Finance, Food & Force: How We Wound Up In This Mess

[This is not the first time Stan Goff's name had cropped up at Fire on the Mountain. What was perhaps his single greatest contribution to the anti-war movement is remembered here, for instance. This piece, reposted with Stan's permission from his own Feral Scholar blog gives a masterful overview of the deep roots of the ongoing economic meltdown.]

The Roles of Finance, Food, and Force in US Foreign Policy

by Stan Goff

The Text of a Lecture at Pennsylvania State University-School of International Affairs, February 2, 2012

Before I begin, I’d like to thank Jan Burnett and Casey Hilland of the School of International Affairs Student Government Association, as well as Dr. Tiyanjana Maluwa, Dr. Tineke Cunning, and John G. Hodgson, all of whom I understand were instrumental in organizing this gathering tonight.

It seems important at the outset to make a few disclaimers. First of all, I am by no means qualified as an expert, in the usual sense of that word, on foreign policy. My personal experience of it was as an instrument of policy within the military special operations community. Even within that community, I was an enlisted man who had gone in and out of the service, graduating through five of my pay grades two times each because of breaks in service. I was not a commissioned officer, nor was I ever a member of anyone’s staff. In fact, I can say that I felt about staff positions about the same way most of us would feel about avian flu; and I earnestly and successfully avoided those positions.

Nor am I am academic. I hold a bachelor's degree from an institution that I have never seen firsthand that specialized in awarding non-resident degrees for military people. My degree, moreover, was in liberal studies with an emphasis in English literature. I have looked into foreign policy and a host of other subjects on my own since 1996 when I separated once and for all from military service. But I have not been formally trained as a foreign policy intellectual.

My work since leaving the army has included non-profit organizing, policy research, security consulting, technical advice, writing, some public speaking, grocery bagging, pizza delivery, landscaping labor, stone masonry, and deconstruction. The latter was not in any way associated with post-modern studies, but was literally deconstructing houses--demolishing them by hand to recover building materials for re-use.

So if there is an appeal to authority raised against my remarks tonight, I have no defense that can be based on credentials.

My political genealogy may also raise a few questions, because I have at different times throughout my life counted myself a conservative, a libertarian, an anarchist, a nationalist pragmatist, a liberal, a Marxist, a pro-feminist; and now my political identity is Christian, though in a way more closely associated with Mennonites or Catholic Worker communities than evangelicals. I am neither conservative nor liberal, and I dislike the term “progressive.”

Again, if anyone objects to my remarks, they are welcome to infer that I have an agenda based on any portion of that political genealogy. I probably have several agendas, but I hope by the time I am finished that you will allow that I am not hiding them.

In 1983, I was in Guatemala. I was there when General Mejia-Victores led a coup d’etat against Efrian Rios-Montt’s regime. In 1985, I was in El Salvador, at the same time that President Duarte’s daughter Inez Guadalupe was kidnapped by the FMLN and exchanged for a number of prisoners. In neither case was I involved directly with those most notable events, but in both cases I was working directly out of the United States Embassy. While my actual role in these places is still classified, what I have to say about these experiences does not relate directly to the work but to my observations of the inner workings of a US Embassy, and those observations are general enough to avoid running afoul of the law.

Embassies, I discovered, were not much different than the military staffs I’d avoided. They were bureaucratic, simultaneously authoritarian and conformist, and there was great deal of superficial courtesy that papered over a red-toothed and Hobbesian struggle for career advancement. But more to the point of this talk, I was obliged to check the Ambassador’s itinerary each day.

As it turned out in both cases, Guatemala and El Salvador, where each of these governments was waging war against its own people, the Ambassador’s most frequent visits were not to the chief of state, or the chief of state’s staff, or even to the host nation’s military chief of staff. The most regular and frequent meetings were with the national Chambers of Commerce. This is when--for a soldier who hadn’t thought enough about it--I came to realize that politics is about business, and that the political class serves the interests of the business class.

It was around that time, in the early 80s, that macro-economic forces were shaping a new form of international economy and corresponding changes in US foreign policy.

In 1973, as a protest against the US rescue of Israel from an impending defeat by the Egyptians in the Yom Kippur War, Arab nations implemented an oil embargo against the US, creating day-long gas lines that broke up only when filling stations pumped out their last drop of gasoline.

Oil prices rose dramatically, creating a tremendous windfall profit for oil producing states. Oil was denominated in US dollars, and those additional dollars were invested at Wall Street by the same oil producers who were withholding gasoline from the US.

Wall Street does not sit on money. Wall Street firms are rentier capitalists, that is, they use money to make more money; and so the glut of petrodollars from the Arab oil states was converted into vast development loans for poorer countries, especially in Latin America.

These loans, not unlike the subprime mortgages we know and love today, had adjustable rates. During the latter Carter years, the United States--for reasons we won’t elaborate here--suffered something the economists hadn’t anticipated: simultaneous lack of growth--stagnation--and rapid inflation, which came to be known as stagflation.

Federal Reserve Chair Paul Volcker responded to this with something called the Volcker Shock, that is, since inflation was the greater danger to the rentier capitalists, he raised the interest rate from 7.5% to 21.5%, doubling US unemployment rates, while making large creditors whole. These elevated interest rates were passed along, via Wall Street institutions, to those Latin American countries that had received the aforementioned development loans, creating a crisis in Latin America. This shock doctrine lasted from 1979 to 1982, and when Reagan was in office in 1982, Mexico announced that it was about to default on its Wall Street loans, stranding Wall Street with more than $100 billion in losses.

Not for the first time, and certainly not for the last, the US government stepped in to bail out Wall Street’s finance capitalists. This was a bailout loan to Mexico, but the intent and the urgency was to ensure that Wall Street didn’t take a bath on the Mexican default. The vehicle for loans to cover the previous loans to Mexico was the International Monetary Fund, an international institution formed in the latter years of World War II, in which the US exercises a very dominant role. But this time, the bailout loans had something attached to them in addition to interest, called “conditionalities.”

These conditions included several ultimatums--that Mexico’s internal markets be opened to US-based investors, including US multinational corporations, that labor and environmental standards be rolled back to increase the rate of profit in order to pay back the restructured loans, and that regressive tax structures be implemented – also to assist in the payback of the loans. A structural imperative, though not one of the specified conditions, was also that Mexican enterprises--in particular, agriculture--be converted from production for local consumption to export products to get more of the US dollars required to service the restructured but now vastly expanded external debt.

Using similar crises, the IMF proceeded over the next few years to impose these conditionalities--called structural adjustment programs--on the majority of nations of the global periphery, effectively undermining their national sovereignty inasmuch as the IMF, the World Bank, and the World Trade Organization, all US-dominated pre-market institutions that manage the so-called “free” market, came to dictate the economic policies of these structurally-adjusted nations.

While these were originally contingent measures used to take advantage of Mexico’s crisis, the Reagan administration soon realized that they had stumbled onto a model that could be used around the world to open home markets to US investment under conditions that were very advantageous to US investors. Moreover, it was a way to capture the political leadership of debtor nations in a dollar-dominated system, which would come to be known as neoliberalism.

I realize that this is a fly-over at several thousand feet, and that I am overlooking many of the details of this process, but I only want to establish a kind of historical context wherein neoliberalism is intelligible, in order to explain subsequent claims about US foreign policy, which has been largely formed by the imperatives of neoliberal policy.

Neoliberalism itself is now in a bit of a crisis, because the same financial establishment that was turned loose on the world by the emergence of neoliberalism has both worn out its welcome around the world--creating great popular resistance to its diktat--but it has created tens of trillions of dollars of fictional value from runaway speculation, threatening the very currency around which the entire system is based.

The US-dominated financial system, called the “Dollar-Wall Street regime” by Peter Gowan and Susan Strange, also found a way to exercise managerial control over first world economies like Western Europe and emerging market economies like China and Brazil. This power was exercised not in the US role as creditor, but in the US role as debtor.

This story actually begins at the end of World War II and continues to the present. The Soviet Union--itself savagely wounded by the war--attempted to secure a post-war partnership with its capitalist war allies in order to regroup. More than 27 million Soviet citizens had been killed, and cities were in ruins all the way to Stalingrad. When the Truman administration opted for the National Security State as an industrial strategy that could capitalize on the ramp-up for the war, it needed an enemy to justify the expenditures of what Eisenhower would christen the “military-industrial complex.” The overtures from the USSR for a post-war peace were rejected in favor of official hostility by Truman. This provocative posture locked Western Europe into a military alliance with the US, and put an official stamp on the US foreign policy of “containment.”

This inaugurated a long period of proxy war, the first in Korea, later in Vietnam. While the US was enjoying the fruit of post-war dollar dominance, Keynesian high employment, and a robust trade surplus, however, the militarization of US domestic and foreign policy created a mounting national debt. The US was indebting itself to other metropolitan nations. The US was borrowing money from Europeans to finance its military adventures in Asia, then running printing presses to make up the difference. Because the dollar’s value was fixed for redemption at 1/35th of an ounce of gold, the US could print money without fear of draining the dollar of its value, which was being used for capital investment in Europe.

