Home > Uncategorized > Austerity: Democracy versus Capitalism

Austerity: Democracy versus Capitalism

From: Peter Radford

That’s where we are. That’s where we’ve been for a while. That’s where we’re likely to stay. Get used to it.

Don’t get me wrong: the history of the past two hundred or so years have shown that capitalism – depending on how you define it – has been a good thing. Yes, it has. My ancestors were much the worse for living in the shadows of an aristocratic England, and it is only in the industrial era that their descendants, me included, have prospered. No, capitalism has not been a disaster, it has been beneficial.

And right there I stop endorsing it.

Because capitalism also unleashes horrible side-effects. These are the kind of consequences that its ardent admirers – like David Stockman whom I lambasted the other day – conveniently overlook. That oversight generally follows right after they’ve managed to make a decent living and so they adopt the posture and comport of a capitalist. They start asking different questions. They start seeking different solutions. They change sides.

It isn’t capitalism that created the American middle class. It was democracy. Which is a countervailing force pressing against capitalism. Democracy is the mechanism through which the likes of you and I prevent the pillage that unfettered capitalism encourages. And it is the method we use to make sure we get our fair share of the collective spoils.

So, you see, capitalism and democracy are locked in a fight against one another. They cannot abide each other.

The one concentrates wealth by encouraging greed, exploitation, monopoly, and conspiracy. The other distributes wealth by enforcing the tyranny of the majority, constraining liberty, establishing rules, and forcing apart those conspiracies.

Ironically true democrats love competition since it sanitizes the economy by opening it up and pushing back against the desire of capitalists to profit at all costs. Likewise, and equally ironic, capitalists despise competition because it prevents them from reaping undue rewards, colluding, and otherwise rigging the game.

It was democratic government that gave the birth to the middle class. It inoculated the masses from the risks of living in a capitalist world: it protected them from the downside so they could enjoy at least a small part of the upside. It did this by creating ex nihilo a welter of programs and tax deductions aimed at creating an affordable middle class life untenable in a ‘winner take all’ deregulated pure capitalist world.

So democracy is the political solution to the problem of exploitation by capitalists.

Which why neither the extreme right nor the extreme left like democracy much. They pay token lip service, but behind the scenes they grumble about its invasive character. Democracy is indeed tyrannical, if, and only if, you mean tyrannical to be the enforcement of fairness.

This is precisely why the Founding Fathers got it so hopelessly wrong. They hated the prospect of majority rule. Or rule by the mob. Why? Because the mob might want something in return for all the hardship the few impose.

In contemporary America this contest is still being played out.

The last election was full of right wing indignation about the 47% – that part of America said to depend on government largesse for its survival. The moral indignation with which right wingers attack such ‘dependency’ betrays their contempt for democracy. It also displays a shockingly naive perspective. The kind of perspective that infects all traditional conservative political economy. The notion that nearly half of all Americans don’t pay income tax was used to demonstrate the abundance of layabouts that decades of government largesse has fostered. Conservatives love this kind of morality play.

But they overlook a more simple explanation. One with a different moral twist. Half of Americans don’t pay income tax because they don’t have enough freaking income. Duh!

Which brings me to austerity and budget cutting.

Apart from defense most government spending goes into programs designed to foster our middle class. It reduces the risk of existing within a rapacious capitalist society where saving for retirement is well nigh impossible because wages have been stagnant for decades, or where health care costs are rising more rapidly than those stagnant wages. And those are very significant risks for anyone existing down the income scale. Without those programs, each a victory for democracy, the middle class would shrivel and America would be revealed to be just an oversized banana republic with a small ultra-wealthy plutocracy and vast poor underclass.

So by reducing the risks of capitalism for those who are not capitalists, democracy averts the danger of the emergence of fully fledged socialism. This is why Marx was wrong when he suggested that democracy opens the door for socialism. It doesn’t. It slams the door. His reading of history was wrong.

It is also why those preaching austerity need to be careful.

Because austerity is class warfare.

