now
shaking the entire structure of the Corporate State. Although
economic influence of debt-propelled, military spending
temporarily veiled the looming social and economic catastrophe;
finance-dominated, corporate expansion, soon revealed its
limitations thus bringing on the present National crisis and perhaps
a new more, extreme crisis of the entire Capital.

More Necessary Questions

The implications of the analytical sketch presented here as a
discussion starter, obliges us to ask fundamental questions of the
continuing social usefulness of Capitalism and the broad social
threat of its fast developing corporate form. While many may
clearly recognize the inherent social madness of stabilizing an
economy, Capitalist or others, through the continuous accumulation
of the tools of destruction, it is incumbent on us, in cooperation
with our own creative thinkers, to estimate the continuing capacity
of any capitalist state to sustain this extreme process of internal and
external destruction. It is now fully evident that the social,
economic, environmental costs of the USAmerican National
Corporate Imperialist project are marking the limits to its future
viability. But, however illogical the systemic need for continuous
destruction may seem to us, flesh and blood human beings, we must
also be aware that we are not the ones who profit but we are forced
to pay in rising taxes, blood and tears.

Clearly the question of an alternative social/economic/political
order is placed on the social agenda by Capitalists themselves. Yet,
the task of charting a better way forward for all humanity is ours. It
begins by asking if we must remain dependent on for-profit
companies to provide societies with needed services and products.
If we can ever pause long enough in our high pressure, work-day
lives to think of the rising emotional, social/economic and
environmental costs exacted by corporate capitalist activities on all
societies, we can quickly see it is a social shake-down, a hold-up, a
ruling class intimidation which boldly asserts that no products or
services can be provided unless the capitalist get their cut. This is
exactly what is happening in the Banking and finance sector of the
economy: loans will not be given unless they can be made
profitably. Similarly health services will not be provided unless
private medical service corporations can gain a profit.

Intuitively, at this deepening moment of crisis, we know that for our
survival, we must create an alternative social order and a way to
build toward it. Instinctively we know that for-profit schools or for-
profit healthcare is taking something way from the process of
providing the needed social service: the full resources are not
available to provide services if some part is held back for personal
individual gain. We sense the private grab for profit must be taking
something out of, away from, the total resources that should be
available to education, health and other social services including
financial services. It is becoming increasingly evident, as Eccles
wrote nearly sixty years ago, that gargantuan wealth cannot
continue to be piled up in the hands of a shrinking minority, while
all forms of human miseries accumulate among a growing majority.
Despite Eccles reformist optimism, it is now increasingly clear that
broad sectors of the Right Ruling elite could not or did not want to
see the broad benefits that earlier social reforms would have
brought to them, which probably would have left them very rich
and feeling much more socially secure. Today we can also be sure

that the Ruling elite of both wings of Capitalism are formulating
policies that will more securely protect and preserve their private
wealth. While the Nationalist Neoliberal mystique has been
shattered, we should also fully recognize that the increasing
corporate pursuit of economic and political controls lead
Neoliberals of all shades to subvert the assumed “freedom”
necessary for open, market exchanges of once fabled Capitalism.

Both the recent authoritarian methods of the Neo-cons in the G.W.
Bush administration and the early reformist maneuvering among the
Neoliberal techno-elite of the recently elected administration are
trending toward another alternative to Capitalism: Corporatism.
Without an assertive popular voice the Neo-Keynesian reformers
will again, as in the thirties, use the power of office to save
Capitalism from the capitalists themselves but this time, again as in
the 1930’s, the Right Ruling Corporatists will also attempt to push
beyond the present social economic relations of Capital, that will
make earlier reform efforts seem almost quaintly naïve. Will they
be so bold as to push for the type of overt coup that Smedley Butler
described in 1935? That is an open question.

The now the National Corporate-Capitalist pursuit of political
influence to protect and expand its economic power in order to
continue to accumulate wealth not only defines it as a rival among
all other Corporatists but against all humanity. The economic goals
and power-controlling objectives of National Corporatism, position
its Ruling elite against its host society. Just as the corporate state
faces all other states as rivals, within the nation the Corporate-State
stands against the human needs of the civil society. The institutional
need for maximum control of its social, political/economic setting,
places Corporatists in an antagonistic relation to the People-Nation.
Plainly put, corporate authoritarian culture stands against popular
democratic culture and tradition. There is no benign or progressive
form of Corporatism as David Brooks of the New York Times has
recently asserted. It is from this more detailed understanding of the

direction of reforms now promoted by the Ruling elite that we may
be capable of moving toward more socially responsive economic

What Challenges are we facing?

A Repeat of a Tragic National Economic History, a New
Depression, a Corporate Coup or a Historic Opportunity?

This overview of the trajectory of Neoliberal political/economic
policy, presently highlighted by the expanding, tragic social picture
of increasing unemployment rolls, foreclosures and drained dreams,
in effect summarizes the deep long-term causes of the rapidly
advancing economic crisis of Corporate Capitalism in our time.
Decisions informed by Ruling Class perspectives are self-serving.
Corporate Capitalism cannot fulfill the promise of “raising all
boats” or as is written in the Constitution of the United States of
America “…promote the general Welfare,” Because Capitalism is a
system of labor exploitation for private gain, it cannot meet the
human social criteria for substantive equality. Someone’s gain is
always made at the cost of someone else’s exploitation.
Fundamentally, for this reason, Capitalism stands against humanity.
Any benefits devolving to real people have either been won in great
civil rights and working class struggles for political and economic
improvements or have been incidental to the profit making and
wealth concentrating requirements for capitalists’ survival. The
devastating, historic social consequences of the system’s narrow
economic success of accumulating and concentrating wealth in
fewer hands marks its internal limits to growth, while also clearly
revealing its anti-social and anti-democratic character.

Capital’s economic success for the few boldly paints the outline of
its failure as democratic-social system. Notions of equality must be
guaranteed in the substantive conditions that make it possible. The
Capitalist process of accumulation persistently undermines the
necessary economic conditions for substantive social equality,
while financial speculation in the Casino fantasy realm of
Capitalism makes it less accessible to growing numbers of people.
This socially irrational system currently concentrating wealth and
income in fewer hands, today, again as in the 1930’s, leaves vast
majority of working people who produce the wealth of a nation
“standing outcast and staring at the wonders that they made.…”
(Words form Solidarity Forever by Ralph Chaplin43) The social
promise of Capitalism like its underlying theory is a myth that is
broadly contradicted by its repeated glaring failures at its center
where the crisis deepens. There are alternatives within our reach to
this increasingly restrictive, undemocratic mode of social

The Opportunity within Our Reach

To sketch an outline of the historic opportunity that we must shape
in the face of the forming depression and the continuing thrust
toward concentrating corporate power at completely unacceptable
human costs, we must go beyond reform toward social-economic
transformations that entirely eliminate the destructive tendencies of
the now unmistakable patterns of Militarized-Corporate-State

  Ralph Chaplin Solidarity Forever and

Capitalism. The initial steps in that direction require that we probe
deeply into the history of the presently unfolding economic
catastrophe and start by looking at the growing contradictions
between the actual practices and myth making propaganda of the
Neoliberal interpreters of Classic economic theory.

Above all we should ask if we must continue to meekly resign
ourselves to a socially failing economic theory and its related,
socially destructive business practices. We must address the
elemental questions of the logic of Capitalist accumulation that
destroys our individual and collective, social wellbeing for private
gain. Must we surrender our native intelligence sustaining our clear
intuitive perceptions of its increasingly evident problems to
soothing, mythologized reassurances of the benign and beneficial
effects of uncontrolled market mechanisms, while we observe the
mounting evidence of its spreading socially disastrous results?

