So... it comes down to this on the way down to the way down below the lowdown-- over here, in front of the TV cameras, the bankers, financiers, the brokers, all of them pointing fingers in every direction but home, shaking their heads in a hundred different rhythms, rolling their eyes in asynchronization, but singing with one voice a drop-dead imitation of Shaggy-- "It Wasn't Me."
And over here, after the cameras are turned off, and the mikes killed, and the committee men and women have left the platform, then the bankers, financiers, brokers, all of them grabbing at the same time with every hand outstretched, all of them channelling Wreckless Eric, singing "Take the K.A.S.H," off-key of course, which is exactly the point when singing Wreckless Eric.
2. Hair[cut]s of the Dog
And it comes down to this too, that the Chairman of the Federal Reserve System, nostalgic for those salad yesterdays days of capital liquidation, that golden era of asset stripping, that happier time when dissolving hard assets in the acid bath of leverage was so innovative, has committed the Fed to lending money at leveraged rates of 10 or 20 to 1 to private equity investment firms, hedge funds, brokers, for the purchases of securities backed by the cash flow from student loans, credit card debt [prime and subprime], auto loans [prime, subprime, and floor plan], and small business loans backed by the US Small Business Administration.
The Fed will offer its, your, cash at par or market value of these securitized loans, minus a haircut of course, to anybody and everybody with a minimum of ten million dollars worth of the securities; the Fed, with commitments from the US Treasury, will offer these loans at the LIBOR rate plus 50 or 100 basis points, for three years, with the collateralized securities themselves the only collateral the borrower need provide-- in effect, allowing the borrower to walk away from the securities with the K.A.S.H. at any time, for any reason, without any recourse on behalf of lender-- the Fed.
So as not to frighten our intrepid financiers from this pot of gold in the middle of the black rain, participants in the TALF will not be subject to the limits on executive compensation that the Congress so thoughtlessly, callously, cruelly imposed on those taking the public's money.
Obviously, the latest version of Federal Reserve monetarism is derived from both the sophistry of Milton Friedman and the legendary larceny of Eddie Antar retailing stereos and VCRs to New Yorkers in the 1980s.
At 2 Maiden Lane in New York City a banner appeared over the Fed's battery of special lending windows: " Welcome to Crazy Feddie's. Prices So Low, We're Practically Giving It All Away! Our Prices Are INSANE!"
3. Barking up Trees while the Forest Burns
Meanwhile, the scientists of the dismal science of political economy, circling the wagons around the pit that is called finance capitalism, fill the print, video, and digital media with their favorite theories of what, where, how, and why things went more than just wrong-- how capitalism has made its own existence so problematic.
Political economy came into being as a natural result of the expansion of trade, and with its appearance elementary, unscientific huckstering was replaced by a developed system of licensed fraud, an entire science of enrichment.
This political economy or science of enrichment born of the merchants' mutual envy and greed, bears on its brow the mark of the most detestable selfishness. People still lived in the naive belief that gold and silver were wealth, and therefore considered nothing more urgent than the prohibition everywhere of the export of the "precious" metals. The nations faced each other like misers, each clasping to himself with both arms his precious moneybag, eyeing his neighbours with envy and distrust. Every conceivable means was employed to lure from the nations with whom one had commerce as much ready cash as possible, and to retain snugly within the customsboundary all which had happily been gathered in.
If this principle had been rigorously carried through trade would have been killed. People therefore began to go beyond this first stage. They came to appreciate that capital locked up in a chest was dead capital, while capital in circulation increased continuously. They then became more sociable, sent off their ducats as callbirds to bring others back with them, and realised that there is no harm in paying A too much for his commodity so long as it can be disposed of to B at a higher price.
On this basis the mercantile system was built. The avaricious character of trade was to some extent already beginning to be hidden. The nations drew slightly nearer to one another, concluded trade and friendship agreements, did business with one another and, for the sake of larger profits, treated one another with all possible love and kindness. But in fact there was still the old avarice and selfishness and from time to time this erupted in wars, which in that day were all based on trade jealousy. In these wars it also became evident that trade, like robbery, is based on the law of the strong hand. No scruples whatever were felt about exacting by cunning or violence such treaties as were held to be the most advantageous.
The cardinal point in the whole mercantile system is the theory of the balance of trade. For as it still subscribed to the dictum that gold and silver constitute wealth, only such transactions as would finally bring ready cash into the country were considered profitable. To ascertain this, exports were compared with imports. When more had been exported than imported, it was believed that the difference had come into the country in ready cash, and that the country was richer by that difference. The art of the economists, therefore, consisted in ensuring that at the end of each year exports should show a favourable balance over imports; and for the sake of this ridiculous illusion thousands of men have been slaughtered! Trade, too, has had its crusades and inquisitions.