Say what?

It follows logically. The people who benefit most from all that government spending are going to be the ones who lose the most when those programs are cut. The poor, the sick, the elderly, and the average middle class family sitting on the edge between being decently prosperous and falling backwards into poverty. The 47%. They are the ones who will bear the brunt of the cuts. And they are the ones who drive democracy. Undermine them and you undermine their commitment to moderate politics. You undermine the quiescence that democracy buys.

This may sound cynical, but I don’t see it that way. Freedom constrained by poverty or sickness or lack of education is not freedom. It is an imposition. It is a form of subservience. So the commitment to the notion of freedom can get strained and extremist solutions begin to appeal whenever the specter of poverty, sickness or lack of education reappear strongly.

Furthermore: the collapse of the economy a few years back, the context for our current fixation on austerity, was not the creation of the majority. It was conceived and acted out by a few. The greed and error of the banks caused the recession. The consequent bail-out, and recession made the public debt soar. Instead of making those responsible for the problem pay for its clean up, we have ‘socialized’ it. We have moved the debt from the banks, the bankers, and their shareholders onto the public books. And now we are told that, because those public books are lopsidedly in debt, we all need to pay the price.

So austerity shifts the cost of private gambling, error, and greed onto the shoulders of the rest of society. Since those playing the game that blew up were, by definition, creditors with capital to play with, asking those without such resources to pay for the clean up is also, by definition, a form of class warfare.

The only way that the game gets played out this way is because the fine balance between capitalism and democracy has been tilted out of kilter. Society has been unbalanced. Democracy lost somewhere along the line. The constraints on capitalism were loosened too much. We valued liberty more than fairness instead of striking a balance.

Now the problem that the capitalists have is that the masses are noticing the inherent unfairness of austerity and are seeking fairness. They will look to protect themselves. This desire will either take the form of the continuance of the government programs that protect democracy. Or it will take the form of a more tyrannical show of force by the majority.

Either way, the attempt to shove the costs of the banking system’s stupidity and greed down the throats of society at large will end up destabilizing societies across the globe.

This I think is the logical end point of the decades of corporatist thinking, right wing dogma, deregulation, and the sustained attack on the underpinnings of the middle class.

Democracy will re-assert itself. We ought to hope. Before something else does

  1. April 7, 2013 at 1:23 pm

    Absolutely right. We tragically lost the balance between the three countervailing forces of capital, labor, and government. Unbalanced society may go fast from democracy to a totalitarian regime – either from the left or the right. Pressure from China will help.

  2. Mike Meeropol
    April 7, 2013 at 2:44 pm

    To develop Peter’s main point more completely, I urge folks to take a look at John McDermott’s RESTORING DEMOCRACY TO AMERICA. It takes a long historical view of the way democracy created the great American middle class (the book focuses only on the western side of the pond) and how that democracy has been under attack since the 1960s decade ended.

    He then proposes a number of interesting political steps that might be taken to restore democracy.

    The one problem I have with Peter’s argument is that often when the masses are confronted with extreme inequality, and a sense of their own powerlessness, they can sometimes focus their anger in the wrong direction — France may have given us the popular front under Leon Blum in the 1930s (and Spain elected their own version before Franco destroyed it) but the Italians and Germans went with fascism and nazism —

    In the US, there is a terrible fascist tendency among too many formerly privileged white people — as represented by the Tea Party and anti-immigrant pro-gun enthusiasm — Instead of democracy reasserting itself with an effort to tame capitalism — a “new” New Deal as some of us (sadly mistakenly) hoped would be ushered in by Obama — we may get a “man on a white horse” to institute an American version of fascism — clamping down even further on unions (as in some states already), making money even more powerful in politics, making the House of Representatives permanently Republican no matter how people vote — all with the aura of “taking our country back” from THEM —

    My take away from all of this is that DEMOCRACY in its broadest outlines must be defended unequivocably so that unions and the majority of voters have a fighting chance once they realize how bad the American version of capitalism has turned out to be —

    Thus, defending what’s left of the New Deal safety net and fighting to protect the right to vote and of unions to organize probably is of the highly priority in the short run.

    Also — of course — reminding people who actually caused the crisis. It is dis-heartening to see how many people have bought the garbage of those who blame the financial crisis on Fannie Mae and Freddie Mac (“big government caused it”) just as Amity Schlaes and her acolytes are blaming the length of the Great Depression on Roosevelt’s New Deal!

  3. Big Bill
    April 7, 2013 at 3:19 pm

    This isn’t Capitalism. In capitalism, when a company fails, it fails and that’s it. It has to so new companies can be formed from the wreckage, it’s an essential part of renewal, of growth, of moving forward. In what we have, when a bank fails, it stays in place and everything else is plundered to support it. That’s not capitalism, never has been. This isn’t democracy either. In a democracy, the people get to choose on important things. Here, the Queen gets to choose on important things whether we like it or not, as she has veto over anything we or our lawmakers might decide. Democracy didn’t ‘lose somewhere along the line’. It was never here in the first place.

  4. Herb Wiseman
    April 7, 2013 at 10:27 pm

    Big Bill is right. Never was true democracy. But there was a fighting chance when the media was more independent. Now the 1% controls the major part of the media and huge resources are spent on our equivalent of the ancient Roman “circuses.”. Check out Edward L. Bernays in The Father of Spin. He believed that the elite have the right to control the opinions and beliefs of the rest of us and was on Time-Life’s list of the most 100 influential people of the 20th century.

  5. April 7, 2013 at 10:54 pm

    Modern International Financial and Monetary Systems Reformation. 2013.

    A new vision is needed of wealth and equality, its existence and how it is administered.

    Excerpts from: “Pontifical Council for Justice and Peace”.
    Comments by Justaluckyfool ( http://bit.ly/MlQWNs )
    ( “You are always welcome to share, copy, plagiarize, improve, etc..any comments.)
    ‘ ***** “Believe nothing merely because you have been told it…But whatsoever, after due examination and analysis,you find to be kind, conducive to the good, the benefit,the welfare of all beings – that doctrine believe and cling to,and take it as your guide.”- Buddha””)

    Pontifical Council, “…“(T)he trajectories of the Church’s close relation with the world. These trajectories intersect in the profound value of human dignity and the quest for the common good, which make people responsible and free to act according to their highest aspirations. The economic and financial crisis which the world is going through calls everyone, individuals and peoples, to examine in depth the principles and the cultural and moral values at the basis of social coexistence. What is more, the crisis engages private actors and competent public authorities on the national, regional and international level in serious reflection on both causes and solutions of a political, economic and technical nature. In this perspective,…the crisis “obliges us to re-plan our journey, to set ourselves new rules and to discover new forms of commitment, to build on positive experiences and to reject negative ones. The crisis thus becomes an opportunity for discernment, in which to shape a new vision for the future. In this spirit, with confidence rather than resignation, it is appropriate to address the difficulties of the present time.” The G20 leaders themselves said in the Statement they adopted in Pittsburgh in 2009: “The economic crisis demonstrates the importance of ushering in a new era of sustainable global economic activity grounded in responsibility.”
    It is time to be united as Monetary Sovereign Nations that has as a social goal , “to form a more perfect union along with acting for the benefit of all mankind. While sharing the redistribution of wealth of these nations while at the service “… of the good of each and every one will necessarily be super partes (impartial): that is, above any partial vision or particular good, in view of achieving the common good. Its decisions should not be the result of the more developed countries’ excessive power over the weaker countries. Instead, they should be made in the interest of all, not only to the advantage of some groups, whether they are formed by private lobbies or national governments…. and no longer for the development of one group to the detriment of another group.

