Encounter With An Advanced Capitalist Economy

part I: Two Economies

The so-called American Dream overwhelmed many. It was a dream, an illusion.

It was not real, but seemed real; it was seemingly attractive and colorful, but there is no attractive color in the reality; it was seemingly accessible, but it’s a mirage in reality; it seemed attainable and achievable, but it’s unattainable and unachievable in the existing production-distribution structure. The Empire’s present crisis divulges this reality.

Crisis brings closer the realness many like to ignore. The Great Financial Crisis (GFC) has torn away the shroud that covered the unreal American dream.

Now, facts show, it was like a walk towards a mirage. Now, reality tells, it was an impossible journey. The GFC has helped understand the American reality, a reality generated by an advanced capitalist economy.

Now, many questions loom, overwhelm many minds. The questions expose the real life, the reality in the economy, the theories upholding and justifying the economy. Many elementary and primary facts are coming to light that once were ignored by many.

Readings in Macroeconomics (28th edition) tells in its “Introduction”: “It sometimes seems that the United States has not one, but two economies. The first economy exists in economics textbooks and in the minds of many elected officials. It is an economy in which no one is unemployed for long, families are rewarded with an ever-improving standard of living, and anyone who works hard can live the American Dream. In this economy, people are free and roughly equal, and each individual carefully looks after him- or herself, making voluntary choices to advance their own economic interests. Government has some limited roles in this world, but it is increasingly marginal, since the macroeconomy is a self-regulating system of wealth generation.” (Eds. Amy Gluckman, John Miller, Bryan Snyder, Chris Sturr, Dollars & Sense collective, Boston)

After tracing the first economy it adverts: “The second economy is described in the writings of progressives, environmentalists, union supporters, and consumer advocates — as well as honest business writers who recognize that the real world does not always conform to textbook models. This second economy features vast disparities of income, wealth, and power. It is an economy where economic instability and downward mobility are facts of life. Jobs disappear, workers suffer long spells of unemployment, and new jobs seldom afford the same standard of living as those lost. And, periodically, market economies unravel, much like today. As for the government, it sometimes adopts policies that ameliorate the abuses of capitalism, and other times does just the opposite, but it is always an active and essential participant in economic life.” On the basis of data, Readings in Macroeconomics eloquently exposes both, the first and second economies.

Advanced capitalist economies, Kurt Dopfer, Swiss economist, noted in 1976, are one of the best institutions to learn about bourgeois political economy. The world, especially the capitalist countries encountering the present crises provide ample evidence of failure of bourgeois economic thoughts. Failure to analyze present economic crisis is the full blown capacity of the bourgeois political economic thoughts.

A fuzzy process

Distance between reality and mainstream economics is noted by John Miller, professor of economics at Wheaton College. John writes in the Readings in Macroeconomics: “When economists at the National Bureau of Economic Research (NBER), a private research organization designated by the [US] Commerce Department as the nation’s arbiter of the business cycle, officially declare the Great Recession over, they will likely identify September 2009 as its end date and the beginning of the economic recovery. But people surely will not believe the recession is over, despite the NBER’s pronouncement, until jobs return and their economic well-being improves. And that could be quite a while.” (“When is a Recession over?”) And, has recovery really returned? A difficult question. What’s the problem in return of the cherished real recovery? Another difficult question.

According to the NBER, there were nine complete business cycles in the US economy since World War II. But “[t]he NBER’s Dating Committee, currently a group of seven economists, admits that the dating process is ‘fuzzy’. The committee has no rigid rules for determining the start or end of a business cycle. The members reach a consensus after studying a broad array of macroeconomic indicators. In short, they eyeball the data. The committee’s founders worked with 46 indicators. Today the NBER’s Business Conditions Digest lists around 1,000 measures.” (ibid.)

They, the Dating Committee, study the GDP, industrial production, employment, real income, trade, several interest rates, and personal income, the index of coincident indicators that measures employment, income, output, and sales, and similar many.

“The Great Recession shows how hard it is to date business cycles. … It takes time for the federal government to publish official GDP figures. And the committee looks for several indicators to show that a decline in activity has spread across the economy before it feels comfortable declaring a recession.” (ibid.)

And, instead of calculation, mainstream sometimes conduct survey to gather opinion, relies on perception, which is subjective. To draw conclusion, science does not rely on perception.

The way a section of scholars in poor, underdeveloped countries imagine – the advanced economies are super smart and their knowledge machine is efficient – is not the sweet fact. Their “science” is hazy or mechanism they have is weak. Encountering this bitter fact will free the scholars from inferiority complex, and help get rid of vulgar thoughts, ideas and imaginations.

The zero decade

The capitalist economy has taken away an entire decade from the life of the common persons although it has amassed unimaginable resources. “After reviewing the feeble expansion and devastating recession that followed, economist and New York Times columnist Paul Krugman suggested that we call the first decade of this century ‘the zero decade’. Job creation for the decade was basically zero. Zero economic gains for the typical family. Zero gains for homeowners. And zero gains on the stock market, even before taking inflation into account.” (ibid.)

A number of poor economies in the South has not experienced similar zero decade. These poor economies are burdened with external debt and interest, ridden with corruption and inefficiency, weak in know how, dictated and tutored by imperial masters, and pressed by many other problems. Legislature, judiciary, democratic process, financial measures, education, and many more in these poor countries are designed and advised by the imperial masters through their organizations and employees. It’s not a strange reality. It’s the reality of the world system that feels proud with its inefficiency. Actually, a part is producing wealth while another is reeling under crisis, and the wealth is flowing to the sick part that tries to keep it strong.

Figures strikingly tell the zero-reality of the mature capitalist economy. Alejandro Reuss, economist and historian, cites real US GDP figures in 2009 and in 2006. Both were nearly the same — just under $13 trillion. “The Bureau of Economic Analysis reports figures of $12.8806 trillion … for 2009 and $12.9762 trillion for 2006. … [T]he figures for the number of workers employed and the number of work hours required to produce that output are strikingly different. In 2006, about 138.7 million workers … were employed, compared to only about 134.4 million in 2009. The total time spent at work, by all workers … was about 18 billion hours less in 2009 than in 2006.” (“Same output + Fewer Hours = Economic Crisis?”, Readings in Macroeconomics)

The figures present a cruel fact. “Producing the same quantity of output in fewer hours means that labor productivity has increased. There are several possible causes: increased intensity or pace of work (or ‘speed up’), increased worker skill, improved production methods, or greater quantity or quality of tools used. During the current crisis, multiple factors may have been involved. High unemployment itself reduces workers’ bargaining power. Employers know that there are plenty of unemployed workers who are desperate for a job. Meanwhile, workers who do have jobs are desperate to keep them. This makes it relatively easy for employers to push down wages or demand a faster pace of work. It may also be that workers’ average skill level has increased, if for no other reason than that less-skilled workers are disproportionately represented among those laid of. There may also have been innovation in production methods and technology that explain part of this productivity increase.” (ibid.) The “mystery” of prosperity and abundance of, and also luxury by, a few is buried in this process.