After two centuries of the recurring patterns of recessions and
depressions in the USA, will we again allow ourselves to be led
through another economic remediation by those who brought on the
crisis and who can not offer more than the same failing
prescriptions that will lead to another economic disaster? Both
schools of mainstream economists admit that destructive business
cycles are an inherent part of the Capitalist process of accumulation
but all that the neo-Keynesians or the neo-Classic monetarists can
offer, as a palliative, is a more powerful Corporate-state that puts us
on a pathway to the formation of a type of dictatorial industrial-
feudal society that will enclose us all in a new dictatorship. Again in
the present economic crisis, as through the opening months of the
War against the Iraqi people, we are being conditioned to trade
human liberty for the terrifying insecurity of a corporate controlled
neo-feudal existence. The Corporate-State Rulers of both wings of
National Capitalism are actively creating a politically guided
transformation of our political/cultural/economic lives. While angry
Rightwing ideologues openly oppose the Neo-Keynesian rescue of

Capitalism, the best reform-minded, neo-Social Keynesians can
only offer remedies to calm the voracious appetite of the Corporate

Will we, the ruled, again passively submit to the continuing
gyrations of an often manipulated, increasingly convulsing
economic system? Must we meekly accept the Neoliberals’ most
terrifying slogan that there is no alternative to the socially
disruptive booms and busts of the normal Corporate Capitalist mode
of destruction? Why not just consciously work toward an alternative
with a deliberate design to fulfill human needs. What is holding us
back? Although we are fearful, we must ask ourselves if we should
continue to accept empty, superficial justifications of the failures of
the Capitalist system served up, time after nauseating time in each
crisis, by policy makers and mainstream economists who grope for
theoretical rationalizations to explain why Capitalism dose not
operate according to mainstream neo-classical theory. And, when
they repeat the monotone mantra of the market myths that fail in
practice, are we to sit supine and helplessly turn inward to blame
ourselves while our collectively produced National treasure is
openly raided again and again more boldly by the very incompetent,
manipulating agents of the Capitalist disorder, who then
audaciously tell us how they will use our collective wealth to
cushion their own financial fall at our expense as they distribute
more lay-off notices to workers? Will we open our eyes to the
distinctly, self-preserving ruling class schemes that are repeatedly
designed to keep Wall-Streeters afloat and main-streeters in leaky
sinking boats? Will we peer through our fears to see the reality of
restoring liquidity to the big financiers, 306 Billion to Citibank44
   306 Billion to Citibank alone - Citigroup Gets $306 Billion Rescue From
Reuters: "The US rescued Citigroup Inc, agreeing to shoulder most losses on
about $306 billion of the bank's risky assets, and inject new capital, bolstering
investor hopes that the government will support big banks as the economy sinks
into recession. The bailout, announced late Sunday, gives the government the
right to buy an equity stake, and marks its latest effort to contain a widening

alone, as another administrative move to rescue the rich while
drowning working families in the tax costs of keeping them afloat?
Why should we continue to pay for corporate solvency at the
expense of the growing insecurity of our working families?

In face of the unfolding social-economic disaster must we passively
accept the norms of the anti-democratic, Corporate Capitalist
methods of dictatorial rule contemptuously and boldly demonstrated
by administrators as they make us pay for yet another historic
moment of their failure? Whose failure? The failure created by the
Rulers of the Capitalist disorder. We cannot internalize the blame:
we, the working class, sit far from the levers of power. Yet, we
cannot passively submit to their customary authoritarian practices
that will most certainly lead, at best, to a replay of a long tragic
National History of Nineteenth and Twentieth Century Economic
recessions and depressions. We can create a transformation toward
a socially equitable alternative but we must reach for the levers of

As we shake the shock from our senses and look clearly at the
manipulation of the shell game presently in play, The Bailout, The
Buyout, The Payouts and the Sellout of public trust, we should
begin to recognize that the most recent popularizes, promoters and
proselytizers of Capitalist myths have in fact betrayed their own
publicly acclaimed beliefs as they have also betrayed their broad,
social public trust. In the name of removing unnecessary regulatory
constraints to secure the assumed benefits of the free interplay of
self-regulating markets, the neo-classical monetarists, the neo-con-
artists, repeated and magnified the abuses of the 1920’s in their
effort to transform the Capitalist system. In name of preserving the
system, the corporate elite, financiers and their economic advisors,

financial crisis that has already brought down Bear Stearns Cos, Lehman Brothers
Holdings Inc and Washington Mutual Inc."

have now unabashedly moved openly and decisively in their
attempt to control the economic crisis to their own corporate

By openly rejecting market theory and subverting it daily through
their administrative actions, Neoliberals, monetarists and neo-
Keynesians, Republican and Democrats are making it clear from
their open, authoritarian, administrative interventions in the
financial markets they are intent upon using their economic
influence to direct state power to reshape political-economic-state
relations in order to overcome disastrous consequences of their own
machinations. However, without including a popular voice, the
technocratic leadership’s reforms will only increase the power of
the Corporate State.

The current framing of bank nationalization discussions presented
in official mainstream Neoliberal circles provides and excellent
example of the enduring class bias and class priorities in preserving
private wealth at public expense. When the bold reformers talk of
temporarily nationalizing the banks with the openly stated
commitment to returning them to private control once they are
reorganized, made solvent and again profitable, we the working
people should note, that at best, the intent is to preserve the class
based system of unremitting worker exploitation by continuing to
bind working families to an economic process of debt based
indenture to private corporate institutions.

Despite the Democrats assurances of their intent to preserve the
private character of banking in their “Nationalization” plan, now
quietly being shunted aside, the Right is not only voicing strenuous
opposition but quite opportunistically labeling the new President’s
economic rescue plan as socialist and communist. From the baseless
Republican Campaign statements that Barack Obama is a Socialist
to the recent comments by the extreme conservative, Alan Keyes,

that the new President is a “radical communist”, few among the
obstructionist Republicans are willing to recognize the new
President’s genuinely reformist credentials. Stated very clearly in
his address to the National Congress on 24 February, President
Obama45 fully contradicted the swelling allegations as he positioned
himself in the unmistakable historic line of reformers when he

I reject the view that says our problems will simply take care of
themselves, that says government has no role in laying the foundation for
our common prosperity, for history tells a different story.

History reminds us that, at every moment of economic upheaval and
transformation, this nation has responded with bold action and big ideas.

In the midst of civil war, we laid railroad tracks from one coast to another
that spurred commerce and industry.

From the turmoil of the Industrial Revolution came a system of public
high schools that prepared our citizens for a new age.

In the wake of war and depression, the G.I. Bill sent a generation to
college and created the largest middle-class in history.

   U.S. / POLITICS, February 24, 2009
Transcript: President Obama's Address to Congress and Obama Tells
Powerful Lobbies: Bring It On
Charles Babington, The Associated Press: "President Barack Obama challenged
the nation's vested interests to a legislative duel Saturday, saying he will fight to
change health care, energy and education in dramatic ways that will upset the
status quo. 'The system we have now might work for the powerful and well-
connected interests that have run Washington for far too long,' Obama said in his
weekly radio and video address. 'But I don't. I work for the American people.'"

And a twilight struggle for freedom led to a nation of highways, an
American on the moon, and an explosion of technology that still shapes
our world.

In each case, government didn't supplant private enterprise; it catalyzed
private enterprise. It created the conditions for thousands of
entrepreneurs and new businesses to adapt and to thrive.

Clearly rejecting the economic fundamentalist view that markets are
self-correcting and showing himself to be a reformer squarely in the
Neo-Keynesian tradition, he stated his undiluted intent to try to
resuscitate Capitalism within the systems’ market framework.
While striking a populist tone acknowledging the hopes of the huge
and increasing parts of the population enduring the direct impact of
the expanding economic disaster, he reached out reassuringly to
assuage the fears and skepticism of the Republican opposition in a
very thoughtfully structured speech designed to eliminate
suspicions of any threat of basic changes to the social economic
order of USAmerican Capitalism. While Barack Obama may be a
sensitive economic reformer in the Social Keynesian tradition, he
has shown himself to be the quintessential paladin of Capitalism
who intends to preserve the mode of production and social relations
of the existing system. Yet in their latest frantic diatribes at the
CPAC convention as reported in the New York Times of 01 March,
Right Republicans again flailed pointlessly at Obama’s purported
socialist economic stimulus program.