In the theoretical market, the value of a currency is determined by how it balances against an aggregate of commodities. Too few units of currency and prices fall. Too many units of currency and prices rise. The latter is inflation--the nemesis of loan sharks and bankers because it reduces the future purchasing power of collected principle and interest. So the dollar was losing purchasing power on the market, even as it remained exchangeable for European currencies at the same fixed rate.

The US was printing more money, but because the dollar was fixed to gold, the Europeans were watching their markets flooded with overvalued dollars, which they had to accept. The market may have been saying that a dollar should be redeemable for francs or marks or pounds at one rate, but the post-war currency-control regime determined that Europeans had to continue to give away purchasing power with every currency exchange for devalued dollars. The US was exporting its inflation to Europe by repaying its military expansion debts to Europeans in under-valued dollars.

So when the first Special Forces advisors went to Vietnam in 1957, the system that appeared so robust on the surface was already creating the conditions for its next crisis.

The Europeans, later buying gold elsewhere at well above the $35 per troy ounce, held onto their dollar denominated assets, hoping to redeem their dollars at something approaching their initial investment later. But by 1967, with the Vietnam War driving the US deficit to record levels, France started cashing dollars out for US gold, draining the US gold stock. The Keynesian system of tightly controlling finance capitalists, which included fixed currency exchange rates pegged to a gold-backed dollar, began to collapse in the face of the US decision to militarize its domestic and foreign policy.

On March 31, 1968, millions of Americans heard Lyndon Johnson announce on television that he would not run again for the presidency, and that he would not substantially escalate the Vietnam War, despite the strategic setback of the Tet offensive nearly two months earlier.

Unperceived by the public at large, the point finally had been reached at which depletion of the U.S. gold holdings had abruptly altered the country’s military policy. As financial historian Michael Hudson noted:

"The European financiers were forcing peace on us. For the first time in American history, our European creditors had forced the resignation of an American president."

But when the 1968 elections arrived, we saw a scenario that is familiar to us again. Democrats could not publicly argue for an end to the war, because withdrawal would mark the destruction of the myth of US military invincibility. The options available in response to the collapse of the US Gold Pool were (1) withdrawal from Vietnam, (2) continue the war and accept further losses of gold and with it the erosion of US global power, or (3) force the abandonment of the entire Bretton Woods regime beginning with the gold standard. Because the Democrats alienate a huge fraction of their base by refusing to oppose the war, Republican Richard Nixon was elected. In 1971, he selected Option 3. He abandoned the gold standard for the US dollar.

This was a staggering checkmate against the US’s alleged global allies. They had to do something with their trainloads of dollars to prevent their uncontrolled devaluation.

Quoting Hudson, "By going off the gold standard at the precise moment that it did, the United States obliged the world’s central banks to finance the U.S. balance-of-payments deficit by using their surplus dollars to buy US Treasury bonds, whose volume quickly exceeded America’s ability or intention to pay.

Twenty-five years [after WWII], the United States [discovered] the inherent advantage of being a world debtor. Foreign holders of any nation’s promissory notes are obliged to become a market for its exports as the means of obtaining satisfaction of their debts."

As the old saying goes, “if you owe the bank a thousand dollars, you have a problem. If you owe the bank a billion dollars, the bank has a problem.

Nixon had not only erased US debt held by allies and forced perpetual European support for US military expenditures with the threat of tearing everyone’s financial house down, he had opened the way for rentier capitalists to escape the limitations put on it during the New Deal. That is precisely why Peter Gowan referred to Nixon’s risky destruction of the Bretton Woods fixed currency exchange rates as the “global gamble.”

New system: debtor imperialism.

Susan Strange referred to the new system as “casino capitalism.” The rentier capitalists were free to speculate without constraints; but more importantly, the US government, in collusion with Wall Street, had a new weapon to use against recalcitrant nations. Domestic currencies could be speculatively attacked; which is exactly what the US did to several Asian countries in 1998, which unexpectedly almost crashed the world economy. The threat of attack on currencies obliged central banks abroad to hold US dollars--in the form of US Treasury Bonds--in reserve, as a defense against speculative attacks on their currencies. These nations then became US creditors; but they were the banks who--as in the banker joke--had the problem.

To this day, no one--including China, about which there is a great deal of financial fear-mongering--can afford to begin a run on the dollar. Too many nations hold too many dollars to sell the dollar down without cutting off their noses to spite their faces. And yet all these creditor nations know that the US has neither the capacity nor the intention of paying back those loans.

China holds over a trillion dollars in US Treasury Bonds. Japan holds almost a trillion. The United Kingdom holds over 400 billion. Brazil holds more than 200 billion. The list goes on. If China were to initiate--as some China-phobes suggest--a cash-out of its t-bills, and that cash-out caused a run on the dollar destroying half its value, China would lose more than half a trillion dollars in purchasing power. This is a game of chicken that the US has, so far, won every time.

The key to dominance in the world of the late 20th and early 21st Centuries has been dependency... interdependency, but of a very unequal nature. We see this in really bad, really patriarchal marriages. A husband depends on his wife for the management of the household, for a lot of unpaid labor, and for the care of children, and the wife depends on the husband for economic security; but in the event of a divorce, we find that the wife comes out much worse than the husband, giving the husband a threat to hold over the head of the wife. They depend on one another, but that interdependence is not synonymous with equal status or parity of power.

This is how US foreign policy is constructed for the most part, as interdependences in which the US is the dominant partner. And there are few things that human beings depend on more urgently than food; which brings me to a subject that is imbricated with finance, but not the same as finance.

Money is not theoretically necessary for life. Human life sustained itself before general purpose money. Human life cannot be sustained, however, without its material basis in food.

If I might, I’d like to actually go deeper on the topic of food than we generally do, into the realms of chemistry and biology, for just a moment. I want to say a few things about energy and nitrogen.

If you touch your neighbor in the seats there, appropriately, of course, you will find that they are heaters. You are all warm. That heat is thermal energy that is part of the overall energy system that constitutes your existence as an organism, as a mammal, as a primate, and as an omnivore. You eat plants and animals that have energy stored in them. The plant energy that animals eat comes from the sun, whose energy is stored in the plants by photosynthesis.

One of the chemical components of our world that is necessary for most plant growth, therefore necessary for food, and therefore necessary for our survival, is nitrogen.

Oddly enough, after Timothy McVeigh blew up a federal office building in Oklahoma City, everyone--even non-farmers--came to know that fertilizer is made with nitrogen.

Yet nitrogen is the most abundant element in the atmosphere, so why should anyone have to “produce” it as a fertilizer? We live our entire lives literally swimming in the stuff.

As it turns out, atmospheric nitrogen, like atmospheric oxygen, is a Siamese twin. It consists of two, fused molecules: N2, as it were. Plants have to break this down into single molecules, then mix it with other stuff, in order to turn sunlight into food. The process is called biological nitrogen fixation. Prior to human intervention, this fixation process was accomplished by prokaryotes (or non-nucleated bacteria) and diazotrophs (or ammonia-making bacteria.)

During World War I, the introduction of new technology, i.e. the machinegun, and the adherence to pre-machinegun tactical doctrines, led to huge armies being first mowed down like grass, then trapped facing each other from pestilential trenches. One of the bright ideas for taking advantage of this horror-film stalemate was the idea of killing the enemy with poisonous gas.

During the war, Fritz Haber, a German-Jewish chemist, was appointed director of the Berlin-based Kaiser Wilhelm Institute for Physical Chemistry.

One of his jobs became the development of chemical weapons. He would eventually invent a gaseous chemical called Zyklon-B, a cyanide derivative, which would be used to wipe out millions of his own co-religionists; but during WWI he was preoccupied with chlorine and ammonia for the development of poisonous gases for the battlefield.

His other preoccupation was nitrogen fixation. He learned how to do that, synthetically, by combining hydrogen and N2 under heat and pressure, along with an iron isotope and aluminum oxide as catalysts. He had already patented this process before the war; but it would take Carl Bosch, the eventual co-founder of I. G. Farben (the company that marketed Zyklon-B) to commercialize the process… which laid the basis for a population explosion from 1.6 billion in 1900 to more than 7 billion today. What he’d made was chemical fertilizer, and it meant that even land that was unfit for agricultural cultivation could be rendered “productive.” The food that feeds that additional 5 billion people is largely produced with the assistance of chemical fertilizers and chemical poisons.

But “heat and pressure” are not some infinite essence like space, nor are they immediately available like atmospheric nitrogen. They are transient phenomena that must be created through some procedure; in this case, using fossil hydrocarbons... lots of them. Haber was looking at a crisis created by the depletion of guano--bat and bird droppings used as fertilizer--mostly collected from the islands off the coast of Chile; so he fell on a system that depended on another exhaustible resource: fossil fuel.