Real life narratives are harsher. Katherine Faherty, a Dollars & Sense intern, narrates in the Readings in Macroeconomics: “Seven months after graduating I have secured an unpaid internship and a part-time job, which puts me in the same boat as many of my classmates. … My roommate, who has a master’s degree in art history, has only been able to find an unpaid internship at an auction house plus a part-time receptionist job. Even without the part-time job, the Bureau of Labor Statistics would count her as employed because she goes to ‘work’ at the auction house every day. She is among the hordes of recent graduates holding unpaid internships that were once the sole province of college students — a viable route only for grads with family resources to fall back on. Another friend has been on a constant job search since March. She moved back into her parents’ house and returned to her old summer job as a bank teller. Then she took a job at the local mall so she could make her student-loan payments. She gets a great discount at her store, but she’s not putting her double degree in economics and psychology to use. Like almost 32% of workers under 25, she is “underemployed.” Along with those who want full-time jobs but can find only part-time ones, underemployed workers are counted as employed. (“A dismal Time to Graduate”) Then, there comes bonuses of CEOs. Everyone now knows it. And, then, Jenny McCarthy, a single mother, posed nude for Playboy in the magazine’s July/August issue. Jenny finds: “Evan’s tuition was really expensive this year,’ she said on the Today show, referring to her 10-year-old autistic son.” (A-Line, June 25, 2012) Is it a cruel economy?

This narration is from a land famous for abundance, opportunity and dream, from a land that has accumulated wealth unimaginable in human history, from a land that teaches and sermons others on ways to prosperity. But reality exposes an advanced capitalist economy. Its age is not 70 years as was the age of the economy in the former Soviet Union. The advanced capitalist economy’s age is much more than 70 years. Then, why the old economy fails to ensure affordable and appropriate tuition for all children?

Part II: Consumption

Consumption has many faces, many interpretations and many implications.

A poor person’s consumption is completely different from a rich. The rich interpret the issue as their interest defines while a poor spends whole life simply to arrange a bare minimum with an output of failure. A section of economists try to gauge level of success of their design by counting the quantity a poor consumes and comparing it with the quantity the poor once used to consume. This section ignores the fact: capital requires consumption by the poor. The poor can’t move wheels if they don’t consume, and wheel’s movement is required by capital to generate more profit.

Ignorance, actually immaturity, about persons behind wheels encourages a section of petty sized nouveau capital in some poor countries to tell or write: It’s not capital’s business to look after the quantity or quality labor consumes. A sheer nonsensical statement! Sense of class interest discourages rascals even from issuing such statement.

Consumption by the rich is totally different from that of the poor. There is luxury, indulgence, waste, flouting, boosting, getting impregnated with newly bought identity of aristocracy and power. They are completely concerned with their consumption no matter how big carbon footprint is being made.

The US economy has different types of consumptions: of the rich, of the poor, capital induced and crisis pressed. In sum, it discloses aspects of the economy.

Jonathan Rowe, fellow at the Tomales Bay Institute and a former contributing editor at the Washington Monthly, writes: “Much consumption today is addictive […] Millions of Americans are engaged in a grim daily struggle with themselves to do less of it. They want to eat less, drink less, smoke less, gamble less, talk less on the telephone — do less buying, period. Yet economic reasoning declares as growth and progress, that which people themselves regard as a tyrannical affliction. Economists resist this reality of a divided self, because it would complicate their models beyond repair. They cling instead to an 18th century model of human psychology — the “rational” and self-interested man — which assumes those complexities away.” (“The Growth Consensus Unravels”, Readings in Macroecnomics, 28th edition) Jonathan died in March 2011. But his voice for the millions struggling for survival with minimum consumption shall echo.

There are consumptions not essential for human survival. But the advanced economy needs it for its survival. Jonathan writes: “Then too there’s the mounting expenditure that sellers foist upon people through machination and deceit. People don’t choose to pay for the corrupt campaign finance system or for bloated executive pay packages. The cost of these is hidden in the prices that we pay at the store. As I write this, the Washington Post is reporting that Microsoft has hired Ralph Reed, former head of the Christian Coalition, and Grover Norquist, a right-wing polemicist, as lobbyists in Washington. When I bought this computer with Windows 95, Bill Gates never asked me whether I wanted to help support a bunch of Beltway operators like these. This is compulsory consumption, not choice, and the economy is rife with it today. People don’t choose to pay some $40 billion a year in telemarketing fraud. They don’t choose to pay 32% more for prescription drugs than do people in Canada. (‘Free trade’ means that corporations are free to buy their labor and materials in other countries, but ordinary Americans aren’t equally free to do their shopping there.) For that matter, people don’t choose to spend $25 and up for inkjet printer cartridges. The manufacturers design the printers to make money on the cartridges because, as the Wall Street Journal put it, that’s ‘where the big profit margins are.’” (ibid.) The mainstream can’t deny it now.

The pattern – compelling consumers to purchase a commodity that they wouldn’t have purchased had there an opportunity – shows capital’s dictatorial power over consumers. It’s an autocratic power, more powerful than political autocracy. Actually, this dictatorial power determines power and limits of political authority. In ordinary situation, consumers can’t escape this “wish” of the seller. Only an organized initiative of aware consumers can alter the seller’s tact.

Jonathan exposes more facts as he argues:

“The economy in such cases doesn’t solve problems so much as create new problems that require more expenditure to solve. Food is supposed to sustain people, for example. But today the dis-economies of eating sustain the GDP instead. The food industry spends some $21 billion a year on advertising to entice people to eat food they don’t need. Not coincidentally there’s now a $32 billion diet and weight loss industry to help people take of the pounds that inevitably result. When that doesn’t work, which is often, there is always the vacuum pump or knife. There were some 110,000 liposuctions in the United States [in 2001]; at five pounds each that’s some 275 tons of flab up the tube. It is a grueling cycle of indulgence and repentance, binge and purge. Yet each stage of this miserable experience, viewed through the pollyanic lens of economics, becomes growth and therefore good.” (ibid.)

Further facts of the economy are there:

“Americans spend some $5 billion a year in gasoline alone while they sit in traffic and go nowhere. As the price of gas increases this growth sector will expand. Commerce deplores a vacuum, and the exasperating hours in the car have spawned a booming subeconomy of relaxation tapes, cell phones, even special bibs. Billboards have 1-800 numbers so commuters can shop while they stew. Talk radio thrives on traffic-bound commuters, which accounts for some of the contentious, get-out-of-my-face tone. The traffic also helps sustain a $130 billion a year car wreck industry; and if Gates succeeds in getting computers into cars, that sector should get a major boost.” (ibid.)

There is demand, and there is supply, and there is market, actually markets, and there is markets’ dictation, and the markets are free, free for the seller. Shall there be equilibrium? Shall there be an opportunity for buyer? There is opportunity, and there is no opportunity. Power of ownership determines the extent of opportunity. A person owning a few bucks in a pocket have opportunity and a person gripping millions or billions have opportunity. The first one has the opportunity to buy a food item and have no opportunity to buy an opportunity to buy proper medical treatment, and the second one has the opportunity to buy many commodities, opportunities, power, influence.

Then, what’s the production process if consumption is utilization of material benefits of the process? Can everyone utilize the material benefits? Many, almost uncountable, are excluded. Doesn’t this type of consumption affect production? Should this sort of consumption be discarded? Why it can’t be done? These and similar questions will lead to question the very essence of the economy.

In this market, consumers have to see, have to hear, listen, have to laugh, have to mould habit, have to buy, consume, have to be happy until a shock, a crisis, externalities create reaction that compel consumers to get away from this pattern.

