Categories
Analysis Democracy: Rule of Law & Elections Economic Justice Immigration Organizing Social Justice

Watch: May Day Forum with Gerry Hudson

On May Day 2022, Voices for New Democracy hosted SEIU Secretary-Treasurer Gerry Hudson for a discussion on the state of the American labor movement. Throughout the conversation, Gerry discussed his history at 1199SEIU, outlining how the union’s participation in struggles for racial justice and immigrant justice mobilized membership and helped secure important victories; how 1199’s emphasis on rank-and-file organizing and leadership was key to their strength; and what lessons these experiences hold for today’s wave of union organizing across gig workers, Amazon workers, delivery drivers, Starbucks workers, and more. Gerry also reflected on SEIU’s political mobilization around the 2020 elections — playing an important role in Biden’s victory — and the challenges and opportunities that lie ahead in 2022 and 2024.

Watch the full forum below.

Categories
Analysis Economic Justice Organizing

Collective Bargaining and the Future of U.S. Labor

| Kent Wong |

This was a paper presented by Kent Wong to an international conference hosted by Ton Duc Thang University in Ho Chi Ming City, Vietnam in April, 2022. Ton Duc Thang is the Trade Union University of Vietnam and is affiliated with the Vietnam General Confederation of Labor.

As the director of the UCLA Labor Center, I have taught labor studies, labor law and collective bargaining for many years.  Collective bargaining is a cornerstone of U.S. labor relations, and yet it has been under attack in recent decades.  This is harmful not only to U.S. unions and workers, but represents an increasing threat to U.S. democracy.  

Collective Bargaining in the U.S.  

For more than 50 years, unionization and collective bargaining have been in decline in the United States.  The right to collective bargaining was won in the 1930’s, in the midst of the Great Depression and as a result of unprecedented organizing campaigns throughout the country including a General Strike in 1934.  The 1930’s saw the birth of contemporary U.S. labor laws, and the establishment of collective bargaining as the foundation of U.S. labor relations.

Throughout In the 1950’s, fully one third of workers in the U.S. were members of unions and covered by collective bargaining agreements.  This massive union expansion resulted in historic improvements in the wages and working conditions of U.S. workers.  U.S. workers were able to improve job quality, raise wages to support their families, and the growing strength of unions resulted in significant government policy victories including social security, employer provided health care coverage, occupational safety and health standards, paid sick time, paid vacation time, and pensions.   

However, in the 1970’s and 1980’s, the U.S. witnessed a decline in unionization that has continued to this day.  The causes of union decline have included globalization, a dramatic change from a manufacturing economy to a service economy, and policies of deindustrialization that resulted in capital flight and plant shutdowns throughout the country.  Union decline was also accelerated by anti-union corporate policies and their support of anti-union labor laws that undermined collective bargaining rights.  Today, only 10% of U.S. workers are union members, and only 6% of private sector workers are in unions.

The decline in unionization and collective bargaining has led to stagnation and decline in the wages and working conditions for U.S. workers.  Previously high wage union jobs have been replaced by low wage non-union jobs.  The two largest corporations in the U.S., WalMart and Amazon, are both fiercely anti-union, and have invested millions of dollars to oppose their workers from forming and joining unions.

The decline in collective bargaining has also weakened worker political power.  Government policies that were established decades ago to support workers have steadily been eroded.  Also, weakened unions have also allowed corporations and the right-wing to exert greater political influence to support reactionary, anti-union politicians and laws. 

The Attacks on Collective Bargaining and the Election of Donald Trump

In 2016, Hillary Clinton won the popular vote for President, and received almost three million more votes than Donald Trump.  However, due to the undemocratic U.S. Electoral College system, Donald Trump was elected President instead.  

Three critical states that had supported Barack Obama in 2012, Michigan, Pennsylvania, and Wisconsin, flipped from Democrat to Republican in 2016.  In each of these three states, Republican Governors and members of the State Legislatures had attacked collective bargaining rights and unions. 

In Michigan, the state where the United Autoworkers of America was founded, the state legislature passed anti-union “Right to Work” laws in 2013, dramatically undermining worker rights.  In Pennsylvania, conservative anti-union forces in the State Legislature have fought to restrict collective bargaining rights, especially for public sector workers.  And in Wisconsin, fifty years of collective bargaining rights for public sector workers was eliminated by a right-wing governor in 2011.  

The attack on unions in these three states had a direct impact on the 2016 election.  Trump defeated Clinton in Michigan, Pennsylvania and Wisconsin by a margin of only 70,000 votes, which allowed him to prevail in the national electoral college vote and become president.  In 2020, after unions intensified organizing in these same three states, all three flipped back to support the democratic presidential candidate, Joe Biden.   

Joe Biden’s presidential victory was commanding, both in the popular vote and in the electoral vote.  In the midst of the pandemic, the 2020 presidential election was held and Joseph Biden and Kamala Harris were elected President and Vice President.  Joseph Biden had previously served as Vice President under President Barack Obama, and Kamala Harris is the first woman and first person of color (both African American and Asian American) to hold the position of Vice President in U.S. history.  

However, to this day, Donald Trump has promoted the “Big Lie” that the 2020 election was illegitimate and that he won the election.  On January 6, 2020, Donald Trump encouraged his supporters to engage in an armed insurrection of the U.S. Capitol to overturn the election results.  The Trump lead white supremacist and right-wing movement presents a major threat to U.S. democracy, and Republican leaders in Congress continue to spread lies and misinformation that Donald Trump won the 2020 election. 

Growing Economic Inequality

During the past two years of the global pandemic, the contradictions and crisis of U.S. capitalism have been exposed.  More than 900,000 people in the U.S. have died as a result of Covid-19.  Former President Donald Trump lied to the American people and deliberately down-played the seriousness of Covid-19.  He attacked public health leaders and safety guidelines, and refused to wear masks and abide by social distancing.  Many Republican leaders continue to spread lives about Covid-19, and have contributed to the public health crisis and increased death toll. 

Although the U.S. has the most expansive and expensive health care system in the world, millions of people do not have access to health care.  Covid-19 has disproportionately claimed the lives of the poor, people of color, and immigrants.  The wealthy have access to the best health care system in the world, while many workers and the poor are dying because they lack of health care access.  

The U.S. is a deeply polarized country, both politically and economically.  The U.S. stock market has been setting new records, and wealthy corporations and billionaires continue to make massive profits during the pandemic.  Housing prices and home rental costs are rising steadily, which also contributes to economic inequality.  The number of homeless people has also grown sharply as housing insecurity impacts more workers. 

A Growing Workers Movement 

The pandemic has also witnessed the rise of a new workers movement.  Public opinion polls reflect that sentiment supporting unions is at a 50-year high in the U.S.  More people realize that unions are necessary to improve the quality of life for workers.

There has been a new wave of strikes throughout the country, including in the manufacturing sector, and more workers have been engaged in union organizing campaigns in recent years than in recent decades.  Amazon workers, Starbucks workers, Fast Food workers, and “Ride Share” workers have been engaged in organizing campaigns in work places and industries that have never before been unionized.

Pro-union sentiment has been especially high among young workers and workers of color, who have been leading many of these organizing campaigns.  These campaigns bode well for the future of the labor movement, and also present opportunities to expand collective bargaining rights in the U.S.  