    Capitalism is the “best” system to date devised by mankind. As it is administrated, perhaps, is where the “flaw” is manifested. If capitalism used its Central Bank properly,that is for the betterment of the common good, with equality and justice for all, capitalism would be the best ways and means to help “form a more perfect union….”
    As stated in https://rwer.wordpress.com/2013/04/04/and-the-ecb/, (And the ECB?)
    The ECB may have described where we went wrong working with our Fed; thereby giving us the opportunity to fix our “flaw”.Perhaps, the ECB has shown that the USA has taken the wrong path to prosperity because the Fed has allowed some one else to issue our liabilities and done so not for the common good.
    Quote,” The ECB remains stuck in a totally outdated and rigid view of money, like the supporters of the gold standard, as it refuses to grasp that, in our current context of deflation/disinflation, losses on its capital have no significance, quite the contrary. It can even operate with negative capital, given that it is the sole issuer of its own liabilities, and create as many euros as it sees fit.
    The US Fed has understood this truth for quite some time, given its inclusion in bylaws of a rule allowing it to delay indefinitely, without any need for recapitalization, any loss posted on its investment portfolio by assigning to them to future seigniorage revenue (MG).”

    THE TIPPING POINT: “… It can even operate with negative capital, given that it is the sole issuer of its own liabilities…”

    The Fed must become a Central Bank Working For The People (CBWFTP) instead of working for the Private For Profit Banks (PFPB) and MUST take away from any other entity
    the ability to issue sovereign currency which based upon todays rules is ” a CB liability”.
    Why would you not want betterment of the common good?
    Why not challenge, improve, endorse;
    ” A Central Bank Working For The People (CBWFTP)
    instead of for Private For Profit Banks (PFPB).”

    When will the people of Italy ( Read, Greece, Spain, any Sovereignty ) realize they have a Central Bank that does not work for their people, in fact it works to make profits for the top 1% of the people in the world.
    Italy (Read…Greece, Spain, any Sovereignty), you can take back your right to prosperity. Create the Central Bank Of Italy, (Greece, Spain, any Sovereignty) and your Central Bank with an account showing 2 trillion “NEW LIRA”, that being todays wealth of the Italian peoples goods and services as of this date. All monetary transactions shall be recorded in “NEW LIRA”. All balances shall be equal in number and converted to “NEW LIRA”. All receipts in an equal denomination of “NEW LIRA” for each Euro. The balance of all debt will be fixed on this date , set with a specific redemption plan.(E.g., 72 or 96 equal monthly payments) The debt will no longer accrue interest.
    Who would not accept this nation as not having a wealth of all that is Italian as not being at least 2 trillion,”NEW LIRA”? As for those who would be that stupid, not to accept that capitalization, please allow them to accept default.

    It is not the cost of government but the cost of money itself that has bankrupted the nations.If any country wishes to free itself from the shackles of debt and restore the prosperity it once had, it will need to take back its monetary sovereignty and issue its own money, either directly or through its own nationalized central bank.(This is the solution for any sovereignty).
    For any nation to be a Monetary Sovereignty….
    .. it must be the sole creator of its sovereign currency.
    …it must have the ways and means to control its sovereign currency for quality and quantity.
    …it must under modern money systems be fiat since its money is transferable “thru thin air”.
    …it must understand that it is the guardian of the value of the currency , if it wishes to be capitalistic; otherwise that nation will be totalitarian. As a guardian (recording and exchanging) it does not own the value of the currency it creates.
    …it must use that currency knowing that it must also return it back to the community (the rightful owners).
    …all transactions using sovereign currency must be “REAL”, meaning backed by 100% of issued sovereign currency.In order to prevent “systemic failure” it must make available the currency as loans at a fixed rate and duration in amounts deemed necessary to allow the private banking system to be solvent.

    Based upon an opinion by “Justaluckyfool” of the concepts of Noble Laureate Frederick Soddy, “The Role Of Money” (1926,1933)
    *****The Switch Game;USA
    *WHAT IF THE …The Fed Reserve were to become the CENTRAL BANK WORKING FOR THE PEOPLE (CBWFTP) instead of working for the Private For Profit Banks (PFPB) .
    The government can not win against ‘compound interest’ on debt for that can be infinite in amount. IF ‘compound interest were eliminated then there would be no “systemic failure”. Or better yet; take that most powerful weapon, use it for the people .
    Let’s try this game: Substitute the words “Central Bank Working For The People” (CBWFTP) where ever” Private For Profit Banks” (PFPB) appears.