The eighteenth century, the century of revolution, also revolutionised economics. But just as all the revolutions of this century were onesided and bogged down in antitheses -- just as abstract materialism was set in opposition to abstract spiritualism, the republic to monarchy, the social contract to divine right -- likewise the economic revolution did not get beyond antithesis. The premises remained everywhere in force: materialism did not attack the Christian contempt for and humiliation of Man, and merely posited Nature instead of the Christian God as the Absolute confronting Man. In politics no one dreamt of examining the premises of the state as such. It did not occur to economics to question the validity of private property. Therefore, the new economics was only half an advance. It was obliged to betray and to disavow its own premises, to have recourse to sophistry and hypocrisy so as to cover up the contradictions in which it became entangled, so as to reach the conclusions to which it was driven not by its premises but by the humane spirit of the century. Thus economics took on a philanthropic character. It withdrew its favour from the producers and bestowed it on the consumers. It affected a solemn abhorrence of the bloody terror of the mercantile system, and proclaimed trade to be a bond of friendship and union among nations as among individuals. All was pure splendour and magnificence -- yet the premises reasserted themselves soon enough, and in contrast to this sham philanthropy produced the Malthusian population theory -- the crudest, most barbarous theory that ever existed, a system of despair which struck down all those beautiful phrases about philanthropy and world citizenship. The premises begot and reared the factory system and modern slavery, which yields nothing in inhumanity and cruelty to ancient slavery. Modern economics -- the system of free trade based on Adam Smith's Wealth of Nations -- reveals itself to be that same hypocrisy, inconsistency and immorality which now confront free humanity in every sphere.
But was Smith's system, then, not an advance? Of course it was, and a necessary advance at that. It was necessary to overthrow the mercantile system with its monopolies and hindrances to trade, so that the true consequences of private property could come to light. It was necessary for all these petty, local and national considerations to recede into the background, so that the struggle of our time could become a universal human struggle. It was necessary for the theory of private property to leave the purely empirical path of merely objective inquiry and to acquire a more scientific character which would also make it responsible for the consequences, and thus transfer the matter to a universally human sphere. It was necessary to carry the immorality contained in the old economics to its highest pitch, by attempting to deny it and by the hypocrisy introduced (a necessary result of that attempt). All this lay in the nature of the case. We gladly concede that it is only the justification and accomplishment of free trade that has enabled us to go beyond the economics of private property; but we must at the same time have the right to expose the utter theoretical and practical nullity of this free trade.
The nearer to our time the economists whom we have to judge, the more severe must our judgment become. For while Smith and Malthus found only scattered fragments, the modern economists had the whole system complete before them: the consequences had all been drawn; the contradictions came clearly enough to light; yet they did not come to examining the premises, and still accepted the responsibility for the whole system. The nearer the economists come to the present time, the further they depart from honesty. With every advance of time, sophistry necessarily increases, so as to prevent economics from lagging behind the times. This is why Ricardo, for instance, is more guilty than Adam Smith, and McCulloch and Mill more guilty than Ricardo.
Even the mercantile system cannot be correctly judged by modern economics since the latter is itself onesided and as yet burdened with that very system's premises. Only that view which rises above the opposition of the two systems, which criticises the premises common to both and proceeds from a purely human, universal basis, can assign to both their proper position. It will become evident that the protagonists of free trade are more inveterate monopolists than the old mercantilists themselves. It will become evident that the sham humanity of the modern economists hides a barbarism of which their predecessors knew nothing; that the older economists' conceptual confusion is simple and consistent compared with the doubletongued logic of their attackers, and that neither of the two factions can reproach the other with anything which would not recoil upon themselves.
This is why modern liberal economics cannot comprehend the restoration of the mercantile system by List, whilst for us the matter is quite simple. The inconsistency and ambiguity of liberal economics must of necessity dissolve again into its basic components. Just as theology must either regress to blind faith or progress towards free philosophy, free trade must produce the restoration of monopolies on the one hand and the abolition of private property on the other.
The only positive advance which liberal economics has made is the elaboration of the laws of private property. These are contained in it, at any rate, although not yet fully elaborated and clearly expressed. It follows that on all points where it is a question of deciding which is the shortest road to wealth -- i. e., in all strictly economic controversies -- the protagonists of free trade have right on their side. That is, needless to say, in controversies with the monopolists -- not with the opponents of private property, for the English Socialists have long since proved both practically and theoretically that the latter are in a position to settle economic questions more correctly even from an economic point of view.
In the critique of political economy, therefore, we shall examine the basic categories, uncover the contradiction introduced by the freetrade system, and bring out the consequences of both sides of the contradiction.
He wasn't kidding. And he wasn't wrong.
6. Was, Not Was; Is, Is Not
Capitalism exists in a condition, not a state, of continuous and dynamic disequilibrium. It "manages" this disequilibrium by maintaining its reproduction as capital. To do that capital must engage, exchange itself with wage labor. The more capital accumulates, the more of itself it must exchange with this opposite-identity in order to increase its accumulation. Yet in order to increase its accumulation, its rate of aggrandizement capital must continuously expel from the production process that proportion of living labor necessary to its reproduction, so that more of itself, its accumulated mass, can be animated by less of its-other-self, living wage labor. Consequently, the more capital exchanges itself with wage-labor, the relatively less of itself capital exchanges with wage-labor, and so its profitability falls. The faster it goes, the slower it gets. The more it reproduces, the more it reproduces itself as the enemy of its reproduction, and thus it embarks on asset-stripping, liquidation, devaluation, and destruction.
The resolution of capital's immanent critique of itself is not in bailouts, nationalizations, "stimuli"etc. For the bourgeoisie, the resolution is, and is only, in destruction of both identities-- the means of production, and wage-labor. For the working class the resolution begins, only begins, with the opposition to bailouts, nationalizations, etc. The resolution advances through and by acts of solidarity with those most intensely exploited in the build-up to the decline in the rate of return. The critical second step-- May Day 2006 was the first step-- is for all workers to oppose all attacks upon, all discrimination of immigrant workers. The class as a whole must insist that unemployment benefits include amounts for remittances to immigrant workers' families. Now that would be stimulating.
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