Economic Reform to Social Renovation

Broadcasting a definitively populist tone, President Obama, in
challenging the neo-Know Nothing opposition, declared himself an
employee of the (US) American people: in his weekly radio address
on 28 February, he simply but emphatically stated “I work for the
American people”. We, ordinary working people, should view that
statement as an invitation to critical, supportive action to infuse the
remnants of public life with the collective courage to boldly
propose and work through alternative modes of socially cooperative
work-place and community based activities toward the
implementation of economic development plans that fully reject
class motivated human exploitation. If Obama sees himself as a
workingman working for USAmericans, we, the working people
should work to expand his program to embrace a broad
democratically driven, social equity agenda.

We should demand a voice in every policy plan put forward by the
President in his Speech to Congress on 24 February. From
healthcare to education and banking reform the direct statement of
the needs of working families must be heard and heeded. For
example, a bank nationalization program need not be a plan to
reinsure the profitability of private financial investments but could
be reorganized, along with healthcare, as a national public service.
Through active public education accompanied by an energetic
organizing drive, within the reform process, it is now increasingly
possible to redesign a social-investment financing system which
does not draw wealth from the bottom to the top of the society but
provides for the circulation of funds on a not for-profit basis. A
Nationalized banking system can be organized as a social-economic
service effectively meeting the funding needs of a stable an
efficiently operating economy. Eliminating the profit incentive from
all banking operations, will stabilize banking functions while
dramatically reducing the opportunity to make profit from
speculation. All the creative human energy devoted to scheming,
scamming and inventing new ways to constantly reshuffle the debt

deck, can be redirected to creatively increasing the efficiency of a
new, social service concept of public banking.

As public discussions of bank nationalizations spread, alterations
within the context of the present crisis conditions are a politically
achievable goal which must be developed as a component of a
broader well-organized popularly supported social renovation. We
should start by insisting on a greater public voice in reform and the
passage of the Employee Free Choice Act while at the same time
vigorously organizing the workers at the banks that will come under
National/public administration and collective control. We can be
reasonably sure that the thousands workers targeted for lay-offs at
major banks and other failing financial institutions will be quite
happy to serve the publics’ financial needs from their newly secured
unionized positions while enjoying full health benefits and
guaranteed pensions. The outstanding question is: will they and all
the workers fight for it. To paraphrase Richard Vogel: it will be the
necessary fight of our lives.

As the neo-cons rushed to Bailout financial institutions before their
Democrat Party counterparts rushed in to Bailout46 the rest of the
failing industrial corporations, the Unions should be alert to the
political space that their members can open through widening
independent public information networks and spirited public
actions, which we can all join to help, to push forward a broader
working-family social agenda. Worker-run, nationalized banks can
set new social priorities and standards leading toward providing
boarder, more affordable human services in the public sector.
Workers and community groups at every level of civil society
should embrace President Obama’s call for wide, public discussions

  This Crisis Is Way Bigger Than Dead Banks and Wall Street Bailouts
By James Galbraith, Washington Monthly, Why the economic crisis, and its
solution, are bigger than anyone has so far admitted.

on healthcare and insist upon presenting their ideas in every
discussion on reform. We must convert the discussion on economic
reform into a public forum for social renovation. Top-down
economic reform measures no matter how well meaning, without
direct public involvement in democratically organized work place
and in community based groups, will leave a wider space for
increasing corporate power.

The new administration may be painted all shades of red by the
Republican Right but until workers and the unemployed are given
or present a full throated voice and demand a role in the Democrats’
reform process, the current Neoliberal plan will remain certifiably a
plan to resuscitate Capital and, I state generously, an unwitting
process of increasing corporate power over the State. Worker’s
rights must be on the agenda of each and all government economic
plans. As an entry point to insure and reinforce the public voice in
the process of social renovation, the right to organize must be
included in each and every economic recovery bill proposed in
Congress. If the Treasury Department can insist upon various
criteria for bailing out and buyout banks, certainly they can insist on
union rights for bank and other workers at those institutions that
receive assistance.

If the Neoliberal Democrats are allowed to follow the secretive,
authoritarian top-down, decision making pattern of their out going
Republican counterparts, they too will not only continue to
demonstrate the neo-cons contempt for democratic process, they
will dash the hopes and loose the broad good will of the new voting
coalition that brought them to power. Furthermore they will open
door to the Right’s effort to take on a pseudo defense of
individualism while widening the pathway to Corporatism. A rapid
cultivation and validation of public collective consultative process
of open democratic decision making is the first necessary step
toward securing the place of real flesh and blood individuals’ voice
at the center of discussions on a necessary renovation of society.

If the new leadership persists in perpetuating the sanctimoniously
popularized market myths of the failing neo-classical economic
notions, they too will explicitly show how they are willing to use
the national resources to insure the survival of those who plundered
the wealth of the Nation and open themselves further to the scathing
criticism from the libertarian right. On the other hand if they wish to
insure their own political survival against the increasingly hostile
Right wing attacks, sure to escalate through the future economic
chaos, the new administration should openly turn to embrace and
animate the active support and involvement of working families,
their Unions linked in community coalitions through a public
democratic program of economic and social renewal.

We the people of the United States of America are in a dangerous
economic situation turning into a delicately precarious political
moment. A popular reform minded president cannot bring about
even a modest program of reform without popular support for
substantive social change. Let’s clearly recall that many of Obama’s
economic advisors were recruited by Robert Rubin, who earlier in
his capacity as Treasury Secretary during the Clinton administration
was a prime advocate for deregulation of the financial institutions
which opened the door to the investment/banking abuses that
hastened the underlying trend of the present crisis.

President Obama has the good will, high aspirations and support of
broad sections of the population. In the face of strong, intense
resistance from the Republican Right, the new President can
activate the base of his popular, that is worker institutional and
community support, to bring out the best in USAmerican creativity
that he himself calls forward. From Health Reform to renovations in
banking concepts, purpose and practices, the process can and should
be guided by the voices of creative innovators. The answer to the
recent elitist question of who will run the financial institutions, if

the wizards of capitalism leave the system, is quite simple: all those
workers and creative critics who are willing to work collectively for
an alternative vision of banking and other social programs in the
public service. Obama was correct when he stated that we have the
talent: the question is how it will be brought into public service. We
can start to answer that question by demanding that civil service job
recruitment be opened immediately and the employment of
financial advisors be extended beyond the circle of conventional

As we build momentum toward wider peoples’ representation in
every discussion on all the necessary social service reforms, we
might ask, for example, if it is really economically necessary to
demand full payment of mortgages at rates and final prices higher
than the cost of construction and then reduce monthly mortgage
payments in line with revised cost-based reassessment of value.
Working People Unite! And get really creative. While standing at
the abyss of a deepening social/economic crisis, we are also on the
frontier of opportunities to form the foundations for a more
economically and socially just domestic society that may have
broader implications.

The surprising success of the workers in their sit-in at Republic
Window & Doors in Chicago47 is merely an indicator of the future
social/economic work ahead. In order to echo a wider social
resonance, worker’s struggles will have to go beyond workplace
and particular economic concerns that have a greater potential to
attract and hold broader public support. The popular content of
healthcare and banking reform offer such expanded socially
  Republic Window and Doors Angry Laid-Off Workers Occupy Factory in
By Rupa Shenoy, The Associated Press, 250 union workers occupied the
Republic Windows and Doors plant on Saturday, saying they won't go home
without what they're owed.

embracing links between work place and our living spaces. While
we can be certain the incoming Neoliberal Democrats will continue
to bailout or even buyout corporations with public funds, the
working class will have to organize to insure that it is not again left
out and sold out by the other party of Corporate Capital.