After WWII, American farmers were using prodigious quantities of chemical fertilizer across prodigious expanses of arable land, along with a new chemical weapon itself, nerve gas… or organophosphates, as insecticides, expanding their harvests far beyond the American public’s capacity to consume.

The American manufacturing base had also expanded during the war, and given that the US did not suffer the devastation that Europe and Asia did during the war, the US emerged from the war as a uniquely powerful actor. The other variable in the expansion of food production was the thoroughgoing mechanization of agriculture, another net consumer of fossil energy. The US began to build farm machinery; and as part of its goal of maximizing profit for farm machinery industries, as well as agricultural chemicals, it began to promote something called “developmentalism” for the so-called under-developed nations.

In 1943, the Rockefeller Foundation, Ford Motor Company, and the Mexican government established a joint venture called--in English--the International Center to Improve Corn and Wheat. Standard Oil--a Rockefeller company--was manufacturing fertilizer, and Ford was building tractors. This was the beginning of the organized effort by first world corporations, with the active support of the US government, to push agricultural commodities into these so-called underdeveloped nations. By 1959, they had opened rural development academies in Pakistan, and by 1963 in the Philippines. These academies were performing research and development on high-yielding cultivars of wheat, corn, and rice. By the time of the Nixon administration, 120 of the largest agribusiness multinationals had established a joint program with the United Nations Food and Agriculture Organization.

The transformation in agriculture that followed was called the Green Revolution, a term coined in 1968 by US Agency for International Development Director William Gaud.

If ever there were a revolution from above, this was it. And it did accomplish a great deal. Caloric intake from cereal grains worldwide increased 30 percent per capita by 1990, and the prices of grains fell. The availability of more staple grains also supported a doubling of world population between 1960 and 2000.

Yet these very general statistics don’t tell the whole story. There were a number of qualitative changes that accompanied these statistical quanta. One early condition of World Bank development loans was that recipient nations industrialize their agriculture.

Smallholders were pushed off land to make way for large monoculture fields. Mechanization cut the number of necessary field workers to a fraction, and a process began whereby millions of formerly rural people--who were monetarily poor, but capable of self-reliant subsistence agriculture--were pushed into cities, where they came to rely more directly on the mass-produced staple cereals, which they now had to buy, and where they provided a windfall to urban manufactories of desperately cheap labor.

Peripheral nation agricultural production was being exported, in order to get precious US dollars for use in international markets and to service external debts. The agri-barons of the periphery were not feeding their own countries, but engaging in monoculture for export, like coffee, sugar, and bananas (ergo the term, “banana republic”).

Urban hunger is a specter that most leaders understand only too well.

I witnessed two food riots when I was in Haiti, and I can say they were among the most memorable experiences of my life.

Political leaders know very well that mass urban hunger is a recipe for political destabilization, and they avoid it at all costs. Because many of these nations were exporting crops, they fell short in providing basic nutrition to their own growing urban populations.

The United States, however, was uniquely positioned to take advantage of this situation, because the agricultural subsidies of the New Deal, originally meant to rescue family farms, had been carried forward to the benefit of large agribusiness corporations that were pushing the American family farm into the dustbin of history. Price supports for US grains meant that agribusiness could produce as much grain as possible, and for every bushel produced the government would pay them a subsidy.

This, along with the arable land mass of the American Midwest, quickly led to massive overproduction of US grain in the face of periodic grain shortages around the world, which gave US agribusiness unprecedented pricing power in grain markets.

In 1973, Secretary of State Henry Kissinger said that the dominance of US grain production in the world was a foreign policy weapon that was more powerful than nuclear bombs.

Grain was on a lot of political minds those days. Hubert Humphrey, the 1968 Democratic challenger for the presidency, had received an illegal campaign contribution of $100,000--a fact that would emerge during the Watergate hearings. The same contributor would also give the Nixon administration $25,000 to assist in its cover-up of the Watergate break-in. These were not insubstantial sums then, as they seem now.

Not many people had then heard of this fountain of largesse, whose name was Dwayne Andreas. Andreas pushed through a historic grain sale to the Soviet Union for the Nixon administration, worth $700 million, with his company as the middleman. That company was named Archer Daniels Midland.

It was the next year, however, when Green Revolution food production was exposed to another vulnerability, the aforementioned Arab oil embargo.

It is here that we can see how the history of the Green Revolution as an instrument of US foreign policy interweaves with the history of neoliberal finance--which we covered earlier--that began its gestation with the Nixon administration.

By 1973, the US was running not a trade surplus but a deficit of $6.4 billion. Even more momentously and permanently, US domestic production of crude oil had peaked and was now known to be in a permanent and irreversible decline that would increase US dependence on imports of this commodity into the foreseeable future. Oil remained the principle feedstock of American domestic agriculture, and of the Green Revolution that was articulating the decolonizing periphery into a new, neo-colonial order. At the same time, the US would become increasingly dependent on fossil energy imported from abroad, not merely to power its machines and transport, but to eat and to maintain the power of the US over food markets worldwide.

Even the Soviet Union had been pulled into the American grain-trade orbit by Nixon, proving Kissinger’s thesis that food was more powerful than nukes.

The increasing dependency of peripheral nations on American agricultural goods, as well as American support for the industrial capitalist model being adopted for peripheral nation export agriculture, would lead to decreases in national per-capita food production as well as financial and ecological bankruptcy.

Nixon broke up the old order; but the new order was not firmly established except serendipitously by the Reagan administration. In the interim, after a period of three years stewardship of the White House by the immanently forgettable Gerald Ford, the next elected president would have a dual-resume: a Naval officer and an agribusiness CEO.

Jimmy Carter.

Under Jimmy Carter, a southern agribusiness plutocrat posing as a good ol’ boy (a peanut “farmer”), an interesting thing happened. Something we Southern folk used to call “white liquor” or “white lightning” became legal and began magnetizing massive cash flows from US taxpayers in the form of corn subsidies.

Corn liquor has been produced for many years by rural scofflaws. My own father did a short stretch in the hoosegow when he was discovered with a car trunk full of it in the 1930s.

When Nixon was taking money from Dwayne Andreas, the CEO of the sugar and corn conglomerate, Archer Daniels Midland, ADM was concocting a new scheme that would simultaneously justify more “farm” subsidies to agribusiness and claim to address the “energy crisis” of 1973, which was also such a windfall to Wall Street. The scheme was to make massive quantities of corn liquor, which is of course flammable, and re-christen it “ethanol.” This was proposed as an “energy independence” measure for the US. It is made, naturally, with sugar and corn.

ADM found a friend in Jimmy Carter.

Carter called the energy crisis the “moral equivalent of war,” and his administration exempted ethanol-spiked gasoline from a federal fuel tax.

Carter began a loan program to build ethanol plants, which was halted by the Reagan administration… for a while, until farm lobbyists paid serial visits to Capitol Hill, whereupon the Reagan administration recanted.

To this very day, neither party will challenge agribusiness subsidies; and to this day, both parties are avid ethanol boosters.

It was this influence, in conjunction with neoliberal “free trade” policies, that allowed US grain producers to begin a process called agricultural dumping. Dumping is introducing a surplus into a foreign market below market value, which results in local producers’ inability to compete. Taxpayer-subsidized US corn, for example, is still routinely dumped into foreign markets at prices often as little as 30 percent of market value. This leads to bankrupted local markets, and a growing and increasingly poor urban population that becomes hostage to an imperial food market.

A Mexican farmer who grows traditional corn is wiped out by genetically modified, chemical-industrial corn that is subsidized by a foreign power. His family loses their land to debt, moves to the city, where they may or may not find work to get money to feed themselves, and barring that, they may take the risk of illegal migration to the north to find work in the United States. One seldom hears about neoliberalism or agricultural dumping when the subject of illegal immigration comes up in the United States; but the connections are clear. US policies have created the conditions that make mass migration inevitable.

After many NAFTA provisions went into effect that allowed US dumping in Mexico, between 1997 and 2004, taxpayer-subsidized US corn exports increased by 413%, while Mexican corn production fell by 50% based on a 66% devaluation of Mexican corn. In the same period, US soybean production increased by 159%, and Mexican soybean production decreased by 83% based on a 67% devaluation. Mexican pork production fell by 40%, corresponding to a 707% increase in US exports. Pork itself is not directly subsidized, but the corn that feeds industrial pork is. It is not a coincidence that NAFTA corresponds to the most massive wave of Mexican immigration to the United States in history.

So the combination of developmental imperatives to mechanize and enclose agriculture for monocrop production, as well as agricultural dumping by the United States has created a situation where most of the rapidly urbanizing world is now dependent on US grain or US seeds and chemicals in order to eat. US foreign policy pertaining to food has become what the late Ivan Illich called “a war on subsistence.” The androcentric cliché for holding power over others as “having them by the balls,” might better be replaced by “having them by the bellies.”

US international power politics combines the neoliberal debt traps with food monopolization as an effective mechanism of indirect control over a good deal of the globe. This is not, however, sufficient to exercise the kind of total dominance the US would require to halt the very real decay of US power that results from various kinds of imperial over-reach. The debt system is not sustainable. The energy system upon which the current system depends is not sustainable. The material resources upon which economic expansion is based are finite. And the tolerance of others is reaching its limits.

