Crude Harvest is about a controversial law Mexico has enacted that puts its publicly owned oil industry up for sale to foreign corporations. The law also grants foreign oil companies the right to override the wishes of Mexican farmers if oil is discovered on their land.
Following a massive popular uprising, Mexico nationalized their oil industry in 1938. It’s the last nationally owned oil company to be opened to foreign investment. US oil economies are extremely excited as Mexico is an extremely corrupt country that makes no effort to regulate oil production. They will be allowed to pollute Mexican water and air as much as they like without consequences.
The documentary goes on to reveal how NAFTA has systemically “raped” the Mexican economy and forced the government to sell their oil industry to pay off Wall Street debt. By flooding the Mexican market with cheap (subsidized) American food, the US has wiped out most small Mexican farmers and ranchers and turned many small indigenous villages into ghost towns. Left with no way to support themselves, these former farmers can only survive by turning to organized crime or illegally entering the US.
Once that their lands are to be turned over to foreign oil companies, yet more farmers will lose their livelihood. Meanwhile Mexican debt will only increase as the government loses oil profits that currently comprise 40% of government revenue.
In The End of Capitalism, geography and anthropology professor Anthropology David Harvey makes the case that economic crises and inequality are part and parcel of capitalism and can only be ended by dismantling the capitalist economic system.
He begins by examining the cumulative “perception control” by the corporate media that has made it virtually impossible (except perhaps in Iceland) to look at any alternative economic systems despite the deplorable performance of capitalism since the 2007 global economic crash.
Quoting from Volume 2 of Marx’s Capital, he goes to demonstrate that growth and debt are structural components of capitalism – how the amount of debt created always equals the amount of capital growth created. In fact, repaying all government debt (as many conservatives advocate) would end capitalism faster than a workers revolution.
He also quotes Reagan advisor David Stockman and former vice president Dick Cheney to demonstrate how the Reagan and both Bush administrations deliberately ramped up the deficit (on unfunded wars) as a strategy to force future administrations to cut social spending.
For me, the most interesting part of his talk is his discussion of the Chinese economy, specifically how their willingness to employ Keynesian tactics (of government deliberately spending money into the economy) to generate 10% economic growth and save the global economy from total collapse.
In elucidating a viable alternative to capitalism, Harvey quotes from volume 3 of Capital, where Marx defines capitalism as a “class relation between owner and worker such that the owner extracts surplus value (profit) from the worker’s labor.” Thus in his (and Marx’s) view, the only viable alternative is a system of worker self-management of our own productive process (ie worker cooperatives). He believes such a system would coordinate production via a Just in Time networking strategy similar to those used by Wall Street corporations.
The video has an extremely long introduction and Harvey starts speaking at 8.00.
Decadence is a 2006 Australian TV series examining the plummeting quality of Australian life, which director and narrator Pria Viswalingam blames on a global economic system based on frenetic consumption, fueled by debt and ridiculously long hours of work. The cinematography choreographs to perfection the self-indulgent moral degradation of a culture that has been subsumed by US political and cultural norms that reward narcissism and the vacuous idolization of celebrity.
The only critique I would have is the absence class perspective. I have a problem with Viswalingam’s blanket assertion that all Australians are working ridiculously long hours because they value the accumulation of luxuries more than family time or friendships. I think this criticism applies chiefly to the shrinking Australian middle class – which I estimate at around 20-30% of the population. From my experience, the majority of Aussies – like their Kiwi and American counterparts – work ridiculously long hours because this is the only way they can put food on the table.
The series consists of six episodes:
Episode 1 Money – describes the MacDonaldization of Australian society, where workers work longer hours than Germany, Japan or even the US and are plagued by debt, depression, drugs and high suicide rates. Viswalingam makes the assertion that greed and ignorance are a far bigger threat to civilization than terrorism. I agree.
Episode 2 Sex – describes how the commodification of sex has led to a situation where more “sex” occurs in the street than in bedroom. Viswalingam especially deplores the sexualization of children for commercial reasons, the alarming increase in culturally driven misogyny and the epidemic of pedophilia in the church.