The theoretical and policy failures of the Neoliberals of all stripes
have forced us to endure, too long, the accumulating consequences
of their policy errors that now beg the basic critical questions, that
once answered, will lead us forward. At bottom we must ask if we
should rely on those whose theory and practices have brought their
system into ignominious failure, as a recommendation for a promise
of a better future. If all we can anticipate from the new Neoliberal
economic team is a return to the status quo ante, if all that they can
promise, at best, is a return to some diluted form of a new-New
Deal, to again rescue a failing system then I argue that we be have
been there in 1907 in 1929 and too often in the second half of the
twentieth century : we have done that, and after making the full
circle into another rapidly forming depression, its past time for
opening a new expanded social agenda. Yes, we will undoubtedly
start with reforms but those reforms can be informed by the needs
of the 90 percent of the National population who have been short
changed for the last thirty years and deserve to see their future

I submit that an alternative social transformation is necessary, it is
possible and can be made probable if we work as Michael Lebowitz
stresses in his short powerful book to Build It Now.48 We workers,
active, retired and future hopeful workers now unemployed, if we
reorganized ourselves, cooperatively and collectively, we are
capable of formulating and implementing policies and programs

  Michael Lebowitz, Build It Now: interview

that are more likely to result in a stable equitable society providing
better service to the vast majority. Private accumulation and
concentration of profits are now holding back the greater potential
of socially based, popularly guided development that can fulfill a
broader range of human needs based upon peaceful domestic
redevelopment. Capitalism is reaching its creative limits as it
demonstrates its increasingly destructive tendencies, and there is no
better example of its complete failure than the present Neoliberal
raid on the public funds to secure private profits at taxpayers’
expense with no guarantees to the workers who will pay the bills.
They either do not know what else to do or they fully understand
that to test some of the ideas sketched in this essay, ends

The Class Chauvinism, The Ruling Class Perspective is

Clearly conventional economic theorists and business practitioners
have been striving, for at least a century, to overcome the
confounding vicissitudes of markets’ operations that they publicly
venerate. Yet, from regulation through deregulation to re-
regulation, the system lurches and stumbles from one economic
crisis into the next. In their ongoing search for predictability within
the framework of neo-classical theory, they have learned its limits
and for at least the last half century economists, politicians and
business people have been struggling to bring the illusively
enigmatic, system-crippling invisible hand of the market under
some form of control. As they have been able to limp through each
successive crisis, their experiences have given them more
confidence that they can avoid the next. But, like old generals they
continually prepare well for past battles without fully recognizing
that the relation of forces are constantly changing: that in fact their

own earlier decisions have changed the national and international
configurations of power. However, they and we have continued to
learn but we seem to learn very slowly. What they have learned is
how to continue a pattern not change their behavior

Neoliberal reformers of all types, emboldened by their accumulated
detailed knowledge, again seem to be self-assured that if they just
get the formula right this time, they will be able to overcome the
problems presented by the next crisis. Their command of the
immense minutiae of the details of social-economic process, which
they view as a mechanism of measurable inputs and out puts, allows
them to feel they can refine and reform the process to yield reliably
predictable and controllable outcomes that will allow the continuing
accumulation of profit. While disagreeing on approaches and
emphasis both major groupings of the conventional
Anglo/USAmerican economists review the same principles with
blinding confidence. And, as we have seen through each moment of
crisis over the past hundred years when the mechanism fails them
they all reach for the levers of the most restrictively proscribed
circles of political power to control the markets. Fearing the popular
voice it is at best tolerated, ignored, channeled and then repressed.
While control is their goal, the very market they venerate repeatedly
thwarts their efforts.

The monetarists of the G.W. Bush administration arrogantly chose
simply to side step public scrutiny and attempted to move recklessly
with speed and in secrecy to indiscriminately flood the system with
funds. In a final self-immolating display of administrative class-
centered power, Henry Paulson, as Treasury Secretary fully
demonstrated the authoritarian Corporate-State approach.
Punctuating the long pattern of the haughty abuse of public trust
typical of the Neocons, he unabashedly dipped deeply in to the
public coffers to salvage private wealth. Right into the last days of
the disastrous G.W. Bush administration these conartists openly
distributed public funds in order to save private corporations from

the consequences of their manipulations of financial markets.
Aggravating the conditions of the financial crisis, as can be seen
from a study of investor reactions over the same period, their
desperate approach deepened the crisis leading to a precipitous
breakdown of the private banking networks.
In an short important interview with the German publication
Deutsche Welle (Germany) on 6 February this year, Joseph Stiglitz,
responding to questions on the emerging topic of the nationalization
of USAmerican banks, used three sharply joined words indirectly
criticizing the inherent problems of the recent arrogance of elitist
Republican fiat decision making: a recipe for disaster. Responding
to the interviewer’s comment:
Economists Nouriel Roubini and Nassim Taleb, who predicted the global
economic downturn, have called for a nationalization of banks in order to
stop the financial meltdown. Do you agree?
Stigliz responded:
The fact of the matter is the banks are in very bad shape. The U.S.
government has poured in hundreds of billions of dollars to very little
effect. It is very clear that the banks have failed. American citizens have
become majority owners in a very large number of the major banks. But
they have no control. Any system where there is a separation of ownership
and control is a recipe for disaster.

Nationalization is the only answer. These banks are effectively
While implicitly alerting his audience to the dangers inherent in a
nationalization plan that dose not include some form of democratic
control, he did not indicate in the interview how a nationalization
plan would avoid the additional problems of technocratic
administrative controls that might be better informed through open
popular democratic decision making. While there are many issues
to be discussed on the broad question of nationalization, the
fundamental importance of the effective voice of public, controlling

“ownership” and the question of future character of banking in the
USA has not yet been raised. Now it must be opened at the public
popular level and made effective by including the workers’ voice in
the decision making process. Immediate passage of the Employee
Workers Free Choice Act will be a start.
Although the Right Ruling Corporatist repeatedly showed complete
contempt for the needs of ordinary working people throughout their
long regime and in the twilight of their rule they fully demonstrated
their class centered dictatorial methods and priorities, the
Democrats have not yet shown any inclination of rethinking
banking as a public service or the future status of employees of the
nationalized banking system. The audacious, authoritarian decision
making style of the out-going Republican administrators will by all
indications be followed by the like minded forming economic team.
The Neoliberals have clearly demonstrated the sacrosanct character
of private banking and that it not fall under any form of public
administration unless those administrators are certified Capitalists.
While the most blatant elitist methods of technocratic control may
be mitigated or veiled in a regimen of administered, state re-
regulation, the broader issue of the nature and purpose of National
Banking has not yet been put on the agenda and it will not be until
working families put it there.
The issues of class prestige, economic power and social position
still dominate the related political- cultural process. While re-
regulation will tend to reduce the most overt abuses of class biased
decision making by the increasingly desperate Corporatist Capitalist
Ruling elite to preserve and resuscitate their economic system, it
will not soon be eliminated unless a power sharing process is
introduced to any reforming nationalization law for healthcare,
education or finance. Unless the bank employees gain the status of
civil servants with rights to full union representation along with a
policy making voice, the potential for a new form of non-profit,
public-service banking will not soon be realized.
We must acknowledge that the practice of banking and finance is
still informed by Ruling Class’ economic/social priorities and

conventional theory as refined through the past hundred years of
crises. We should also recognize that the style and purpose of
administrative interventions we are witnessing today are the
outcome of both a particularly self-confident techno-specialist view
of the “mechanisms” of the Capitalist economy and now, despite
disagreements among the Ruling elite, their deeply ingrained,
enduring, class perspective on the solutions that best meet their
needs as a group, which means sources of profit cannot be forfeited.
The recent Neoliberals’ suppression of market functions, not only
emphatically marks another glaring failure of Capitalism; it points
to a more thorough transformation of economic practice through
increasingly assertive direct market interventions.

