Conference at the American University, Washington DC, September 23 to 26 2016
Notes by Peter Venton
The following are my notes on the video of Gar Alperovitz` address to the conference. My comments are presented in square parentheses. The video is on the conference link, http://worldbehondwar.org/NoWar2016
Alperovitz argues that, since WWII, the US government has used the UN as a place to bounce propaganda off in order to convince the American public that war was necessary to prevent the spread of communism. The three major wars in Korea, the Gulf of Tonkin and Iraq were unconstitutional and/or dishonest. He notes that the national US press simply does not cover this issue because it does not cover matters about the left. The local or regional press does not have the capability.
[My view is that the capitalist American economy almost failed in the 1970s owing to the re-emergence of globalization that featured commercial competition from Japan and Europe after those countries rebuilt their economies that had been substantially destroyed in World War II. Note that the US produced a staggering 50% of the entire world’s manufacturing in the 1950s. Free trade was very much in the interest of America since it had little competition and could dominate world trade. With the re emergence of globalization since the 1970, and particularly after the 1980s, there has been a substantial reduction in the US share of world manufacturing. On top of that the enormous increase in labor productivity in manufacturing has resulted in less employment and stagnant growth in labor income for many working class Americans over the last three decades but particularly since the financial crisis in 2008.]
Alperovitz does mention the re emergence of Japan and Europe economies after World War. He noted that the military budget for the Vietnam war gobbled up 14% of US GDP. The central point in his argument is that “capitalism inherently must expand to succeed”; If it does not it goes into “financial crisis and economic depression” . [This of course happened in America with the crash of 1929 which was followed by the Great Depression. It is the analysis of Karl Marx (1850), John Maynard Keynes( in the 1930s) and more recently French economist Thomas Piketty in his 2014 book Capital in the Twenty-first Century.]
[The failure of American capitalists – as predicted by Indian-American economist Ravi Batra for 1990 was deferred to 2008. The government tax reductions on corporate income and high personal incomes which have greatly increased the inequality of wealth and income were offset by massive increases in household debt of Americans and by the maintenance of a war economy that has generated aggregate demand.
[The tax and fiscal policies of the US governments ran contrary to Keynes’ argument for progressive taxation and spending on public infrastructure for a balanced economy that would ensure full employment. Instead. as John Kenneth Galbraith pointed out in the mid 1970s, the US embarked on a regime of military expenditure and disproportionate tax reductions for the wealthy. Government austerity required by the tax reductions was mostly concentrated mostly on the poor and the lower middle class. Thus military spending substituted to a significant degree for Keynes’ prescriptions for expenditure on public infrastructure that were necessary for a balanced economy that would sustain full employment. In short economic growth is imperative for the interests of the capitalists and wars (or planning for war) are instrumental for creating economic growth.]
In any event Alperovitz says the US military expenditures as a percent of GDP is now down to 3.5%; furthermore Americans have little appetite for more war. This means that the military can no longer be a major factor supporting economic growth and the capitalist system – except of course for the recent US government plan to spend a trillion dollars to upgrade its nuclear capability.
[In this light I would suggest that the projected “peace dividend” of one trillion dollars from not upgrading the nuclear arsenal could be a huge boost to the American economy in terms of government expenditure to reduces its estimated 3.5 trillion dollar public infrastructure deficit. Furthermore the investment needed to provide sufficient renewable energy to replace fossil fuels to meet climate change objectives is equally as huge according to some estimates by British economists. ]
[America could take the lead towards proposing that Russia and China collaborate with it (and NATO) to reduce military expenditures under UN auspices in a setting of world federalism for both military security and for protecting the world’s environmental commons against further degradation. Both Russia and China have the same problem as the US in the sense that they are operating capitalist systems that are not sustainable without further imperialism either in trade or in planning for war and waging war. The only difference is that China and Russia are engaged in “state capitalism” as opposed to the US private sector capitalism in a nominally- democratic (as opposed to an oligarchic) polity. So China has light taxes on capitalists and major subsidies and procurement to support them. Meanwhile the US has higher taxes but also greater indirect subsidies in terms of (a) infrastructure support to corporate operations, (b) public education of skilled labour force for corporations (c) massive technological innovation (e.g. the internet) that is made free to corporations to exploit commercially and (d) massive assumption of the costs of corporate externalities of pollution which now represent a third of corporate profits. On top of that the US government provides a whole host of patents and copyrights and procurement policies that generate easy excessive profits for large monopolistic corporations. Last but not least the US government provides free insurance for big corporations (e.g. automobile manufacturers) and banks that are judged “too big to fail”. ]
The next time the banks fail Alperovitz suggests the government could take them over and run them as public utilities. [Actually this is not a new idea; in the 1970s; John Kenneth Galbraith suggested government own shares in the 200 largest corporations which were highly monopolistic (as opposed to the vast majority of corporations that are largely competitive) and that were in the business of creating new products and services rather than the provision of basic public goods and services that the electorate needed.)
[The prospects for imperialism to expand growth are now very limited for the US, for China and for Russia because of the limits on the world’s environmental resources and because of the weakening economies around the globe that cannot afford to import American goods and services to the extent that they once did. That is one of the reasons why the prospects of third world wars are now greater than they have been for a long time. The prospects for further acquisition of natural resources through trade are limited so the only other alternative is acquisition of resources through waging war or introducing other forms of aggression through trade and investment initiatives to obtain access to natural resources.]
[By contrast a democratic capitalism system (aka democratic socialism) in the US would require very little economic growth. More importantly it would not require the extent of imperialism that now prevails The US, Russia and China are also major imperial powers. In the foregoing circumstances all stand to gain from a new economic order and from world federalism that would provide them with a massive peace dividend to restructure their economies so as to avoid further destruction of their natural resources and reduce civic unrest. Civic unrest is now very obvious in the US and heavily squelched in China. I don’t know about Russia.]
According to Alperovitz, the surprising reality in America today is the acceptance of Bernie Sanders’ remarks; Saunders is described as a “socialist”. Alperovitz argues that 85% of US millenials embrace socialism as an alternative to [the current variation of] capitalism. Capitalism has clearly failed a substantial proportion of the American public comprised mostly of the poor and the lower middle classes. Alperovitz notes that many US Mayors are using their political power to develop cooperatives of workers. By definition these cooperatives do not depend on profits; more precisely they recycle profits back to the workers and hence into the real economy. [By contrast much of the profits of big capitalist firms are not recycled into the real economy but rather into the financial sector where they lead to increasing the prices of existing assets such as real estate, stocks, collectibles . Large amounts of financial assets are transferred to tax havens where they have no impact on the real US economy. Alperovitz cited a Spanish workers cooperative of 60,000 workers in which the spread between the highest and lowest wage rates is 6:1. This compares with the 300: 1 ratio in the US.
Meanwhile Alperovitz notes that intellectuals are working on building the theory, the practical experiments, the policies and the politics for a “new economy”. He specifically referred to a conference of 1000 experts who met in Buffalo in 2015. He noted that generally the national press does not report on these proceedings because they are regarded as too left. And the local press does not report on them largely because they do not have the capability and are struggling financially.
Alperovitz raises three problems with the work of a new economy. First, “How do we open up the understanding that the alternative of democratic socialism works better than the present form of American capitalism? Secondly “What do we do with the big corporations in the new economy? Do we break them up as the US government broke up Standard Oil long ago? Do we make some like the banks into public utilities? Thirdly “How do we build participatory democracy in a country that is 3,000 miles across (diagonally) with a population of 350 million? With respect to this third problem he suggests that somehow we need to build participatory democracy at the local level from the ground up.
February 21, 2017