The Importance of Collective Bargaining Education

As the Director of the UCLA Labor Center, I teach Labor Studies to our students at the university.  Each year, we introduce collective bargaining education into the classroom, to provide our students with an appreciation of the role of unions, an understanding of the dynamics of collective bargaining, and the importance of a union contract in providing good wages, benefits, and working conditions, and a collective voice for workers.

One of the most popular learning activities within our curriculum is a collective bargaining simulation, where each student is assigned to participate on either a union or management bargaining team.  The students are given informational hand-outs based on real collective bargaining case studies, and then engage in a mock collective bargaining session.  They have the option of either signing a union contract, or engaging in a strike or lockout.  Inevitably, most of the student bargaining sessions result in a signed union contract, although in a few instances there are strikes or lock-outs.   This outcome mirrors what happens in the real world, where the vast majority of collective bargaining sessions result in a mutually agreeable settlement.  

The UCLA Labor Center in recent years has established a Labor Studies Major, the first in the history of our university and the first within the nine campus University of California system.  We are also in the process of establishing a Master’s Degree in Labor Studies.  

The Labor Studies program provides a foundation for students to learn about unions, collective bargaining, labor history, labor law, and contemporary issues that impact workers and the work place.  Our program also provides opportunities for students to engage in research on labor issues, and to take part in internship programs that directly place them with unions and worker organizations.  Through these placements, students learn about the world of work first hand, and many find jobs and careers through developing their skills and relationships.

The UCLA Labor Center has also established innovative programs to conduct research on young workers, and to encourage young workers to learn about their rights on the job, and to form and join unions.  Labor education plays an important role in preparing the workers of tomorrow to join the labor movement and advocate for the interests of the working class.  

The UCLA Labor Center is committed to continue our partnership with Ton Duc Thang University.  We applaud the efforts of Ton Duc Thang to promote worker rights and global labor solidarity, and we share our mutual commitment to advance peace and prosperity for workers in Vietnam, the United States, and throughout the world. 

Categories
Analysis Economic Justice Organizing Social Justice

Watch: Forum on Black Liberation with Robin D. G. Kelley

“There has never been a moment in the last 150 years on the planet that we did not have to rebuild the Left.”

Robin D. G. Kelley

On Sunday, January 23rd, UCLA Professor and acclaimed historian Robin D. G. Kelley joined Voices for New Democracy for our latest monthly political forum discussing the past and future of Black liberation.

The wide-ranging conversation touched on important reflections on where the Left stands today, and explores some of the lessons from historical experiences in the struggle for Black liberation from Jesse Jackson’s Rainbow Coalition to BLM, and the reactions and backlash these struggles have faced. Building on recent forums and essays on Voices for New Democracy exploring some of the recent challenges and defeats we’re facing, Kelley asserts that the present moment is still full of opportunity. But to seize the moment, Kelley challenges us to think deeply about how we can build a unified Left, inspired by new ideas, that operates with organized cooperation and accountability. And as capitalism undergoes new structural changes in the face of concurrent crises, the Left will have important opportunities to advance our movement in different places at different moments. Whatever dark moments lie ahead, Kelley reminds us to maintain our commitment to the struggle.

Watch the full forum below.

Categories
Analysis Commentary Economic Justice Organizing Social Justice

Robin D. G. Kelley Interview & Forum

As we enter the new year, Voices for New Democracy is proud to announce our next monthly political forum will take place on January 23rd at 4 p.m. PT / 7 p.m. ET featuring UCLA Professor Robin D. G. Kelley.

In anticipation of the upcoming forum, we are reprinting an interview with Kelley from March 2021 by the writer Vinson Cunningham, which delves into key themes of his work and analysis. In it, Kelley discusses Black Marxism and the legacy of Cedric Robinson, highlights the role of the Black radical tradition in the summer 2020 uprising, interrogates and clarifies our understanding of racial capitalism, and highlights the importance of solidarity in advancing movements for justice. Among other wide-ranging topics, Kelly also touches his experience with the Communist Workers Party and his personal history of activism.

The interview (below) was originally published in the L.A. Times. We look forward to joining you later this month in our forum with Professor Kelley.

The future of L.A. is here. Robin D.G. Kelley’s radical imagination shows us the way.

| By Vinson Cunningham |

Robin D.G. Kelley is, for my money, the great historian of our era. He has written groundbreaking works about, among other things, Alabama’s Communist Party during the Great Depression; the life of Thelonious Monk; and the visions of activists and thinkers from the African diaspora. On top of his work at UCLA — where he is a distinguished professor and holds the Gary B. Nash Endowed Chair in U.S. history — he issues a steady stream of limpid, persuasive, almost casually brilliant essays on politics, current affairs and cultural matters for Boston Review and other outlets. He keeps an eye on grassroots movements and on how maintaining a fertile, humane vision for the future creates new opportunities for radical action in the present.

In the year 2000, Kelley led the charge to reissue “Black Marxism,” a great, globe-spanning work of political history by one of his mentors, Cedric Robinson — successfully rescuing the book, then out of print, from near-obscurity. Since then, he has quite accidentally become the foremost authority on the late Robinson’s work and ideas. (“I did not want that,” he told me, sounding good-naturedly harried by the distinction.) Last year, after the deaths of George Floyd and Breonna Taylor, among others, at the hand of police officers, and the global protest uprising that followed, UNC Press decided to reissue “Black Marxism,” which — as Kelley had predicted two decades earlier — had become more relevant than ever.

Kelley wrote a rousing foreword for the new edition of “Black Marxism” and is working on a book called “Black Bodies Swinging: An American Postmortem,” about how the protests of 2020 are connected to a long history of resistance.

———

Vinson Cunningham: I’ve been thinking about you and Cedric Robinson. I love how, in your foreword to “Black Marxism,” this new foreword, you always call him by his first name. It’s like: Marx and Engels and Cedric. That’s moving to me. It reminds me of one of my favorite essays, “Looking for Zora,” where Alice Walker goes to find Zora Neale Hurston’s grave. There’s a kind of artistic and intellectual lineage that’s not only about reading — there’s an affective aspect, something to do with feeling and familiarity. What is it about Cedric for you?

Robin D.G. Kelley: I was a student of Cedric’s. He was on my dissertation committee. I was in awe of him. Reading “Black Marxism” that first time in 1984, it just blew my mind and changed my whole orientation. Everything I do as a scholar can be traced back to that book — everything.

He passed in 2016, and with his passing, that’s the first time I ever really dug into his biography. His widow, Elizabeth Robinson, knew that I was close to Cedric intellectually and in other ways. She said, “Look, no one’s writing an obit. We can’t get an obit anywhere.” And I said, “I’ll write one.” I interviewed her, talked to her, and learned all these details that I was kicking myself. I was like, “If I had asked the question … .” I didn’t ask the question because I’m a very shy person. I know that I’m in the public and stuff, but it’s a different thing.

VC: Why did you think the time was right for this third edition?

RDGK: I confess, I’m not the one who came up with the idea of putting it out again. It was UNC Press: Brandon Proia. In the midst of the protests — you had 26 million people on the street. He emailed me and Elizabeth and said, “Look, now’s the time to put out a third edition.” With the new foreword I wanted, one, to really tell Cedric’s story, to situate his intellectual biography to understand where this book came from. Two, to situate the book in relationship to the rebellion of 2020 and talk about it as a manifestation of a black radical tradition. So much of the conversation in political circles, coming out of or preceding the 2020 rebellion, all use terms like “racial capitalism” more than anything else. So I wanted to try to understand this movement, while also trying to clarify what Cedric meant by (a) Black radical tradition and (b) racial capitalism.