The fallback position of any imperial power, when indirect controls are no longer effective, is direct control in the form of violence. That is one of the reasons the United States--with some of the best naturally defensible borders in the world, and an impossibly large land mass for any would-be invader--maintains a military force that is more expensive than the combined military forces of the rest of the world. Calling the War Department the Department of Defense is perhaps the most ironic example of PR-speak you might encounter The US military is almost exclusively dedicated to missions of aggression abroad.

Moreover, the force component of US foreign policy is not merely the uniformed services, it includes a shadowy and well-financed covert operations component that allows military actions by US-directed surrogates to provide an element of plausible deniability to US actions that might undermine ideological claims of commitment to principles like “freedom,” “human rights,” and “democracy.”

Neoliberal theology asserts the primacy of the private, the value of small government; but neoliberal practice has been massively underwritten by the state. The assurance of the market economy--as Karl Polanyi pointed out almost 70 years ago--requires a network of regulatory institutions. Without the state’s affirmative actions on behalf of the international business class, the system would collapse. Begin by thinking about how six battle groups from the US Navy are required to ensure the flow of fossil hydrocarbons into the industrialized metropolis, and you can extrapolate from there.

The failed attempt to conquer Iraq in 2003, while it certainly involved oil, was also part of an effort to maintain a forward deployed US military capable of strategic intervention far from home. The Cold War had ended, and the disposition of US military forces had become obsolete. They needed to be redeployed from positions that were calculated to contain the USSR into positions that would give the United States more capacity to intervene in energy-rich Southwest Asia, to put the imperial hand--as it were--on the spigots of global energy.

The goal of the Iraq invasion was permanent bases; but instead the Bush administration managed to win the Iran-Iraq war on behalf of Iran. The Obama administration has decided that the next best thing is to forward base near the Middle East and in the Asia-Pacific Theater to prepare to contain China; and the Obama administration has vastly expanded the role of the covert operations forces, as well as armed mercenaries, in its expansion of the Afghanistan War into Pakistan and increased covert operations against Iran. For myself, I believe Obama’s military moves in Southwest and South Asia will prove as disastrous as those of his predecessor.

Obama’s administration was instrumental in the execution and consolidation of the coup against the democratically elected president of Honduras in 2009, just as the Bush administration was in the failed coup against the democratically elected president of Venezuela in 2002, and its successful coup against the democratically elected government of Haiti in 2004. In two cases, the offending parties--President Chavez of Venezuela and President Zelaya of Honduras--were guilty of defying the Washington Consensus, that is, of opposing neoliberalism. President Aristide had merely criticized neoliberalism.

More than strategic interests drive the reliance on military operations. In the United States, the Department of Defense has become a substitute export market for US industries. The reason the taxpayers are not bailing out Lockheed Martin, Northrup Grumman, Boeing, General Dynamics, Raytheon, KBR, L3 Communications, SAIC, Dyncorp, Hewlett-Packard, and a host of other major American corporations, including General Electric, Motorola, Goodrich, and Westinghouse, is that the margin of earnings that ensure their continued viability as capitalist enterprises comes from DOD contracts. If war spending were ended tomorrow, the US would experience a dramatic loss of jobs across a wide spectrum of Congressional districts that have hitched to the DOD pork wagon.

American foreign policy is amphibious. It operates through both the wet depths of public institutions and the dry lands of private institutions, and it has an integrated public-private perception management apparatus.

One of the key advantages of the public-private partnership is that foreign policy is insulated from accountability to those below those institutions on the social hierarchy. The boundaries are blurred, via contracts and memoranda of understanding, between the US public sector--with its administrative apparatus, and its military and intelligence establishment with their vast budgets--and the private sector, composed of publicly funded “non-governmental organizations,” think tanks, foundations, and an army of horizontally-integrated perception managers.

Those perception managers use mass media as a conformity-producing web of influence that reaches right into the living rooms of a US culture that has 2.24 television sets per household, running an average of six hours and 47 minutes a day, 2,476 hours a year. To appreciate the latent power of television, realize that the average college class has a student in tow for three hours a week, approximately 45 hours for an entire course, excluding out-of-classroom study.

The limits of public discourse are established de facto by a media that operates on the same liberal market principles as the people who own them and exercise hegemony within the government and in those sectors sometimes called civil society. The media, the governing apparatus, and civil society are in fact three faces of the same dominant interests in the same epoch.

In saying this, I am obliged to clear up a common misunderstanding of what this means and what I mean to say. It is easy to jump from the very general outline I have presented of three aspects of US foreign policy--finance, food, and force--to the conclusion that I mean to say, or that these facts tend to support the idea that, there is a conscious group of the conspiring powerful who direct the world. On the contrary, I want to emphasize that this system has evolved through a series of contingencies, and that its stability is maintained precisely because it is what some systems theorists call self-organized. It’s most powerful actors are in many ways as constrained, or more constrained, by neo-neo-liberalism – or whatever you choose to call this particular period – than most of us are. President Obama is far less free, for example, to say the kinds of things I can say here as an unemployed grandfather.

I, on the other hand, do not have the legal power to send US troops to war, or to call them home.

We each play our parts, and while some conspiracies have always been part of the terrain of politics, they are generally reactive, and far less determinative of large-scale outcomes than, say, changes in the built environment, demographic shifts, or institutional inertia. Many of the most pivotal events in history emerge unexpectedly from long-standing trends that have gone unnoticed or ignored until they reach a breaking point--the 2008 housing bubble crash being a good recent example.

Remember, in our saga about the birth of neoliberalism, there was no straight line, but a confluence of events and contingent decisions: French buying US gold, Nixon dropping the gold standard, the Egyptian war for the Sinai, the American decision to airlift TOW missiles to the Israelis, the decision of Arab oil producers to embargo oil to the US, the US balance of payments deficit, Nixon drops fixed currency exchange rates, rising oil prices creating petrodollars, the petrodollar tsunami being converted into opportunistic development loans, the Mexican threat of default, and so it goes. These were not plots, but actions and reactions, each producing a number of unintended or unanticipated consequences, which stimulated new actions and reactions.

The belief in a conspiratorial view of history seems to me to be a psychological reaction to the fear of chaos. If the world is not as one would like it, at least a conspiratorial view of history suggests that history as a process is still subject to human control, and that once we wrest control from the unjust conspirators, the world can be made right again.

This unpredictability, this sense of instability that compels some of us to reach for order in chaos with a history of conspiracy, ironically, has been produced by the current political milieu, one wherein neoliberalism has disembedded economies from local control and re-embedded them in national and transnational institutions, and those institutions are themselves now experiencing a loss of control in the face of unanticipated changes.

Structural adjustment programs have become political lightning rods that are igniting mass unrest around the world. Green Revolution agriculture has spawned megacities that are entropic black holes, teeming with desperation and crime. The US military, long considered the guarantor of last instance for the world order, has proven to be both the least cost effective institution on the planet and a perennial source of new resistance and unintended outcomes. In Iraq and Afghanistan, the myth of US military invincibility was shattered; and the costs of the Southwest Asia wars have bled the US Treasury white. Offshoring of US industry and the political empowerment of rentier capitalists--Wall Street--that was accomplished through foreign policy, has transformed much of the US domestic population not merely into wage workers, but debt slaves.

There is a bumper sticker that sums it up: “I owe, I owe, so off to work I go.”

Consumer debt in the United States is above $2.4 trillion. In 2010, consumer indebtedness amounted to $7,800 for every man, woman, and child in the United States. 33% of that debt is in revolving credit, that plastic you carry in your pockets. The rest is in mortgages, student loans, automobile loans, and other non-revolving credit schemes. You students collectively owe $556 billion dollars. Good luck with that.

US household leverage, the ratio of debt to disposable income, was 55% in 1960. By 1985, that number was 65%. Today, household debt is 133% of household disposable income.

Yet when the crisis of fictional value created by Wall Street came home to roost, trillions in bailout money were awarded to Wall Street, while Main Street was left holding its debts. Wall Street, according to the experts who work the Wall Street-Washington nexus, was too big to fail. Generations into the future are now saddled with paying for these bailouts. We are being structurally adjusted, which has always been a euphemism for privatizing the gains and socializing the losses.

Meanwhile, far away, in response to US and EU attempts to form an economic blockade against Iranian oil, rumors have begun to circulate that China and India, both on steep industrialization gradients and thirsty for oil, are figuring out how to pay for Iranian oil with gold. These two countries already constitute 40% of Tehran’s oil market; and they are not prepared to cut back consumption in support of an American belligerence in which neither of them have any vested interest. India flatly refuses to abide by the sanctions, and is working with the Russians to act as middle-men for Tehran to New Delhi oil transactions; and China knows that the efficacy of the sanctions depends completely on whether China participates or not. The US has no capacity as a unilateral actor any longer, still smarting from its defeat in Iraq and its interminable and expensive entanglement in Afghanistan. The threats against Iran’s oil exports, however, are likely to drive up the price of oil, which will drive up the price of grain, which will drive up the price of food. And so we see, even today, the interaction of forces between finance, food, and military force in foreign affairs.

With that, I will say that I have held you hostage quite long enough, and I thank you for your kind attention.

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California Loses A Great Teacher

The economic cyclone that started over two years ago continues its devastating path across the country, with public services increasingly in the path or already sucked up into the funnel itself. I just got a letter written by an old compa of mine, revolutionary poet Joe Navarro, explaining why he feels he has to take an early retirement offer from his teaching job in the Hollister, California, public schools.


I hope those who have never met Joe will get a sense from his letter just how serious a loss this is for the students of Hollister. He is a concerned and gifted educator whose ability to teach has been all but destroyed by the crisis-fueled policies being imposed on the system.

Before Joe's letter, here is a little context. And let it serve as a damn wake up call to those in states where the budget crisis is still festering and hasn't erupted into the open running sore that it is in California--the eighth largest economy in the world, state officials used to like to brag.

A three minute Google search turned up an AP article from yesterday on schools in San Jose, whence this ugly excerpt:

The library at Silver Creek High is open for only an hour a day. The career center is closed. There is no more summer school. And student athletes must pay $200 each.

State budget cuts will make things even worse next year. The school will probably have five fewer classroom days and lose three of its four guidance counselors and three of its four custodians, as well as its health aide, mental health coordinator and student activities director. The future of student government, clubs, pep rallies, homecoming and prom is in doubt.

Though there was no mention of it in the alarming article, there are doubtless teachers, good experienced educators, right at Silver Creek High making the same agonized decision that Joe Navarro has.

Dear Friends,

I have come to an important decision. I have accepted an offer to take early retirement from my school district. My conscience is at a crossroad. I can no longer deliver the methods of instruction as prescribed by my school district, the state of California and federal mandates.

Teaching has been my passion and my calling. I started late, at 40 years of age and my starting point was a student and parent advocate.

When I began teaching there were still ideals that included teaching to the whole child, bilingual/bicultural education, content mastery, equality, quality education, developing children into problem solvers and critical thinkers. Since then, the language has been hijacked by politically conservative think tanks and politicians. Now, the quest for quality teaching has been replaced by the quest for best test scores. Scripted lesson plans, rote memorization, English-only education, drill and skill instruction and overzealous test preparation now dominate teaching.

The carefully crafted wording for education reform has tapped into the righteous sentiments of people of color who want education to be equal for all nationalities. Phrases like "tougher," "more rigorous," "higher," "run schools using the business model," etc. have fooled people into believing that the only problem with education has been that we have gotten too soft on kids and cannot compete internationally.

One major problem with these arguments are that rote memorization and drill and skill instruction do not amount to higher quality learning. Another problem is that if you look at high performing schools in affluent communities they teach critical thinking skills and problem solving, while people of color and poor people receive higher doses of rote memorization and drill and skill instruction.

The U.S. produces huge numbers of scientists, engineers and intellectuals in comparison to the rest of the world and cannot be compared to countries that do not have the same multinational characteristics as the U.S. The reason that work for scientists, intellectuals and engineers are being exported to other nations is not because there are not enough of them in the U.S., but that scientists, intellectuals and engineers in the third world work cheaply.

Current standards in the US are high. The problem is that there is a double standard of how education is delivered to schools, from teacher preparation, to policy makers, to administrators and teachers. No one wants to deal with issues like underfunding poor people and people of color; racist policies like zero tolerance; eliminating bilingual/bicultuaral education; or whitening the curriculum. Paolo Freire argued for critical pedagogy where you create an education system that not only teaches children how to read, write and do math, but also to teach them to be analytical, critical thinkers and grow up to improve society.

I have argued this point, written letters to the editor, joined in the letters to Obama, written to my congresspersons, shared my research, argued with my administrators and defied policies by teaching critical thinking skills, art and culture. My hands are tied in the classroom.

I don't know what is next. It's a bitter-sweet reality for me. I am sad and feel relieved at the same time. I am also uneasy now that I don't have a job. What's next? I don't know.

Best Wishes,

--Joe

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March 4: The Tide Is Rising--A First-Hand Report

Perhaps the most important single protest of the Obama era so far took place yesterday--the national day of action in defense of public education. Despite the huge differences in specifics from pre-K to grad school and from state to state, there were hundreds of protests around the country in response to an initial call, from Cali, the epicenter of the current wave of struggle.

These battles are the most widespread organized resistance to tuition hikes, savage cutbacks and privatization initiatives, all fueled by the economic meltdown. Somehow the "green shoots" the administration and media so like to talk about appear to be unable to push up through the mountainous state and local budget deficits and education is one of the first targets.

Although there's a lot of day after reportage, the build-up took place largely under the media's radar, despite endorsements from the likes of the national AFL-CIO. One noteworthy occurrence suggests real concern and divisions in the ruling clas--that's the feature article published March 3, the day before the protest, in the NY Times, on rebarbative "education reform expert" Diane Ravitch, who is now recanting the pro-privatization, pro-charter school, pro-standardized testing views she had spent decades pushing. Clearly some realize that a total collapse of the US educational system is not in the interests of the ruling class.

Anyhow, I want to get to cases. Here is a inspiring and moving summation of some of what happened in Berkeley, just sent me by Liz, a 'rade of mine who is in grad school there.

It Looked Like Movement To Me!

What I saw yesterday at UC Berkeley looked like "movement" because so many different kinds of people were moving in sync: anarchists who want to shut it down and occupy; students who want to lobby in Sacramento; laid off high-school teachers who want to teach; Asian and Pacific Island students demanding the right to education for immigrants; custodians who want to send their own kids college; 10 year-olds chanting "We want P.E." Black, brown, Asian, and white. Students, parents, teachers, and workers. Movement is when one student who prefers to march and chant, has friends who are shutting down the highway.

The organizing was broad and deep, connecting radical students with identity groups, with unions with faculty and staff, and community groups. It was highly coordinated - centrally democratic and drawing on institutions of student organization and unions. It was also spontaneous and decentralized. Many groups organized their own actions behind their own banners, in their own style, in their own language, choosing their own targets.

We marched in a group of 30 law students through our law school, through the library and the main lecture hall screaming "Whose University? Our University!" and "Join us! Join us!" When we passed our building's custodian in the hallway, she yelled "Si se puede" for us. The librarians chanted quietly. We "took the street" outside the law school, shutting it down for about 10 minutes, and marched to the main campus protest with our banner "Berkeley Law: We Object." It was not radical, but it was a crack in the wall of business class solidarity that holds up conservative law school culture. Chanting in the law library felt a little bit like movement.

The mobilizations at the law school in the fall attracted mostly white students with labor organizing backgrounds, targeting the law school Dean and protesting the law school fee hikes (we're going to pay $8,000 more next year to the education loan industrial complex). This semester women of color leaders organized in advance, taking care to build strong relationships among students, with radical staff at the law school, and with leaders on the undergrad campus. Women of color at the helm focused the message on "We are public education" - what it means to be a school for low-income students, for students of color, and immigrants. Many of the students who joined the mobilizations yesterday were newly politicized, new leaders, and students of color.

The march from UC Berkeley to Oakland was an exodus of students pouring off campus into the city. We were joined along the way by groups of kids and parents. The faces were Black, brown Asian and white. The sight of downtown Oakland filled with the masses was beautiful to all of us. I wasn't there for the protests around Oscar Grant (young black man murdered by police last winter) but people were saying they felt connected to that protests.

Two of the best movement moments of my day happened on the train on my way back to Berkeley. A groups of kids in braces, Asian and white, looking a little bit punk and a little bit like chubby children saw my sign and said "Yeah, money for schools not for war!" They told me they staged a walk-out at their school and they were kind of bummed that only 7 kids walked out. I told them 7 kids was more than ever walked out of my middle school. They agreed that next time there would be more.

On my way out of the train, the operator paused before pulling out of the track to talk to me. She was an older African American woman and she wanted to know how the protest went. She wanted to make sure I knew that slave owners denied education to slaves. She wanted to tell everyone on the train platform that government divests from education in order to suppress political dissent, so that the masses will be poor and helpless and too uneducated to do anything about it. She said we have to fight back, and then moved the train to the next station.

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A Bad Afternoon At Stella D'oro

It was a rough afternoon.

At 2:00 PM yesterday, I was standing in front of City Hall in lower Manhattan, serving as an extra at a press conference for the Stella D’oro workers. After winning an arduous 11 month strike against concessions, the workers have been fighting plans by new owners Lance, Inc. to move the 78 year old bakery from the Bronx to Ashtabula, Ohio and reopen non-union.

The press conference/mini-rally had been a good one, though major media was thin on the ground, Speakers from the plant, a range of union officials and other supporters gave short sharp statements, demanding that Mayor Bloomberg do something to save Stella D’oro and its union jobs. As we were about to break up, two of the workers got hasty phone calls from the plant. Managers had told the morning shift that when they left at 3:00 PM, the bakery was shutting down!

Maybe a quarter of the 100-plus at City Hall headed up to 237th Street and Broadway, where the arriving shift had been ushered into work to empty their lockers. They were still trickling out at 3:00 when the day shift came out en masse, carrying plastic bags with whatever they had had inside. The three dozen supporters and workers outside the gate clapped as they did and there were chants that had become familiar to all from almost a year of picketing.

Still, while some workers looked angry, many had tears in their eyes, and the majority seemed to be in shock, a few still wearing their production-line hairnets. You know how it is--even if you know that something bad is almost definitely coming down the pike, it’s still a shock when it hits. Now imagine this layoff hitting workers with decades at the company, men and women who maintained a picket line for eleven months without a single worker out of 134 crossing it, breadwinners who had been back on the job only since an NLRB decision in their favor in the summer ended management’s scab-herding.

The struggle isn’t over. There’s a rally at the bakery at 3 PM today, which should be well-attended, and there’s a legal
strategy to try and to stop the company from moving out equipment based on the City’s right to recoup the half a million in tax abatements given Stella to upgrade its equipment and keep it in the Bronx.

I know it sounds kind of cheeseball, but this is a blow not only to the Stella workers and their supporters but to the whole working class—and for several reasons.

The Stella workers, members of Local 50 of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, a rather dozy outfit on the whole, had become heroes to rank and file labor activists in NYC and, indeed, around the country, over the course of their long strike, and had drawn the attention of the city’s trade union establishment. These officials eventually proclaimed it, as they did at yesterday’s press conference, the front-line battle for all unionized workers in NY. The media, drawn by the David and Goliath aspect of the battle, gave sporadic but generally favorable coverage, more than small strikes and other labor disputes generally get.

Then there’s the whole Goliath thing. Stella D’oro spent decades as a family-owned business with a solid presence in a regional niche market. After the founders’ deaths it was sold to Nabisco. In 2000, Nabisco was eaten by Kraft Foods, now the second largest food and beverage company in the world. Kraft screwed up the tiny Stella D’oro brand bad and then unloaded it in 2006 on a private equity firm called Brynwood, whose efforts to pillage it before reselling it included the concession demands which triggered the strike.

Once the NLRB ruling went against them, Brynwood’s partners (perhaps upset by picket lines in front of their swank suburban homes as well as the failure of their “operating expertise” to produce the expected shower of gold) sold to Lance, Inc. (Even so Stella can’t compete with Simmons Bedding, recently featured in a NY Times story about how it had been flipped seven times in 20 years by investment groups—read “looters”—finally winding up in bankruptcy.

Lance is a publicly traded low-end snack company based in North Carolina—with Goldman Sachs as a large and influential shareholder. Goldman Sachs is, of course, far and away the biggest winner so far in the feeding frenzy in the shark tank of global finance capital that was kicked off by the economic meltdown. Are they so fat and so arrogant that they can ignore the protests and media attention that come with screwing a handful of mainly immigrant workers? So far, it looks like their answer is yes.

I plan to hit the rally today and learn more about what the next steps in the battle may be. While the prospects are daunting, there are a few positive lessons that deserve to be highlighted. First, the small but dedicated solidarity committee did effective work throughout the strike and since. Any number of socialist groups had a presence, with comrades from Solidarity playing a noteworthy role in keeping things on track, but the most striking thing was how generally well-behaved cadre from such diverse and sometimes fractious groups as Progressive Labor, the ISO, Workers World, Revolutionary Organization of Labor and others were. As the small US left, with no hegemonic organization, faces the continuing meltdown, such behavior will be crucial in building the broadest possible resistance among the people.

Second, while broader support for the Stella workers, especially from the NYC labor and political establishments, has tended to be a day late and a dollar short, a sign that things may be changing for the better comes with recent weeks’ firestorm of protest in the Boston area following the Hyatt Corporation’s layoffs of over 100 veteran hotel housekeeping staff and their replacement with part-timers working for a subcontractor for $8 an hour and no benefits.

Hyatt had the housekeepers train their replacements before telling them they were canned! Hyatt management pleads the necessity of the economy, but it is exactly awareness of the meltdown that appears to be driving the ferocity of the response from area residents, politicians and unions. Hats off to the Boston Taxi Drivers Association who wrote the company stating that if the workers were not rehired, the 1700 member cab drivers would boycott the company’s three area hotels!

So support the Stella D’oro workers. Support the Hyatt workers. And get ready to throw your weight behind whatever battle erupts where you live as greedy or desperate bosses try to make workers shoulder the costs of the deepening meltdown.

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Tracking the Meltdown: Sweating the Small Stuff [updated]

The big economic news is all over the place—lately the truly dire unemployment figures which have administration officials suddenly hemming and hawing instead of bragging about “green shoots.”

But the unfolding depression is making its mark in a thousand pinpricks of pain as well. A newspaper that will flesh this point out a bit just rose to the top of one of the piles here at Casa FotM. It’s an issue from last month of The Millbrook Independent—a six page weekly whose masthead proclaims “Serving Millbrook and Stanfordville and the Greater Millbrook Region” in Dutchess County, New York.

Along with coverage of wetlands regulations and high school math scores were two articles that illuminated unexpected aspects of the crunch.

One, on the front page, plugged a new “state of the art” storage facility opening in a former bowling alley in Mabbetsville. It struck me as perhaps an unfortunate business to be starting in this climate, but the owner had a quote which led me to reconsider: “With the huge advent of home offices, people now need to store what was once in that room.”

And damned if the NYC exurbs aren’t fuller than ever of folks freelancing after losing their jobs. And one woman of my acquaintance is working most of the week at home on the computer for the big name financial firm she used to commute to every day.

The other story in The Millbrook Independent, on page 5, celebrated a local dairy cow, judged the #2 Holstein in the US. The owner, Stephen Van Tassell, explained that this ranking had permitted him to keep the farm’s finances above water by the sale of Sheray’s embryos. Otherwise things didn’t look so good with bulk milk selling for $11.70 a hundredweight “about as low as it’s been in the past, but our costs are higher, around $19 cwt, so the damage is greater.”

Even more significant, this little seven paragraph piece includes striking evidence of neoliberalism’s effects on US agriculture, combined with the impact of the contraction of global trade since the credit crisis broke:

What happened to getting milk prices pegged to regional production costs?

"It’s gone exactly the other way,” Stephen explained. “Now our prices are based on national and international supply and demand. Last year, we [the American dairy industry] exported about 15 percent of our US production. This year we are down to two or three percent. China seems to be importing less."

UPDATE:

A whole other angle on this from my sweetie, Dody. She points out in Cornwall, CT, the nearby small town where she lives, there are now three small dairies which pasture their cows year round and bottle their own milk—two selling raw milk and one pasteurized but not homogenized—and all three are doing well. One guy I know with a largely Jersey herd mentioned that demand for his milk was so great that that he was 20 gallons short on a store order last week.

This may be one of the positive effects of the crisis—accelerating the trend of people turning to healthier, locally-produced foods, including stuff they raise themselves, and in doing so, making smaller scale, environmentally sound agriculture economically feasible again

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Building & Winning: Left Response to the Economic Crisis

[Ever look at the right hand column here at FotM? There are two Key Links there. One is for the Freedom Road Socialist Organization/Organización Socialista del Camino para la Libertad. Fire on the Mountain just wants to pull everybody's coattail to some changes at the Freedom Road website. There's a snappy redesign, still ongoing and including easier navigation.

More important, there's been an increase in the frequency with which new articles are posted, and some damn interesting ones have gone up. This is one of them, reposted here because in reporting on one city, Portland, OR, it sketches some of the tasks as the New Depression deepens. So, please check out the Road's new improved website--and bookmark it. More good stuff coming right up, we understand.]


Written by Patrick Ryan
Saturday, 07 March 2009

“The Master's Tools Will Never Dismantle the Master's House.” - Audre Lorde

It has been credited to the life of Oregon activist Tom Bernard, who not only thought it up, but provided the initial sketches for his idea: a local “town hall” style meeting of the Left in Oregon, bringing together the dispersed and diffuse groups to coordinate effective responses to the economic crisis. Tom unfortunately did not live to see his idea manifest on January 31st, 2009, when a mass gathering of 900 activists and community members was held in Portland, Oregon, to learn, discuss and organize a response from the Left.

The guiding principle of the town hall was that “getting back to some pre-meltdown state is inadequate,” and that allowing people to wait and see how the government would respond would not win any real victories. Organized initially by the local Jobs with Justice, the town hall brought participants from unions, churches, and antiwar groups. Teachers, students, parents and activists got together to complain about the state of things but also to equip themselves with the tools and organization to change it.