The advanced capitalist economy is vibrant with more activities:

“C. Everett Koop, the former Surgeon General, estimates that some 70% of the nation’s medical expenses are lifestyle induced. Yet the same lifestyle that promotes disease also produces a rising GDP. …The automobile gave rise to car wash franchises, drive-in restaurants, fuzz busters, tire dumps, and so forth. Television produced an antenna industry, VCRs, soap magazines, ad infinitum. The texts present this phenomenon as the wondrous perpetual motion machine of the market — goods beget more goods. But now the machine is producing complementary ills and collateral damages instead. Suggestive of this new dynamic is a pesticide plant in Richmond, California, which is owned by a transnational corporation that also makes the breast cancer drug tamoxifen. Many researchers believe that pesticides, and the toxins created in the production of them, play a role in breast cancer. ‘It’s a pretty good deal,’ a local physician told the East Bay Express, a Bay Area weekly. ‘First you cause the cancer, then you profit from curing it.’ Both the alleged cause and cure make the GDP go up, and this syndrome has become a central dynamic of growth in the U.S. today. …The fastest-growing occupations in the country include debt collectors and prison guards. What would we do without our problems and dysfunctions? The problem is especially acute for those at the bottom of the income scale who have not shared much in the apparent prosperity. For them, a bigger piece of a bad pie might be better than none. This is the economic conundrum of our age. No one has more than pieces of an answer, but it helps to see that much growth today is really an optical illusion created by accounting tricks. The official tally ignores totally the cost side of the growth ledger—the toll of traffic upon our time and health for example.” (ibid.)

It’s not a single country-picture. In countries, rich and poor, this “amazing” picture is at hand. But the economy teaches not to minutely observe the background of the picture, not to question the economy. Lessons of economics being imparted also induce learners’ minds to ignore these facts, to isolate these facts from other aspects of the economy.

Shall these facts be mentioned while lessons will be run in class rooms? Shall students be asked to find out similar facts in their societies? Shall they be asked to find out reasons driving these practices in an economy, and the factors shaping such an economy? Even the forward-looking student activists, who unhesitatingly unfurl flags of rebellion, shall not formulate demand to redesign curriculum and syllabus so that these issues are raised and discussed in class rooms of economics, so that instructions rely on up-to-date information and problems that the Readings in Macroecnomics and similar other books identify.

People in countries are searching for alternatives. There are innovations and initiatives. They are not waiting for a section of over-active student activists in some countries, who are having no time to question curriculum and syllabus being followed in class rooms as they are busy in organizing revolution.

“Sooner or later”, Jonathan informed in the Readings in Macroecnomics, “we’ll need different ways of thinking about work and growth and how we allocate the means of life. This is where the social economy comes in, the informal exchange between neighbors and friends. There are some promising trends. One is the return to the traditional village model in housing. Structure does affect content. When houses are close together, and people can walk to stores and work, it encourages the spontaneous social interaction that nurtures real community. New local currencies, such as Time Dollars, provide a kind of lattice work upon which informal nonmarket exchange can take root and grow.” (ibid.)

Carlos Perez de Alejo, co-director of Third Coast Workers for Cooperation in Austin, Texas, informs: “In the midst of mounting economic insecurity, fueled by widespread unemployment, foreclosures and budget cuts, many people are seeking alternative models to business as usual. From community gardens to bartering networks, grassroots efforts are sprouting up across the [US].” (“Embrace the Cooperative Movement”, Austin American-Statesman, Oct. 26, 2010)

In the US, according to Carlos, more than 29,000 cooperatives are operating in nearly all sectors of the economy. There are more than 130 million members in these cooperatives. Under the shadow of the ongoing economic crisis, many people have got organized in worker cooperatives owned and controlled by the people. By providing stable jobs and higher wages worker cooperatives have an impressive track record. The movement in the US has become increasingly organized. In May 2004, members of the worker co-op community founded the US Federation of Worker Cooperatives, a national membership-based organization “of and for worker cooperatives, other democratic workplaces, and the organizations that support the growth and continued development of worker cooperatives.” Membership in the Federation has grown 25% per year.

In the face of crisis and hardship people are creating their spaces. Of course, there are limitations. Possibilities of set backs are there also. Fundamental questions are yet to be identified and resolved. But it’s a part of a process. People learn in their way whatever the dominating economy dictates. These lessons encourage, energize and strengthen people’s initiatives.

Part III: The “Insignificant” trillions of dollars

One of today’s undeniable facts is women’s labor almost all over the world are underpaid and unpaid.

Now-a-days many are asking: “[Are] housewives paid [with] wages? By the government? That may seem outlandish to some, but consider the staggering amount of unpaid work carried out by women.” The International Wages for Housework Campaign, a network of women in Third World and industrialized countries, demands unwaged work that women do are to be recognized as work in official government statistics, and this work be paid. Lena Graber and John Miller discuss the issue in their “Wages for housework: the movement & the numbers”: “Producing credible numbers for the value of women’s work in the home is no easy task. Calculating how many hours women spend performing housework […] is just the first step. The hours are considerable in both developing and industrialized economies.” (Eds. Amy Gluckman, John Miller, Bryan Snyder, and Chris Sturr, Readings in Macroeconomics, 28th edition)

As example of hours spent by women in household work Lena and John refer to a set of data related to the issue. In Australia, 2 hours and 27 minutes were spent for child care per day in a household by a woman in 1997. In the UK in 2000, it was one hr. and 26 min. while in Nepal the time spent for the same purpose in 1996 was two minutes more than that of the UK. In Norway, it was 42 min. in 2000 while in Japan it was 24 min. in 1999. Time spent for food preparation was: Australia – 1 hr 29 min., Norway – 49 min., the UK – 1 hr. 8 min., Nepal – 5 hr. 30 min. Time spent for water and fuel collection in Nepal was 1 hr 10 min while in Norway it was 1 min. Time was also spent for cleaning and shopping. The total time spent was: Australia – 3 hr. 39 min., Japan – 3 hr. 34 min., Norway – 3 hr. 56 min., the UK – 4 hr. 55 min. The sources of this information were: www.abs.gov.au/ausstats; www.unescap.org/stat (Japan); www.ssb.no/tidsbruk_en (Norway); www.statistics.gov.uk/themes/social_finances/TimeUseSurvey; www.cbs.nl/isi/iass (Nepal). A number of data were not available. The data cited are not comparable between the countries referred here because of difference between the economies and time period of data gathering. However, the data provide a picture of women labor deprivation. All the economies cited here are capitalist and all but Nepal are advanced capitalist countries.

Citing the International Labor Organization Lena and John say: In 1990, women carried out two-thirds of the world’s work for 5% of the income. In 1995, the UN Development Programme’s Human Development Report estimated that women’s unpaid and underpaid labor was worth $11 trillion worldwide, and $1.4 trillion in the US. The share of the advanced economy is more than one-tenth.

Paying women the wages for the household work, the economists argue, “would go a long way toward undoing these inequities and reducing women’s economic dependence on men.” The UN 4th World Conference on Women developed a Platform for Action in 1995 that called on governments to calculate the value of women’s unpaid work and include it in conventional measures of national output, for example, in GDP.

Only a handful of countries including Trinidad & Tobago and Spain have passed legislation mandating the new accounting. A number of countries including Australia, Bangladesh, Canada, the Dominican Republic, India, Japan, Nepal, New Zealand, Tanzania, and Venezuela have undertaken extensive surveys to determine how much time is spent on unpaid household work. (ibid.)

There are different approaches to put value to the household work: output-based evaluation, input of household production, opportunity cost based calculation, specialist-replacement method. These techniques produce quite different results.

“In Canada, a government survey documented the time men and women spent on unpaid work in 1992. Canadian women performed 65% of all unpaid work, shouldering an especially large share of household labor [….] (Men’s unpaid hours exceeded women’s only for outdoor cleaning.) […] In Great Britain […] unpaid labor hours are high for an industrialized country […], far greater relative to GDP. […W]hen valued using the opportunity cost method, unpaid work was 112% of Britain’s GDP in 1995! With the specialist-replacement method, British unpaid labor was still 56% of GDP—greater than the output of the United Kingdom’s entire manufacturing sector for the year. In Japan […] women perform over 80% of unpaid work […] The Japanese Economic Planning Agency calculated that counting unpaid work in 1996 would add between 15.2% (generalist-replacement method) and 23% (opportunity-cost method) to GDP. Even at those levels, the value of unpaid labor still equaled at least half of Japanese women’s market wages.” (ibid.)

“While estimates vary by country and evaluation method, all of these calculations make clear that recognizing the value of unpaid household labor profoundly alters our perception of economic activity and women’s contributions to production. ‘Had household production been included in the system of macro-economic accounts,’ notes Ann Chadeau, [a researcher with the Organization for Economic Cooperation and Development] ‘governments may well have implemented quite different economic and social policies.’ For example, according to the UNDP, ‘the inescapable implication [of recognizing women’s unpaid labor] is that the fruits of society’s total labor should be shared more equally.’ For the UNDP, this would mean radically altering property and inheritance rights; access to credit; entitlement to social security benefits, tax incentives, and child care; and terms of divorce settlements. (ibid.)

The Great Financial Crisis has aggravated the situation. Burden on women has increased. It has spread outside of households. “Since the Great Recession began in December 2007,” writes Heather Boushey, senior economist at the Center for American Progress, in the Readings in Macroeconomics, “there [in the US] has been a sharp rise in the number of married couples where a woman is left to bring home the bacon because her husband is unemployed.” The reason is “men have experienced greater job losses than women over the course of this recession, losing three out of every four jobs lost.” (“Women Breadwinners, Men Unemployed”)

In 2009, share of families having unemployed men while women held job rose sharply compared to 2007. In the first five months of 2009, 5.4% of working wives had an unemployed husband at home compared to an average of 2.4% over the first five months of 2007. In terms of number about 2 million working wives with an unemployed husband. (ibid.)

The hardship in household increases as family budget gets strained “since women typically earn only 78 cents for every dollar men earn. In the typical married-couple family where both spouses work, the wife brings home just over a third — 35.6% — of the family’s income.” (ibid.)

If the issue of unpaid household work is set aside temporarily for the sake of putting “things simply” the hard fact that comes up is of “giving” women labor less money compared to men, and asking, actually compelling, women labor to take larger burden.

A single area can be cited as example of hardship. Heather writes: “[M]ost families receive health insurance through the employers of their husbands. So when husbands lose their jobs, families are left struggling to find ways to pay for health insurance at the same time they are living on just a third of their prior income.”

The hardship increases when the family has child. Heather provides data: “Families with children have been hit especially hard hit by unemployment. Among working wives in families with a small child — under age six — at home, 5.9% have an unemployed husband. […T]here are 1 million working wives with children at home, but an unemployed husband.”

Heather moves further with hard data that provides harder aspect of life during the period: “There has also been a sharp rise in the share of families where both the husband and wife are unemployed. Between the first five months of 2007 and of 2009, the share of married-couple families with both spouses unemployed rose to 0.5% from 0.1%, meaning that one in 500 families is struggling with dual unemployment. The share of families with a child under age 18 with both parents unemployed is 0.6%, meaning that one in 165 families with children have both parents looking for work.”

These facts show the cruel face of the economy that is concerned only with profit. The hardship of women labor can be gauzed fully if necessary labor time and surplus labor time are considered. With less wage women labor has to survive, make arrangement for survival of family members, work unpaid in household. But she isn’t allowed to produce less. This is an economy that at times even cares not to wear mask of humanity.

Part IV: Productive Investment? No

Inequality and capitalism are indivisible. Today, even proponents of capitalism don’t deny it. In the US as in other capitalist countries, increasing inequality is undeniable. The Empire is now residence of deep inequality.

Joseph Stiglitz observes: “America has the highest level of inequality of any of the advanced countries – and its gap with the rest has been widening. In the “recovery” of 2009-2010, the top 1% of US income earners captured 93% of the income growth. Other inequality indicators – like wealth, health, and life expectancy – are as bad or even worse. The clear trend is one of concentration of income and wealth at the top, the hollowing out of the middle, and increasing poverty at the bottom. (“The Price of Inequality and the Myth of Opportunity”, Project Syndicate, June 6, 2012)

“Economic inequality”, James M. Cypher, professor of economics at California State University, Fresno, writes, “has been on the rise in the United States for 30-odd years.” (“Slicing up at the long barbeque”, Readings in Macroecnomics, 28th edition, Eds. Amy Gluckman, John Miller, Bryan Snyder, Chris Sturr)

The inequality gives a lot of money, unimaginable, in total trillions of dollars, to a few. At the same time questions born. Does that huge money brings in any or produces something good? Answers to the questions reveal the type of activities the advanced capitalism is carrying out. At the same time, with the ultimate output the economy can claim legitimacy or can forfeit its rationale for existence.

James provides the answer with a number of facts. “[T]he big money has not gone into productive investments in the United States. Stripping out the money pumped into the residential real estate bubble, inflation-adjusted investment in machinery, equipment, technology, and structures increased only 1.4% from 1999 through 2005 — an average of 0.23% per year. Essentially, productive investment has stagnated since the close of the dot-com boom. Instead, the money has poured into high-risk hedge funds. These are vast pools of unregulated funds that are now generating 40% to 50% of the trades in the New York Stock Exchange and account for very large portions of trading in many U.S. and foreign credit and debt markets. And where is the income from these investments going? Last fall media mogul David Geffen sold two paintings at record prices, a Jasper Johns ($80 million) and a Willem de Kooning ($63.5 million), to two of “today’s crop of hedge-fund billionaires” whose cash is making the art market “red-hot,” according to the New York Times. Other forms of conspicuous consumption have their allure as well. Boeing and Lufthansa are expecting brisk business for the newly introduced 787 airplane. The commercial version of the new Boeing jet will seat 330, but the VIP version offered by Lufthansa Technik (for a mere $240 million) will have seating for 35 or fewer, leaving room for master bedrooms, a bar, and the transport of racehorses or Rolls Royces. And if you lose your auto assembly job? It should be easy to find work as a dog walker: High-end pet care services are booming, with sales more than doubling between 2000 and 2004. Opened in 2001, Just Dogs Gourmet expects to have 45 franchises in place by the end of 2006 selling hand-decorated doggie treats. And then there is Camp Bow Wow, which offers piped-in classical music for the dogs (oops, “guests”) and a live Camper Cam for their owners. Started only three years ago, the company already has 140 franchises up and running. According to David Butler, the manager of a premiere auto dealership outside of Detroit, sales of Bentleys, at $180,000 a pop, are brisk. But not many $300,000 Rolls Royces are selling. “It’s not that they can’t afford it,” Butler told the New York Times, “it’s because of the image it would give.” Just what is the image problem in Detroit? Well, maybe it has something to do with those Delphi workers facing a 40% pay cut. Michigan’s economy is one of the hardest-hit in the nation. GM, long a symbol of U.S. manufacturing prowess, is staggering, with rumors of possible bankruptcy rife. The best union in terms of delivering the goods for the U.S. working class, the United Auto Workers, is facing an implosion. Thousands of Michigan workers at Delphi, GM, and Ford will be out on the streets very soon. (The top three domestic car makers are determined to permanently lay of three-quarters of their U.S. assembly-line workers—nearly 200,000 hourly employees. If they do, then the number of auto-workers employed by the Big Three—Ford, Chrysler, and GM—will have shrunk by a staggering 900,000 since 1978.) So, this might not be the time to buy a Rolls. But a mere $180,000 Bentley—why not? But perhaps those who decry the trend can find at least symbolic hope in the new boom in yet another luxury good. Private mausoleums, in vogue during that earlier Gilded Age, are back. For $650,000, one was recently constructed at Daytona Memorial Park in Florida—with matching $4,000 Medjool date palms for shade. Another, complete with granite patio, meditation room, and doors of hand cast bronze, went up in the same cemetery. Business is booming, apparently, with 2,000 private mausoleums sold in 2005, up from a single-year peak of 65 in the 1980s. Some cost “well into the millions,” according to one of the nation’s largest makers of cemetery monuments. Who knows: maybe the mausoleum boom portends the ultimate (dead) end for the neo-Gilded Age.” (ibid.)