VC: What are the difficulties in defining what racial capitalism means?

RDGK: The slightly more traditional Marxist scholars reject the idea that capitalism can actually be racial. They say, “Race is real. It’s a phenomenon. But it’s not really the fundamental one. It sort of gets in the way of what’s really the root of oppression: the reproduction of a capitalized class.” That’s class reduction. And then meanwhile, the so-called race reductionist position — you could call it Afro-pessimism lite — is that we’re just for Black people. They say, “The whole structure of Western civilization is based on anti-Blackness and anti-Blackness alone. And therefore, there can be no allyship, there can be no solidarity.” This kind of standoffishness, saying Black people need to just be for Black people, is not Cedric’s position at all.

The class reductionist versus race reductionist debate doesn’t really advance us. Cedric advances us by helping us understand how capitalism is based on racial regimes. So, for example, property may be capital, in the Marxist sense, but property values are dependent on things that are nonmaterial — that are ideological, or superstructural — like race. Capitalism is rooted in a civilization that is based on difference. This doesn’t at all mean that white people are the enemy, or that Black people are all victims, which I totally reject. It doesn’t mean that all white people benefit. It just simply means that capitalism is structured through difference.

I have made a point of the fact that Cedric was writing a critique of Marxism — but not a hostile critique. He wasn’t rejecting all of Marx and Engels’ ideas, but he felt like Marxism was a window to understanding forms of radicalism that neither Marx nor Engels, nor Lenin, and others, could really grasp. Ironically, some people have gone to a kind of extreme, saying, “There’s nothing in Marxism that’s useful. It’s just a white man making up some stuff, and Cedric is right.” And I’m like, “No.” I find myself actually becoming more of a Marxist in my defense of Cedric.

VC: What do you view as your role as an intellectual? As you write “Black Bodies Swinging,” how do you make sure that what you’re describing is not only scrupulously true but also feeds into a politics that helps us both survive in the present and get somewhere more free in the future?

RDGK: That’s a great question. I feel like it’s not mandatory but it’s really important for me to be engaged in these movements, to make no pretense about some kind of dispassionate, detached objectivity. I think that we need to practice something that’s even better than objectivity. And that is, as you know, critique. Critique, to me, is better than objectivity. Objectivity is a false stance. I’m not neutral. I’ve never been neutral. I write about struggles and social movements because I actually don’t think the world is right and something needs to change.

As a historian, as a writer, I’ve got to try to be as critical as possible. I’m always trying to be truthful. As I write and produce this work, I learn things that we didn’t see before, but then, the work also reveals things that I failed to understand. And so to me, it’s always a process.

VC: Speaking of that kind of deep involvement, I would love to hear you talk about what California — and maybe Los Angeles, specifically — has meant for you in terms of your life but also in terms of your imagination of struggle.

RDGK: I came to California by way of Seattle in high school at the age of 15. It was in Pasadena. I was able to go to a state university where the tuition or the fees were $90 a semester. Cal State Long Beach. This was a time when we had a lot more Black students and brown students in college. I was involved with the Black student union. I had a part-time study group that was organized by the All-African People’s Revolutionary Party in Long Beach. That’s where I read Walter Rodney and Samir Amin and C.L.R. James — not so much in classrooms but in study groups.

A lot of the young people at the university and older people were working-class people — these were not the elites. In the ’80s we had the invasion of Grenada, we had the sanctuary movement, and the wars in Central America that were just driving Central Americans into Southern California; there was the anti-apartheid movement.

I ended up joining the Communist Workers Party at some point around 1983 or ‘84. I can’t remember when. [Jesse] Jackson’s 1984 campaign was really, really important. We had the Olympics come to Los Angeles in ’84. We organized a whole protest around the Olympics called Survival Fest. And we had a march down Wilshire Boulevard, MacArthur Park. There were like 10,000 people. Got no press, but 10,000 people marching down Wilshire Boulevard. Demanding what? Our demands were jobs, peace and freedom. It was a very exciting time.

VC: I’m glad you mentioned Jesse Jackson, because I have often lamented our resistance to his idea of a Rainbow Coalition. He was explicitly tying rural whites to Latino immigrants to Black working-class people, and putting forward the idea that we can only do this together. Solidarity was in the air.

RDGK: And, of course, where does Jesse Jackson get the idea of the Rainbow Coalition? It comes from Fred Hampton. He coined the term. The Black Panther Party, Illinois chapter, coined the term. And it’s through, specifically, a man named Jack O’Dell. I knew him. Jack was a former Black Communist, a close associate of Dr. King’s and then of Jesse’s, who bridged the generations and brought a left orientation to the civil rights movement. He was the one who introduced the Rainbow Coalition to Jackson. In our current moment, it’s hard to talk about things like a Rainbow Coalition politically. It goes against the white-ally idea, which I’m not really big into, where the ally is perceived to stand aside, standing there ready to be …

VC: … happy to help.

RDGK: Yeah, “happy to help.” The Rainbow Coalition’s more like, “We need to build a movement and we’re all in it.”

VC: And my freedom is a part of yours. I can’t get mine without you getting swept up too.

RDGK: Absolutely. The Rainbow Coalition notion really happened at the grass roots. It had less to do with Jackson and more to do with all the organizing on the ground. When Jackson ran for office, there was a vacuum because the Democratic Party establishment did not like him. The Black Democratic Party establishment did not like him. So that vacuum meant that all of these left-wing organizations basically swept in and became his advisors, Line of March, Communist Workers Party, the Communist Labor Party. I can name them because I was part of it. I was a member of the Communist Workers Party working on the Jackson campaign, all part of this underground of left-wing forces.

VC: You’ve said that in some ways the Black radical tradition comes together at “the crossroads where Black revolt and fascism meet.” What does fascism have to do with our moment, and what resources do we have to fight it?

RDGK: Yes.

VC: In order to fight it, you have to fight it everywhere it exists and be in solidarity with — show love for — everybody who lives under it.

RK: Internationalism is the Raid for the cockroach of fascism. Because fascism, it’s always about using nationalism, and the nation, as a bludgeon to generate support for death policies, on behalf of death governments. For violence and repression and exploitation, internationalism is the antidote, always.

Categories
Analysis Ecological Justice Economic Justice Environmental Justice Financial Justice Global Peace & Collaboration Organizing

Watch: Forum on the Climate Crisis

On Sunday, December 12th, Voices for New Democracy hosted our latest monthly political forum exploring the climate crisis and what it means for today’s left.

Moderated by our very own José Z. Calderón, the discussion was led by Voices for New Democracy friends Bob Eng and Harrison Carpenter-Neuhaus, starting with a presentation highlighting the scope of the climate crisis and the path toward a decarbonized world. The discussion touched on important and challenging issues raised by the specter of climate change: the disruption of extreme weather events, demobilization due to “climate grief,” a new era of geopolitics driven by demand for clean energy commodities like lithium, and the threat of exploitative business models driving the global energy transition. Conversation with the audience also raised important questions about how the left should orient itself politically amid these headwinds: whether we must embrace the movement for “degrowth,” prioritize indigenous liberation and anti-colonialism in our efforts (as advocated in The Red Deal), and how to engage with more mainstream labor-climate proposals like the Green New Deal.