Episode 3 Democracy – explores America’s zeal in exporting “democracy” to the rest of the world and the undermining of Australia’s parliamentary democracy by wealthy business interests.
Episode 4 Education – explores the decline of Australia’s educational system, which focuses more on fast tracking students into lucrative jobs than on teaching ideas and critical thinking.
Episode 5 Family – explores statistics showing Aussies are marrying less, breaking up more and increasingly opting to remain childless. Viswalingam blames this partly on the absence of good paying jobs (forcing mothers into the work place) and the failure of the feminist movement to win support for women in their struggle to balance work and family responsibilities.
Episode 6 Religion – describes how organized religion sowed the seeds of its own destruction through centuries of justifying wealth accumulation and genocidal western expansion. Here Viswalingam makes some fuzzy, poorly supported assertions about the fundamental importance of spirituality in facilitating human connection.
For me, the most interesting part of the talk is his discussion of the historical link between debt and the rise of the world’s major religions (Hinduism, Christianity, Confucianism, Islam, Buddhism, Judaism) between 500 BC and 600 AD.
As Graeber describes it, all commerce was based on credit prior to the development of coinage around 500 BC. In all societies, coinage arose in conjunction with the onset of empire building – traveling armies had to be paid in hard currency rather than credit. The result, according to Graeber, was the simultaneous rise of military/coinage/slavery* empires in Greece, China and India.
According to Graeber, all the major religions arose around the same time – as a “peace movement” opposing militarism, materialism and slavery.
Around 400 AD, when the Roman and other empires collapsed, coinage vanished, along with the standing armies that necessitated its creation. During the Middle Ages, nearly all financial transactions were based on credit. Until 1493, when the “discovery” of the New World initiated a new cycle of empire building, accompanied by militarism, coinage and slavery.
I was also intrigued to learn that Adam Smith stole most of his thinking about free markets from medieval Islamic philosophers. The Islamic ban on usury enabled the Muslim world to operate pure free markets that were totally outside of government influence or control. Trying to operate an economy without such a ban (or a system of debt forgiveness like the Biblical practice of Jubilee) leads to inevitable economic chaos and ultimately collapse, even with government intervention.
People who like this talk will also really like a series Graeber recently produced for BBC4 radio entitled Promises, Promises: The History of Debt. In it, Graeber explores the link between Native American genocide and the harsh debt obligations imposed on the Conquistadors. He also discusses the formation of the Bank of England in 1694, the role of paper money as circulating government debt and the insanity of striving for government surpluses.
* In ancient times, the primary mechanism by which people became enslaved was non-payment of debt.
The Joy of Tax: How a Fair Tax System Can Create a Better Society
by Richard Murphy
Corgi Books (2015)
Book Review
Although the topic is economics, I personally guarantee this product to be totally painless. Murphy describes economics in ordinary comprehensible language – unlike mainstream economists who treat economics like a religion that can only be understood by high priests – and who speak and write in obscure language so you can never be sure if they’re telling the truth or not.
In The Joy of Tax, UK Tax Justice Network co-founder Richard Murphy offers a radically pioneering approach to tax and fiscal policy. Murphy is one of the first economists to link tax policy to the 400- year-old reality that nearly all money is created by private banks out of thin air.
For political reasons, most economists try to conceal that private bank loans, i.e. debt, are the source of nearly all money in circulation. According to Murphy, the recent admission by the Bank of England (Quarterly Bulletin April 2014) about the true source of our money makes it possible to debunk a number of myths perpetuated by mainstream politicians and economists. Some examples: that investment is only possible when there are sufficient savings in the economy, that government debt is bad and that austerity, balanced budgets and government surpluses are good.