What happens in a society with this type and level of consumption by this sect of persons? Krugman has an answer.

“Should we be worried about the increasingly oligarchic nature of American society? Yes, and not just because a rising economic tide has failed to lift most boats. Both history and modern experience tell us that highly unequal societies also tend to be highly corrupt. […] And I’m with Alan Greenspan, who […] has repeatedly warned that growing inequality pose a threat to “democratic society”. (Paul Krugman, “Graduates versus Oligarchs”, New York Times, Feb. 27, 2006)

A sharper tone tells: “[…] America looks more and more like a class-ridden society. […] Our political leaders are doing everything they can to fortify class inequality, while denouncing anyone who complains […] as a practitioner of ‘class warfare’.” (Paul Krugman, “The Death of Horatio Alger”, The Nation, Jan. 5, 2004)

Destiny of this journey is not a happy place for the advanced capitalist society. Krugman asks: “Where is this taking us? Thomas Piketty, whose work with Saez has transformed our understanding of income distribution, warns that current policies will eventually create ‘a class of rentiers in the U.S., whereby a small group of wealthy but untalented children controls vast segments of the US economy and penniless, talented children simply can’t compete.’ If he’s right – and I fear that he is – we will end up suffering not only from injustice, but from a vast waste of human potential.” (ibid.) The economy is sowing seeds of class conflict as it destroys human potential.

There is poverty, there is poor along with the rich. There is debate also on identifying the poor. Ellen Frank, who teaches economics at the University of Massachusetts-Boston, writes: “The poverty line is widely regarded as far too low for a household to survive on in most parts of the United States. For one thing, as antipoverty advocates point out, since 1955 the proportion of family budgets devoted to food has fallen from one-third to one-fifth.” (“Measures of Poverty”, Readings in Macroecnomics, 28th edition,)

There is an opposite view. “Poverty calculations also have critics on the right. Conservative critics contend that the official poverty rate overstates poverty in the United States.” (ibid.)

The fact that comes out is: Methodology is not even spared of class interest. Conservative interests like to deny existence of the poor. An ostrich policy is preferable to the interests instead of resolving the problem of poverty. And, interests make them incapable of resolving the problem. It’s an inherent limitation.

There is need to revise the poverty line. Scientific approach requires this. It will be easier to propagate conservative class interests without a proper measurement method; but that will ultimately hurt the interests although the interests with short sighted view prefer immediate profit. Jeannette Wicks-Lim, assistant research professor at the Political Economy Research Institute at the University of Massachusetts-Amherst, writes: “Without revising the official poverty line to reflect the actual costs of families’ basic need, the key statistics we use to understand economic deprivation in the United States will not only undercount the poor, but it will do so by a larger margin every passing year.” (“Lies, Damned Lies, and Poverty Statistics”, Readings in Macroecnomics)

The poverty line controversy also reveals another fact: State of scientific knowledge in an advanced capitalist economy, signs of a moribund society.

Stiglitz describes the state of the society: “America likes to think of itself as a land of opportunity, and others view it in much the same light. But, while we can all think of examples of Americans who rose to the top on their own, what really matters are the statistics: to what extent do an individual’s life chances depend on the income and education of his or her parents?

Nowadays, these numbers show that the American dream is a myth. There is less equality of opportunity in the United States today than there is in Europe – or, indeed, in any advanced industrial country for which there are data. […] In a country where money trumps democracy, such legislation has become predictably frequent. […] Inequality leads to lower growth and less efficiency. […] The Great Recession has exacerbated inequality, with cutbacks in basic social expenditures and with high unemployment putting downward pressure on wages. […] America has become a country not “with justice for all,” but rather with favoritism for the rich and justice for those who can afford it […] America can no longer regard itself as the land of opportunity that it once was. (“The Price of Inequality …”, op. cit.)

The “story” is almost endless as it’s of a vast empire. However, the story helps understand capitalism, its present state, its limitations, and the need to have a new economy that shall not breed and increase inequality.

Europe And Economy: Looming Dark Clouds

Dark clouds loom over Europe and the US and the time to tackle the problem is short. None but the International Monetary Fund and the UK chancellor make the warning. As desperate capital continues to press people with intolerable burdens Europe, broadly, is now a continent of protests, demonstrations, strikes, and possible political upheavals.

As the UK chancellor George Osborne warned that the time was running out, only “six weeks”, to end the eurozone debt crisis, and the world’s share markets experienced another volatile week, Christine Lagarde, the IMF chief warned: “There are dark clouds over Europe and there is huge uncertainty in the US. And with that we could risk a collapse in global demand.” Lagarde advised countries to collectively “act now”. “We are linked by a common destiny.” She assumes that the “turbulent times” is the bond of unity. She was speaking at the IMF-World Bank annual meeting in Washington. She assures that “there is a path” to recovery, but the path has narrowed down “than it was three years ago”.

But capital is failing to unite. There are voices in Europe to force out of eurozone some countries including Greece. There are also talks of abandoning the zone. Signs of fracture in the bond of capitals’ “unity” should not astonish onlookers.

World Bank President Robert Zoellick’s “confidence is being eroded daily by the steady drip of difficult economic news”, although he “still thinks a double-dip recession for the world’s major economies is unlikely.” He was addressing policy makers at Washington. Zoellick warned: Europe, Japan and the US must immediately tackle their financial problems before it becomes a world crisis. “A crisis made in the developed world could become a crisis for developing countries.”

The IMF said days ago that the global financial system is more vulnerable now since the 2008 financial crisis. “Risks are elevated, and time is running out to tackle vulnerabilities that threaten the global financial system and the ongoing economic recovery,” the IMF said.

In the Slowing growth, rising risks report, the IMF mentioned the urgently need to halt the deepening crisis in the single currency area. The euro zone is expected to have a slower growth in 2011 and 2012 while the emerging markets are expected to attain a much more rapid growth this year: 6.4%. But there is dramatic increase of financial stability risks, the report said. It mentioned geopolitical tensions and vulnerabilities in emerging markets as among others factors that pose threats to global growth. Capitals, one should not forget, cannot operate without creating tensions in geopolitics and making economies vulnerable.