Tossing theory aside, the Neoliberals of all types more vigorously
impose administrative measures to control the crisis. Implicit in the
concentrating authoritarian organizational style is, at best, the elitist
notion of beneficial effects of technocratic supervision of society
based on two assumptions they hold deeply: the Capitalist system is
fundamentally a tractable mechanistic process that can be guided
scientifically and concomitantly, the administrators hold that
popular democratic involvement in the techno-tweaking process
will only gum up the works. This elitist, corporate technocratic
attitude among Democrats and Republicans represents a growing
institutional cultural bias in favor of non-democratic, top-down
management styles which relegates human beings to the role merely
dutiful functionaries and passive recipients of centralized services.
It is also their clearest statement, in practice, that they have no
confidence in the in markets and are now again prepared to regulate
those operations or bring them under a plan of corporate-state

Furthermore, the few rulers of private financial corporations, as part
of the complex National corporate structure in society, comprising
the vast business operations of the USAmerican Capitalist system,
feel they deserve the close faithful support of their appointed and

paid-for public administrators of their Corporate-Capitalist system
and certainly do not yet embrace the idea of involving the workers
in their decision making circles. Broad sectors of the Ruling elite of
USA pride themselves as class-leaders of the foremost model of
Capitalism in the World and are striving to maintain the image of
their national self-importance and international standing.

Equally working families all over the world are now more fully
learning that their life condition is incidental to the Corporate-
capitalist drive for profit. Yes, as Antonio Gramsci taught us, there
really are rulers and ruled leaders and led. The remaining question
for the working majority is how they will lead in the future.

The Right-Ruling elite have put the historic class-struggle on the
social agenda. The Neoliberal technocrats will try to remove it.
While many critical thinking authors have recognized the assault on
working families as a Class War accelerated by the neo-con Right
more than thirty years ago, few have carried the logic of their clear
analysis to point of recognizing the implications of a corporate
controlled transformation, to a Corporate-State.

There must be a better way: it makes no sense to cannibalize the
collectively produced wealth of nation to again prop up a failing
system of increasing multiple exploitations of working families that
relegates them to the future indentured servants of Corporatism.

 An Historic Moment of Opportunity

Men make their own history, but they do not make it just as they
please; they do not make it under circumstances chosen by
themselves, but under circumstances directly encountered, given
and transmitted from the past.
Karl Marx, The 18th Brumaire of Louis Bonaparte, p. 15.

Capitalism against the People-Nation

Corporatism against democracy

While the retirement dreams of the Baby-Boom Generation49 are
being dissolved in the acid reality of the present deepening crisis
and the dreams of their children and grand children are abruptly cut
short by the rolling shocks of massive lay-offs, foreclosures and
business failures, we must fully recognize that we, all the working
people of the world and many more who would like to go to work
or return to work, are facing something more momentous than
another major economic contraction. We are all facing the
possibility of two distinctly different historical transformations of
Capitalism. Here I am not now referring to an open Right wing
coup. However, the trend to Corporatism is already well underway.

  Boomers Not Happy

Neoliberal Corporatist need not trouble themselves with the
problems of marching Black Shirts or Brown Shirts. Corporatism
has been fused with the Capitalism though increasing acceptance of
top-down command management style characteristic of
USAmerican business practice.

The consequences of the present economic crisis, in the context of
high and low politics are far graver than are commonly presented in
the mainstream press. As I have argued, I hope convincingly, the
central issues for the Rulers of Corporate Capital are not the
immediate problems of the financial melt- down or the deepening
economic crisis but how the possible social upheaval, the
broadening “middle class insurgency” as the UK Ministry of
Defense put it in key report a year ago (See Beyond Capital, beyond
democracy…?), will force a social renovation of Capitalism. The
Right would violently repress the “insurgency” while the Social
Keynesian programs will mute it. However, both plans, without
direct popular involvement in the decision making process will lead
to Corporatism.

About ninety years ago Rosa Luxemburg, had already identified
this type of Capitalist transformation as Barbarism, which soon
after she was murdered by the precursors of Fascism, took the
terrifying form of Nazism. The other, the alternative, she called
socialism.50 More recently István Mészáros wrote two must-read
books, Beyond Capital and Socialism or Barbarism51 in which he

  'Socialism!' Boo, Hiss, Repeat March 1, 2009, by Mark Leibovich
Conservatives may be seeking a spiritual leader, organizing principle and fresh
identity, but they seem to have settled on a favorite rhetorical ogre: socialism.
  István Mészáros:

carries Rosa Luxemburg’s thoughts forward and underscores her
warnings in the specific context of our perilous time. Those who
remember history have seen or studied the forms of Barbarism in its
many vicious expressions from Mussolini’s Black Shirts to the
USAmerican concentration camp in Guantanamo, Cuba.
Corporatism in all its forms is repressive, exclusionary, isolating
and reduces human begins to the level of controlled instruments of
production and passive consumers. It attempts to truncate and
channel their creativity into narrow economic ends. It cultivates a
public mode of conformism and passivity that confines the immense
human inventive capacity: it kills the human spirit.

In the present crisis of Capitalism, the mainstream debate over the
broad economic stimulus plan of the new Democratic
administration can deepen a form of top-down administratively
directed controls designed to recapture the popular spirit of the New
Deal era which also has the potential to open new public spaces for
the inclusion of the collective popular voice to be broadly heard.
People must open the necessary popular space for frank,
cooperative discussion that ushers in a new style of bottom up
creativity. Passive public acceptance of new forms, perhaps
comforting forms, of top-down decision making will shrink public
spaces necessary for a wider popular democratic debate essential to
the formation of a cultural /democratic transformation,

To protect ourselves from those many forms of Barbarism inherent
in Corporatism, we must fully recover our democratic principles
and practices in order to give full social expression to another
possible type of transformation guided from the depths of societies
that will enhance the economic conditions necessary to guarantee and

the maximum popular participation indispensable to help each other
to fully realize our collective human potentials. In order to resume
the long-historical struggle of improving ourselves, thus expanding
our combined capacity to grow into the fullness of our human
capacities, we must cooperatively organize our courage to formulate
a broadly inclusive, alternative social vision.

While the financial crisis exposes the deeper problems of
Capitalism to all its supporters and detractors, the reform measures
proposed by the Ruling elite must be infused with a powerful
democratic content that has the potential to move us beyond
Corporatism. Working together we can cultivate an expansive
alternative, democratic, social vision, of a political-economic future
based on the formulation of equitable, democratically decided
economic options. If that’s socialism, I want a double helping.

Beyond Capital…Toward revitalizing peoples’

asked in 1999

We need to ask whose transformation?

On November 4 2008, USAmerican voters gave their initial

In a dramatically poetic, political moment, 66,882,230 USAmerican
voters marked their ballots with the indelible imprint of historic
change. In one impressive collective stroke the majority of voters
repudiated the long history of political/economic failure, voiced
their shared expectation for a better future and simultaneously
pointed to the need for a more democratically guided alternative
economic transformation. Through their combined political voice
they rejected the abuses of a long, successful divide and conquer
strategy deeply rooted in racism and xenophobia that has continued
to make possible the rule of the Right-Wing, Corporate Elite. That
momentous voter statement made by the new multi-cultural, multi-
racial, democratic voting-bloc rising from deep in the bowls of the
enclosing Prison State has given hope to many more, far beyond the
USAmerican, walled-in borders, that popular democratic renewal is
possible. That commanding majority of the USAmerican voters
signaled their desire for a more inclusive, democratic approach to
solving the accumulated social and economic problems of their
Nation – the People-Nation. However, we should all recognize
those admirable and often very courageous voters have merely

created the opportunity for all of us to form the necessary, active
democratic, social coalitions needed for a broad permanent,
international social struggle for democratic alternatives to the now
rapidly advancing Corporatism.