    ****PFPB (read CBWFTP) have $100 trillion in assets as mortgages on residential and commercial real property (RE) loans. The average compound interest rate is 4% for a term of 36 years. The PFPB (read CBWFTP) would have created that $100 trillion ‘out of thin air’ which would have an attachment that would require $400 trillion to be paid to the PFPB (read CBWFTP). YES, take away the smoke and mirrors, this is a fact-the Rule of 72. Now we must replace (reduce to zero ) the Horizontal Money by subtracting $100 trillion leaving a profit,income,taxation from ‘somewhere else’ of $300 trillion. This amount goes as profits to the PFPB.(read CBWFTP) Revenue they may use for their own selfish purposes. That’s not the bad news-what the bad news is :That $300 trillion is real money, real currency, sucked up by the PFPB, (CBWFTP).
    Why would you not want prosperity for yourselves and your children?
    Why would you not want $300 trillion
    Share: “You are always welcome to share, copy, plagiarize, improve, etc..”

  6. Ken Zimmerman
    April 8, 2013 at 4:12 am

    Per the latest edition of Samuelson’s “Economics” the 2007-2009 financial crisis was bad, but it followed a half-century of spectacular increases in the living standards of most of the world, particularly those living in the affluent countries of North America, Western Europe, and East Asia. The book asks will these successes be repeated in the 21st Century, will the affluence spread to the poor countries? Or will the four horsemen of the economic apocalypse — famine, war, environmental degradation and depression — spread to the North? According to Samuelson and Nordhaus these are the questions this newest version of the number one selling Introduction to Economics textbook seeks to answer. You’ll notice little is said here about democracy. But elsewhere in the text Samuelson and Nordhaus talk of democracy and a market economy as the twin goals sought in Eastern Europe, China, and the former Soviet Union. What the protestors in these places protested against was socialism and what they protested for was “the hope that they many enjoy the freedom and economic prosperity of democratic market economics.” So Peter as far as the top Economics textbook is concerned you are dead wrong. And believe me this textbook reaches a lot more students and people in general than blog posts anywhere on any blog. That being the case, how would you suggest Samuelson and Nordhaus change their textbook, or in the alternative how would you change your position so that market economics and democracy work together? Samuelson and Nordhaus are smart guys. I would not want to dismiss what they say without a full hearing.

    • Garrett Connelly
      April 8, 2013 at 12:35 pm

      I realize you asked Peter, Ken; yes, Samuelson and Nordhaus are smart guys who reach further than this blog, even so they are propagandists pushing an argument that requires blinders. What kind of success leads to the end of civilization and extermination of all higher life forms unless it is stopped quickly?

      If these two textbook writers were as intelligent as you claim, wouldn’t they be able to see they are on a dead end road. They would clearly see the need for degrowth and justice and attempt to solve the riddle of prosperity with a gradual declining population easily accomplished by harnessing endless capitalist war effort to full emergency planet-wide education.

    • Peter Radford
      April 8, 2013 at 2:21 pm


      I will respond in a second article rather than in this comment section.

      • April 8, 2013 at 2:44 pm

        Peter Radford, “That’s where we are. That’s where we’ve been for a while. That’s where we’re likely to stay. Get used to it.

        Don’t get me wrong: the history of the past two hundred or so years have shown that capitalism – depending on how you define it – has been a good thing. Yes, it has…. No, capitalism has not been a disaster, it has been beneficial.
        And right there I stop endorsing it.
        Because capitalism also unleashes horrible side-effects. ”
        Why ? Why not correct or improve ? Why not respond with a due examination of where the “best” system has gone wrong and how we can fix it?
        What IF…They were to have a ” CBWFTP” (Central Bank Working For The People) That would have as is sole goal “to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity,…”?
        What IF … Life, Liberty and Justice for all were to be the only influences, that is anything that is for the betterment of the common good. Surely no one would argue that “The wealth of the world is abundant enough for all mankind, thereby allowing this goal to be met.
        Read more: http://bit.ly/MlQWNs
        “Modern International Financial and Monetary Systems Reformation. 2013.”