News from the center and near-enter of the globe was not encouraging: the US Federal Reserve’s warning that the US economy is facing significant risks slumped world shares, Moody downgraded eight Greek banks’ rating, rumors circled that Greece was contemplating defaulting on its debts, the G-20’s commitment “to take all necessary actions to preserve the stability of banking systems and financial markets” by November failed to impress investors. Markets declined to listen to leaders, loyal believers of market. The debt crisis in Europe is haunting the market leaders. World markets on September 22 made their deepest dip in more than a month. Fears of a double-dip recession have come back.

The European Commission apprehends “a virtual standstill” in economic growth in the eurozone in the second half of 2011. Jose Manuel Barroso, the European Commission president, warned in August that the sovereign debt crisis was spreading beyond the periphery of the eurozone.

The euro, since officially coming into existence in 1999, is in crisis. With an accumulated public debt reaching 100% of GDP on average in the OECD countries, uncontrollable fiscal deficits, and unemployment, all creations of ruling elites, a permanent bailout fund with about 500bn euros, the European Stability Mechanism, now stands guard against failures. But powerful crisis is declining to surrender. Rather, anguish is brewing up even within establishment. Greece with its debts of 300bn euros, 113% of GDP, the highest in modern history, is feeling that it has been, as the Greek finance minister complained, “blackmailed and humiliated” and made a “scapegoat” for the EU’s incompetence.

Debt rating downgrading of European countries now sounds old news. Italy is the latest one, from A+ to A by the Standard and Poor’s. There are accusations of “political considerations” in grading the rating as Italy has voiced. Now, it is not only the poor PIGS that are feeling the fang of capital. Strong economies including Germany are staring at the horizon of crisis.

Without the continued payments, Greece is set to run out of cash by mid-October. Its debt rating has been cut down seven times since 2009, from A to CC. In last May, Portugal became the third eurozone country to receive a huge EU/IMF bailout - 78bn euros. Its rating has been cut down four times since 2009. With 21% unemployment, the highest rate in the EU, Spain is feeling the grinding weight of freewheeling capital. As its growth has slowed Germany plans to cut the budget deficit by record 80bn euros by 2014. “Poor” Greek capital, considered a junk, is seems planning to pull down the mighty German economy. France plans to cut spending. Romance with Greek banks has created a threat to the French bankers busy to don Napoleon’s coat in Africa. The UK, a proud partner of the Empire, now owns the biggest cuts in state spending since World War II. Eurozone cannot bail out the trans-Mediterranean warrior, Italy, with the highest total debt in the eurozone and stagnant growth. With a collapsed banking system and rating cut down five times since 2009 the Irish Republic is standing as a threat to the British banks. Small Cyprus has not been spared by the powerful bankers.

Capitalism is trying to find out its survival path, eternal growth with finite resource base and a fragile world ecology. The monopoly finance capital is playing; playing with its speculation tools, time, and peoples’ hardship and misery. It declines to admit that its options are running out. It has competition within its camp. But they dream to bury the competitions with nice promises that they know are hollow. They also deny people’s limits of patience, an exercise with ignorance.

Allowing markets function with the least possible government intervention has proved wrong. Now market believers look for intervention. Now, section of mainstream admits that “fundamental principles of capitalism - that human beings are rational and markets behave rationally, and that markets will assign prices - are flawed…. That game is over ….capitalism has essentially hit a wall.” A social matrix of protest is being created.

Cuts in social security, monthly pensions, public sector wage, public investment, subsidies for local government, education spending, family tax benefits, and subsidies to parents, cap on wages and bonuses, increased health care fees, raised retirement age, freezed/slowed down recruitment, frozen salaries, and closing down of schools are the “gifts” financial elites are now presenting to, broadly, the Eurozone people. They have planned to sale out ports, airports, land and mining rights, telephone, water and electricity services, refineries, and many more public assets. It seems the finance elites are going to formally and privately own almost entire countries but the social responsibility. There is also a “golden rule” in the constitution of a country, Spain, to keep future budget deficits to a strict limit. In an European country, France, the highest earners will be required to pay an extra 1% income tax while working people in other countries will “contribute” more by sacrificing much higher portion of their income.

Vigorously unpopular austerity budgets now are degrading life of common people in countries in Europe. Thousands of Romanian police officers went on strike over their pay cut. Protests have spread across Europe. European cities are witnessing marches against new austerity measures. Trade unions are vowing bigger protests.

It will not be astonishing if dominating capitals plan to rely on the emerging economies. But these are not free of capital’s “virtues” – crisis, bubbles and bursts, unemployment, disparity, and anguish. At the same time, countries that rely on selling labor in European markets should take into account of the unfolding situation in the continent. 

The Wisconsin Protest And A Few Questions

Increasing conflict and crises in today’s US are revealed by the Wisconsin protest. Thousands are protesting to oppose a bill that aims to narrow down labor rights. Protests spread from Wisconsin to Ohio. Rallies in support of the Wisconsin protest were held around the US, including in Minnesota and New York.

Massive demonstration, larger in number and more sustained than any in Madison in decades, shouted “Kill this bill!” and demanded recall of the governor. University of Wisconsin-Madison teaching assistants and students poured into the Capitol rotunda and spent night in sleeping bags on the floor of the rotunda. They raised slogans inside the Capitol, banged on drums, and waved signs comparing governor Walker to Mubarak. Public schools were closed for days after teachers continued to call in sick to protest. The “sickout” spread across the state as several other school districts including Milwaukee, the state's largest, canceled classes as a result of teacher absences.

Majority leader Fitzgerald termed the situation “a powder keg” while Obama termed the bill as “an assault on unions”. Danny Donohue, president of the Civil Service Employees Association, said: Walker “is waging one of the most vicious attacks on working people our nation has seen in generations.” Jesse Jackson led one of the marches. There was gathering of conservative supporters also, but few in numbers. It is a state politically torn apart.

At the center of the days of protest is a controversial bill that would strip most public employees of their collective bargaining rights which the governor, an outspoken conservative, said was needed to balance a $3.6 billion budget shortfall and avoid widespread layoffs. The plan would make workers pay half the costs of their pensions and at least 12.6% of their health care premiums. State employees’ costs would go up by an average of 8%. The changes would save the state $30 million by June 30 and $300 million over the next two years, and Unions could not seek pay increases above those pegged to the Consumer Price Index unless approved by a public referendum. Unions also could not ask employees to pay dues and would have to hold annual votes to stay organized. Walker has threatened to order layoffs of up to 6,000 state workers if the measure does not pass. While other states have proposed bills curtailing labor rights, Walker’s measure is the most aggressive anti-union move.

Wisconsin, the first US state to pass a comprehensive collective bargaining law in 1959, is the place the American Federation of State, County and Municipal Employees, the national union representing all non-federal public employees, was founded in 1936. The proposed bill, being imposed by the conservatives, is an irony!

Democratic practices saw there in Wisconsin moves showing limits of its accommodation. Senate Republicans met in secret to discuss the bill. Asked where Republicans stood on Walker’s proposal, Sen. Dan Kapanke told the Associated Press, “That's a really good question. I don't know.” Fitzgerald said: Sen. Miller, a Democrat, “shut down democracy” while Democrats said: the Republicans were undemocratic. “This is wrong! Desperately wrong!”, minority leader Barca shouted from the floor of the Assembly as Republicans left after turning off the microphones. The state’s Democratic senators left the state, effectively jamming any movement on the bill, the “boldest action Democrats have taken since midterm elections swept Republicans to power in statehouses” across the US. Democrats on the run in Wisconsin avoided state troopers and threatened to stay in hiding for weeks, potentially paralyzing a state government they no longer control. The state patrol was asked to go to Miller’s house, signaling the circumstances at the Capitol. Senate Sergeant-At-Arms said: Troopers knocked on Miller’s door and rang his doorbell, but no one answered. An advanced democracy is being practiced with hiding, halting quorum, using trooper! Should Third World learn from it?