That poetic historic-political proclamation, given social expression
by the millions of true USAmerican heroes of the day, merely opens
the door to forming an alternative political-economic, social
formation through which people’s needs must come before profit.

A Special Note to the readers: Now that you have diligently
persevered to read this essay to its conclusion, I strongly
recommend its companion Beyond Capital, beyond democracy, also
published by Tlaxcala.

Recommendations for further reading

A Short Selection of General References for Further Reading

In addition to the Short Selection presented below for the reader’s
convenience, I have compiled an extensive list of references on all the topics
and issues discussed in this essay which I will be pleased send to readers who
may request readings on individual topics or the entire list. Send your
requests to

The references in this section generally follow the order of the introduction
of names of writers, topics and issues discussed in the essay. However, due to
repeated mention of issues and authors, the order in this section is not as
precise as in the End Notes above. However, for the reader’s convenience I
have tried to group reading thematically.

Ferdinand Pecora

Ferdinand Pecora

Naomi Klein, The Shock Doctrine,,2159184,00.html

Naomi Klein Shock Doctrine
Wall Street Faces Worst Losses Since Herbert Hoover
Joe Bel Bruno, The Associated Press: "Investors are preparing to close out the
last three trading days of 2008 with Wall Street's worst performance since
Herbert Hoover was president. The ongoing recession and global economic shock
pummeled stocks this year, with the Dow Jones industrial average slumping 36.2

percent. That's the biggest drop since 1931 when the Great Depression sent stocks
reeling 40.6 percent."

Recession? Depression? How Deep, How Far and What Can Be
A survey of what some of the best thinkers believe we're facing in the coming
months and years -- and the best ways to prevent complete disaster.

Financial Meltdown 101Arun Gupta , you ever wanted to know
about the biggest economic meltdown since the Great Depression but were afraid
to ask.

The New York Times | The Crisis Agenda
The New York Times, Editorial: "As stocks cratered on Monday and lending and
borrowing remained frozen, the Bush administration rushed to implement the
$700 billion bailout enacted on Friday. The Treasury Department said that it
would soon post help-wanted ads on its Web site for asset managers to run the
program and that because of the urgency, the hiring may be 'through other than
full and open competition.' Is it any wonder that the markets lack confidence?
One business day after the bailout was enacted, and it already had a tilting-at-
windmills quality.".

Neoliberalism as Creative Destruction

U.S. Is Said to Be Urging New Mergers in Banking
The Treasury Department reportedly hopes to steer some of the $250 billion
rescue to banks willing to buy rivals.

The Mask Slips

The G.O.P. has masked the terrible consequences of much that it has stood for
over the decades. Now the mask has slipped

Tom Engelhardt | Going on an Imperial Bender
Tom Engelhardt, "The fact is: We garrison the planet north to
south, east to west, and even on the seven seas, thanks to our various fleets and
our massive aircraft carriers which, with 5,000-6,000 personnel aboard -- that is,
the population of an American town -- are functionally floating bases. And here's
the other half of that simple truth: We don't care to know about it. We, the
American people, aided and abetted by our politicians, the Pentagon, and the
mainstream media, are knee-deep in base denial."

FOCUS | Pentagon Wants $450 Billion Increase Over Next Five Years
Josh Rogin, Congressional Quarterly: "Pentagon officials have prepared a new
estimate for defense spending that is $450 billion more over the next five years
than previously announced figures. The new estimate, which the Pentagon plans
to release shortly before President Bush leaves office, would serve as a marker
for the new president and is meant to place pressure on him to either drastically
increase the size of the defense budget or defend any reluctance to do so,
according to several former senior budget officials who are close to the

Chalmers Johnson | The Military-Industrial Complex: It's Much Later Than You
For, Chalmers Johnson writes: "Most Americans have a rough
idea what the term 'military-industrial complex' means when they come across it
in a newspaper or hear a politician mention it. President Dwight D. Eisenhower
introduced the idea to the public in his farewell address of January 17, 1961. 'Our
military organization today bears little relation to that known by any of my
predecessors in peacetime,' he said, 'or indeed by the fighting men of World War
II and Korea ... We have been compelled to create a permanent armaments
industry of vast proportions ... We must not fail to comprehend its grave

implications ... We must guard against the acquisition of unwarranted influence,
whether sought or unsought, by the military-industrial complex.' Although
Eisenhower's reference to the military-industrial complex is, by now, well-
known, his warning against its 'unwarranted influence' has, I believe, largely been

Chalmers Johnson | We Have the Money: If Only We Didn't Waste It on the
Defense Budget
Chalmers Johnson, "There has been much moaning, air-
sucking, and outrage about the $700 billion that the U.S. government is thinking
of throwing away on rich New York bankers who have been ripping us off for the
past few years and then letting greed drive their businesses into a variety of
ditches. In fact, we dole out similar amounts of money every year in the form of
payoffs to the armed services, the military-industrial complex, and powerful
senators and representatives allied with the Pentagon."

Bush's Mammoth Defense Budget is Another Bridge to Nowhere
By Katrina vanden Heuvel, The Nation
One built on the backs of ordinary Americans. Read more »

Michel Rocard: "The Decline of the Roman Empire Began Like That"
In an interview with Sylvain Besson of Geneva's Le Temps, former French Prime
Minister Michel Rocard, considered the sage of the French left in economic
matters, puts the financial crisis into the context of the history of capitalism's
shocks. He demands the system be re-equilibrated for the benefit of workers.
Militarism Is Deeply Entrenched in the American Psyche
By William Astore,
The military is not from Mars. We must understand its endless appeal if we ever
hope to change it. Read more »
The US Has 761 Military Bases Across the Planet, and We Simply Never Talk
About It
America garrisons the globe in ways that are truly unprecedented, but if you live
in the United States, you rarely hear a word about it.

Costs of Militarism
Michael Winship | Corruption Destroys Afghanistan
Michael Winship, Truthout: "Just when you've finally gotten your mind around
the enormous $700 billion financial bailout - even if none of us are really sure
where all that money's going - there comes an even greater, breathtaking price

The Costs of Empire: Can We Really Afford 1,000 Overseas Bases?
By David Vine, Foreign Policy in Focus
Our overseas military bases are pushing the nation deeper into debt and making
the United States and the planet less secure. Read more »

Naomi Klein: Bailout = Bush's Final Pillage
The bailout has been designed to keep stealing from the Treasury for years to

William Greider | Paulson's Swindle Revealed
William Greider, The Nation: "The swindle of American taxpayers is proceeding
more or less in broad daylight, as the unwitting voters are preoccupied with the
national election. Treasury Secretary Hank Paulson agreed to invest $125 billion
in the nine largest banks, including $10 billion for Goldman Sachs, his old firm.
But, if you look more closely at Paulson's transaction, the taxpayers were taken
for a ride - a very expensive ride. They paid $125 billion for bank stock that a
private investor could purchase for $62.5 billion. That means half of the public's
money was a straight-out gift to Wall Street, for which taxpayers got nothing in

Finance -Cronism of the last days of 2008
Bailout Isn't Just for Wall Street Anymore

Kevin G. Hall, McClatchy Newspapers: "After a bruising battle to get it through a
doubting Congress, the Bush administration's $700 billion Wall Street rescue plan
to purchase distressed mortgages and other bad assets has morphed into
something else entirely.... What once was disparagingly referred to as bailout for
Wall Street now looks like a broader bailout of all sorts of troubled businesses?
Some lawmakers and outside analysts question whether that's serving the public
interest as intended - or whether it's becoming a taxpayer-financed giveaway to
favored firms."