A point Murphy emphasizes repeatedly is that government also has the ability to create money out of thin air. Moreover it has regularly exercised that right to stimulate a stagnant economy. In fact, because all money is created as debt, it’s essential for government to “create” money (by spending it into the economy) whenever private banks fail to create sufficient credit. If this didn’t happen, severe economic recession results.
In Murphy’s view, the primary purpose of taxation is to reclaim the money government creates to keep it from over-inflating the economy. He claims the conservative elites who rabbit on about repaying government debt are really making the case that only private banks should have the right to create money. Aside from making them enormously rich, this makes no sense. Private banks are incapable of acting in the public interest – by law they can only act in the interest of their shareholders.
Citing Adam Smith in The Wealth of Nations, Murphy maintains a rational tax system can deliver other important goals, such as reducing inequality, recovering externalized costs (e.g. pollution, toxic waste) imposed by corporations and promoting economically and ecologically sustainable growth.
For the current tax system to accomplish these goals, it would need to be far less regressive. At present most of the tax burden falls on middle and low income taxpayers. According to Murphy, the global economy will continue to stagnate until the wealthy shoulder their fair share of tax.
To make our current tax system fairer, Murphy proposes to introduce a number of “progressive” taxes, including a financial transaction tax, a wealth tax, a carbon/pollution tax, a land value tax to fund local government and a special tax on corporations that fail to re-invest their profits. He also proposes to do away with the current welfare bureaucracy by introducing an Unconditional Basic Income (UBI).
Although most of these tax reform proposals are specific for the UK, they would clearly produce similar benefits for the US and other post-industrial economies.
Money as Debt is the classic primer for understanding where money comes from in contemporary society.
Most people erroneously believe that government issues all the money in circulation by printing bills and minting coins.
In reality, less that 5% of all the money circulating in the global economy is issued by government. More than 95% is issued by private banks as loans to businesses, families and governments.
Most people also mistakenly assume that banks lend money their customers have deposited in savings accounts. The truth is that banks lend out vastly more money than they have on deposit. In fact, every time they issue a loan, they simply create the money out of thin error as a bookkeeping entry.
There is a deliberate effort (by banks and government) to conceal these facts. Even front line bank employees don’t understand this is how money is issued.
The belief that the economy would improve if all government and private debt were repaid is also erroneous. Because nearly all the money in circulation is debt-based money issued by banks, if we paid off all the debt, there would be no money left to run the economy.
A severe shortage of debt triggered both the Great Depression of 1929 and the 2008 economic crisis. Both occurred when banks drastically reduced the supply of new bank loans.
Money as Debt also makes an important link between this debt-based monetary system and the drive for perpetual economic growth. Banks only create (out of thin air) the principal for new loans. Money to pay the interest can only be found by creating more debt through new loans. This pressure to create more and more debt requires a continual increase in production and simultaneous depletion of resources.
The film traces how our current debt based money system first started in England in 1694 and how US founding fathers fought to resist private bank control of the US monetary system until 1913. That was the year Woodrow Wilson signed the Federal Reserve Act, handing control of the US monetary system over to a consortium of private banks called the Federal Reserve.
Filmmaker Paul Grignon is particularly concerned about a system in which governments are forced to borrow from private banks to run military and public services. Because it gives banks far more control than voters over government decisions, he calls it an invisible economic dictatorship.
Check out Positive Money to examine some of the alternatives.
China Rises purports to uncover the secret of China’s phenomenal economic success. It traces the massive migration of rural peasants into scores of newly fabricated cities and industrial centers. Of the thousands of new factories springing up over the last thirty years, half are privately owned and half are state owned enterprises. Most manufacture consumer goods (clothes, electronic gadgets, shoes, textiles, heavy appliances, household goods, toys, watches) for export.
The filmmakers attribute China’s economic miracle to their newfound openness to private enterprise and their ridiculously low wages. At the time the documentary was made, the average Chinese wage was 60 cents an hour for a 12 hour day. By the end of last year, this had increased to $1.69 an hour Rising Chinese Wages
Most of the film focuses on the lavish lifestyles of China’s most famous self-made millionaires. There are also several interviews with rural peasants who have migrated to China’s designer cities to work. Most are extremely grateful for the opportunity to earn money to lift their families out of extreme poverty. Women, however, tend to be sad about being separated from their children – their earnings aren’t sufficient to bring them to the city, so they are cared for by grandparents in the rural villages.