  7. April 8, 2013 at 8:13 am

    Great article and very thought provoking. But, in putting all blame onto bankers rather than governments, you overlook the fact that democratically elected governments have ultimate power. Instead of using this power to control the excesses of the banks (which was undoubtedly verging on criminal) they were only too willing to use the false profit to pretend economies were growing and to overspend accordingly. Then, when banks failed, they bailed them out leaving the remaining ones thinking there is no problem continuing to take unsupported risks.

    Paradoxically, it seems that those countries without democratically elected governments did not allow this to happen – eg China. Is it possible that contrary to your article, democratically elected governments are influenced far too much by short term populism.

    • Herb Wiseman
      April 8, 2013 at 4:07 pm

      A more likely scenario is that governments increased spending and were happy to see deficits so that they could later justify shrinking government. It seems that the right wing conservative governments are the ones that most often run deficits and then use those as justifications for cutbacks. You also assume that spending is the culprit and that is not necessarily true either. Government borrowing from the private sector instead of from their own central banks is a more recent cause of debts and deficits (since the mid 70s). Check out the curves. You will also find that the spending on programmes and staff has not changed significantly as a percentage of the GDP. Therefore revenues have not kept pace with the increase in GDP. I have not seen the numbers but I am willing to bet that government revenues have shrunk as a percentage of the GDP while many expenditures have remainded the same. Justaluckyfool outlines it nicely.

  8. sergio
    April 8, 2013 at 12:52 pm

    Samuelson: “I don’t care who writes a nation’s laws — or crafts its advanced treaties — if I can write its economics textbooks”
    Mayer Amschel Bauer Rothschild: “Give me control of a nation’s money and I care not who makes it’s laws”

    Money and Economics are tools of control.

    • davetaylor1
      April 8, 2013 at 10:13 pm

      Yes, Sergio; it’s been going on a long time and not just banks and governments have been at fault, so have many economists. This 1905 quote from G K Chesterton (for ‘Heretics’ read ‘heterodox’) seems apt:

      “Science in the modern world has many uses; its chief use, however, is to provide long words to cover the errors of the rich”.

  9. April 8, 2013 at 1:47 pm

    Yes, “democratically elected governments are influenced…”
    What IF…They were to have a ” CBWFTP” (Central Bank Working For The People) That would have as is sole goal “to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity,…”?
    What IF … Life, Liberty and Justice for all were to be the only influences, that is anything that is for the betterment of the common good. Surely no one would argue that “The wealth of the world is abundant enough for all mankind, thereby allowing this goal to be met.

  10. Melissa Serpico
    April 26, 2013 at 4:36 pm

    Does anyone have a reference I can use for my dissertation for the clash between democracy and capitalism?

    • Robert Locke
      July 11, 2013 at 4:17 pm

      Melissa, the clash between democracy and capitalism, only took place in those countries that had a democratic revolution in the 18th-19th century, before the great age of capitalistic industrialization in the late 19th century. Roughly, then, democratization occurred in the US(the Age of Jackson) before modern industrialized capitalism and, to cite a second example, in France. This permitted the clash between democracy and capitalism to take place. In Germany and in Japan, capitalistic large-scale industrialization occurred starting in the second half of the 19th century in societies that did not go through democratization, until America occupied them after WWII. There never was much of a clash between democracy and capitalism in Japan and Germany because no democracy preexisted financialization and large scale industrialization in those countries. Google “organized capitalism” to find out more about capitalism without democracy, which might sound strange to people outside the Anglo-American orbit, but which has succeeded in transforming nondemocratic countries into modern ones — no matter how strange that sounds to people living in Anglo-Saxonia.

  11. Bruce E. Woych
    September 12, 2013 at 7:33 pm

    200 years of changes due to capitalism? ; but frankly capitalism is not the positive driving force.
    [Selected excerpts]

    “The European Revolutions of 1848, known in some countries as the Spring of Nations, Springtime of the Peoples[3] or the Year of Revolution, were a series of political upheavals throughout Europe in 1848. It remains the most widespread revolutionary wave in European history, but within a year, reactionary forces had regained control, and the revolutions collapsed.”

    “The revolutionary wave began in France in February, and immediately spread to most of Europe and parts of Latin America. Over 50 countries were affected, but with no coordination or cooperation among the revolutionaries in different countries. Five factors were involved: widespread dissatisfaction with political leadership; demands for more participation in government and democracy; the demands of the working classes; the upsurge of nationalism; and finally, the regrouping of the reactionary forces based on the royalty, the aristocracy, the army, and the peasants.”

    “The revolutions were most important in France, Germany, Poland, Italy, and the Austrian Empire, but did not reach Russia, Great Britain, Spain, Sweden, Portugal, or the Ottoman Empire…”

    “Rural population growth had led to food shortages, land pressure, and migration, both within Europe and out from Europe, especially to North America. In the years 1845 and 1846, a potato blight caused a subsistence crisis in Northern Europe. The effects of the blight were most severely manifested in the Great Irish Famine,[11] but also caused famine-like conditions in the Scottish Highlands and throughout continental Europe.”

    “Aristocratic wealth (and corresponding power) was synonymous with the ownership of farm lands and effective control over the peasants. Peasant grievances exploded during the revolutionary year of 1848.”

    “Despite forceful and often violent efforts of established and reactionary powers to keep them down, disruptive ideas gained popularity: democracy, liberalism, nationalism, and socialism.”
    …….post hoc ergo propter hoc ?

  12. Bruce E. Woych
    September 12, 2013 at 7:55 pm


    Vladimir Ilyich Lenin
    Imperialism, the Highest Stage of Capitalism[1]

    Written: January-June, 1916
    Published: First published in mid-1917 in pamphlet form, Petrograd. Published according to the manuscript and verified with the text of the pamphlet.
    Source: Lenin’s Selected Works, Progress Publishers, 1963, Moscow, Volume 1, pp. 667–766.
    Transcription\Markup: Tim Delaney & Kevin Goins (2008)
    Public Domain: Lenin Internet Archive 2005. You may freely copy, distribute, display and perform this work; as well as make derivative and commercial works. Please credit “Marxists Internet Archive” as your source.
    PREFACE 187

    Notes: http://en.wikipedia.org/wiki/Imperialism,_the_Highest_Stage_of_Capitalism

    In the Preface to the post-war French and German editions of Imperialism, the Highest Stage of Capitalism (1920), Lenin informs the reader that First World War (1914–1918) occurred as “an annexationist, predatory, plunderous” war among monarchic empires, the historical and economic background must be perceived.[2]

    In order for capitalism to generate greater profits than the home market can yield, the merging of banks and industrial cartels produces finance capitalism—the exportation and investment of capital to countries with underdeveloped economies. In turn, such financial behaviour leads to the division of the world among monopolist business companies and the great powers. Moreover, in the course of colonizing undeveloped countries, Business and Government eventually will engage in geopolitical conflict over the economic exploitation of large portions of the geographic world and its populaces. Therefore, imperialism is the highest (advanced) stage of capitalism, requiring monopolies (of labour and natural-resource exploitation) and the exportation of finance capital (rather than goods) to sustain colonialism, which is an integral function of said economic model.[3][4] Furthermore, in the capitalist homeland, the super-profits yielded by the colonial exploitation of a people and their economy, permit businessmen to bribe native politicians—labour leaders and the labour aristocracy (upper stratum of the working class)—to politically thwart worker revolt (labour strike); hence, the new proletariat, the exploited workers in the Third World colonies of the European powers, would become the revolutionary vanguard for deposing the global capitalist system.


