Saturday, January 14, 2017

Book Review: Is Socialist Revolution in the US Possible?

Is Socialist Revolution in the U.S. Possible?

The short answer is no. But that's the title and thesis of this book by Mary-Alice Waters, Olympia Newton and Norton Sandler. Of course they answer Yes.

Published in 2009, the book recounts events at the Venezuela International Book Fair, held in Caracas in 2007, specifically the session on the prospects for socialism in the US. It includes Ms. Water's opening presentation, along with reporting on the entire proceedings by Ms. Newton, and a presentation Ms. Waters gave a year later at another event in Caracas. Mr. Sandler contributes the introduction.

I guess it's human nature to regard our current generation as representing some inflection point in history. People imagine that folks in the future will spend their days thanking/condemning us for what we have or haven't done: saved the climate; prevented nuclear war; stopped an asteroid from hitting the earth; prevented the dystopia of artificial intelligence that's smarter than we are; solved the problem of overpopulation; returned us to the gold standard; etc.

Any of these items could represent the end of civilization as we know it, but they probably won't. Chances are the real threat to human flourishing will be something nobody today has even thought of. What the soothsayers all forget is that life is very contingent; the future depends as much on what side of bed Kim Jong-un wakes up on tomorrow morning as on anything else.

But Mary-Alice takes soothsaying to an extreme. Part of the future is inevitable, and another part of it depends on our choices.

The money quote is actually on the back cover.
To think that a socialist revolution in the U.S. is not possible, you would have to believe not only that the ruling families of the imperialist countries and their economic wizards have found a way to 'manage' capitalism. You would also have to close your eyes to the spreading imperialist wars, civil wars, and economic, financial, and social crises we are in the midst of.
In her world, the bourgeoisie are compelled by their "declining rate of profit" (she never explains what that means) to steal from the rest of us until the entire world order collapses into a catastrophic mess. The rich, despite their wealth, are insatiably hungry and inevitably can act in no other way.

On the other hand, we, the working class, have options, albeit only two of them. We can organize to fight back and defeat the bourgeoisie. For this we will need a vanguard party, which is the unique role of the Socialist Workers Party (SWP). Or, we can allow ourselves to be guided by false prophets who sell us out for a pocketful of change, betraying the working class and leading to the very end of the human civilization.

It's like a train rolling inevitably down a hill, and ahead is a switch between two tracks. Choose the wrong track and you'll head over a cliff. Flip the switch the other way (follow the SWP) and instead you'll reach safe harbor where everybody lives happily ever after.


On matters of fact the above quote is misleading in at least two ways. First, she is quite right that the wizards are unable to 'manage' capitalism--neither the Fed, the Treasury department, nor the White House. Capitalism is, by design, completely unmanageable. But what she doesn't understand is that capitalism is stable--it doesn't need to be managed. Adam Smith's invisible hand works remarkably well.

And second, she is also correct that we have turmoil, strife, and "crises." The Militant always exaggerates every problem into a crisis--today we have an economic crisis, an educational crisis, an ecological crisis, and so on. Mostly these are just the warp and woof of every day life--problems, to be sure, but hardly a crisis. It is true that in 2008 we had a financial crisis, and in 1961 we had a missile crisis. But nothing today rises to anywhere near such a level. History has always been thus.

The most interesting part of the book is the contribution from Olympia Newton reporting on the rest of the conference. Most attendees apparently didn't agree with Mary-Alice, taking a much more pragmatic point of view.

Author Eva Gollinger said she didn't " 'share the same optimism that revolution is possible in the United States.' because 'it's very easy to change the channel. People are not poor and hungry in the U.S. like they were in Venezuela. You get two or three credit cards in the mail every day. There is poverty, but it's only in a few small sectors.' " (Italics mine. The conference took place when optimism about Venezuela still prevailed, hence poverty was spoken of in the past tense. How quaint!)

Ms. Gollinger's view seems more in accord with facts than Mary-Alice's.

Ms. Waters sees the struggle of illegal immigrants as central to the American Revolution. Recall that in 2006 (a year before the conference) there was a flash mob of Mexican high school students who demonstrated by the hundreds of thousands to protest deportations. Ms. Newton reports that Latin Americans were much less tolerant of these people than Ms. Waters would have you believe.
In various ways, several said that Latin Americans living in the United States are simply there to "get a piece of the pie."
"They are only there to get passports," said one participant. "Once they get them they will stop marching." Many spoke with barely concealed contempt for immigrant workers as sellouts who had bought into the "American dream" instead of remaining in Latin America to fight for political, economic, and social change.
This does seem like a truer description of immigrants than Mary-Alice's relentlessly downtrodden workers.