Fed Defies Transparency in $2 Trillion Loans
Mark Pittman, Bob Ivry and Alison Fitzgerald, Bloomberg: "The Federal
Reserve is refusing to identify the recipients of almost $2 trillion of
emergency loans from American taxpayers or the troubled assets the central
bank is accepting as collateral. Fed Chairman Ben S. Bernanke and Treasury
Secretary Henry Paulson said in September they would comply with
congressional demands for transparency in a $700 billion bailout of the
banking system. Two months later, as the Fed lends far more than that in
separate rescue programs that didn't require approval by Congress, Americans
have no idea where their money is going or what securities the banks are
pledging in return."
Was the 'Credit Crunch' a Myth Used to Sell a Trillion-Dollar Scam?
By Joshua Holland, AlterNet
Even as the media continue to repeat the claim that credit has frozen up, evidence
has emerged suggesting the entire story is wrong. Read more »
Robert Borosage, Campaign for America's Future: "Free fall. The U.S. has lost
private sector jobs for 10 straight months. One quarter of all businesses in the
U.S. plan to cut payroll over the next year. Retail sales fell in October by the
largest monthly drop on record. Auto sales have collapsed; driving the auto
companies towards the precipice ... 'The era of big government is over' is over. In
the crisis, we are, as Richard Nixon once said, 'all Keynesians now.'"

The Fall of the Wall: Hard Times in Money World
by Danny Schechter There was once a wall on what is now Wall Street. For many
years it was walled off from what's called the real economy, the place most of us
live, work, pay bills, run up debt and earn a living. Today, we seem to be walled
off from where the financial relief is, with taxpayer funds flowing into the firms
that caused or were complicit in this deepening crisis and bypassing workers
losing jobs and industries, not to mention homeowners losing their homes.

Nouriel Roubini | The Worst Is Not Behind Us
Nouriel Roubini, Forbes: "It is useful, at this juncture, to stand back and survey
the economic landscape - both as it is now, and as it has been in recent months.
So here is a summary of many of the points that I have made for the last few
months on the outlook for the US and global economy, as well as for financial


Dean Baker | Sharpest Consumption Drop Since 1980 Pushes GDP Negative
Dean Baker, Truthout: "A surge in defense spending added 0.86 percentage
points to gross domestic product (GDP) growth. Consumption spending fell at a
3.1 percent annual rate in the third quarter, which was the main factor leading to a
0.3 percent decline in GDP. Inventory build-ups prevented an even larger decline;
final demand fell at a 0.8 percent annual rate."
The Big Takeover: How Wall Street Insiders are Using the Bailout to Stage a
By Matt Taibbi,
The global economic crisis isn't about money -- it's about power. Read more »
Toward a More Corporate Union of the Americas?
By Katherine Sciacchitano, Dollars and Sense

The Bailout: How Capitalism Killed Democracy

We now face market forces uninhibited by democratic governance. The bailout
is an aggressive attempt to trade democracy for autocracy.

Naomi Klein , The Shock Doctrine

Wall Street's Bailout is a Trillion-Dollar Crime Scene -- Why Aren't the Dems
Doing Something About It?
By Naomi Klein, The Nation Washington's handling of the bailout is not merely
incompetent. It may well be illegal. Read more »

Rick Wolff, Video Analysis of the Present Economic Crisis Dean Baker | Bush Brings WMD Line to Wall Street

Now Is the Time to Resist Wall Street's Shock Doctrine
by Naomi Klein I wrote The Shock Doctrine in the hopes that it would make us all
better prepared for the next big shock. Well, that shock has certainly arrived,
along with gloves-off attempts to use it to push through radical pro-corporate
policies (which of course will further enrich the very players who created the
market crisis in the first place...).Click here to read more on our site

$56 Billion Stimulus Bill Fails in Senate
Andy Sullivan, Reuters: "The Senate on Friday blocked a $56.2 billion economic
stimulus package that would have extended unemployment benefits, increased
food aid and funded new construction projects to create jobs. The 52-42 vote fell
short of the 60 votes needed in the 100-member Senate for Democrats to clear a
Republican procedural hurdle and move toward passage of the bill, which backers
said would give the ailing US economy a needed boost."

What may be over for Wall Street especially after the bailout is only the
beginning of problems for the Working Class.
The Long Road Ahead -- Are You Ready for the Worst the Economy Has to

Are we headed for a deflationary period followed by a tidal wave of inflation?

Mark Weisbrot | Wall Street Bailout Won't Do Much to Help Ailing Economy
Mark Weisbrot, The Center for Economic and Policy Research: "It is now clear
the approval by Congress of President Bush's $700 bailout package on Friday
October 3rd has done nothing to ease the current financial crisis. Credit markets
have worsened for several days after the bill passed the Congress. The stock
market also plummeted to nearly ten-year lows."

By Jeff Faux For more than a decade, we Americans have been living on an
economic San Andreas fault--a foundation of fracturing competitiveness covered
by unsustainable consumer spending with money borrowed from foreigners. A
financial earthquake was inevitable. We don't know how high on the recession
Richter scale the current crisis will take us, but it increasingly looks like, as they
say in San Francisco, "The Big One."

Robert Reich | The Rebirth of Keynes, and the Debate to
Robert Reich, Robert Reich Blog: "The economy has just about come to a
standstill - not so much because credit markets are clogged as because there's not
enough demand in the economy to keep it going. Consumer spending has fallen
off a cliff. Investment is drying up. And exports are dropping because the
recession has now spread around the world. So are we about to return to
Keynesianism? Hopefully."

Wall Street and Washington Are Failing Spectacularly -- Where Do We Go?
The U.S. political and economic systems are not equipped to deal with the
looming problems of the 21st century.

There Is an Alternative to Corporate Rule
All over the world, alternative approaches to capitalist greed are bubbling up
from the grassroots.

Economic Meltdown: A 'Teachable Moment' About Socialism for the Rich
By Dean Baker,
Rather than taking this opportunity to tighten the screws, many progressives are
actually cheering on plans to bail out the ridiculously rich. Read more »

Howard Zinn: US 'In Need of Rebellion'

Going Bankrupt: Why the Debt Crisis Is America's Greatest Threat
Welcome to 2008, a year of morally obscene, fiscally unsustainable spending.
Watch as the military bloats and our standard of living sinks.

Rick Kepler | The American Worker
Rick Kepler, Truthout: "I am an American worker, and you are damn right I want
the wealth to be shared and spread. I am talking about the wealth my hard work
helped to create, but was taken from me by George Bush's base, the very rich, or
as I know them, my corporate bosses. For the past eight years I have watched
W.'s and McCain's (Country Club First) base grab the largest share of our
country's wealth. Where did they take it from? They took it from my family's
pocketbook, and my co-workers' families' pocketbooks. They stole the wealth
that I was trying to build for me and my family when they stripped my pension
plan from me and told me to invest in a 401k."

In Modeling Risk, the Human Factor Was Left Out
Risk models used on Wall Street failed to keep pace with the growth in complex
securities, experts say

The Debt Trap: How Banks Push Troubled Borrowers Deeper Into
Debt Big Finance's pursuit of
struggling American consumers is one of the overlooked causes of the debt boom
and the resulting crisis

Dominique Nora | The Plastic Trap
Dominique Nora, Le Nouvel Observateur: "After houses, consumer credit? While
bankers plug up as best they can the breaches created by the mortgage
earthquake, another bubble threatens them: Americans have been living their
dreams on credit. And, having overheated their cards, millions of households will
have problems making their payments ..."

Personal finance, precarious finance -Living on the edge of collapse.
The Debt Trap: How Banks Push Troubled Borrowers Deeper Into Debt Big Finance's pursuit of struggling
American consumers is one of the overlooked causes of the debt boom and the
resulting crisis.

Sun Sets on US Power: Report Predicts End of Dominance
Julian Borger, The Guardian UK: "The United States' leading intelligence
organization has warned that the world is entering an increasingly unstable and
unpredictable period in which the advance of western-style democracy is no
longer assured, and some states are in danger of being 'taken over and run by
criminal networks.' The global trends review, produced by the National
Intelligence Council (NIC) every four years, represents sobering reading in
Barack Obama's intray as he prepares to take office in January. The country he
inherits, the report warns, will no longer be able to 'call the shots' alone, as its
power over an increasingly multipolar world begins to wane."