The situation led Miles Mogulescu, an activist and writer, to say: “the first stirrings of American resistance to the corporate oligarchy since Wall Street greed and malfeasance brought the American and world economy to its knees in 2008 are coming from the organized labor … in the capital of Wisconsin. …It was one of the first shots across the bow in a 30-year long war by America’s corporate oligarchy to transfer wealth from the working and middle classes to the rich and to deregulate the economy in order to increase the wealth and power of the corporate and financial elite. …This one-sided class war by the corporate oligarchy against the middle and working class has, until now, been met by … little resistance ….[R]ight-wing Republicans may have woken a sleeping giant in organized labor that is just beginning to show its power in the streets of Wisconsin. It may be the beginning of a new mass movement of the middle and working class … to take power back from organized corporate oligarchs and to restore a measure of social and economic equality ….[W]hat started in Wisconsin may spread … across the country.” (“Wisconsin Is Ground Zero in America’s New Uprising Against the Corporate Oligarchy”, The Huffington Post, Feb. 18, 2011)

Now, as an imaginary exercise, put the entire political scene onto a Third World country-political stage. What would have been described? Would it not be termed: an assault on labor, attempt to curtail rights, chaos in legislature, failure of legislature compelling people to show power, etc.? Were not all these signaled limits of practices in institutionalized politics, of accommodating and co-opting, of problems in spreading out burden fairly among constituents? When these limits and problems arise? Is it a proper functioning of a political system where stalling quorum is a way to resolve a dispute? When the need to stalling quorum arises? When troopers are sent to knock door of lawmakers’ homes? These are not, to put it softly, healthy signs in an advanced democracy. Similar political scene in case of a Third World country would have been termed by mainstream media and democracy watchdogs, by the so-called civil society as crumbling down of legislative process, symptom of a serious disease.

The symptom appears grave if the incidents are put on the backdrop of widening inequality, increasing poverty, and reckless gambling by significant part of capital. These may show first signs of rising tide of protest.

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This article was published at countercurrents.org , on 21^th  February, 2011

Increasing instability in a world not flat

New Age - May 9, 2009

Dropping the curtains on the cold war stage has not brought in stability in a much-propagated unipolar world. It was told by a section of pundits that The World is Flat (a book by Thomas L Friedman, 2005). Competition for accumulation in the centre and near-centre of the world system and the near-complete globalisation by capital has intensified instability that is inherent in the present world order. Gone is the static, stable world created in the period of cold war. Sounds of bombing on the lands of former Yugoslavia torn into pieces that peace.

The cold war bled the Soviet Union white. Military competition with the US together with weaknesses and faults within the post-revolutionary society in the Soviet Union made its collapse. The United States, the surviving super power in the cold war, reaped dividends from that war. The cold war 'increases the demand for goods', as the Harvard economist Sumner Slichter told bankers in 1949, 'helps sustain a high level of employment, accelerates technological progress and thus helps the country to raise its standard of living.... So we may thank the Russians for helping make capitalism in the United States work better than ever.'

The Second World War pulled up the country out of depression and as the war came to a conclusion bounty came in to the country as prize of the war and of the post-war reconstruction in Japan and Europe. The regional wars in Korea and Vietnam played crucial role in creating the 'golden age' in the history of capitalism in that land of 'opportunity'. By that time military-industrial complex made its seat in the US economy well-entrenched and the economy got dominated by the military-Keynesianism.

Then the world economy, as Sweezy put, experienced slow growth and the 'great' globalisation had the Midas touch of monopolisation and finacialisation. The contradiction of huge surplus and no scope for newer investment brought to life speculation with financial instruments that instrumented the present financial crisis. To George Soros, the renowned investor, these are 'fancy instruments for investment'. A market, unimaginable in size, with complex forms of investment including credit-default swaps that made it possible for investors to bet on the possibility that companies will default on repaying loans came into being. 'Such bets on credit defaults', according to Soros, made 'a market of $45 trillion', an amount more than five times the total of the US government bond market, which was entirely unregulated and the risks of such investments were not acknowledged by the mainstream. And, he said: 'the system' was 'built on false premises.' Market fundamentalism, the dominant ideology in the market, relied on the helpful hidden 'hand' of market.

Then the present great financial crisis came, erupting in the United States in August 2007 and spread around the globe. It entered a tumultuous new phase last fall, shaking confidence in global financial institutions and markets. The global stock-market witnessed $6.5 trillion losses on October 6 and 7, as measured by Standard & Poor's BMI Global, an index of major markets worldwide. Total worldwide losses from the financial crisis from 2007 to 2010 could reach nearly $4.1 trillion, the International Monetary Fund estimated in a recent report. Whatever the amount, it was a trillions-dollar game by the speculators.

There are 'stories' on financial crisis from the other sides of the Atlantic and the Pacific. Iceland was on the brink of bankruptcy. Then a political crisis followed there. Tales of state standing beside bankers were told from the United Kingdom, France, Germany, Japan, Australia, India, Canada, Hungary, Ukraine, China and many other countries. Europe is going through severe economic problems. 'By any measure, the downturn is the deepest since the Great Depression of the 1930s,' the IMF said in its latest World Economic Outlook. 'All corners of the globe are being affected.' Xu Lejiang, chairman of Baosteel, one of China's giant steelmakers, said: The era of rapid growth for Chinese steel 'will soon be remembered as history.'

Time wrote in October 2008: The Chinese stock market has also been hit hard; it was down about 60 per cent in 2008. China's economic growth has been a critical factor for the US because working in tandem, the nations have served as the twin motors of world economic growth: American consumers have snapped up everything that the Chinese have manufactured, from toys to apparel, and in return the Chinese have helped to finance America's deficits by accumulating ever larger amounts of US debt. If their economy hits the brakes, Chinese will buy fewer GM cars, Chinese steelmakers will use less US iron ore, and Beijing may want to use its cash reserves for other purposes, including investment at home to stimulate its own economy rather than to bail out the US treasury. New York Times said in last December: An ensuing movement of China away from the dollar could drastically destabilise the entire US-dominated world economic order.

These tales are now being told and retold all over the media and academia. Now, sections of the mainstream search the pages of Marx. Dr John Sentamu, the archbishop of York, as The Telegraph, UK, of September 24, 2008 reported, denounced the 'Alice in Wonderland world of global finance' and condemned 'the financial traders who made millions by driving down the share prices as "bank robbers and asset strippers"' while Dr Rowan Williams, the archbishop of Canterbury, opined that Marx was right in his analysis of 'unbridled capitalism'.

Along with this hullabaloo in the lands of capitalist 'miracles', 'miracles' that spellbound many of our economists, there are countries with big surpluses that have set up sovereign wealth funds, state-owned investment funds held by central banks. These countries include Abu Dhabi, China, Norway and Saudi Arabia. They aim to diversify their assets from monetary assets to real assets, one of the major developments. These sovereign wealth funds were equal in size, in 2008, to all of the hedge funds in the world combined, were growing and were expected to grow to about five times the size of hedge funds in the next 20 years.