Then there was explicit antisemitism from "Leftist", Amiri Baraka, among others. Mr. Baraka recited one of his so-called poems.
"Who decide Jesus get crucified?" one poem asks. "Who knew the World Trade Center was gonna get bombed? / Who told 4000 Israeli workers at the Twin Towers / To stay home that day? / Why did Sharon stay away?"
Another "participant from Panama had said during the discussion that Jews are the main problem facing working people in the world today because 'they have all the money' and control everything."

Norton Sandler, representing the SWP, demonstrated appropriate courage. "[H]e spoke from the floor the next day and pointed to the deadly danger scapegoating and Jew-hatred posed for the working-class movement."

Whatever their intellectual failings, my former comrades have retained a moral compass.

Further Reading:

Wednesday, January 11, 2017

Book Review: Rise & Fall of American Growth

Robert Gordon's book The Rise and Fall of American Growth certainly doesn't need another review: see here, here, here, and here, for example. But I'm so inspired by reading it that I can't resist.

Whatever you think about Mr. Gordon's conclusions, the book itself is magnificent. He posits a miracle century from 1870 to 1970, beginning with the invention of the electric light, and concluding with the widespread adoption of central air conditioning. Prior to 1870, Americans lived lives more similar to medieval times than to our own. If not necessarily brutish, life was definitely nasty and short. Men's work was dirty and dangerous, while women's toil was unremitting drudgery. Children often died young.

By contrast, a household in 1970 had electricity, indoor plumbing, clean, running water, a car, television and radio, a refrigerator, washer and dryer, a telephone, and more. Nobody needs to share bathwater anymore. While there have been incremental improvements in all those devices, a modern family could move into an unrenovated, 1970s house and live quite normally. The only significant household appliance invented after 1970 is the microwave oven.

Similarly, workers have it much better off than before. They're employed in air-conditioned offices, in ergonomically-designed factories, and stores with break rooms and washrooms with indoor plumbing. Women don't have to sew their own clothes, or launder their husband's filthy clothes by hand, much less cook over an open fire. Today they can go work in the same climate controlled offices where their husbands are employed.

The result is a huge increase in productivity! Mr. Gordon documents it meticulously, and discovers that the largest productivity gain occurred during the decades from 1920 to 1950. That despite the Great Depression and World War II, or perhaps, even because of those events. For example, US manufacturers learned how to build one B-29 bomber every hour. That skill was not forgotten at the end of the war.

The central thesis of the book is that the miracle century can only occur once. The electric light has already been invented--that can't happen again. And likewise with the equally important internal combustion engine. Households can be networked (electricity, water and sewerage, telephone) only once, and while the network can be upgraded, the fundamental productivity change can't happen again.

In other words, we've eaten the low-hanging fruit. Productivity improvements such as occurred during the miracle century are once-off, never to be repeated. Hence economic growth will shrink from ~4% annually during the miracle century, to something around 1% today.

But Mr. Gordon's thesis does not just rely on anecdote and statistics. He brings some solid economic reasoning to the task as well. The growth in GDP is typically decomposed into three terms, which are then added together. Those are 1) the growth in the size of the labor force; 2) the growth in the total capital stock; and finally 3) the growth in TFP, which concerns most of the book.

TFP stands for total factor productivity, but that's really a misnomer. A more apt name is the Solow residual, named after Robert Solow, who invented the concept. But residual is the important label, and that means everything that is left over after you've accounted for the principal factors.

So economic statistics are always a bit dismal--hard numbers are hard to come by. For example, Mr. Gordon demonstrates conclusively that government statistics systematically overstate inflation--not because they're evil, but just that inflation is really hard to measure. Simple concepts such as real GDP growth are fuzzy--beset with uncertainties such as the inflation rate. And likewise with growth in labor and capital investment.

Nevertheless, within some error margin one can estimate growth as a function of labor. Add one additional worker x, and y amount of additional output will be produced. Similarly, buy a new machine for that worker to use, and output will increase all the more. Thus GDP growth as a function of the size of the labor force and as a function of capital investment can be reasonably estimated.