Corporatism -Fascism
Le Monde | The American Firm

Le Monde's editorial writer muses, "Oligarchy: a political regime in which
sovereignty belongs to a small group of people, a restricted and privileged class.
The word became fashionable again to define the Cossack capitalism that has
plundered Russia for the last several years. But, in the end, weren't Vladimir
Putin's friends directly inspired by the American model?"

Naomi Wolf End of America

Naomi Wolf,_will_you_help_save_t

The World's Billionaires: A New Count, a New Record
By Sam Pizzigati, Too Much: A Commentary on Excess and Inequality
Forbes' latest list of billionaires reveals a global concentration of wealth that has
reached truly staggering proportions. Read more »

Amit R. Paley, The Washington Post: "The financial world was fixated on
Capitol Hill as Congress battled over the Bush administration's request for a $700
billion bailout of the banking industry. In the midst of this late-September drama,
the Treasury Department issued a five-sentence notice that attracted almost no
public attention. But corporate tax lawyers quickly realized the enormous
implications of the document: Administration officials had just given American
banks a windfall of as much as $140 billion."

Most Corporations Don't Pay Income Taxes
Richard Rubin, Congressional Quarterly: "Most corporations, including the vast
majority of foreign companies doing business in the United States, pay no income
taxes, according to a Government Accountability Office report released

Laurent Pinsolle | Is Free-Market Fundamentalism Immoral?

Laurent Pinsolle, Marianne2: "Governments save banks, some of the managers of
which save themselves with comfortable golden parachutes. American
households that have lost their homes weren't so lucky. And they'll keep on
paying taxes. To save the banks. Where is morality in this system?"

Tom Engelhardt | The Ponzi Scheme Presidency: Bush's Legacy of Destruction
Tom Engelhardt, "With Bush's 'commander-in-chief'
presidency only days from its end, the price tag on his 'war' continues to soar as
dollars grow scarce, new investors refuse to pay in, and the scheme crumbles.
Unfortunately, the American people, typical suckers in such a con game, will be
left with a mile-high stack of IOU's. In any Ponzi scheme comparison with
Madoff, however, one difference (other than size) stands out. Sooner or later,
Madoff, like Charles Ponzi himself, will end up behind bars, while George, Dick,
& Co. will be writing their memoirs and living off the fat of the land."

By Cliff DuRand
Like many of you, I’ve been trying to figure out what is the deeper cause behind
this financial crisis and the larger economic crisis that is likely to follow. The
conclusion I’ve come to may seem counterintuitive at first blush: the problem is,
there’s too much money! I don’t mean the average American has too much
money –so many don’t have enough to pay their mortgage, fill their gas tank, buy
groceries, send the kids to college. We don’t have enough money. It’s the wealthy
capitalists who have too much money. They have so much that there is a problem
finding places to invest it profitably –as capitalists, that is what they seek to do:
invest money in order to make more money, to accumulate more capital.

By David Schweickart
Our economy is a capitalist economy. That is to say, we rely on the private
savings of private individuals to provide for the investment that any healthy
economy needs. But in depending on private savings, we are compelled to keep
up the spirits of those with money to invest…. Let's be utopian for a moment. Let
us imagine a quick transition from the deeply irrational, ultimately unsustainable

economic system we presently inhabit to a democratic, socialist economy, one in
which enterprises are run democratically, and economic stability no longer
requires keeping our capitalists happy.

by Dan La Botz The increasingly popular sentiment that the bankers should be
made to pay for the crisis opens the door to the notion of nationalization of the
banks. What would it mean to have the government own the banks? Historically
the Populists, various labor parties, and the Socialist and Communist left have
raised the slogan of nationalization of the banks as part of a process of bringing
about socialism. … During the last couple of decades, countries as different as
Mexico, France, Sweden, and Japan carried out partial or more or less complete
bank nationalizations to regain control of the financial situation. Read more at

How Washington's Right-Wing Wrecking Crew Robbed Us Blind
By Thomas Frank,
Conservatives have turned a vast government built for our protection into a
device for exploiting us. Read more »
$5 Billion in Lobbying for 12 Corrupt Deals Caused the Multi-Trillion Dollar
Financial Meltdown
By Robert Weissman, Multinational Monitor
$5 billion in lobbying to Congress got the finance industry lucrative legislative
favors that paved the way for Wall Street's devastating collapse. Read more »
Can You Trust a Wall Street Veteran With a Wall Street Bailout?
Kevin G. Hall, McClatchy Newspapers: "Making the rounds on the Sunday
morning talk shows, Treasury Secretary Henry Paulson repeatedly said today's
financial problems were long in the making. He should know. He was part of the
Gold Rush that has brought the global financial system to the brink of collapse.
Paulson presided over one of the most profitable runs on Wall Street as chairman
and chief executive officer of investment banking titan Goldman Sachs & Co.
from 1999 until President Bush nominated him on May 30, 2006 to take over the
Treasury Department."

Joseph E. Stiglitz, The Nation: "The champagne bottle corks were popping as
Treasury Secretary Henry Paulson announced his trillion-dollar bailout for the
banks, buying up their toxic mortgages. To a skeptic, Paulson's proposal looks
like another of those shell games that Wall Street has honed to a fine art. Wall
Street has always made money by slicing, dicing and recombining risk. This
'cure' is another one of these rearrangements

Paul Krugman | Cash for Trash
Paul Krugman, The New York Times: "Some skeptics are calling Henry
Paulson’s $700 billion rescue plan for the U.S. financial system 'cash for trash.'
Others are calling the proposed legislation the Authorization for Use of Financial
Force, after the Authorization for Use of Military Force, the infamous bill that
gave the Bush administration the green light to invade Iraq."

Is the Bailout Needed? Many Economists Say "No"
Kevin G. Hall, McClatchy Newspapers: "A funny thing happened in the drafting
of the largest-ever US government intervention in the financial system.
Lawmakers of all stripes mostly fell in line, but many of the nation's brightest
economic minds are warning that the Wall Street bailout's a dangerous rush job.
President Bush and his Treasury secretary, former Goldman Sachs chief
executive Henry Paulson, have warned of imminent economic collapse and
another Great Depression if their rescue plan isn't passed immediately. Is that
Dean Baker, Truthout: "Remember how President Bush got Condoleezza Rice
and Colin Powell to run around warning about Saddam Hussein's nuclear bombs?
This phony scare tactic got Congress to give him the authorization he needed to
start the Iraq war. Even though his credibility has vanished, in large part because
of the Iraq war, President Bush is again using a lie to cow Congress into giving
him a huge blank check. This time, the check is for $700 billion, to be handed
over to Treasury Secretary Henry Paulson, to spend pretty much as he wants."
AGY: The Neocons know what they want to do in order to consolidate the
corporate state. Let's go back to Naomi Klein and Bertram Gross.

The Pornography of Power: Lust for Empire Has Weakened America
By Emily Wilson, AlterNet
Veteran journalist Robert Scheer on the media's complicity in war, the rise of the
neocons and how even Nixon got some things right. Read more »
As the "New Economy" Crashes, to What Degree Will Mainstream Economists
Change Their Stripes?
By Mark Engler, Dollars and Sense
These days, establishment defectors from the doctrine of market fundamentalism
are growing in number. Read more »
December Job Losses at 673,000, Worse Than Thought
Reuters: "U.S. private-sector employers shed 693,000 jobs in December, a private
employment service said Wednesday in a report that was far worse than expected
and pointed to more ugly news from the government's jobs data due later this
Financial Crisis or Economic Crisis
Yes We Can (Have Economic Justice), but We Need to Fight Like Hell for it
By Arun Gupta, Indypendent
We need to band together and organize powerful new movements across this
country. Read more »
Michael Lebowitz, Build it Now

A list of Recessions and Depressions in the History of the USA can be found at:


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