While discussing the 'Four Crises of the Contemporary World Capitalist System', William K Tabb wrote: 'In 2006, for the first time, emerging markets accounted for over 50 percent of global output. If they continue to grow at the rate they have, forecasts project a very different world by mid-century. ... A 2006 study by PriceWaterhouseCoopers projected that in the year 2050 the Chinese economy would be almost as large as that of the United States in dollar terms, and that India would be the third largest. A year later Goldman Sachs researchers predicted China would pass the United Sates in 2027 and India's economy would become larger than that of the United States before 2050. Investment bankers predict Brazil's economy in 2050 will be as large as Japan's, and the Indonesian and Mexican economies will be larger than those of the United Kingdom and Germany. PriceWaterhouseCoopers' researchers expect the "E-7" (Brazil, China, India, Indonesia, Mexico, Russia and Turkey) will be about 25 percent larger than the current G-7 and will be driving the growth of the global economy.'

Assessments made in these predictions may change due to the global economy's lurch into reverse this year and in the coming few years. The changed equation of economic power might bring in powerful factors that might even create greater forces of instability. In 2010, the IMF, in the context of the present financial crisis, has predicted that the US economy will be flat, neither shrinking nor growing while Germany's and Britain's economies will shrink by 1 percent and 0.4 percent respectively. Other countries, such as Japan, Russia, Canada and Mexico, are projected to grow again. And China and India should pick up speed. Tabb says: 'A renewed strength of the dollar could be a reflection of greater trouble elsewhere rather than economic recovery in the United States.' These will reverberate in the arena of world power equation.

China is now much more important with its rise as a world power. With inroads in Africa and Latin America China has become a permanent point of pain in the US establishment. There is concern in the US establishment of a China-Russia-Iran coalition The Time report said: China's huge currency reserves and its vast holdings of US securities make it a key player in the US financial markets. If the Chinese decided to shift any of their money out of the US or the dollar, it would cause a huge upheaval, potentially sending the dollar skidding and hurting markets even further.

India, building up a blue water navy, is an emerging market on the bent backs of millions of poor. The US is making efforts to establish a military alliance with India. At the same time, there is a process of partnership among China, India and Russia. India and China are in need of energy. Tabb wrote in Z Magazine: 'Russia is selling advanced military systems to India and China and cooperating on energy.' He continued: The Shanghai Cooperation Organisation emerging as a counter to NATO has brought together China, Russia, India, Uzbekistan, Turkmenistan and Kyrgyzstan while observer status in the SCO to the US was pointedly denied. The same status has been given to Pakistan, Afghanistan, Iran and Mongolia. The SCO has declared that the US should leave the Middle East.

'Something' is coming up as Beijing Consensus as it appears an alternative to the Washington Consensus. While the former is based on respect for sovereignty the latter uses economic threats and cruise missiles to spread 'democracy' and 'free' market. There is the possibility of a nuclear armed Iran where India has billions of investment in gas and oil. Iran's alliance with Venezuela is not an easy event for the US and Russia is selling arms to Venezuela.

The changing colour of much of Latin America, from white to pink and red, is a challenge to the famous Monroe Doctrine that defined the Western Hemisphere as a US sphere of influence, and the Roosevelt Corollary that reasserted the US's position as protector of the Western Hemisphere. The radical Bolivarian Alternative for Latin America is promoting regional solidarity in Latin America. The Banko del Sur (Bank of the South) has weakened the grip of the IMF and the World Bank in the region. Discussions for a regional monetary system in the region have been initiated. Cuba is not having a sense of US imposed isolation. It is surviving with its increasing friends after passing through the 'Special Period' as its leadership calls the tough time the island - country went through since the demise of the Kremlin empire.

The imperial ambition of Russia, possessing the third-largest hard currency reserves in the world, haunts the US dominated faction of the mainstream. Yuliya Tymoshenko, the Ukraine prime minister for nine months in 2005, wrote in the US ruling elite-journal Foreign Affairs, May-June, 2007: The policy of 'containment' of Russia is still applicable today. Russia straddles the world's geopolitical heartland and is heir to a remorseless imperial tradition. She tells about 'Russia's ... desire to recapture its great-power status at the expense of its neighbours.' It is a tone of anxiety and concern. Russia's foreign policy is troubling for the US. Moscow has given Tehran diplomatic protection for its nuclear ambitions, and Russian arms sales are promiscuous. Putin once spoke favourably about creating a 'gas OPEC'. A number of times one of its neighbours has experienced the power of suspending gas supply. Georgia had a bitter experience with Russian firepower recently.

Northeast Asia is 'one of the most dangerous places on earth' now. Kent E Cadler, a former special adviser of the US ambassadors in Japan, wrote in Foreign Affairs, January-February 2001 issue: 'Only there are the world's three principal nuclear powers (the United States, Russia, and China) and the two largest economic powers (the United States and Japan) still politically and geographically engaged - their interests entwined in a volatile arc surrounding Japan. As other global hotspots moved fitfully toward peace [?], Korea remained locked in conflict. South Korea has long been a geostrategic island... a bridge - to Russia, China.' It has been argued in The United States, Japan, and Asia (ed. Gerald L Curtis) that there are dangers if the United States and Japan go separate ways in dealing with China, a difficult partner to deal with in world affairs, as they did in the 1930s. Financial and economic interests of both the countries may compel them to deal with China separately. The 'loose balance of power' between Russia, China, Japan and the US in 'the Strategic Quadrangle', East Asia, is not going to be permanent with the building up of ocean-going navy by China, its thirst for energy and expansion of trade relations.

Then where does the sole superpower stand on the stage of geopolitical drama? It is an apparent ambiguous position. The sole superpower is the largest empire in the history of humankind. Its arms could reach every corner of the earth with the mightiest machine for war mankind has ever made. But the war machine now finds that the economy that was supposed to support it does not now carry that capacity. Its adversaries and competitors do not match it in terms of fire power but outperform it in the area of economy. Even its mighty machine is overstretched; it cannot twist arms of 'disobedients' as it did decades ago. These are few of the contradictions that made it more adventurous and aggressive. A few of its fight are turning fistfights with Frankenstein and shadows. Its navy has to degenerate itself into marine police at times as it has to engage with pirates. Today it is with a band of pirates near the Somali coast, tomorrow it will be in the Gulf of Mexico.

The war on terror, Sorors argues in his book The Bubble of American Supremacy: The Costs of Bush's War in Iraq, has put the US on a wrong track. This war, to Soros, is responsible for the decline of US political influence and military power. This is only the 'story' in the centre of the centre of the world capitalist system. Soros writes: 'We are at the end of an era.' And, in terms of economy, he says, the US will not be the world power when the current crisis ends. It is a period of considerable uncertainty and turmoil. Hillary Clinton intends to revitalise the mission of diplomacy in American foreign policy and called for a 'smart power' strategy in the Middle East. At her confirmation hearing before the Senate Foreign Relations Committee, she said: 'America cannot solve the most pressing problems on our own, and the world cannot solve them without America.' But, alas! Often the outward face of geopolitics does not provide the sulphurous roaring to the most mighty Neptune, often the tricks of desperation are neutralised by the sharp wind of the north (italicised words are from The Tempest).

There are other actors, minor and emerging, in the drama of geopolitics. They are making moves as their needs compel them and as their capacity permits. These needs and capacity are influenced by factors including economy and historical destiny. There are hotspots, bigger and smaller, in Europe and in other continents that are turning difficult to deal with in this round world. A tumultuous time indeed!

Farooque Chowdhury mainly translates. One of his edited books is Micro Credit, Myth Manufactured