But there are some factors in GDP growth that are not a function of either labor or capital. For example, fine weather will produce a much larger agricultural output, regardless of how many workers or tractors the farmer employs. A change in government regulations may make it cheaper and easier to manufacture widgets, as can also a change in global trading networks. None of these can be expressed by the principal components (labor and capital), but are instead are left over as a residual, aka a fudge factor, known as TFP.

Among other things, TFP collects any errors that accrue in measuring labor and capital investments. I propose that it be renamed TFF: total fudge factor.

But the total factor productivity moniker is longstanding, and not irrational. While nobody denies any of the items that I've designated TFF, most of the residual is attributed to new technology. Buying a new abacus may improve the productivity of your new accountant at the margin, but replacing the abacus with a computer makes for a whole new ball game--productivity will make a giant step upward.

And Mr. Gordon is certainly on solid ground when he attributes to the miracle century to new technology. The rest of the fudge factor is either small or it cancels out. For example, despite the Great Depression, TFP growth continued unabated throughout the 1930s. There is no other reasonable explanation for this other than technology.

He also makes a strong argument about why TFP growth has decreased since 1970: apart from the digital revolution there's been very little new technology. While digital technology (computers, internet, etc.) caused a large spurt in TFP from 1994 to 2004, since then it's petered out--yet another revolution that can no longer be repeated.

So his book is a tour de force in economic history, and well worth reading just for that reason. The problem, insofar as there is a problem, is when he starts predicting the future. He's what might be called a techno-pessimist. I think he's too pessimistic--I believe AI and driverless vehicles will have a much larger impact than what he predicts. But then my crystal ball isn't any better (or worse) than his--we'll just have to wait and see.

Nevertheless, in addition to declining TFP growth he details four headwinds to American economic growth. One of these is rock solid, namely demography. The US labor force is not growing very fast, and soon may actually decline. This is partly because the baby boomers are retiring, partly because men are disproportionately leaving the workforce, and even workforce participation by women is declining slowly. Further, immigration rates will slow down (regardless of what Mr. Trump does).

If labor force growth declines, then economic growth will decline with it. No way around that.

The second headwind is debt. Government has run up huge debts. Not just the federal deficit, though that's bad enough, but social security and Medicare are increasingly burdensome obligations. States and municipalities are committed to pension payments that are unsustainable. Debt has added to economic growth today in exchange for reducing growth in the future. And Mr. Gordon's reasonable prediction is the future economic growth will be reduced. I agree with this conclusion as well.

The third headwind is education--we're no longer making progress in increasing the percentage of high school or college graduates. I think he's just wrong here. Our country invests way too much in education. I've written about that elsewhere.

Finally, he mentions inequality. This is a bit of a category error--he doesn't claim that inequality will per se inhibit growth, but rather that the proceeds will not be evenly distributed. "When we consider the future of American growth, we care not just about the growth of average income per capita, but also about growth of income per capita for the median American household" (p. 612).

I think the inequality problem is overstated. The proper comparison is not income, but rather consumption. The CEO may earn 1000x more than the worker, but he doesn't consume 1000x as much. He certainly doesn't eat much more than the average employee, and he can only drive one car at a time. Maybe he's 10 or 20 times richer than the working stiff. Not a big deal.

In summary, whatever you think about Mr. Gordon's conclusions, this is a superb book and well worth your time.

Further Reading:

Wednesday, January 4, 2017

One State or Two?

In a front page article by Naomi Craine entitled "UN Israel vote registers blow to Palestinian national fight," The Militant (SWP*) opposes the recent UN resolution condemning Jewish settlements on the West Bank.
The resolution states in part that “the establishment by Israel of settlements in the Palestinian territory occupied since 1967, including East Jerusalem, has no legal validity and constitutes a flagrant violation under international law and a major obstacle to the achievement of the two-State solution.” 
The vote in fact registers a blow to the decades-long struggle of the Palestinian people against national oppression. It reinforces the dead-end course of the Palestinian Authority and Hamas leaderships to rely on Washington and other imperialist powers to pressure Tel Aviv, while shackling the Palestinian masses as passive bystanders. It gives a boost to forces in Israel pushing for greater inroads into Palestinian territory.
This odd reasoning is consistent with Trotskyism, which accepts as a given that nothing United States supports can help the working masses, in this case Palestinians. The solution for Palestine is not reliance on the "imperialist powers," but instead mass action on their own account.