Martin Hart-Landsberg, a noted professor of economics and writer for Monthly Review, gave a succinct breakdown of the events leading up to the crisis, and insisted that economic democracy is as much of a right as political democracy, and that it is ours to win. Local labor leaders demanded that working people defend the rights of immigrant brothers and sisters. Jo Ann Bowman from Oregon Action explained how people of color in the Northwest were “never the problem, but those who paid for [the problem].” In what can only be described as an electric feeling from the audience, respected veteran activist and Teamster Tom Leedham said, “If workers wage an aggressive fight, we can win. Now is the time to go on the offensive!”

Town Hall

Participants then worked in groups to discuss issues on various topics such as better wages, accessible health care, affordable housing, local environmental sustainability, democratic unions, and strengthening local democracy. Affordable housing, for example, is blocked by state exemptions that prevent measures like rent control. Unemployment stands officially at 9.9%, which ranks Oregon among the highest in the country. Hundreds of homes have already been foreclosed on, and the hardest hit have been the neighborhoods of color. After learning the stark reality, groups then learned what organizations and resources were already available to help, and how to strengthen them or build new resources.

Activists around the country will be mobilizing to fight for the improved conditions for the people and not more wealth and power for the absurdly wealthy, who, with capitalism, caused this problem in the first place. This is the point we need to promote among our friends and families. Capitalism got us here and the people organized and mobilized to win will be the ones who solve it.

Firmly understanding that this crisis will be different than past ones, possibly even worse, will be the basis for organizing a strong and effective Left resistance. We are already watching this crisis produce suffering for working people, especially those of color: massive layoffs, rising unemployment, cutbacks in state and local budgets, and millions of foreclosed and lost homes.
All of those are only the immediate problems, which overlook the larger looming ecological crisis.

The town hall saw itself as a beginning of something larger. Organizers invited participants to problem solve in an open and democratic way and got the message out on local listservs and mailing lists and the local independent media. The town hall ended with a message of inspired activism that works to sprout many more teach-ins, church meetings, protests and demonstrations that put the tremendous opportunities for the Left up for grabs. It was the beginning of a dialogue “toward building an economy good for all working people.” The energy and motivation was followed by a meeting a few weeks later to sum up the town hall and determine focus areas of struggle. They expected about fifty people to come, but over a hundred did, and they brought friends. The primary focus that emerged from those discussions was the need for local democratic control of city and state budgets, and the people-power to struggle against attempts to privatize resources.

What activists and community members took from this event was the knowledge that we are facing historic challenges and unimaginable difficulties, but also profound and equally historic opportunities. Basic people are questioning this whole system and its legitimacy. They wonder why their children receive no health care or slashed food stamps when the ruling rich are taking million dollar vacations. They say we're all “in this together.” The word “socialism” is being used again in popular discourse, of course with the tired old rhetoric and equations claiming that socialism is some kind of safety net for the rich. We know that isn't socialism.

The corporate media have us believe that we all have to tighten our belts. But our communities have been tightening our belts for a long time and we say it's time for the rich rulers to tighten their belts by ending their wars of aggression, and providing us with real health care, living wages, and livable housing. We will not allow the mess the capitalists have gotten us into to scapegoat immigrant workers, deepen their racist programs, and strengthen their privatization efforts. Going “back to the way things were,” as the town hall said, is completely inadequate. We want a better world, and we will win.

Patrick Ryan is a member of FRSO/OSCL and student activist in the Portland, Oregon area who has worked with a number of labor and community organizations.

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The Road Ahead As Obama Takes Office: A Green Light, A Roadblock, And A Bridge That Isn’t There

[UPDATED: Now with key links.]

With Barack Hussein Obama making history today as he takes the oath of office and a wave of optimism engulfing the country, it is a good time to review what faces us on the road ahead. (The “us” I refer to includes Reds, revolutionaries, socialists, activists, progressives, and all the rest of us who (a) believe a better world is possible and (b) know that work and struggle is the only way to get there.)

Let’s just stipulate one thing from the start. President Obama will be heading up what Karl Marx called the “executive committee for administering the affairs of the whole bourgeois class,” the modern state. He would not be where he is today if he weren’t seen as suited to the job by those whose affairs he will be administering.

But it is also undeniable that there are major differences between Obama and the last crew entrusted with that job. Things after today will be different in very important ways from what they have been over the last eight years. I want to flag three features of the road we are heading down over the coming months.

• First, there is a green light for struggle to advance on many fronts.
• Second, the anti-war movement, by contrast, faces a huge roadblock to moving forward.
• Third, as far as the economy goes, the bridge is collapsing and we are on it.

A Green Light for Struggle

Since November 4, there has been a dramatic uptick in popular struggle in this country. The election of Barack Obama, and the massive mobilization of people from all parts of the US and all sectors of society that made it possible, have created a vastly different terrain of battle than that of the last 8 years. Last month, I heard “Si Se Puede” and even “Yes We Can” chants rising from within a crowd of hundreds of SDSers and other serious young militants mobilized to defend college students who were carrying out an occupation (overall successful) of the New School in NYC.

The emotional highlight of the last few months has been the victory won by another occupation. Union workers at the about-to-close Republic Windows & Doors plant in Chicago seized control of their factory and won nationwide sympathy, including a statement by President-elect Obama affirming the righteousness of their cause and ignoring the illegality of their tactics. When they won their demands, the UE members left the plant chanting, yep, “Si Se Puede” and “Yes We Can.”

Now a wave of protest against the police murder of a young Black man, erupting at times into outright rebellion, has shaken Oakland, CA. Police departments across the country are reviewing their “deadly force” policies and training--and updating their riot preparedness plans.

Any one of these can be dismissed by the cynical as an isolated particular. Let me instead suggest a look at the broadest protest movement which has broken out since the election--the battle which followed the passage of California’s anti-gay-marriage Proposition 8. This ballot initiative, a little gem of rancid bigotry, not only denied same-sex couples the right to wed, but even officially “un-married” tens of thousands of lesbian and gay Californians. It was hands-down the biggest bummer of Election Night, 2008.

But look at what has ensued!

First, there were a couple of weeks of near-spontaneous demonstrations, pulled together by email, instant message and Twitter. Often thousands strong, they reached all 50 states. Many protesters quickly--and correctly--identified and focused on the Church of Jesus Christ of Latter Day Saints (LDS) as the main target. Rallies took place in front of Mormon temples not only across California and in other modern-day Sodoms like NYC but even at LDS Central in Salt Lake City.

The effect has been profound. The demonstrations gave rise to an incredible cultural flowering in defense of gay marriage, from the movie-star-laden YouTube micro-musical “Prop 8: The Musical” (starring Jack Black as Jesus) to the tongue-in-cheek petition drive launched in Princeton, NJ for an initiative forbidding Princeton freshmen to walk on town and campus sidewalks.

Major media outlets and think tanks undertook investigations which showed that, just as protesters charged, LDS money and machinations were at the center of the Prop 8 campaign. Boycotts of tourism in Utah and of Mormon firms, as well as other businesses run by Prop 8 backers, are underway. Members have quit the church or spoken out publicly against its embrace of bias.

On the political front, Obama has felt the heat, especially after his inaugural invitation to Prop 8 supporter Rev. Rick Warren triggered a spasm of revulsion even among his loyalists. One response to the pressure has been his unexpected and unequivocal pledge to move rapidly to end the Armed Force’s homophobic “Don’t Ask, Don’t Tell” policy.

To grasp the new mood of struggle, try and imagine the scene if Proposition 8 had passed during the grim 2000 or 2004 elections. The anger would have been swamped in the overall angst and depression. The flowering of protest and culture would never have taken place. Most important, we would not have the current mood, the overwhelming optimism that the passage of Prop 8 is just a bump in the road which will soon be behind us.

A Roadblock for the Anti-War Movement

The exception to this generally very favorable climate for struggle is unfortunately a crucial one: the wars of aggression the US government is locked into in Iraq and Afghanistan.

The anti-war movement has been the single most powerful opposition force in this country during the last six and a half years. The fact that 70% plus of the American people want the war over with, and pronto, owes much to the tireless and thankless work of tens of thousands of anti-war activists. In fact, the coalescing of broad popular sentiment against the war was perhaps the single most important factor in the Democratic Party’s 2006 victories and 2008 landslide.

The problem facing the anti-war movement now is a grimly ironic one. Despite its enormous contributions to the changed political atmosphere in this country, the movement’s demands --Stop the War! Bring The Troops Home Now!--seem today most unlikely to be met by the Obama administration.

The brutal underlying contradiction remains what it has been since the invasion of Iraq--the US ruling class cannot afford to stay in Iraq and they cannot afford to leave. To stay is to extend an insanely costly occupation indefinitely, in the face of popular hatred, with chaos always around the corner and the sketchiest prospects for a stable hegemony. To leave is to give up the prospect of a US hand on the world’s second largest oil spigot and to accept a drastic defeat for US military power and geostrategy.

We are left with two unknowns about Obama’s intentions regarding these wars, and one known.