Given the scope of the climate crisis, our presenters believe that climate politics represents the political terrain of the 21st century. But big questions remain about how the left can rise to the moment, and we need your analysis.

With that in mind, we encourage our readers to write to us to share their thoughts and analysis around these questions. If you’re interested in responding to any points raised by this discussion, please email voicesfornewdemocracy@gmail.com.

Watch the full conversation below.

Categories
Analysis Ecological Justice Economic Justice Environmental Justice Financial Justice

Capitalism, Ecology, and the Green New Deal

| Harrison Carpenter-Neuhaus |

The world’s climate is changing, and it’s surprising — and disappointing — how little our responses have changed since we first recognized the problem decades ago. Since the 1970s, the world has been well aware of climate impacts of burning fossil fuels and many have recognized how our political economy lies at the heart of the problem. Marxist thinkers in particular, like Paul Mattick, were quick to describe the irreconcilable contradiction between our extractive and growth-oriented economic systems and the carrying capacity of our natural ecosystems. But despite these prescient warnings, the world today is still clinging to the same economic systems and largely failing to resolve these tensions. In the face of the accelerating crisis, it’s worth reflecting on the clear trajectory that thinkers like Mattick identified, and what it means for our options in the present moment. 

In 1976, Mattick published his analysis of the problem in “Capitalism and Ecology,” just four years after scientist John Sawyer published the study Man-made Carbon Dioxide and the “Greenhouse” Effect in 1972. Sawyer’s study summarized the scientific consensus at the time around the Earth’s pressing climate concerns: the anthropogenic attribution of the carbon dioxide greenhouse gas, their widespread distribution and their exponential rise throughout the modern era. By the mid-70s, even the Club of Rome recognized the impending ecological crisis in The Limits to Growth. In short, everyone was beginning to recognize the issue: too many of us are using too many resources, too quickly, in too many places. 

The fundamental problem is that we have not been able to reconcile science with the social imperatives of our economic system. The reality is, our system cannot decouple economic growth from environmental impact.

As Mattick writes, Marx recognized that “the exhaustion of the earth’s wealth and relative overpopulation were the direct result of production for profit” (a point that has been explored in great detail by a new generation of eco-Marxists like John Bellamy Foster). And science bears this out. Our world has only become more productive, populated, and globalized since the Industrial Revolution, and this has correlated closely with rising levels of energy usage and greenhouse gas emissions every year. As our economic activity increases, we cannot avoid using more raw materials to keep the system moving and maintain profit margins.

Ultimately, it is capitalist social relations that drive this ecological crisis. “Social phenomena are ecological phenomena,” Mattick writes. To keep profit rates high (the motor driving the entire system), companies simply have no choice but to keep expanding and growing, and that always requires the use of raw materials — and as global capitalism expands (and demand grows as populations increase and more workers are brought out of the subsistence economy into the wage labor system), that rate of raw material consumption can only increase. 

But this does not mean that the solution is to roll back our productive forces and institute new limits on personal consumption. For millions of exploited workers, a vision of the future defined by less is a very hard sell. In fact, if we take this approach, we risk undermining our own efforts to build economic justice. The Yellow Vests movement in France was sparked by a new tax on gasoline, as were protests in Ecuador against the elimination of a fossil fuel subsidy. The logic behind the proposals used an ecological rationale: wealthy people use far more oil, so limiting their excesses is sensible and, at first glance, progressive. The problem comes from the ways that such approaches are regressive at the margins. While lower income people do use far less oil than the wealthy, they rely heavily on subsidies and cheap fuel simply to be able to go about their days. The problem is that these approaches impose ecological austerity whose burden is felt most strongly by the working class, and offer little benefit to them in return. 

Besides, the promise of communism was the progressive advance of productive forces to improve overall human well-being. Rather than advance a dialectic, rolling back production and consumption would only turn back the tide of history to earlier modes of production. Fundamentally, we cannot resolve this crisis simply by turning back the clock. 

We must remember that humanity does not live separately from the natural world (even though we tend to conceive of ourselves this way); we rely on it to reproduce our societies every day. So the way forward must be with a recognition that the two are inextricably linked. It is our social reality that drives our ecological condition, and trying to treat the ecological condition without addressing the roots of our social relations will only lead to these kinds of regressive solutions. 

As Mattick summarizes, “[T]he problem is not so much the miserliness of nature as a social class system of institutions and power relationships that stands in the way of increasing production and productivity.” Rather, “it is landed property, the tenant-farming system, usurious loan capital, the plantation economy, and the parasitical state bureaucracy that hinder any progressive development by maintaining the existing social structure.” Likewise, “the increasing discrepancy between industrial and agricultural production has less to do with population growth and decreasing fertility of the soil than with the one-sided over-emphasis on industrial expansion, or capital’s expansion, demanded by capitalist competition” at the expense of agricultural output (let alone any embrace of polyculture or regenerative agriculture). 

The task, then, is to overcome the key issue we identified before: the link between economic activity and environmental impact. But to do so, Mattick writes, we must treat social liberation as the prerequisite to ecological transformation:

“What is necessary, today and tomorrow, is to end the human misery due to the capitalist relations of production, as the starting-point for a rationally planned mode of society in accordance with natural conditions—one based not on further privations but on a higher standard of living for everyone, on which the diminution of population growth depends, and which would make possible the further development of society’s productive forces.”

In other words, development itself is not the problem, but rather the way that it has taken place under conditions of competitive struggle, where environmental costs are externalized without frameworks for accountability. And critically, this competitive struggle is not dictated by our actual access to raw materials, but rather by a capitalist mode of production that perpetuates artificial scarcity to maintain competitive growth rates. With that in mind, the way forward is to continue developing productive forces progressively (and in ways that actually offer quality of life improvements for workers), but to do so under a new framework that is rationally planned, actually serves human need, and meaningfully takes ecological limits into account. 

Fortunately, one policy proposal has begun to synthesize these insights and, despite some gray areas, has managed to get buy-in across the political spectrum: the Green New Deal (GND). The GND represents a revolutionary shift in how we conceive of environmental policy by tying it inextricably to labor and industrial policy. This comes with both the benefits and risks of being a placeholder for a holistic social transition (onto which many different actors can project distinct visions). But it still shifts consciousness of the issue, and must be developed, not abandoned. 

The GND recognizes that, given the existential threat climate change poses to human society, the federal government (in coordination down to the local level) must lead a deliberate and expansive national mobilization to restructure our physical realities, as well as social and economic systems, and build a new, sustainable way of life in the country. It overcomes the binary between environmentalism and class struggle by placing workers and marginalized communities at the center of this transition, promising that high-paying union jobs will enact the program and build our carbon-neutral systems, with an emphasis on serving frontline communities and undoing the damage that the capitalist mode of production has already inflicted on working people through environmental racism and pollution. Furthermore, the GND is distinct in its national approach to the issue, which actually recognizes the sheer scale of what will need to be done to meet our climate goals. 