The article then wanders far from traditional Trotskyism.
It [the UN resolution--ed] reflects the absence of any Palestinian leadership fighting for a way forward — a negotiated agreement that includes recognition of the state of Israel, coupled with recognition of a Palestinian state, as it exists today, as a stepping-stone to the fight for a single, contiguous homeland for the Palestinian people. Only this fight can provide the basis for advancing the interests of working people of all nationalities in the region today.
Or in other words: The Militant proposes the following plan 1) recognition of the State of Israel by Palestinians; 2) the recognition of a Palestinian state in a two-state solution; and 3) a long-term, utopian goal of a democratic, secular Palestine/Israel from river to sea.

There are many things to criticize here, not least the mere impracticability. But it gets one, huge, thing glaringly right: it is NOT antisemitic.

All the other grouplets I follow argue that the State of Israel should be wiped off the map. Here's how Socialist Action (SA) puts it.
Only a democratic and secular Palestine extending throughout the historic territory of the Palestinian people, with full rights guaranteed for all regardless of nationality or religion, can effectively replace the current system of settler-colonial domination. 
The resolution also ignores and limits the right of Palestinians to resist the illegal occupation. It calls for confiscation of “illegal” weapons and equates the right of Palestinians to self-defense and military resistance to colonial occupation with “terrorism.”
The first paragraph is the usual prophylactic against charges of antisemitism. After all, how can anybody in favor of a "democratic and secular Palestine" be an anti-Semite?

But the second paragraph puts a lie to the illusion. Palestinians, on this telling, are "occupied", and have an unlimited right to resist the occupation. By any means necessary! Which leads inevitably to supporting Hamas--an archetypal antisemitic organization if there ever was one. Indeed, for me it's a litmus test: if you support Hamas, you're an anti-Semite, whatever else you might say. And SA enthusiastically supports Hamas!

The key difference is this: for the SWP the utopian outcome comes last, and only after both Israel and Palestine are recognized. Or put another way, nobody in the SWP is gonna be driving the Jews into the sea.

For SA, the order is reversed--the utopian solution is a prerequisite before anything else can be discussed. And in the meantime Hamas and allies have unlimited authority to drive as many Jews into the sea as possible. Because, occupation, don't you know.

Since we're speculating on utopian outcomes, let me propose one of my own. The model is my own experience. I moved to New York 32 years ago. I was not born here. By SA's lights I am, therefore, an occupier. After all, what right do I have to live here if I wasn't born here? Indeed, I have even less right than an Israeli Jew has to Israel because not only was I not born here, but neither were my parents or my great-grandparents, or any of my ancestors.

Yet New Yorkers accept me as one of their own. They let me buy a house here, and I'm even registered to vote!

Regarding the "occupation", Ms. Craine provides us with some actual data.
Some 580,000 Israeli Jews now live in these areas beyond the 1967 border, in settlements scattered throughout the West Bank and in housing developments built up around eastern Jerusalem, ringing the city’s Arab neighborhoods. These include 123 settlements authorized by Tel Aviv and about 100 unauthorized outposts, carving up Palestinian land right up to the border of Jordan.
Wikipedia breaks it down a bit further. In 2015 the Israeli population in the West Bank excluding East Jerusalem was 388,000 people. In addition, as of 2003 (the most recent data provided by Wikipedia), the Jewish population in East Jerusalem was 176,000.

Also from Wikipedia, the Arab population in the West Bank (in 2012, not including East Jerusalem) was 2.7 million. That means Jews made up about 14% of the total West Bank population. Jews are no demographic threat to the Palestinian people in the West Bank. By comparison, 20% of Israel's population is Arab.

So here's the utopian dream. Draw a boundary between Palestine and Israel--I'd pick the 1967 border with an exception made for East Jerusalem, but whatever. People who live on the Israeli side are Israeli citizens. As just mentioned, approximately 20% of Israeli citizens are Arab. And people who live on the Palestinian side are Palestinian citizens. We just noted that roughly 14% of Palestinian citizens would be Jewish.

So what's the problem? The only issue is that each state--Israel and Palestine--has to guarantee the protection of its minority citizens' rights and property. Israel has mostly done that for its Arab population. Palestine, meanwhile, is still possessed of murderous passions, requiring large portions of the West Bank be reserved for security.

What's wrong with Jewish settlers being citizens of an independent Palestine? If only Palestine joined the civilized world...oh well. We can all dream a utopian dream.

My utopian dream is not substantially different from that of the Socialist Workers Party. And neither of us are antisemitic.

*The Militant is published by the Socialist Workers Party (SWP).

Further Reading: