The China Beat

This post is in response to three recent articles from the Trotskyist press--one by Jeff Mackler, another by Michael Roberts, and a short piece by Roy Landersen.

Mr. Mackler's piece is entitled The Myth of a New “Cold War” Between the U.S. and China/Russia. He's addicted to the word imperialism--the word fragment imperial- shows up 28 times in the article. This despite the fact that he has no clue what the word means. He's not alone--nobody else knows what it means either.

What I think he thinks it means is something like unequal exchange. That is, on the one hand US capitalists will exploit Chinese workers who manufacture cheap products for American consumers by paying them "near slave wages." On the other hand, the US will export expensive, overpriced products back to China. Thus the capitalist realizes excess profits on both legs of the round trip. The problem is it doesn't work that way. Why would China volunteer their citizens for slavery? And why would they agree to buy overpriced products when the same can be had for cheaper from other countries?

Mr. Mackler actually admits that the imperialism model doesn't fit. He writes,

In the 20 years since China was admitted to the WTO, China went from operating as one of the world’s lowest technology nations to today, when Chinese technology rivals or exceeds almost all other nations on earth. In the past 20-plus years China was transformed from providing “internal migrant” teenage girls from the countryside, producing garments in prison-like foreign-owned dormitory factories at six cents per hour and seven days a week, to a nation with some of the most modern Chinese-owned factories in the world, producing world-class industrial tools and machinery and state-of-the-art 5G (fifth generation) electronics and telecommunication products.

So--in a mere 20 years those migrant slave girls went from being ruthlessly exploited to becoming middle class citizens of an increasingly wealthy country. There is still a lot of poverty in China, but the collaboration between Walmart, on the one hand, and Chinese entrepreneurs on the other has lifted 400,000,000 people into the global middle class--an achievement unprecedented in human history. Mr. Mackler needs to explain how "imperialism" wrought such a change, and if so, then why is "imperialism" such a bad thing?

It's not like American consumers suffered. Walmart reduced prices across the board, sharply lowering the cost of living, especially in rural areas. More, Walmart kept its operating margins at 3%, thereby passing nearly all the benefits of the China trade on to American consumers. Sam Walton only got a small slice.

The problem with Mr. Mackler's version of Marxism is that he sees trade as being a zero-sum game. He thinks anybody who trades with the USA is getting ripped off. Other people postulate the reverse: the US is getting ripped off by foreigners selling cheap products to Americans (I put Barry Sheppard into this category here). Though Mr. Mackler is inconsistent: he also believes Cuba's suffering is due to the US trade embargo, i.e., Cuba can't trade with the US.

There are social and geopolitical reasons why the US needs to curtail its trade with China--but we will pay an economic price by doing so.

Michael Roberts' article, entitled China at a turning point?, is much better--not least because the word imperialism isn't mentioned even once. More, Mr. Roberts actually knows something and is careful about terminology--nothing he says can be dismissed out of hand.

The article is inspired by the collapse of the giant real estate developer, Evergrande. I think Mr. Roberts' analysis of the near-term consequences is accurate. It is not a financial collapse on the order of Lehman Brothers, nor will it bankrupt the entire Chinese economy. But it will lower the standard of living by a misallocation of resources. Mr. Roberts suggests that China is creating "zombie companies" such as exist in many capitalist countries. He writes,

The real problem is that in the last ten years (and even before) the Chinese leaders have allowed a massive expansion of unproductive and speculative investment by the capitalist sector of the economy.  In the drive to build enough houses and infrastructure for the sharply rising urban population, the central and local governments left the job to private developers.  Instead of building houses for rent, they opted for the ‘free market’ solution of private developers building for sale.  Evergrande-like development in China wasn’t just capitalism doing its thing. It was capitalism facilitated by government officials for their own purposes. Beijing wanted houses and local officials wanted revenue. The housing projects helped deliver both. The result was a huge rise in house prices in the major cities and a massive expansion of debt.  Indeed, the real estate sector has now reached over 20% of China’s GDP. 

I think this diagnosis is largely correct, except I wouldn't blame the free market, but instead government intervention in the market. "Beijing wanted houses and local officials wanted revenue" has nothing to do with free market capitalism.

The Chinese problem is in a sense the opposite of that of the USA. In our country we subsidize housing demand: Section 8 vouchers, eviction moratoria, generous tax benefits, subsidized mortgages, concerted government efforts to extend home sales to poor people, etc. At the same time, housing supply is sharply limited, mostly by local zoning and environmental regulations. Many Greenies want to ban single family housing altogether. The result, of course, is sharply higher housing costs as subsidized demand outstrips constrained supply.

In China it's the other way round. Both the local and national governments want more houses--and boy, have they built houses! Whole ghost cities full of them. Supply is hugely subsidized, leading to falling prices. But the government can't have falling prices since that would destroy middle class savings. The result is a bankrupt Evergrande that is building houses that nobody really wants to pay for anymore.

My take on this is government regulation--on either the demand side or the supply side--screws things up. It's not capitalism anymore, but rather government cronyism, which eventually morphs into fascism/socialism.

Mr. Roberts' solution is to prohibit consumers from buying what they want. In the US consumers by a large majority want to live in single family homes in the suburbs. Chinese consumers want to own their own apartment and drive a car. But Mr. Roberts and his fellow socialists are against that--they think they know what the people want more than the people themselves. His penultimate paragraph makes precisely that point.

What is needed is not a further expansion of consumer sectors by opening them up to ‘free markets’, but instead state-led investment into technology to boost productivity growth.  And that state sector investment can be directed towards environmental goals and away from uncontrolled expansion in carbon-emitting fossil fuel industries.  As Richard Smith has put it: “The Chinese don’t need a higher standard of living based on endless consumerism. They need a better mode of life: clean unpolluted air, water and soil, safe and nutritious food, comprehensive public health care, safe, quality housing, a public transportation system centred on urban bicycles and public transit instead of cars and ring roads.” Rising personal consumption and wage growth will follow such investment, as it always does.

Somehow I doubt Chinese consumers prefer to ride around on bicycles instead of owning a car.

Mr. Landersen, writing for The Militant, pens a piece entitled Embracing Mao, Chinese rulers continue assault on working people. The premise is much the same as Mr. Mackler's--Chinese workers were exploited and oppressed by their Stalinist masters (which makes me wonder why The Militant offered the Maoists critical support for all those years). That oppression continues near unabated to this very day--the dramatic rise in China's material well-being is barely mentioned.

China's travails are contrasted with Cuba's virtues:

This is the opposite of the working-class trajectory of the Marxist leadership of Cuba’s socialist revolution. Under Fidel Castro and the July 26 Movement, workers and farmers were led to take political power into their own hands and to take on ever-greater control over all aspects of economic and social life, transforming themselves in the process. Working people became conscious actors in history, extending their hand to anti-imperialist struggles around the world.

Yet China has manifestly been more successful than Cuba! Cities like Shanghai and Beijing look a lot more like New York than Havana. There are good restaurants, excellent public transportation, and nice stores. As mentioned China has a sizeable middle class.

None of that exists in Cuba. Smart and ambitious Cubans have all been exiled. Those still living in Cuba are hungry, live in housing so dilapidated that they're functionally homeless, and survive without electricity for much of the day.

China has a lot of problems--but there is no way that Cuba compares favorably with China.

Further Reading:

• Book Review: Capitalism Alone
• Comrade Keith L. Writes About China
• Book Review: Walmart

The Eurodollar

The Eurodollar is the world's reserve currency.

Most people think the US dollar serves that role, and that's not entirely wrong. But it is misleading.

So just what is a Eurodollar?  A Eurodollar is created when a US dollar is deposited in a foreign bank account, e.g., in Switzerland. Many foreign banks will let you open up dollar accounts where you can deposit dollars and keep them as dollars without having to convert them to the local currency. Historically those dollar accounts were typically in Europe--Switzerland, London, Frankfurt, etc.--hence the misleading prefix Euro-. Today dollar accounts exist in banks around the world: Toronto, Tokyo, Bermuda, Hong Kong, etc. These are collectively known as off-shore banks, and Eurodollars can be found in nearly every country on earth--not just Europe.

The advantage of a Eurodollar account is that foreign banks are not regulated by the US Federal Reserve Bank (Fed). For example, there is no reserve requirement. Domestic banks need to place reserve money at the Fed to protect citizen depositors from a bank run--the amount is equal to 10% of total deposits. Off-shore banks don't need to do that.

In addition domestic banks can borrow or lend money to the Fed, which gives the Fed power to determine short-term interest rates (and indirectly long-term interest rates). Off-shore banks are under no such constraints, and in fact interest on Eurodollar accounts is typically higher than at domestic banks. Further, off-shore banks pay no taxes to the US government. And finally, off-shore banks are exempt from all the myriad rules and regulations (such as the very complex Dodd-Frank rules) that constrain domestic banks.

The Eurodollar system evolved by accident--it wasn't designed by anybody. Likewise, it exists more or less independently of any central authority. Accordingly, it's difficult to determine how many Eurodollars are in circulation, though a 2016 estimate cites nearly $14 trillion. It is precisely this unregulated free market that has pushed the Eurodollar to the fore as the exchange medium for foreign trade.

The Bretton Woods agreement, signed in 1944, envisioned a structure where most currencies would be pegged to the US dollar, and the dollar would in turn be pegged to gold at $35/oz. In 1960 Robert Triffin realized that this was impossible--gold production was not sufficient to maintain the price at $35/oz, and soon the US Treasury's gold reserves would be completely drained. A variety of kludges were invented to keep the system operational, by which the dollar was effectively pegged to fictional gold. It is out of this confusion that the Eurodollar evolved--the term was first used in the early 60s. In 1971 President Nixon called it quits on the gold standard and formally ended the Bretton Woods system.

Eurodollars, while exempt from US regulations, are governed by the rules where the off-shore bank is located. So, for example, a Eurodollar in a Shanghai bank is governed by Chinese rules, and is in some sense is "owned" by China. Thus, even though a Eurodollar is a US dollar, the national sovereignty of China is preserved. This is what makes Eurodollars so valuable to foreigners compared to US dollars in a US bank.

So how are Eurodollars created? A small number arise from retired Americans living abroad, e.g., in Costa Rica. They deposit their social security checks in a dollar account at a Costa Rican bank--and pronto, Eurodollars are born. They remain Eurodollars until they're repatriated back into the US banking system.

The much more important source of Eurodollars is the US trade deficit. The US exports some products to foreign countries, and imports other products from foreigners. When the dollar value of imports exceeds that of exports, then a trade deficit occurs and net dollars are being paid to foreign countries. Those dollars get deposited in foreign banks, thereby becoming Eurodollars.

The US has run a trade deficit every year since 1974 (pdf). That's all money deposited in foreign banks, growing the total stock of Eurodollars. Indeed, the sum of all those annual deficits since 1974 results in about $13 trillion, comparable to the estimate above. In short, the overwhelming bulk of Eurodollars in circulation comes from the US trade deficit.

So now the bottom line: what makes Eurodollars so useful? They are the currency of foreign trade. Suppose a company in Thailand wants to buy goods made in Uganda. Ugandans have no great need for Thai Baht, nor do the Thais have excess reserves of Ugandan Shillings. So without a common and trusted currency by which to finance the trade, it wouldn't happen.

In the old days such trade might have been mediated using gold or silver. That doesn't work very well today--the transaction costs are too high. So instead Eurodollars are used. Because Thailand has a trade surplus with the US, it has a supply of Eurodollars which it can use to buy Ugandan products. Uganda, meanwhile, may not have a positive trade balance with the US, but instead sells products to other countries, e.g., Thailand, and acquires Eurodollars that way.

In order to engage in foreign trade, every country on Earth needs Eurodollars. Otherwise they're essentially reduced to barter with a few of the nearest neighbors. They have no globally accepted money.

Peter Zeihan suggests that the US trade deficits were purposeful, with the intent of buying allies against the Soviet Union. By allowing any country to sell into the US market, America financed the postwar trade boom, massively increasing globalization and raising living standards around the world, most notably in China. For much of the postwar era the Eurodollar system benefited the United States, but of course it had some costs. Today the costs begin to outweigh the benefits.

An obvious cost is the hit American workers have taken as manufacturing has moved off-shore. We imported cars first from Europe, then Japan, and now Korea. We can't run a trade deficit if we don't import manufactured products, and as a result the wages of US factory workers are depressed. Donald Trump won the election in 2016 in part because of this problem. He initiated tariffs on China and Europe--which persist to this day.

Then, in relative terms, the US economy has shrunk compared to the global economy. In 1960 we made up 40% of global GDP. Today we're merely 22%. It's important to emphasize the word relative. In absolute terms the US economy is much richer today than in 1960, but the rest of the world has grown even faster. Given our smaller relative size, it becomes increasingly expensive for us to finance global trade. Hence there are recurring Eurodollar shortages.

Ludwig von Mises (The Theory of Money and Credit) distinguishes between two types of money (among other distinctions): fiat and commodity money. Commodity money begins with the direct exchange of a monetary commodity, e.g., gold coins of known weight and fineness. This evolves into paper certificates that can be exchanged for the equivalent amount of gold, and in the meantime used as money. Often there isn't enough gold to redeem all the certificates (as happened with the dollar under Bretton Woods) in which case the commodity fix is partly imaginary.

The opposite of commodity money is fiat money, or reliance on currency printed up by the government, no longer redeemable for gold even in theory. The US transitioned to a pure fiat regime in 1971 when President Nixon finally dropped the gold peg. The problem with fiat money is the government's continuing temptation to print ever more paper dollars and thereby devalue the currency through inflation.

While the US dollar is pure fiat money, the Eurodollar is not. The Fed can print as many US dollars as it wants, but the Fed cannot print Eurodollars. Eurodollars are created only when American consumers buy products from other countries. The limitation on the creation of Eurodollars depends on the ability and willingness of American consumers to pay for imports, not on how many US dollars the Fed prints.

Indeed, the Eurodollar is much closer to being commodity money than fiat money. It doesn't depend on gold or silver, but instead on the economic wherewithal of the American consumer. This is a real economic datum--a hard number if you will--and not just an imaginary notation in the Fed's accounts. For the reasons described above--protectionism to benefit American workers and the smaller relative size of the US economy--the ability of American consumers to buy from foreigners is marginally smaller than it has been historically. Accordingly, since 2008 (and I don't know why specifically that year), there have been recurring Eurodollar shortages.

Jeffrey Snider, in a long series of videos, has documented this effect. He records four or five Eurodollar shortages since 2008. The first one began in 2008, with the great recession. Subsequent shortages began in 2012, 2014 and 2018. The fifth, possibly now underway, perhaps began in November, 2020. During these shortages the number of Eurodollars in global circulation stopped growing and/or shrank. Data presented in the slide deck here illustrate the point, though note there is no direct measure of Eurodollars in circulation.

So how can there be a Eurodollar shortage? Two ways: supply and/or demand. The supply of Eurodollars depends on the whims of American consumers, and clearly during recessions they tend to hold back. The demand for Eurodollars depends on the volume of global foreign trade (not just with the US). If that grows faster than the US trade deficit, then a Eurodollar shortage will ensue. Today, for example, China needs to buy oil from the Persian Gulf, and because of bad weather they currently need to import food. Both of these purchases require Eurodollars, and given the Covid recession in the US, those may not be readily available. Hence the current shortage (if that's what it turns out to be).

For Americans a Eurodollar shortage is deflationary. As Milton Friedman said, “Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.” Deflation is the opposite: if the quantity of money is shrinking, then prices have to go down. Since Eurodollars constitute the money supply for global trade, a Eurodollar shortage makes imports into the US cheaper.

Mr. Snider seems to think (I'm not sure) that the Eurodollar is effectively the "real money" that drives the US economy, and therefore US domestic inflation is determined not so much by US dollars, but instead by Eurodollars. I'm not sure I accept that, for according to the World Bank, the "United States exports of goods and services as percentage of GDP is 11.73% and imports of goods and services as percentage of GDP is 14.58%." Wikipedia has a list of countries by trade-to-gdp ratio which shows that the US depends less on foreign trade (as percent of GDP) than almost any country in the world. Further, we're the only country in the world that doesn't need Eurodollars--we can import products using our very own US dollars (which then become Eurodollars).

Nevertheless, Mr. Snider does show that since 2008 there is a close relationship between US recessions and Eurodollar shortages. But correlation is not causation, and what the cause-effect interaction is is anybody's guess.

One last point: Some countries, notably Germany, Japan, South Korea and until recently China, have run large trade surpluses with the United States, hence collecting a large horde of Eurodollars. There is no point in letting all this money sit idly in their domestic banks, so instead they use them to buy US Treasury bills and bonds, and sometimes US equities. The dollars thus flow back into the US banking system, but the foreigners hold a claim on US debt. Since Treasurys are very liquid, they can easily sell the Treasurys and reclaim the dollars as Eurodollars. So effectively US debt held by foreigners is part of the world's Eurodollar supply.

Foreigners will tend to cash in their Treasurys--and/or not buy more of them--when there is a Eurodollar shortage. As that may be happening now, it may be the cause of the very recent rise in interest rates.

Further Reading:

• Peak Bitcoin?
• Trickle-Up Economics
• The Declining Rate of Profit

American Brezhnevism Today

Jeff Mackler, in his piece entitled Afghanistan: The Defeat of U.S. Imperialism and the Road Ahead, published in Socialist Action (SA), gets at least one thing right: The US needlessly surrendered Afghanistan to the Taliban, departing in the most humiliating and disgraceful way possible. Everything else in Mr. Mackler's article is wrong. A typical paragraph:

After 20 years and $2.6 trillion in Pentagon spending, after deploying more than 120,000 U.S. troops at the highpoint of the war – half of them U.S.-financed via Blackwater and other privatized mercenary and war crimes committing forces accountable to no one – after more than 470,000 direct and indirect civilians killed and 2,442 U.S. troops dead and another 20,666 wounded – Afghanistan, among the poorest nations on earth, is once again free of foreign invaders – a critical first victory that blasts open the imperialist-sealed door to the potential for future social progress.

Mr. Mackler attributes every war casualty in Afghanistan to the American forces. Apparently the Taliban never killed anybody. And he ignores the Afghan civil war that started before the Americans arrived and will continue with renewed brutality now that we're gone.

You can't believe Mr. Mackler's numbers. Recall he's the guy who claimed that "between 15 million and 26 million people" showed up for the George Floyd protests--a manifestly ridiculous assertion that not even his own followers believe.

The current article contains at least a few howlers, e.g.,

[Belgian King] Leopold, however, was compelled to grant American robber barons, J.P. Morgan and the Rockefeller billionaires, (today the J.P. Morgan/Chase $trillion mega conglomerate) the mining rights to that nation, rights that they retain to this day.

JP Morgan has a market cap of $470 billion--nowhere close to the trillions that Mr. Mackler claims. This number is easily checked. Further, what mining rights does JP Morgan still have? Certainly no copper mines. The cobalt mines are now owned mostly by China. Unlike me, Mr. Mackler cites no references--I think he just makes stuff up. And how did an article about Afghanistan wind up documenting King Leopold's sins from the 19th Century? This is argument by irrelevancy.

I've already opined about Afghanistan here--no need to repeat any of that. Instead, this post is about American Brezhnevism, which is the way I describe the politics of Socialist Action and its leader, Jeff Mackler.

For those too young to remember, Leonid Brezhnev (1906 - 1982) was, second to Joseph Stalin, the longest-serving general secretary of the Soviet Union, holding office from 1964 until his death. He was a renowned bureaucrat, expert in the internal politics of the Kremlin, and largely immune from any outside criticism. He led his country through the Age of Stagnation (1973 - 1982) during which the Soviet economy shrank relative to the United States (and depending on which numbers you believe, also in absolute terms).

Brezhnev suffered from ill-health beginning already in the mid-70s. By the end he was largely incapacitated, acting a puppet serving the interests of the Politburo. After a short interregnum, he was succeeded by Mikhail Gorbachev, whose attempts at reform led to the demise of the Soviet Empire.

Brezhnev's politics were pragmatic and unprincipled. He viewed the United States as a great power competitor, not as a capitalist/imperialist evil. Accordingly, he allied himself with anybody who opposed the USA, regardless of their opinions on anything else.

The modern variation on Brezhnevism is today known as campism. This is succinctly defined in Socialist Forum this way:

Campism is a longstanding tendency in the international and U.S. left. It approaches world politics from the standpoint that the main axis of conflict is between two hostile geopolitical camps: the “imperialist camp,” today made up of the United States, Western Europe, Saudi Arabia, and Israel (or some such combination) on one hand and the “anti-imperialist camp” of Russia, China, North Korea, Syria, Iran, Venezuela, Cuba, and other less-industrialized nations on the other.

Campism, like Brezhnevism, is utterly unprincipled. There are no red lines, green lines, demilitarized lines--and certainly no class lines. There is only the USA and its close allies on one side, and everybody else on the other. The truest and best exemplar of campism on the American Left is, indeed, Socialist Action, represented ably by its chief bureaucrat, Jeff Mackler. Indeed, Mr. Mackler supports all of the above listed regimes, at least vis a vis the United States.

Socialist Action has begrudgingly admitted that Russia and China are capitalist. But they still support those countries against the USA. More egregiously, they excuse the gross human rights abuses in North Korea and Iran only because the US opposes them. Mr. Mackler has been a staunch supporter of the vile Assad regime in Syria.

(As an aside, I mention that the Socialist Workers Party (SWP) also still supports the North Korean regime. Assistant Chief Honcho Steve Clark sent a letter to Pyongyang:

“We stand in solidarity with the Korean people’s struggle to reunify the country and restore Korea’s national sovereignty,” Steve Clark wrote for the Socialist Workers Party in a Sept. 9 letter to the North Korean government on the 73rd anniversary of the founding of the Democratic People’s Republic of Korea.

So regards the Norks the SWP is similarly guilty. But they're not campist because they never supported the Assad regime, and no longer support the Ayatollahs in Iran.)

What it boils down to is that Socialist Action lets Donald Trump determine their politics for them. They simply do the opposite of whatever Trump says.

So is it really any surprise that Mr. Mackler wants to lend critical support to the Taliban? No--of course it isn't.

We begin with the proposition that the U.S. defeat in Afghanistan is a victory for all humanity... In inflicting this defeat the Afghan people, regardless of the reactionary ideology and practice of the landlord capitalist Taliban leadership, exercised the right of poor and oppressed peoples and nations to self-determination, that is, to be free from imperialist domination and rule.

Despite being "reactionary," the Taliban have struck a blow for freedom and liberty worldwide. I hope Mr. Mackler can go on a speaking tour in Kabul and tell that to a crowd of schoolgirls.

He's willing to give the Taliban the benefit of the doubt.

The Taliban have issued statements indicating that they will not repeat their policies of excluding women and girls from receiving public education and from working more generally. They have indicated that the most reactionary aspects of Shariah law may be modified. No doubt all these statements and proclamations, as well as their initial dealings with the governments of world capitalism, are aimed at demonstrating a semblance of tolerance and stability following two decades of unmitigated chaos under U.S. rule.

No--I don't think it "remains to be seen." Of course the Taliban are going to enforce a strict interpretation of Shariah law. It only depends on how carefully they hide their brutality. And note how Mr. Mackler will now blame the US if the Taliban so much as lays a finger on a schoolgirl.

The other odd thing about the just-quoted paragraph is that it could've been written by Joe Biden (or at least by his ghostwriters). Jen Psaki has said much the same thing. This looks to prove my claim that Mr. Mackler is just a Democrat in thin disguise--serving a role much the same as the CPUSA did when Brezhnev was in power.

Socialist Action is a bunch of unprincipled, Brezhnevist Democrats all the way down.

Further Reading:

• Book Review: Kim Jong Un
• Book Review: Gorbachev
• Jeff Mackler on Trump, Trade, and China

Louis Proyect: January 26, 1945 -- August 28, 2021

Louis Proyect died last Saturday. An announcement is posted on his webpage, which I didn't see until today.

I'm not the person to eulogize him. I never met him personally, and am not familiar with the details of his life. But even from afar, I found him in many ways to be an admirable man.

He had no academic rank, and as far as I know never attended grad school. The man earned an honest living. Yet he was a master historian--mostly self-taught. His lack of academic standing freed him from the corrupting constraints of tenure committees, funding agencies and journal reviewers. He was free to tell the truth as he saw it. He was very knowledgeable about Syria, disagreeing with many of his Leftist friends. I considered him the go-to source for factual information on that conflict.

His blog was wonderful. Very few people can turn a personal blog into an important success--but Mr. Proyect did so, without in any way sullying his reputation by trying to monetize it. He was early to the web, and among its most resourceful users. 

He was an excellent writer. Given the quantity of output it must have come easy to him. His work was always clear and entertaining.

Obviously, I did not share his Leftist/Socialist sympathies. I especially objected to his opinions on environmental issues, about which I thought him ill-informed.

As a polemicist, I often thought his arguments were too ad hominem. Instead of addressing issues, he simply lobbed insults at his interlocutors. Entertaining? Yes. Helpful? No.

Had I known he was dying I likely would not have published my most recent essay--very discourteous but written tongue-in-cheek. Though I don't feel too bad--Mr. Proyect sure could dish it out. I assume he could take it as well.

I will miss Mr. Proyect. His blog was always food for thought, and often fodder for a blog post as well. The world is poorer without him.

Further Reading:

• Louis Proyect and the More-Poverty Solution
• Louis Proyect on "Radical Professors"
• Louis "Lyndon LaRouche" Proyect

The Fourth International--Trotskyist Faction Tried to Ruin my Breakfast

The Fourth International--Trotskyist Faction is represented in the United States by Left Voice, a blog run by a collective of New York City college professors and their groupies. It's a very dicey project.

The very name is weird. For those not in the know, the Fourth International was founded by Leon Trotsky himself in 1938, in response to the Stalinist takeover of the Soviet Union and the associated Third International. So the Fourth International is, by definition, a Trotskyist movement--so what is the point of having a Trotskyist faction within a Trotskyist International?

Trotskyism today is a largely academic discipline, which cadre is disproportionately made up of professors, grad students, failed academics, schoolteachers, and other public employees. They're often called the lumpen intelligentsia, and far from being a proletarian movement, they're more likely a force for fascism. Surely the logo, depicted below in front of a crowd of people presenting a Nazi-like salute, proves the point. It looks like a stylized swastika superimposed on the hammer and sickle, giving new meaning to the Stalin-Hitler pact.

From Who is the Trotskyist Faction in Left Voice

Like college professors everywhere, these people have way too much time on their hands, and so write long, meaningless documents debating Marxist esoterica. The "Manifesto" which recently crossed my radar screen bears the heading The Capitalist Disaster and the Struggle for an International of Socialist Revolution, dated April 18, 2021, and was "approved by the leaderships of the groups of the Trotskyist Fraction – Fourth International." It's almost 13,000 words long, and it's one of those that I've read (more accurately, skimmed through) so that you don't have to.

The professors are all busy trying to out-Trotsky each other, which is why one needs a Trotskyist Faction inside a Trotskyist International.

None of this is important--and this post is about something really important, namely my breakfast. We'll get to that in a minute, but I have to give you a flavor of the "Manifesto" first.

The new coronavirus spread rapidly — faster than any virus before it — following the same circuits that connect global just-in-time supply chains. While human viruses have frequently followed the flow of goods (the bubonic plague, for example, spread through trade routes for years), the speed and massive scale of globalized capitalism has created a scenario in which diseases can spread throughout the globe in a matter of weeks. This highlights the fact that capitalism not only makes it impossible to establish a harmonious relationship between humans and nature, but that it also increasingly destroys both.

Even just 100 years ago polio was rampant. Two hundred years ago the most widely feared disease was smallpox, which led to a very painful death. The American South was a hotbed for malaria, and not too long ago cholera, dysentery, typhoid and more plagued urban populations around the globe. This describes the "harmonious relationship between humans and nature" that capitalism has supposedly destroyed.

The Covid pandemic, serious as it may be, has a death rate of about 0.3%, preying mostly on older people. Within the first few months some effective treatments became available, and within about year, three or more variously effective vaccines were developed. The leaders of this effort were capitalist pharmaceutical companies in the US, who hired thousands of employees to work on the project--employees who do expect to get paid for their efforts. Which is why the companies insist on patent protection--how else are they supposed to pay their people? (In Cuba, where there are no patents, people get paid about $60/month--roughly a child's allowance.)

My breakfast is a simple affair. I'm a creature of habit and have eaten roughly the same thing for 50 years now. There are three ingredients:

• Oatmeal--the generic brand. The only ingredient is rolled oats (the dehusked grain, flattened to speed cooking time). It comes in an airtight, bug-proof, sealed container. Cost: about 70 cents per day.
• 2% milk--refrigerated, pasteurized and homogenized, typically with a sell-by date two weeks later than my purchase. It is sold in a plastic, air-tight, leak-proof container, carefully designed so it doesn't spill when poured. Cost: about 70 cents per day.

I don't recall how oatmeal was sold in my childhood--though we did eat it occasionally. Without a microwave oven (invented in the 1980s) cooking it was a bit of a chore. When I was very young I recall that the milkman would deliver milk to our home in returnable glass bottles. That was surely much more expensive and less sanitary than what I get today. Obviously, in the intervening years capitalist competition to sell better food for cheaper prices has greatly improved my quality of life.

But nothing compares with the third ingredient: fresh blueberries. Twenty years ago these were only available when in season locally--for perhaps six weeks. The rest of the time I'd have to make do with raisins. Then it became possible to ship blueberries over longer distances--I think this is because they are packaged under nitrogen--i.e., without much oxygen present. This, plus refrigeration, keeps food fresh for much longer.

Today I get fresh blueberries year round. During December and January they come from Chile. In January and February they often arrive from Peru. February and March brings in the crop from Mexico, and also from Florida. April and May 'tis the season in North Carolina, while in June and July they are locally in season here in New York and New Jersey. In August and September we get blueberries from Quebec. Only in October and November are the berries a bit less fresh and slightly more expensive.

You need to read the fine print to know where they come from--you can't tell by the price. That is, shipping blueberries half way around the world so that they arrive fresh at my local Walmart--is much cheaper than a pint of blueberries! It's so cheap that as a consumer I barely notice it. I spend another 70 cents per day for breakfast blueberries.

The total cost of my very delicious breakfast is a bit over $2/day. There is absolutely no way any socialist society could provide me with such an elegant luxury at so reasonable a price. Do they get fresh blueberries year round in Cuba or North Korea?

So imagine my distress when, in 2019, I read about mass rioting in Chile. The riots started because of a fare hike on the Santiago Metro system. So the rioters trashed the Metro, vandalizing stations and destroying rolling stock! That'll show them! They covered much of the city with graffiti, smashing store windows as they went. Of course they fought with police. Here is a picture from Left Voice.

November 12, 2019. Frontline youth facing police repression in Santiago de Chile.
(Picture & Caption Source)

So who are these people who threaten to ruin my breakfast? I certainly hoped they weren't farmers! The last thing I need is for Chilean farmers to go on strike. I needn't have worried. The Chilean blueberries arrived on time and under budget. From the cost of blueberries, I would never have known the rioting ever happened.

Another major Chilean export is copper, mined in the Atacama desert. Did the riots disrupt copper production? I doubt it, because copper prices in 2019 were lower than they were in 2017 and 2018. So apparently the copper miners didn't go on strike, either.

In other words, anybody who did useful work selling valuable products to consumers--those people kept on working. They had to earn a living. So, again, who are those nihilistic dingbats wearing garbage cans on their heads pretending to be revolutionaries?

Of course we know: they're the lumpen class, or more specifically, the lumpen intelligentsia. These are misguided folks who thought if the they went to college they'd get the corner office and earn a big paycheck. What they learned is that the corner office doesn't exist anymore, and big paychecks aren't earned by going to college, much less grad school. So now, as grad students or freshly-minted PhDs, they have no prospects for gainful employment.

Of course they're pissed, and want to ruin it for everybody else. So why not vandalize the subway? It's a lot of fun and it makes you feel like a bigshot.

Fortunately, the workers and farmers of Chile--the real workers and farmers who mine copper and grow blueberries--have kept the country alive and well. The Fourth International--Trotskyist Faction has not succeeded in ruining my breakfast.

Further Reading:

• "A Program to Unify the Oppressed and Exploited"
• The Revenge of the Lumpen Proletariat
• Malik Miah on the Virus

Afghanistan

My Trotskyist friends are all celebrating the defeat of American "imperialism" in Afghanistan, while at the same time lamenting the takeover by the Taliban.

The Militant (published by the Socialist Workers Party) posts a piece by Roy Landersen entitled US rulers end 20-year-long imperialist war in Afghanistan. The lede:

The U.S. rulers’ 20-year war and occupation of Afghanistan, and the carnage it inflicted on working people at home and abroad, ended with further devastation as the Taliban retook the capital, Kabul, Aug. 15.

By the end, the US had 2500 troops in Afghanistan, which hardly rises to the level of "occupation." The supposed "carnage it inflicted" described in the first clause, in fact prevented the Taliban's "devastation" asserted in the second. Incoherence best describes that sentence, along with the rest of Mr. Landersen's article.

In fact, the American war in Afghanistan largely ended by 2013, after which we provided air and intelligence support to aid the Afghan army. All of this was suddenly withdrawn by President Biden without notice, as Mr. Landersen reports.

In the wake of President Joseph Biden’s April 13 announcement that all U.S. forces would withdraw by Sept. 11, and Washington’s abandonment of its main Bagram airbase without any notice to Afghan government forces, the reactionary Taliban stepped up its military offensive. The Afghan army disintegrated after the withdrawal of U.S. army and air support. President Ashraf Ghani fled the country. Taliban commanders announced the formation of the “Islamic Emirate of Afghanistan.”

Among that air support taken out of the country were all the Med-Evac helicopters used to airlift wounded Afghan soldiers to hospital. Apparently Mr. Biden expected the Afghan troops to bleed to death on the battlefield just so the US could make a graceful exit.

A better article, albeit with the contradiction already in the headline, posted by Socialist Resurgence and written by Farooq Tariq, is Afghanistan – The U.S. occupation took only human lives; Taliban victory is not a sign of peace. The lede paragraph:

It is now evident that the U.S. imperialism has lost all its human and financial investment in Afghanistan. The Taliban have almost occupied Afghanistan without a fight. What has been spent in Afghanistan in the name of development, “democracy” and training of the armed forces for the last 20 years was unprecedented in the history of the world.

Well--true, of course. The US has needlessly thrown away whatever it has built in Afghanistan, though I doubt the amount--inflation adjusted--was "unprecedented in the history of the world." 

I'm bothered by the word "financial"--I don't know what it means. I believe he thinks the US was invested in Afghanistan for potential business ventures--like Walmart was gonna open up a chain of stores in Kabul, Kandahar and Herat. If this is what he suggests, it's ridiculous. Afghanistan was never going to be a trading partner for American consumers.

The reason the US was in Afghanistan was to fight Jihadi terrorist groups that used the country as a base. You may or may not agree with that reason--but that was the reason. It was not an excuse for "democracy," "imperialism," or anything else.

Mr. Tariq admits that the US was partially successful.

Although some human progress has been made: For example, the average age [i.e., life expectancy—editors] has risen from 56 to 64 years, and the number of children who die before the age of five has halved. The literacy increased from 8% to 43%; 89% have access to safe drinking water in the cities. It was only 16% before.

This is not trivial--though it's all gone now, thanks to Mr. Biden's stupidity.

Mr. Tariq claims that "[a]ccording to the Cost of War Project, the United States poured $2226 billion into Afghanistan. This money could have provided basic education and health care all over the world."

Really? Tell that to the girls of northeastern Nigeria, routinely murdered or kidnapped by Boko Haram for the crime of going to school. Or tell that to 10-year-old boys in Uganda and Congo, forced by the Lord's Resistance Army to murder their parents. For that matter, tell that to the girls in Afghanistan--now that the Taliban is in charge, where is their schooling? Absent American "imperialism" it's all gone up in smoke.

For without competent soldiers for protection, any money spent on teachers and textbooks is wasted.

The silliest response to the Afghanistan debacle is that put forth by Ezra Brain, writing for Left Voice, in an article entitled Refugee Caps Are a Tool of Imperialism. Don’t Trust Imperialists to Resolve the Refugee Crisis. The money paragraph is this:

Be it refugee bans or refugee caps, socialists must oppose all imperialist attempts to use borders to restrict the free movement of people, especially refugees from imperialist wars. To put it bluntly: the greatest imperial power in the world, with a coalition of other imperialist powers, attacked, looted, and occupied Afghanistan for 20 years and is now trying to prevent refugees from entering. After 20 years of imperialist occupation, Afghanistan is left impoverished, war torn, and with a growing COVID rate. This is imperialism in its clearest form. Every refugee from the Afghan war — indeed, every refugee anywhere — must be allowed entry into the U.S. and given full legal rights and protections.

Pretty much every word here is wrong. What has the US "looted" from Afghanistan? The country was poor long before we got there and it remains poor today, albeit as Mr. Tariq pointed out, slightly better off than it was before.

But the truly inane demand is that the US accept all refugees from Afghanistan--that would likely be half the population. Beyond the useless claque of New York City college professors that make up Left Voice, there is no political constituency in this country that wishes for this.

It is particularly weird coming from Mr. Brain, an activist in the LGBTQ... community. Suppose only 99% of the Afghans who arrive on our shores are honest refugees--the remainder are instead Jihadis. That means for every million Afghans arriving in Manhattan, 10,000 of them will be hellbent on destroying secular America. I doubt Mr. Brain will do very well when surrounded by 10,000 anti-gay, homophobic, murderous Islamist extremists.

Mr. Brain's demand is ridiculous and very unlikely to come true, but people like him really should be careful what they wish for.

Socialist Action has gotten too small to maintain a proper webpage, and they have yet to post anything about Afghanistan. Which is unfortunate because they represent the dying embers of Brezhnevism in America, and I'd like to know what a Brezhnevist thinks. I predict that, unlike Trotskyists, they'll celebrate the rise of the Taliban--this because the enemy of my enemy is my friend. It's the same reasoning for their support of Kim Jong Un, Nicholas Maduro, Bashir al-Assad, and even Xi Jinping.

For just like their mentor, Leonid Brezhnev, they support any government that opposes American "imperialism", no matter how vile.

Further Reading:

• Cuba Needs More Communism
• Comrade Keith L. Writes About China
• Book Review: The Absent Superpower

Wittenberg, 2021

Octogenarian SWP leader Jack Barnes, with similarly aged Mary-Alice Waters seated at the dais.
(Source: Militant/Dave Wulp)

Just what is to be done, anyway?

You will never find the answer to that question in Terry Evans' and John Studer's account of the Socialist Workers Party's (SWP, aka the Party) conclave (SWP conference: Leading the working class to take power), held this year at Wittenberg University in Wittenberg, Ohio. Such conferences--annual events, but for last year because of the pandemic--have historically taken place at Oberlin College and became known as Oberlin conferences. The venue changed this year because Oberlin College humiliated itself by slandering a local bakery.

The conference had three themes, highlighted on the banner above the podium: 

• Leading the Working Class to Take Power
• Join the Socialist Workers Party!
• Build the Communist Vanguard!

It beggars belief that the SWP--a grouplet of barely 100 comrades--is going to lead the working class to power. 

Socialist revolutions can only be led by parties that have been built and steeled in struggle beforehand. Their members are imbued with the program, the courage and audacity needed to lead millions to take power when it becomes both possible and essential in order to prevent the triumph of reaction.

That's pretty rich coming from cadre whose median age is now over 60 and whose numbers are dwindling through natural attrition. This faith is not based on any historical precedent or material fact--it is simply a religious assertion. They're the chosen people.

The second bullet represents an appeal to those few attendees who were not yet members of the Party--in numbers insufficient to make any material difference. I have no idea what the third bullet means as distinct from the other two.

If those were the three themes of the conference, they are not discussed in Evans' and Studer's article. Instead they highlight three other topics: Malcolm X, Israel, and historical materialism.

The conversation about Malcolm X begins this way:

At the last party conference in June 2019, the banner hanging above the platform read, “Advancing Along the Line of March of the Working Class. Act on Imperialism’s Deepening Political Crisis. Build the Labor Movement. Build the Socialist Workers Party.” No one could have foreseen how today’s capitalist crisis would unfold these last two years, Barnes said, but the SWP acted on what that banner said, never missing a beat in going more deeply to the working class and dealing with challenges posed by the pandemic along the way.

Then follows some boilerplate about how, despite the pandemic, they continued to sell Militants, oppose police brutality, etc., etc. Somehow that segues into this:

Barnes urged participants to read what Malcolm X said about how he had to transform himself to become a revolutionary leader. A precondition for Malcolm acting on his own worth and that of other working people was turning his back forever on the life he led as an uneducated hustler, thief and pimp.

It was in prison that Malcolm started to read and to get his life together. Mr. Barnes claims he was becoming a revolutionary. Instead, he was becoming a devout follower of the Nation of Islam--a religious conversion. Mr. Barnes' own language--"acting on his own worth"--is a weird way of acknowledging that.

What are our elderly comrades, who likely have never smoked a joint in their entire lives, supposed to take away from this? Are they in danger of becoming hustlers, thieves or pimps?

I think Mr. Barnes is reiterating the religious mission of the Party. For if they lose faith in their status as the chosen Vanguard, then the Movement falls apart. Any sense of human worth--much less your "own worth"--stems fundamentally from religious faith. Absent religion, human beings are just animals, and all we usefully do is eat, sleep and fuck.

The second topic--Israel--is introduced this way:

The endurance of Jew-hatred in the imperialist epoch, and its use at times of crisis by the capitalist rulers to divide and crush the working class and its communist vanguard, requires the revolutionary party to champion the fight against it and unconditionally defend the right of Israel to exist today, SWP leader Dave Prince said in the second major conference presentation. It was entitled, “For Unconditional Recognition of Israel as a Refuge for Jews in the Imperialist Epoch: The Stakes for the World Working Class.”

I commend the Party for disavowing the rabid antisemitism found nearly ubiquitously on the American Left. But have they gone too far with this?

If there ever was a chosen people, then it certainly is the Jews. They wrote the Bible--a marvelous and elegant collection of folk wisdom compiled over two millennia and expressed in beautiful language. No other book in the world can compete.

This inspires great envy, and that envy is the source of Jew-hatred. The Germans may have an illustrious and accomplished history--but nothing like the Jews. China may be 5000 years old--but they have produced no book like the Bible. Hinduism can plausibly lay claim to being the world's oldest religion--but they never wrote anything down until recent times.

Everybody envies the Jews, and so even today the Jews are placed at the center of world history. Israel is often held up as the archetype of evil--not because Israel is so sophisticated or threatening, but simply because it's Jewish.

The Party also envies the Jews--but rather than hate them, they want to emulate them. Accordingly they've turned the tables--the Jewish state is no longer the chief threat to world peace. It is instead the key to the coming Revolution! What happens in Israel is somehow very, very important! The Party has put the Jews on a pedestal.

Again--the Party's position is moral, and they don't support Hamas, and for this they deserve credit. But it is a mistake to elevate Israel beyond its status as a small, Middle Eastern country that is home to a persecuted minority. Modern Israel is not really key to anything outside of its immediate neighborhood.

I think Mr. Barnes wants to reinforce his comrades' belief that they are a chosen people, rather like the Jews, which is why he identifies with them. (Besides, I believe many comrades are Jewish, so it makes sense.)

The third topic concerns the importance of historical materialism, which the Party claims has been ignored by the Left. Mary-Alice Waters delivered a speech entitled “Without Historical Materialism There Can Be No Working-Class Unity, No Answer to ‘Wokery,’ No Revolutionary Workers Movement.”

“Historical materialism is under ferocious attack today,” said Waters, “even though you may never hear that world outlook — one of the cornerstones of Marxism — mentioned by name.” The attacks are spearheaded not by the traditional centers of reaction, she added, but by privileged middle-class layers that many consider to be the “progressive” wing of liberal bourgeois democracy.

Historical materialism is the Marxist notion that history is driven by material forces, i.e., economics, and can--at least in broad outline--be predicted. The supposed Marxist advantage is that they understand mechanism by which history works.

The problem with the Marxist view is that it unreasonably elevates economics as history's primary driver. It ignores biological and social evolution, which is not principally about economics. It's about who is most proficient at making babies. The modern world does not look to be very good at that, which is certainly cause for concern. Evans and Studer write

The New York Times  1619 Project was one of the examples of the political war on historical materialism addressed by Waters, as well as “cancel culture” and the counterrevolution on women’s rights represented by the campaign to deny the biological reality of two sexes.

This hints at the true problem: our academic elite's concerns for "transgender rights," for birth control and abortion as positive goods, and for the abolition of the family and all associated traditions and roles--does not augur well for the future of our society. We as a culture will go extinct--with Leftist feminists leading the way to the graveyard.

A vanguard Party has to hold vanguard positions. It can't simply be an Amen Corner for the rest of the Left. By denying the silliest parts of current Leftist ideology, the Party asserts its role as a vanguard, and it also strikes a blow for common sense. I doubt this will prevent the Party from eventually dying out, but it will make it more relevant during its twilight years.

The penultimate paragraph of Evans' and Studer's article is this:

The day after the conference, party supporters met to map out plans for their work organizing the production, printing and distribution of books by SWP leaders and other revolutionaries and raising funds for the work of the party.

That's all they have to say about What Is To Be Done Next. That's it. Raise money and print books.

I will argue that the Party is still a radical Left party, and that it still lies loosely within the Trotskyist tradition. But, unlike when I was a member, it is no longer an activist Party. Instead it's a vaguely religious organization that exists for the spiritual comfort of its own members, and that believes itself to be the Chosen Vanguard.

Further Reading:

• Oberlin, 2019
• Oberlin, 2018
• The 47th SWP Convention