Ultimately, we must also challenge the idea that all forms of growth are equal. Much (if not most) of our productive activity is wasteful, and we should cut back on resource-intensive activities (which largely don’t benefit the public, anyway) and instead organize our economies around lower-impact, more human-centered labor like care work. Mattick writes that much of our wasteful economic activity “could be transformed into productive labor—’productive’ not in the sense of profitable but in the sense of creative of use-value [emphasis mine] —while shortening labor time.” We would still have to work and promote development in our communities to deliver improved quality of life and overall social prosperity, but we can approach it in a rational way that operates within ecological boundaries. This also implies new social, political, and economic relations that can build a more egalitarian society. 

This represents a more radical vision of what the Green New Deal can offer by reconceptualizing the goals of our economic and social systems. To truly operate within planetary limits, it’s not possible for individual consumption to remain at current levels. But at the same time, we must be able to offer a better future for the masses if we have any political hope of advancing a sustainable system.

The notion of public luxury could be the key to resolving this tension. In some ways, it’s common sense: collective problems require collective solutions, and collective cooperation makes for a smaller impact for each individual (hence the old saying “many hands make for light work”). Our social relations fundamentally define how we use energy and resources, so to be as sustainable as possible it only makes sense that we must embrace collective and cooperative frameworks to maximize efficiencies. And if we do so appropriately, we can truly speak of luxuries for the public: well-connected rapid transit systems, higher-quality housing, more green spaces and public parks, more resources devoted to healthcare and other care work, more free time, shorter hours, well-funded public amenities, etc.  

Systems driven by social competition produce destructive cycles for the individuals within them, and will reproduce similar forms of destruction on an ecological level. It is only through cooperation, coordination, and a commitment to collective well-being that we can deliver a sustainable and flourishing future. Whatever it’s called, such a system would represent a historic and revolutionary departure from the capitalist mode of production, and would likely have to approximate a form of communism. If that is the case, then true communism may be our only hope for a sustainable future on Earth. 

Still, we can’t be utopian in our outlook; there are limits to what can be done, both politically and ecologically. Any transition from our system will require massive amounts of lithium and likely more resource-intensive development to build the infrastructure for a sustainable society; this is sure to unleash new struggles over control of resources and raw materials and could meet justifiable resistance from frontline communities. And there are sure to be significant challenges in shifting our mode of production: as we restructure our way of life, new fractures are certain to emerge and new struggles will have to arise over the form that this takes. It will be a difficult line to walk, but the left must develop a vision that advances economic and political justice as a prerequisite to ecological transformation, and sustainably develops clean productive forces that don’t rely on moonshot technologies like carbon removal. Now more than ever, we must challenge the underlying logic and the basis on which our system operates, and we must remain committed to this radical vision for a different society. 

Categories
Analysis Economic Justice Financial Justice Global Peace & Collaboration

Politics Should Frame the On-Going Discussion of MMT and the Dollar Regime

| Steve Clark and Tom Clark |

Tom Clark and Steve Clark (unrelated) were the initial proponents of October’s two-part, Voices for New Democracy forum on Modern Monetary Theory (MMT).

The recent discussions about MMT and the Dollar Regime showed clearly that (1) we are all deeply opposed to US imperialism and wish to break its stranglehold on the global economy; (2) we all agree that finance capital uses its present domination at the IMF to retain US dollar dominance in the world’s financial affairs and to impose sanctions on those that resist this domination; (3) we all favor deep cuts in US military spending, an end to the US-imposed sanctions regime and, alternatively, development of international collaboration (climate change, etc.) and peaceful conflict resolution; and (4) we all want higher taxes on billionaires and corporations to constrain their private hoarding and political influence.

We differ on a number of interconnected monetary issues including (1) the nature and cause of inflation and what recent price increases indicate about potential for runaway inflation; (2) how interest rates come to be what they are (how they are set), their impact on the economy, and whether falling rates are a problem; and (3) whether rising deficit spending relative to GDP is a barometer of a nation’s financial fragility.

In our minds, the matters of unity are crucial for working together and uniting with other segments of the progressive movement. In contrast, the issues in struggle are less crucial and can be worked on (and worked out) in the course of today’s practical fight for progressive political power.

One meaningful two-line struggle clearly came out in these discussions. After Steve offered the view that progressives gained a significant measure of dual power in the 2020 elections and the key political task, now, is expanding our base in 2022 and 2024, this participant said (we paraphrase) that a peaceful path to socialism is near-fantasy and the overthrow of corporate power by force is the only real path to socialism in this country. No one overtly agreed with him so, presumably, he is alone on this point. Apparently, we others share unity that, currently, progressives are in pursuit of a socialist USA via non-violent struggle and the election box.

Another important two-line struggle may exist but needs more clarification. While we — Tom and Steve, representing the MMT perspective — say Biden’s agenda is fully affordable and should be enacted forthwith, it’s not entirely clear (to us) whether Dennis Torigoe (who wrote — again, we paraphrase — swords must be beat into plowshares because we can’t do both) supports its passage, given Biden’s on-going failure to restrict military spending and his anti-China adventurism. In our view, progressives should continue criticism of Biden’s imperialist agenda while fully affirming his effort to put domestic spending on a new foundation.

Certainly, the results in 2022 will turn on the voters’ perception of the Biden Administration’s efforts to pass its domestic agenda, as well as its approach to certain international issues (like immigration and climate change).

Yet, the Biden agenda is being sabotaged by conservative (corporate) Democrats who reject it for corrupt (bought-off) reasons while offering the public rationale that it is too expensive and can’t be paid for. In the context of such obstruction, MMT stresses that Uncle Sam is the monopoly supplier of US dollars and can always create as many as are necessary to fund Congressionally-mandated objectives. A decision not to fully fund Build Back Better agenda is politically, not financially, motivated.

We appreciate the views that were shared in the forums. Our discussion about the nature of contemporary public finance (aka, modern money) must continue, and the on-going struggle for social justice and ecological salvation, worldwide, will provide plenty of context for resolution of our current differences.

Categories
Economic Justice Financial Justice

Watch 10/3 MMT Forum, Join 10/10 Follow-Up Discussion

Last Sunday, Voices for New Democracy hosted our latest monthly political forum discussing Modern Monetary Theory (MMT) and the insights it holds for today’s Left. The full forum is available to watch in two parts below.

We also invite you to join a follow-up discussion to carry the dialogue forward. Please join us on Sunday, October 10th at 7pm ET / 4pm PT. Use this link to join the conversation.

The follow-up discussion of MMT will be open for any points or comments that you have. For stimulation, below is a list of questions that the planners gathered after last Sunday’s session. Don’t see your question on this list? Add it here.

  1. Why does this discussion of finance and MMT matter to me? 
  2. How is positive, public investment in US funded or how could it be better funded?
  3. What is the federal deficit and the accumulation of deficits (national debt), and what are their relevance?
  4. What is the point of increasing taxes on the rich (and/or corporations)?
  5. How is the general level of prices in the US set? What is inflation?
  6. How are interest rates set and is there a seed/reap cycle?
  7. What is the effect of US currency going abroad?
  8. Why are taxes and government income the basis of bonds and Treasuries issued by the government?
  9. Why are some government’s interest rates negative?
  10. How does massive currency creation for imported goods create structural unemployment at home?

The discussion is set for 90 minutes. If you want to prepare and investigate further on your own, please see the resource list here.