Unknown #1 is how far he will go toward pulling out of Iraq. Obama’s goal, in practice, appears to be to finesse the contradiction, by pulling out a majority of the US troops and reducing the combat role of the tens of thousands who will remain. This risks further undercutting US ability to dictate what happens in Iraq, while leaving US troops, bases and other assets more vulnerable to insurgent attack or the re-eruption of civil war between Iraqi forces.

Unknown #2 is how far he will go in honoring his pledge to win in Afghanistan. The pledge was made, and repeated incessantly, to make Obama look tough and highlight the Bush administration’s failure to hunt down al-Qaeda’s leadership. Still, Afghanistan doesn’t have the same strategic importance to the US as Iraq and there are excuses aplenty to step back--corruption in Kabul, NATO allies pulling out, the need to conserve funds and rebuild the military.

The thing which we do know is a simple fact of political life: whatever his intentions, inside of six months, these wars will be Obama’s wars, not Bush’s wars.

It is remotely possible that he will actively try to end them both, but there has been no sign of this since Election Day. Appointees of his in the State Department,the national security apparatus and the military are all publicly saying that a too-rapid withdrawal from Iraq is risky and impractical. Continuing the occupation of Iraq or even dragging out its end will continue the bleeding, actual and economic, there and here.

Moving to double down in Afghanistan threatens major catastrophe. There are reasons that Afghanistan is called the Graveyard of Empires--25 centuries worth of reasons.

All of this leaves the anti-war movement off balance, with hard choices before it.

Should the anti-war movement attack Obama now, or not? There are some in the liberal wing of the movement who, in a touching combination of wishful thinking and denial, want to give him a long honeymoon as a chance to follow through on his promises. Most activists are far more skeptical.

Very sensibly, though, most are also reluctant to launch an all-out assault on him and risk alienating the great swaths of his ardent supporters who so far still believe that he will bring the occupation of Iraq to a close, who will keep believing it so long as troop levels are falling, and who don’t know much about Afghanistan.

With Iraq less and less visible on the country’s radar--none of the Big Three teevee networks even has a Baghdad correspondent any more--some argue that we should seek to end the war indirectly by directing our main attack on the bloated military budget. I think this is a mistake and plays into the hands of those, including those in the new administration, who want Iraq off the radar. People need reminding that there are still 142,000 US troops in Iraq, not help forgetting it.

In my view, the best option is to keep on keepin’ on--continue to protest, step up outreach to our friends and neighbors and rattle the cages of elected officials, especially when appropriation-for-occupation time rolls around again. As Iraq becomes Obama’s war, Obama will increasingly be the one the people hold responsible for its continuation. Even if he should actually begin substantial troop reductions, as promised, that doesn’t oblige the movement to drop the demand that all the troops be brought home. Now.

Should we raise the profile of Afghanistan in anti-war work? The anti-war movement is playing catch-up, in a sense, after keeping its focus rather strictly on Iraq. But with the situation changing rapidly, the occupation’s outlook “grim” (according to the latest national Security estimate) and the promise of the US force there being doubled, to 60,000+ this year, we have no choice. And any step by Obama to escalate the US occupation of Afghanistan or to maintain the deadly status quo there should be opposed directly, with all the vigor possible, as education around that occupation is stepped up.

No Detour Past the Collapse of the Economy

I’ve had a little trouble with my roadway metaphors for this one. I thought about the collapsed bridge in Minneapolis (with overtones of The Bridge To Nowhere), Given all the rebuild-the-infrastructure talk, it seemed a natural.

But what the new administration is facing today is a collapsed global financial system and a rapidly crumbling global economy.

In other words, the actual fact is that we are, all of us, sitting on that metaphorical bridge right now while it comes apart beneath us. Furthermore, it is unclear where a rebuilt bridge might (or should) wind up anchored.

The first effort at shoring up the bridge was a failure on an epic scale. Trillions have been spent to bail out the banks and get credit flowing again. Instead, Citibank and Bank of America have just followed AIG back to Uncle Sam’s free money window for seconds. Globally, whole countries are insolvent or facing bankruptcy.

The most intriguing thing about the Obama administration during the transition months was his immediate post-election pledge to create 2 million new jobs (by late December bumped up to 3 million) by 2010. How? “We’ll put people back to work rebuilding our crumbling roads and bridges, modernizing schools that are failing our children, and building wind farms and solar panels; fuel-efficient cars and the alternative energy technologies that can free us from our dependence on foreign oil and keep our economy competitive in the years ahead.”

This is interesting indeed. It suggests that some in the new administration have concluded what most economists and commentators are still eager to deny, at least in public: we are in a depression! That’s the only reason to contemplate adopting a massive industrial policy/public works program like this.

But if the US (along with the rest of the world) is already the early stages of a full-fledged depression, this is desperately insufficient. Employers are sloughing off between half a million and a million jobs every month these days. 3,000,000 jobs won’t stop the hemorraging, let alone reverse the trend. It does, however, set the precedent for further government jobs programs.

However, the other major steps the new administration has announced to deal with the economic meltdown will only deepen it, and place the burden on working people, now and for generations to come.

First, Obama’s people pledge to continue the doomed effort to rescue the banks by throwing more money at them, although this time trying to figure out how to make them start lending. This just won’t work. The reason the banks need more money is to avoid having to admit that they have gone broke. (All of the UK’s banks are “technically insolvent,” the Royal Bank of Scotland reported yesterday.) They are holding, and hiding, so much “bad paper”--unsaleable toxic assets like CDOs and other fancy speculative instruments--that they need to hoard cash. They certainly won’t loan it to other banks they suspect or know are in the same boat, or to consumers who are themselves already up to their ears in debt and at risk of layoff, or to businesses which depend on the spending of those consumers.

Second, Obama’s appointees are trying to jack up consumer spending as the only fast way to break the meltdown’s downward spiral. Any cut or rebate for regular taxpayers (even with its impact boosted by crude oil prices now less than a quarter what they were only months ago) is likely to be used to pay down debt or hoarded as a shield against bad times, not pumped into reviving the cycle of compulsive purchases of unneeded stuff that fueled the credit bubble in the first place.

Third, all of this can only be funded by trillion dollar deficits “for years to come”, as Obama put it. This amounts to putting off the day of reckoning into the future, when all the IOUs the Treasury issues now to finance this “rescue” of the economy have to be paid off by our children and our children’s children. And that’s assuming that buyers can even be found for all the debt the new president is talking about issuing. If you are an investor from China or the United Arab Emirates or the US, for that matter, how enticing does this proposition sound: Loan us trillions so we can throw it at banks which will hoard it to keep staggering around a little bit longer before going belly up?

Obviously government policies can make an enormous difference in how deep the depression goes, how long it lasts and who bears the burden. What it cannot do is bypass the depression.

Look at the last two months. Broke consumers, many with credit cards canceled or limits reduced, sat on their wallets during the holiday shopping seasons. Sales dropped to their lowest since figures were first published, in 1969. Naturally a wave of small store and chain outlet closings is underway, and soon more big chains will be following Circuit City into the boneyard. That means more broke unemployed folks, of course. It also means that the highly leveraged commercial real estate market is tanking fast. That’s the folks who brought you all those malls now starved for customers and covering empty shop windows with brown butcher paper.

And guess what? All the commercial loans and mortgages the developers and management firms took on have long since been bundled, split into tranches, overvalued and sold off to eager banks, hedge funds and speculator--just like residential mortgages. Now there’s another pile of steaming toxic waste which has to be kept hidden in the vaults of the banks. And another turn of the downward spiral takes shape.

From the standpoint of the ruling class, whether they grasp it or not, two things have to happen for this depression to end. First, the global financial system has to be rebuilt from the ground up, and that can only happen on the rubble of the huge, flat-broke banks currently acting as parasites on national economies the world over. Isn't dread that this will happen the best explanation of why desperate financial firms, bleeding money and with stock prices tanking, opted to become the biggest donors to Obama’s $50 million Inauguration?

Second, the huge overproduction--of consumer goods and of means of production--has to be destroyed. That’s what’s starting to happen in the auto industry right now. It won’t be pretty and it won’t be over soon.

From the point of view of everybody outside the ruling class, this gives us one task, crystal clear. Resist! Every single bid to dump the crisis on ordinary working people must be resisted with determined struggle, preferably of the pitchfork and torch variety. Plant takeovers and organizing drives in the workplace. The pillorying of cut-minded local officials like Philadelphia’s mayor when he tried to close eleven libraries. Campus protests like the coordinated demonstrations in the California higher education system. Hounding Wall Street bigwigs when they dare to appear in public.

The watchword of the Obama campaign was “Hope.” Well, if all we do now is sit back and hope, we are going to find ourselves hoeing one very hard row.

Hope will not make President Barack Hussein Obama and the Democratic Congress (much less Republican congresscritters) turn their backs on the banks and corporations--on their lobbyists, on their campaign donations, on their bought-and-paid-for media, on the think-tanks and “experts” they fund. Only struggle, and the fear it engenders in their hearts, will do that.

Pitchforks.

Torches.

Struggle.

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