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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. 

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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.

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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.

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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. 

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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.

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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.

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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
Analysis Economic Justice Financial Justice

Post-Industrial Systemic Transformative Thinking in the Contemporary Period

| José Z. Calderón |

Hidden too often in the mainstream’s version of history in this country are the many collective efforts that have created economic and political models of systemic structural change — models nationally and globally which have sought to create structural changes in Capitalism.  

We have the commonality that there is a need to advance a dialogue on the contradictions inherent in the system of capitalism, deepen research on the new local and global economic models that are emerging, and promote the growth of a movement based on the creation of transformative structural models of equity.   

With the inability of traditional politics and politicians internationally not being able to come up with viable solutions to a growing economic crisis, there is a growing movement to advance theories and practices for a new economy.  

This movement is one that is based on rethinking the nature of ownership and rethinking the definition of “growth” as a basis for gauging whether there is progress.  This is a movement advancing a transformation of the economy so that the public, rather than a small elite, little by little come to control the productive assets in the society.  

At the base of this rethinking is the turning around of a system that survives on the existence of an unequal stratification system and the divisions it creates on the basis of wages, wealth, and opportunity.  

An emphasis on the quantity of profit over quality of life has led to the rise of a right-wing movement to make sure that our potential power is scattered and decapitated through: deregulating and allowing corporations to spew chemicals in the air that result in more of us dying (particularly in people of color and low-income communities); through the cutting of our cutting health care; through incarcerating us (we have more African Americans in jail now than we had in slavery); through keeping us from voting by gutting the voting rights act and unjust gerrymandering; and through increased enforcement, deportation, and limits on asylum of our immigrant young people, families, and refugees. This movement, particularly evident in the policies of the past Trump administration, continues to rear its head by waging a war against our communities (and particularly those who have been in the forefront of any gains made in civil, human, and environmental rights in the last decades).  

We have the Alt-Right, the Bannons, the Rockford Institute, the neo-conservative movements in this country who promote white supremacist, racial-nationalist and neo-fascist ideologies, who push a deregulated free enterprise system, more funding for the military, and stand against anything that promotes a system based on equality. These are movements that continue to defend and promote the privatization of our economy and that, rather than advancing spaces and places of a more just and equal world, are seeking to foment a politics of individualism and ignorance about global warming and the economy.

This trend promotes an unregulated economic system where corporations rule, where the needs of our communities are put aside for the priorities of profit-making interests, and that advances a form of neoliberalism that places emphasis on privatization and consumerism with the outcome of destroying any ideology that truly advances practices for the collective good.  

To combat this right-wing conservative trend, we need a program that: transforms power at the top; abolishes a structure that allows the wealthy, the corporations, and businesses to manipulate the tax system in their favor; reverses banking concentration and supports a system of decentralized community accountable banks and credit unions; combats unjust gerrymandering; abolishes the electoral college; moves toward a form of proportional representation and builds a social movement in support of a living wage; health care with universal coverage; accessibility for everyone to a quality education; a guaranteed basic income; investment in pre-school, K-12, and higher education; public financing of elections; and trade agreements that ensure environmental and labor standards. 

At the local level, we need a social movement to create transitional forms of a new structure or a new system that is based on the collective and not just the interests of the individual. Some of these transitional forms include employee-owned enterprises; cooperatives; and businesses that are used in the interests of the community.  

About 130 million people in the country are members of various urban, agricultural, and credit union cooperatives. In Cleveland, Ohio, a group of worker-owned companies has been developed that is supported in part by the purchasing power of large hospitals and universities. The cooperatives include a solar installation and weatherization company, an ecologically advanced laundry, and a greenhouse capable of producing over three million heads of lettuce a year. The Cleveland model is not simply about worker ownership but the democratization of wealth and building community particularly in the low-income areas. They are doing this through the creation of community-serving non-profit corporations, a revolving fund, agreements that the companies cannot be sold outside the network and that they must return ten percent of profits to help develop additional worker-owned firms in the area. Further, an important element are the agreements with  local hospitals and universities who, until recently, spent their $3 billion on goods and services per year, outside the immediate neighborhoods. The “Cleveland model” has now won over these entities to be responsible as publicly-financed institutions and to allocate part of their spending and assets to the worker co-ops in support of a larger community-building vision. There are other cities now creating similar models (Atlanta, Pittsburgh, Amarillo, Texas, and Washington, D. C.) and there are unions, such as the United Steelworkers, that are developing co-op union models of ownership.

This is about an alternative form of municipal development and land use.  In some cities, such as Washington, D. C. and Atlanta, cities bring in millions by capturing the increased land values that their transit investments create. The town of Riverview, Michigan has been a national leader in trapping methane from its landfills and used it to fuel electricity generation (providing both revenues and jobs). There are 500 such projects nationwide. Many cities have established municipally-owned hotels.  There are nearly 2,000 publicly-owned utilities that provide power and broadband services  to more than 45 million people — generating $50 billion in annual revenue. In Alaska, state oil revenues provide each person living in the state,  dividends from public investment strategies.   

Related to this is the creativity of Community development Banks, like the Bank of North Dakota (a state-owned bank founded in 1919) that are designed to facilitate economic revitalization of poor communities.  In recent years, the bank returned $340 million in profits to the state. In Oregon, there are efforts to develop a similar bank, a “virtual state bank,”  with no storefront. The South Shore Bank in Chicago is another example (developed in 1973) that provides real estate management, technical assistance, job training, equity investment, and economic consulting. It has assets exceeding $1 billion with $150 million invested in low-income communities.   

All these models are closely related to what the New Democratic Movement (that many of us were part of) advocated in the 1980s: the development of a post-industrial society with concrete  innovative economic “transitional” forms.  

The Post-Industrial Society thinking of the 1980’s proposed a “struggle to develop the material basis for a strong cooperative movement” — and a society, not just based on “high levels of productivity” but on the maximum involvement of all the people. This outlook encouraged the development of small businesses, worker-owned cooperatives, and investment in human capital (particularly in education, housing, and health). It called for a society based on a revolution in the current mode of production where high productivity is possible through the development of the most advanced technologies. 

This direction, in the contemporary period, includes some contemporary writers and thinkers that are thinking along the lines of the need for a new economy. Some of the ideas that relate to the post-industrial thinking advocated in the 1980’s by the New Democratic Movement are now being promoted by such economists as Richard Wolff, Emeritus in Economics at the University of Massachusetts; Gar Alperovitz, historian and political economist; Marjorie Kelly and Ted Howard of the Democracy Collaborative; and Joe Guinan, Executive Director of the Next System Project and Martin O’Neill, Political Philosophy at the University of York.  There are many names being given to these models that, in addition, to post-industrial a post-industrial economy, include:  stakeholder capitalism, the solidarity economy, new economy, sharing economy, regenerative economy, and the living economy.

In connecting with some of these themes, in the contemporary period, economist Richard Wolff, proposes systemic change “where the nature of work is transformed;” where people “once again control production;” where the creativity of workers is valued, and where they are in “control of the entire product.” Agreeing with Marx’s notion of surplus value, Richard Wolff proposes “workers self-directed enterprises where workers, who produce the surplus capital, are in charge of the profit (and not the managers or executives). Similar to aspects of the post-industrial article, Wolff proposes that production works best “when performed by a community that collectively and democratically designs and carries out shared labor.” The transformative element for Wolff is the “reorganization of all workplace enterprises to eliminate exploitation … where the workers become collectively self-directed at their work sites.”  

In his book Democracy at Work: A Cure for Capitalism, Richard Wolff proposes that these models are fine but that what needs to change is the class structure of production and that many of the systemic models, including private and state capitalism have had the commonality of advancing state-capitalist class structures of  top-down production that exclude the workers from production decisions and the distribution of their production. He proposes that even in the transitions from capitalist to socialist economic systems in various countries, there was a lack of prioritization or did not “explicitly include, or if they came to power, institute an economic system in which the production and distribution of surplus was carried out by those who produced it.” Overall, he argues that even in those countries categorized as “socialist,” there was a lack of prioritizing what he proposes as workers’ self-directed enterprises (where the workers who produce the surplus generated inside the enterprise function collectively to appropriate and distribute it). His solution of “workers’ self-directed enterprises” emphasizes that workers must partly or completely own the enterprises where they work and have a decision-making voice in the surpluses they produce. Such a transformation, from his outlook, will also advance the abilities of “workers to become informed, competent, and full participants in the democratic governance of the communities in which they reside.” 

Similarly, Joe Guinan and Martin O’Neill in The Case for Community Wealth Building propose that organizing at the local level, in what they call “local justice,” can be a means of developing models (such as the ones that have been presented here as examples) that both take on the power of corporations and “build a more equal and democratic economy.”  

Gar Alperovitz, in What Then Must We Do, proposes a direction that builds models of democratizing wealth and the building of a cooperative and community-based economy from the ground up. Like aspects of the post-industrial article, Alperovitz proposes cooperative models that include community land trusts, worker-owned businesses, and employee stock ownership plans.

In this vein, Marjorie Kelly and Ted Howard, in The Making of a Democratic Economy, present models that are “making what was once radical seem more like common sense.” These models include: “cooperatively-owned work places; of cities committed to economic policies rooted in racial justice; of ethical financing and investing; of communities on the frontline of crisis-building” to show us that “a different economy is not just a theoretical possibility but that it is something happening in right now in the real world.” The models include policies such as that of the  Green New Deal (proposed by Congresswoman Alexandria Ocasio-Cortez) to shift to 100% renewable energy in 10 years, to create tens of thousands of new jobs, and to advance the implementation of publicly-owned banks like the North Dakota Bank. Already, New Jersey Governor Phil Murphy and California Governor Gavin Newsom have committed to establishing state public banks. This follows with the thinking of Gar Alperovitz that a whole new economic system is emerging that already include models of economic development with racial justice at the forefront, employee-owned companies, and local purchasing by anchor institutions. Agreeing with other economists, Alperovitz presents “anchor” models that are not just about theory but are “real models” that have taken the example in Cleveland (the Cleveland Model) and are now being constructed in other places ranging from St. Paul, Minnesota, to Milwaukee, Wisconsin, to Albuquerque, New Mexico, to Rochester, New York, and to Richmond, Virginia.

The rise of this new economy include worker-owned cooperatives ranging from the “Si Se Puede” cooperative (a Brooklyn house-cleaning enterprise owned primarily by Latinas) to union cooperatives (such as the Communications Workers of America Local 7777 in Denver (Green Taxi) where the leadership and board is made up entirely of immigrant drivers from East Africa and Morocco). Further, worker coops are being implemented now in New York City, Newark, Oakland, Rochester, and Madison. There are more than 6,600 employee stock ownership plans (ESOPs) throughout the country with $1.4 trillion in assets and “businesses owned by the people they serve” (that include credit unions, agricultural cooperatives, and consumer cooperatives) that represent $500 billion in revenue and employ more than 2 million people.

There are four principles that involve moving in this direction:  

  1. Thinking of new ways to democratize wealth  
  2. Placing the building of community and what is in the interests of community in the forefront in all development  
  3. Decentralizing power in general – so that there is community input 
  4. Planning in the interests of quality of life  

The character of capital and corporations is that they have the highest level of planning in individual corporations that do everything competitively to reap the most profits with a culture of greed and selfishness in the forefront.  However, there is the capacity for a new kind of planning, with a culture of collectivity in the forefront, to use the earth’s resources to solve the many problems threatening our survival.   

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

Watch: Voices for New Democracy Forum With The Poor People’s Campaign

In our latest monthly political forum, Roz Pelles and Lucy Lewis from The Poor People’s Campaign: A National Call for Moral Revival joined Voices for New Democracy to discuss the important work of the campaign and its strategy of weaving together diverse struggles that center impacted communities.

The Poor People’s Campaign draws on the legacy of Martin Luther King, Jr.’s organizing and the Civil Rights Movement to bring the fight against poverty back into the national conversation through grassroots organizing in communities across the country and nonviolent direct action with their diverse coalition.

In the forum, Roz Pelles discusses the outlook and strategies of the movement, highlighting the leadership by directly impacted individuals and the ongoing work of bringing together diverse social, political, economic, and environmental movements to build a unified voice demanding common goals. She also discusses the Campaign’s work of submitting a “moral budget” to Congress, highlighting priorities for investment in family care and community support, which may have influenced the recent Congressional infrastructure bills that would deliver historic investments in these areas.

Watch the full forum below.

Categories
Analysis Commentary Financial Justice Global Peace & Collaboration

Steve Clark Responds to “The Dollar as the World’s Reserve Currency”

| Steve Clark |

In this piece, Steve Clark responds to Dennis Torigoe’s recent article, “The Dollar as the World’s Reserve Currency.”

Thanks to Signe for raising a stimulating comment on Dennis’ piece in regard to Modern Monetary Theory (MMT). I appreciate what Tom had to say and wanted to comment further.

A bifurcated agenda (MMT at home and financial imperialism abroad) would be inconsistent and morally reprehensible for any progressive, and I don’t think anyone in or around MMT takes such a position. Rather, at worst — and like Dennis (and most of us) — MMT advocates don’t have a clearly articulated plan for remaking the international financial order. They know how it works, but they don’t know how to assert popular control at that scale (currently, their focus is on gaining effective influence in sovereign states and, someday, “going global” from such new-found power bases). Rather than criticize MMT for the same shortcoming that we all share, we need to put our MMT thinking caps on, figure out the necessary “next steps,” and advocate for consistent financial restructuring across our both domestic and global economies.  This might require a think tank and a legal corps, but that could set us in the right direction.

It seems to me that when our nation’s progressive wing overcomes dual power (defeats neoliberalism) in the US (that is, for now, in the Biden Administration and the Congress), all nations and people stand to benefit because the world does, in fact, have an integrated, global, financial system (and I think Dennis would agree) in which the US dollar and the US central bank (the Fed) dominate decision-making and financial power (at the IMF/BIS/SWIFT/IIF etc.). 

Given this institutional domination, if/when American progressives gain the power necessary to implement a true, worker-oriented, social investment agenda in the US, we also will gain (or will be on the verge of gaining) the power to pursue a similar agenda at global scale (via the IMF, where we progressives will have just acquired dominant power, or via some new authority that we and the world create to replace the IMF).

Further, given the scale and breadth of today’s crisis, when American progressives finally break the power of finance capital in the US (winning majority control of our government), the rest of the world’s progressives (in countries everywhere) will demand we immediately break that same financial power globally as well. Having gained control of the US votes at the IMF, we will have no choice but to comply (twist my arm!). 

Few American progressives have given much thought to how this “next system” of finance must operate to meet the needs of the whole world, including its impoverished nations. Obviously, “trickle down” from the US to the world doesn’t work, but, for sure, there’s no way some kind of global planned economy will be imposed. Rather, the next system — which has to carry civilization through the era of climate change impact and mitigation ahead — will be some kind of global mixed economy in which private entities and markets operate alongside public investment entities and non-market allocations, both within the world’s many nations and in transnational forms as well (corporations, global NGOs, UN-determined public investments(?), etc.).  

However this next system shapes up, the world is never going back to the gold standard. It will remain on fiat currencies because that is the actual and only way, now, that nation-states and their markets can operate (if anyone can see beyond the era of fiat currencies, please let us know what that might look like!). When US progressives quash dual power and take general control of our government (sometime over the next few election cycles), the dollar will become our currency (the public’s currency!), and we can directly and forthrightly engage China, Europe, Japan, Britain — the other four IMF-approved-for-trade currencies — the Global South, and all other sovereign nations on the matter of how best to reconstruct and democratize global finance for the challenging crisis-mitigation era ahead (including, possibly, setting a new Special Drawing Rights (SDR) currency to replace the dollar as the global reserve… MMT suggests how that might be done).  

I think that forging a new system of global finance is a necessary piece of this era’s struggle, an issue to be resolved sooner rather than later. MMT is empowering because it explains not only how the system works (and, as a corollary, how finance capital exploits the system for its own ends) but, also, how our nation’s democratic majority can impose its will on the system, reprioritize its investment agenda, move on to global financial reform, and, thereby, tackle all the vital problems of our time.

To me, a crucial task, now, is raising the financial consciousness of voters so elected politicians fight for popular oversight of finance in the public interest. That’s how we overcome dual power (defeat neoliberalism) and win progressive legislative majorities over the next few election cycles. Right now, the MMT folks are leading this project, but they need allies as well as broadened popular grounding and intersectional collaboration. I hope we Leftists will walk towards them, learn from them and help them see and link more effectively, beyond the financial realm.