Categories
Analysis Economic Justice Financial Justice Global Peace & Collaboration

THE US DOLLAR REGIME

A RESPONSE TO STEVE CLARK, TOM CLARK AND SIGNE WALLER FOXWORTH ON THE DOLLAR AS THE WORLD’S RESERVE CURRENCY

| Dennis Torigoe |

First of all, thank you Steve, Tom, Signe and others for responding to my recent article, The Dollar as the World’s Reserve Currency. This discussion will help activists grasp the issue’s importance as well as deepen our understanding of this issue.

Under US capitalism, policies pushed by MMT can help with partial solutions to some of the country’s problems. However, in practice, the continual debt-driven printing of money drives economic polarization and the country down the wrong path to the future. Under what we call the US dollar regime, the rich are getting much richer while structural unemployment, as shown in the labor participation rate and deindustrialization, is worsening.  While the prevailing narrative of unemployment is that the Chinese are taking our jobs away, this story is increasingly being contradicted by acknowledging that we can simply print money and get their manufacturing products. Why should we then bother to do the dirty work of investing and manufacturing at home in the first place? 

Under the Fed’s huge printing of money the assets of the rich, like stocks and desirable real estate, have been skyrocketing. Wages and salaries for most workers are stagnant. While it shields the middle class, who own their homes in the right places and stocks in retirement funds, from the ravages of inflation, the super-rich are getting richer and the poor are getting a lot poorer. The paradox is that economic polarization gets worse as more money is printed. Alongside that, the US has always used its ability to print money — a de facto use of what is described in MMT — to fund wars of aggression and expand its military dominance around the world.

Printing money to fund spending on infrastructure and human needs makes sense because they are a direct investment in our postindustrial future. Large budgetary spending on programs such as early childhood education, cleantech, and communications make sense because they will propel us into a highly productive, more equal and democratic postindustrial future. Federal support of research and development — whether through universities, national labs or private enterprises engaging in activities such as semiconductor chip development — is decades behind and should be vastly increased. Printing money for use in these endeavors enhances the sciences and productivity and will be paid back in time. Even when a direct payback is absent, such as for Covid vaccination and climate adaptation in developing economies (provided these are offered free of conditions and imperialist designs), these types of expenditures  are essential to further a just and fair society. 

We are not against the dollar as a reserve currency in principle if it was a result of superior US productivity and innovation or the use of deficit spending by the government to carry out crucial infrastructure, for human needs and in developing human capital that will propel us into a highly productive, more equal and democratic postindustrial future. What we are against is the dollar as a reserve currency used as a weapon of the US to rip off other countries and vastly overfund the US military to carry out wars of aggression and threaten other countries with economic sanctions. We are against the use of the US dollar regime as a means to push the US into gutting its real industries, creating greater structural unemployment and extreme polarization in society. 

Turn Swords into Plowshares

Military spending and adventures that serve and enrich a narrow part of US society and special interest groups, to further empower the US military industrial and intelligence complex, are the opposite of the positive expenditures enabled by printing money. They take away useful, value-added productivity and turn it into death, destruction, waste and decay.

Thus, as part of a progressive program, we call for swords to be beaten into plowshares.

All of us agree that spending money on wars of aggression and huge military budgets are wrong.  We also agree that spending on domestic programs to increase productive activities that increase social wealth and equality are positives. 

Here is where we disagree. We cannot do both: there has to be a choice between plowshares and swords. Swords have to be turned into plowshares. That’s an essential programmatic element for any progressive agenda.  As Signe has said, there is a challenge to our view of economics and ethics.

By saying that we can do both, we are following the narrative of neoliberal US imperialism, which indeed, always attempts to do both guns and butter, of war, with reform and repression. But their neoliberal narrative does not acknowledge that spending at least 750 billion dollars every year on war and the military, with its hundreds of bases in foreign countries, is the amount not spent creating the conditions for postindustrial development. 

Even from a perspective of national self- defense, should such an unlikely eventuality become a necessity, a vast and rigorous R&D culture and network with the aim to better humankind will form a strong scientific and technological basis for a new and innovative national defense. 

Moreover, the cost of sustaining the current vast war machine is not just reflected in the annual Federal budget. It is reflected in the oppression of people in other countries who are victims of that war machine and US imperialism and the lost opportunities to implement real positive change in the conditions of the American people and the world.   

The Nature of Fiat Currency

We would like to address Tom’s point on fiat currency. All currency serves two basic purposes: first as a unit of account and as a store of value within a legal jurisdiction (normally within a country). Secondly,  it is a medium of exchange. Gold and silver have often been used historically for these purposes. However due to the expansion of human production and civilization (roads, cities, productive tools, cultural products and services) both in scale and quality, there is no longer an adequate amount of these precious metals to perform these two functions. 

Store of Value

However, to understand the US dollar regime, we must study a national currency used in more than one jurisdiction, that is, internationally. The rise of mercantile capitalism, colonialism and imperialism meant that a dominant currency was used in multiple jurisdictions. So a fiat currency of a particular nation, say in the case of  the British Pound, particularly one that’s powerful militarily and, like the Bank of England, has a long tradition of honoring its currency and establishing its global value. It built trust in maintaining its currency’s value or for goods and services. The replacement of Great Britain by the US as the premier international power, allowed the US dollar to have a greater value as a fiat currency with global dominance.

Medium of Exchange

The other principal reason for the dominance of a currency is its value for the exchange of goods. The US dollar through its redeemability in gold and silver and even before OPEC became the ONLY currency permitted in buying oil. Since the value of the global oil trade at oil’s high points could constitute up to 60-70% of the total value of global trade, the US dollar became more valuable and desirable as a result of this linkage,( which by the way seems voluntary but is not. It’s decidedly by force or the threat of force). Almost all globally-traded commodities are priced in US dollars, including energy, precious metals, base metals, and agricultural commodities. 

The US dollar is the dominant global currency. As such, it is used as a reserve currency by other countries. Today the US dollar is about 50-69% of all currencies kept by other countries for trading and other reserve purposes, though this has declined since the 1990s, before the US invasion of Iraq. To show the relative strength of the US dollar, only 2% of the world’s reserve currency is in China’s renminbi, even though it is a dominant trading nation. The Euro is in the ballpark with 20-30% while the Japanese Yen is about 10%.The US dollar is dominant not just in trade. It is also used as the basis for other pegged currencies such as the Hong Kong dollar and other currencies around the world including China which has printed its RMB from 1980 to the present, but particularly in the early years, based on the amount of US dollar they owned.

Why Has US Inflation Been So Low Since the 1990s?

The US became a world reserve currency and relatively free from inflation, even though a  much larger amount is printed beyond its domestic economic needs, because a large amount of printed currency gets absorbed by other countries, free from US domestic circulation, which would be highly inflationary. MMT and some mainstream economists contend that we can print as much as we need since there is no inflation. For example, they set up a 2% inflation goal (which justifies printing 2% more US dollars as a neutral, non-inflationary act). Since this 2% US dollar inflation was never reached in recent years, they say that it shows that it’s okay to print even more. 

What they didn’t say is that this is only a temporary phenomenon. Many formerly colonial and developing countries have embarked on economic development and created a lot of savings in the last two or three decades.  Their savings were saved in US dollars due to the weakness of their own currencies.  Absorption of this large pool of global savings enabled the US dollar to be printed without inflation. 

But will this continue indefinitely? We don’t think so. There are no free lunches in the world. These developing world savings are finite and have been exhausted. There is no more coming. Furthermore, will manufacturing countries continue to accept the US dollar as good IOUs as the Federal Reserve engages in quantitative easing, again and again into infinity? 