    • Bruce E. Woych
      September 12, 2013 at 8:05 pm

      For the most part, minus some of the jargon; The guy predicted everything right on the money better than some of the current economists. Why is THAT?

      • Robert Locke
        September 15, 2013 at 11:14 pm

        In 1954 I took a course called Colonies in World Politics in which we read Lenin’s Imperialism the Highest Stage of Capitalism and Schumpeter’s essay On Imperialism, one saw imperialism as an historical atavism, the other as the highest stage of capitalism. At the time I wrote an exam in which I said that Lenin made a lot of sense. I got a D. So in the ideological frenzy of McCarthyism I dropped Political Science as a major.

  13. Norman L. Roth
    September 15, 2013 at 4:49 pm

    Sept. 15, 2013,
    In order to understand what follows, interested readers should refer back to the following:

    [1] Ping Cheng’s Challenge to the RWER blog, especially # 3 & # 10.

    [2]WEA Newsletter, 3-4 August 2013, Interview with Prof. Ping Cheng

    [3]”Democracy vs. Capitalism, Take Two” of RWER”, April 12 ,2013: #1 through #20

    [4] “Austerity: Democracy vs. Capitalism”, April 07, 2013 in RWER, especially #2, a particularly sad example of historical amnesia & revisiting “a hair o’ the dog what bit ye’ ”

    Can anybody identify the source document from which the following “policies” are taken ?

    [1] The activity of individuals MUST not counteract the interests of the universality. But MUST have its results within the framework of the whole, for the benefit of all.

    [2] We demand the abolition of unearned work and labour, the breaking of debt-interest slavery, the nationalisation of all associated industries [& trusts]

    [3] WE demand a [dictated ?] division of profits from ALL ‘heavy’ [??] industries

    [4] “WE demand the communalization of the great warehouses & the issuance of [dictated ???] leases to ‘small’ [???] firms under contracts to STATE, County & Municipal governments.” Sort of like what Hugo Chavez did in Venezuela with the Wholesale food industry; With entirely unnecessary, predictable & disastrous consequences.

    [5] WE demand land reform suitable to OUR needs And free [??] expropriation of land for purposes of “public utility”. And prevention of ALL “speculation” [defined by whom ?] in landed property.

    [6] WE demand the formation of a strong central authority. And unlimited power for the CENTRAL parliament over the WHOLE, and ALL of its institutions.

    And last but not least: ” THE GOOD of the STATE COMES BEFORE THE GOOD OF THE INDIVIDUAL”

    Compare this stuff to the scarcely disguised “policy recommendations” of so many undoubtedly well-meaning contributors to RWER. Or to some of the musings in Prof, Cheng’s interview regarding his version of the recent history of China’s Economic “management. Gordon Chang is a much better & freer authority for this purpose. Although he’s learned some hard lessons himself from dabbling in the morass of economic soothsaying. Also, please read the section on “The Chinese Vector” in TELOS & TECHNOS”, Chapter six.
    For example: “Social stability & economic efficiency MUST be balanced to achieve sustainable growth. Prof. Chen’s perspective below:

    “Economic analysis cannot be separated from POLITICAL & historical perspectives”.
    By the way, What does Prof. Cheng mean by “CULTURAL CONSTRAINTS” ?
    Take your choice dear readers. Who said it better ?
    “The only thing that’s “new” is the history you don’t know ” Harry S. Truman,
    Or: “When the glaciers melt & wane, old weeds bloom afresh” Old Japanese Haiku.

    Norman L. Roth, Toronto Canada, Please GOOGLE [1] Norman Roth, Economics
    [2] Technos, Norman Roth [3] Origins of Markets, Norman Roth [4] Telos & Technos, Roth

    • Robert Locke
      September 15, 2013 at 11:17 pm

      See Thread # 20. So Norman, your giving us more McCarthyism.

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