The recent commodity inflation (PPI) index has reached 10% and the consumer price (CPI) index over 5% indicating a pivotal change in inflation. Many mainstream leaders in finance such as Jamie Dimon and Larry Summers challenge the Federal Reserve’s view that inflation is only temporary. They both said that we will be surprised by the persistence of this inflation.

The Nature of the Federal Reserve’s Interest Rate Cycles

As Prof. Salas stated in his recent immigration forum, the Mexico border issue is not just a Mexico-US problem. It’s a North-South or developing world-US problem as a result of the US neoliberal imperialist system. US neoliberal imperialism is an economic-industrial-military political order which reaps world wide profit from the massive expansion of low-interest debt. As the US raises interest rates in due time, it bankrupts those that borrowed massively for economic development. This interest rate cycle, often depicted as a boom and bust cycle, or a Federal Reserve interest rate cycle are global and omnipotent. It sweeps the world first with hope and then certain despair. The finest assets such as Korea’s Samsung were once almost taken over (which would be like taking over a country without firing a shot) by the same group of hedge funds such as Elliot Management, the same group that attacked the Thai Baht, the Malaysian and HK dollars in the Asian Financial Crisis. The force of US-led global capital pushed Latin American countries and Russia  into bankruptcies or debt traps like the Brady Bonds. This spreading of the fishing net and reaping by pulling it in is predictable in almost 10-12 year cycles. 

The Federal Reserve’s Interest Rate Cycle is the US Dollar Regime

The key point is that the Federal Reserve’s MMT-like currency cycle is the US dollar regime. It doesn’t separate military spending from lending to poorer nations. If the set up does not guarantee “reaping,” that is, the ability to enforce measures on those who default on loans or the  military capacity to enforce isolation of countries like Iran or Venezuela when they get out of line (which is the post World War II practice) they won’t lend their money until the country targeted capitulates or there is regime change. In the first place, the US dollar regime is a regime — an established system of monetary, political, military and organizational orders that doesn’t separate where the money goes. It prints because it’s set up. It is set up to reap. 

When we say Keynesian spending on human capital and needs is good, we are not saying that as a part of that system. We are against the US dollar regime as a system. We are just saying there is nothing wrong to borrow through legitimate commercial channels or even by government spending but without military, SWIFT and hedge fund enforcement — the way it is done today.

The Counter-Cyclical Nature of Interest Rate Cycles of the Former Victims of the US Dollar Regime 

The US Fed has lowered the interest rate to almost zero as Covid-19 hits. Now they are tapering and ready to raise the rate to reap. However, this time things may be different. Many countries learned this game and have raised their rate before the US raises its rate. They do so to be countercyclical to preempt US reaping by minimizing potential damage, by trying to get out of or lowering debt before the nets are pulled in. Countries from North to South, Turkey to Korea, China to Vietnam are all trying to raise interest rates and lighten their debt owed before it’s too late. This actually has forced Federal Reserve Chairman Powell to taper ahead of schedule! This is another reason that this round of US monetization of debt and QEs may not hurt others as much it hurts itself.

After the wakeup call from China reversing its buying of US Treasuries, this round of the interest rate cycle may be a reset for the US. The amount of US government debt of $29 trillion along with $5.6 trillion of Federal Reserve debt on its balance sheet is scaring the rest of the world and they are buying fewer US Treasuries fearing inflation. This is part of the counter-cyclical interest rate game to minimize their losses.

This makes the latest round of Fed Chairman Powell’s moves questionable. Inflation is widening from commodities to everyday consumer products, a rare global occurrence that may foreshadow the beginning of the end of the US dollar regime. Stanley Druckenmiller has stated that the US dollar regime could end in 15 years if we keep printing money like this. And, he says, that could be the end of the American way of life as we know it.

Massive Deficits a Burden? 

Tom states: “As Godley showed, this accounting is a fact, not a theory, and decisively exposes the myth that the national debt is somehow a burden to our descendants, any more than the massive deficits from WWII were a burden to us.”              

While it is not necessarily true that national debt is a burden, there are limits to a sovereign currency. One is that the fiat money supply (printing money)  must not continually vastly outstrip the amount of goods produced, services available or savings or the currency will devalue. This devaluation most often will show itself as inflation, where prices paid in that currency rise on goods and services, which will lower people’s buying power and if it grows higher and uncontrolled will devastate the economy. This happened, for instance, in the 1970s in the US during and after the Vietnam War and in Latin America during the 1980s and early 90s and most infamously in Weimar Germany in the 1920s. In fact, Modern Monetary Theory recognizes that the limit of currency creation by a sovereign country is the ability to keep inflation at a tolerable level. Thus, sovereign currency debt creation is in fact not unlimited, but constrained by the real economic conditions in which it functions.

The other limit is that the government has to service debt created by deficit financing, for instance the servicing of bond interest. As the US government continues to deficit finance its budgets, it has to be able to pay bondholders the promised interest on the bonds. Right now, the US government allocates about 7.9% of its budget to interest payments ($325 billion) and the 2021 Federal Budget Proposal projects this by 2030 to become 10% of the budget, or $665 billion. The Congressional Budget Office projects that federal debt payments could reach 27% of GDP (GDP, not the Federal Budget !) by 2050 from around 8% in 2021. No amount of raising taxes could save the day. Moreover, any problem that arises from this debt servicing, such as the Tea Party Republicans threatening to default on US interest payments in 2011 and 2013, or like the Republicans in the Senate are doing today, will cause US treasuries interest rates to rise because of perceived risk, slows economic growth and weakens the dollar’s value, increasing import costs.

This growing federal debt service eating up more of the federal budget is also both a lost opportunity to fully fund more productive postindustrial programs and an increase to the inflationary threat. As more dollars are printed to cover this debt service, more dollars are released into the economy, causing inflationary pressure. It can also cause asset bubbles as investors chase higher returns  than near 0% interest Treasuries,  bubbles which burst and cripple the economy as happened in the 1970s, the dotcom stock market bust in the 1990s and the Great Recession in 2009-2014. Today, leading investors like Stanley Druckenmiller (who along with George Soros broke the Bank of England by shorting the English pound in support of the US dollar as the rising reserve currency) see that as a real risk in the next year or two. As stated before, he also predicted that the US dollar reserve regime may end in 15 years, fundamentally changing the American way of life as we know it.

On the question of the US’s massive deficits after WWII, I think we have to look at the global economic picture after the war.  While the US was not invaded or devastated, the countries of Europe and Asia were. The fact is that the US won the war. The statement that the US didn’t feel the effects of its debt fails to take into account the widespread economic destruction in China, SE Asia, the Soviet Union and Europe. The outcome was that America felt it in lives lost in war but in fact profited economically. By taking the mantle of global superpower and imposing the post war international order on the non-socialist world, through means of the Marshall Plan, the reconstruction of Occupied Japan and the crushing of Communist-led rebellions in Greece, the Philippines, Vietnam and Malaya, the US enriched itself by reconstruction contracts, the control of third world commodities, the domination of global trade and commerce producing major profits for its capitalist class. With the Bretton Woods dollar regime, the US lorded over the rest of the world economically and militarily.

In fact, North America enjoyed the longest rise in the standard of living in history during the post WWII period, until we hit Vietnam, Iraq and the Middle East. The Vietnam War ended in 1975 with 55,000 American lives lost but millions of lives lost in SE Asia. The war cost a little less than $1 trillion then. But combined with the rebellion pacification money of the Great Society and Urban Renewal (the last big printing of money by the US government) it was less than 20% of what we spent in wars in the Middle East and Afghanistan. Even then the Volcker recession drove the US economy way down in the 1980s (see The Myth of American Deindustrialization) until we revived it through the digital revolution that went from the mid 1980s until it went bust in the stock market’s internet debacle in 2000.

Is US Dollar Hegemony a Product of, or Integral to US Imperialism?

Tom states that the “dollar’s status as reserve currency is a result, not a cause, of US imperialism.” That is untrue.  The key fact is that US dollar hegemony is an integral part of US imperialism, and is part and parcel of US domination of other countries. Iraq was invaded and Saddam Hussein was ousted mainly because of his attempt to decouple Iraqi oil from petrodollars (oil could only be bought and sold by using US dollars). This agreement  was imposed by the US and OPEC. It was not only due to his invasion of Kuwait, as the US claimed.

The forging of the petrodollar and other US dollar-denominated commodities took arm-twisting, and were a huge part of what formed the post Vietnam War US-led world order in the first place. The agreement to back Saudi Arabia with US weapons and the stationing of troops there was in exchange for the Saudis and OPEC’s willingness to couple oil transactions with the US dollar to the exclusion of all other currencies. 

The Brady Bond Debt Trap

Another example is the imposing of the Brady Bond solution to the massive debt crisis in Latin America of the 1970s and 1980s that became shackles on many Latin American countries. The Latin American debt crisis was in large part due to the large loans to third world countries by US and European banks when interest rates were low, and this became a crisis caused by the increased debt service on loans because of  the huge increase in oil prices in the 1970s and 1980s. Because all oil had to be paid for in dollars, those countries had to further borrow huge amounts of US dollars from US and European banks (who were getting petrodollars invested from OPEC) to pay for imported oil. Latin American countries, beginning with Mexico in 1982 started to default on US dollar loans.  The results were catastrophic. According to Wikipedia, “A massive process of capital outflow, particularly to the United States, served to depreciate the exchange rates, thereby raising the real interest rate. Real GDP growth rate for the region was only 2.3 percent between 1980 and 1985, but in per capita terms Latin America experienced negative growth of almost 9 percent. Between 1982 and 1985, Latin America paid back US$108 billion.[4]

The Brady Bonds were a way to restructure the Latin American loans to make it easier for them to be repaid, but also to recover as much as possible for US and European banks and investors, rather than lose all in defaults.  Even then, defaults occurred in Brady Bonds. Ecuador, for instance, defaulted on interest payments and faced immediate repayment demands. It ended up cut off from the world financial markets and suffered through years of deprivation, social and political unrest.

The US Dollar Regime is the Most Effective Part of US Imperialism

The use of sanctions against Cuba, Venezuela, Russia and Iran, were direct acts of imperialism through the control of the dollar regime. The US SWIFT sanctions became in fact far more effective than the US military, as US military ventures often stalled and became ineffective, costly and unpopular in the US. There are no protests against US economic sanctions since there are no American soldiers brought home in body-bags by such acts.

In fact, today US dollar hegemony is the most effective part of US imperialism. It allows the US to conquer and dominate countries without firing a shot. The US dollar regime is the highest development of Western imperialism, and represents the furthest development of Lenin’s thesis of imperialism and the export of capital.

Weakening of the SWIFT system Weakens the US Dollar Regime

The excessive use of economic sanctions by the US against Iran, Russia, Cuba, Venezuela and many others and even European countries that use the SWIFT currency settlement information system forced many countries into developing alternative currency systems such as the Chinese Union Pay or the European Interdex systems. Some stopped using the US dollar as a reserve currency, period — like Russia. Furthermore China has signed a 25- year agreement with Iran in trade and economic cooperation to bypass the US dollar based SWIFT system.  

The development of sovereign digital currencies that don’t require SWIFT or any settlement systems at all also weaken the US dollar as the required reserve currency. MMT accepts the logic of the US dollar as a reserve currency. But this logic is failing.

Conclusion

The money printing policies of the US dollar regime is an integral part of modern US imperialism. On the domestic front, it can partially finance needed postindustrial development and necessary social needs, but as practiced in the US over the last decades, overall it has caused deindustrialization and devastating economic polarization.  

Internationally, the policies call for indiscriminate printing of money and lending it out at low interest rates around the globe as the beginning of the “seeding” cycle. For the US to reap the maximum profits from the world, they must inject or “seed” the largest amount of capital to the most vulnerable or greedy developing countries, who most need economic development. This first cycle is justified by MMT.  Then interest rates are gradually raised and liquidity is withdrawn around the world. This reaping process leads to destruction of the seeded and a profit festival for the global banks and hedge funds. This repeated seeding and reaping process, along with economic sanctions, the use of military force and the control through the SWIFT system is the reign of neoliberal imperialism.  

In order for the US dollar regime to survive it must keep on reaping profits either through outright military victories or continuous reaping from other countries.  The actual human toll of the US dollar regime’s repeated seedings and reapings around the world can be seen in deforestation, waves of refugees, overcrowding of urban centers and the gutting of American industries and urban decay.  We now have the unprecedented divergence of extreme wealth and hopeless poverty driven by extreme financial crises like the Asian Financial Crisis in the 1990s and the Great Recession, sparked by the Lehman Brothers collapse in 2008.  

In response, we must work to end this destructive, imperialist US dollar regime. We must turn swords into plowshares, resist US imperialist wars and economic aggression while fighting for the desperate need of the American people to build a highly productive, more equal and just postindustrial future for the nation and the world.   

Categories
Economic Justice Financial Justice Uncategorized

MMT Forum: Background Reading

In advance of our upcoming forum on Modern Monetary Theory (MMT) this Sunday, October 3rd, our panelists have assembled a helpful list of background materials to ground your understanding of MMT before our discussion. While Voices for New Democracy has published a number of pieces relating to MMT (here, here, here, and here), these additional resources offer further insight and breadth.

One week after our MMT forum, we will also host a follow-up discussion on Sunday, October 10th at 7pm ET / 4pm PT. Use this link to join the conversation.

Learning styles are different.  

MMT has resources for any style.

Videos

  1. Stephanie Kelton’s TED Talk – (14 minutes – new as of Sept. ‘21, includes her recommended resources)
  2. The Basics of Modern Money (6:30 minutes)
  3. Demystifying Modern Monetary Theory with Bill Mitchell (22 minutes)
  4. Kelton on NPR’s Marketplace – (2:30 minutes)

Articles

  1. Learn to Love Trillion-Dollar Deficits, Stephanie Kelton, New York Times
  2. MMT Basics, Real Progressives Collection

Podcasts

  1. The MMT Podcast with Patricia Pino and Christian Reilly
  2. Macro N Cheese with Steve Grumbine (Real Progressives)

Websites

  1. Modern Money Network
  2. Public Banking Institute
  3. Wall St. On Parade
  4. Democracy Collaborative

Books

  1. The Deficit Myth by Stephanie Kelton
  2. The Case for a Job Guarantee by Pavlina Tcherneva
  3. Macroeconomics by William Mitchell, Randall Wray, Martin Watt
  4. Debt: The First 5,000 Years by David Graeber