The film also features segments about China’s emerging middle class learning to pamper themselves and China’s rampant knock-off industry, specializing in counterfeit luxury items, fake birth control pills, fake antibiotics and even fake milk powder. The latter caused 54,000 Chinese babies to be hospitalized (six died) in 2008.
Ignoring the Real Reason for China’s Stellar Growth
What I find most significant about this video is what it leaves out. In fact, it totally ignores the main impetus for China’s phenomenal growth – namely a monetary policy that doesn’t rely on borrowing money from private banks.
As of February 2014, China had only borrowed a total of $US 823 billion from foreign banks – about 9% of GDP. In contrast, the debt the US owes to private banks is 101.5% of GDP.
Unlike most western economies, 90% of the loans used to finance businesses and government services originate from China’s government-run central bank.* Bloomberg’s refers to it as “Chinese-style” quantitative easing, ie the Chinese government is creating the money out of thin air, rather than borrowing it from private banks (and paying them interest to create it out of thin air).
This differs from US-style quantitative easing in that the Chinese government spends the money they create directly into the economy instead of handing it over to private banks.
Despite Obama’s recent attacks on China for “weakening their currency,” neither the President nor the corporate effort make any effort to explain exactly how the Chinese are doing this. The explanation is actually fairly simple: pumping more yuan/renminbi into the Chinese economy causes inflation and weakens the currency’s value in relation to other global currencies.
The corporate media glosses over these details because they don’t really want Americans to understand where US dollars come from – that 97% of the dollars in circulation are created by banks out of thin air and loaned to us at interest. Or that depending on private banks to create and control our money supply is a big reason for our current economic crisis. See Stripping Banks of Their Power to Issue Money
They especially don’t want us to realize there’s an alternative – government-issued currency by a government owned central bank – nor that it’s working miracles for the Chinese economy.
*Contrary to popular belief, the US central bank, aka the Federal Reserve, is a consortium of private banks overseen by a government appointed director (Janet Yellen).
Catastroika is a Greek documentary on neoliberalism, with a specific focus on the privatization of publicly owned resources. Although it makes no mention of historian Richard Linebaugh, its depiction of the neoliberal privatization movement provides an elegant illustration of the ongoing theft of the Commons (see Stop Thief: the Theft of the Commons).
After a brief overview of the University of Chicago economists (championed by Milton Friedman) who first put neoliberal theory into practice during the Pinochet dictatorship, the documentary tracks the wholesale privatization of Russia’s state owned industries after the 1993 coup by Boris Yeltsin, in which he illegally ordered dissolution of the Russian parliament (see The Rise of Putin and the Fall of the Oligarchs).
The fire sale of state assets to oligarchs and western bankers would virtually destroy the Russian economy, throwing millions of people into extreme poverty and reducing average life expectancy by ten years.
The Privatization of East Germany
With German reunification in 1990, East Germany would be the third major target for massive privatization. According to German economists interviewed in the film, the process amounted to an “acquisition” of East Germany by West German bankers. The West German government set up an agency called Treuhand to buy up state owned East German businesses at the rate of ten to fifteen a day – a total of 8,500 businesses in four years. The process, undertaken with virtually no oversight, predictably resulted in massive chaos and fraud. Many well-performing East Germany companies were dissolved for the simple reason they competed with West German businesses. Three million (out of 4.5 million) East German workers lost their jobs, which East Germany’s GDP shrank by 30%.
Using Debt to Compel Compliance
With the gradual demise of the world’s dictatorships during the 1990s, debt, rather than brute force, became the main mechanism to compel people to give up their publicly funded assets. At present, most of the focus is on Greece.
Current EU Commission Jean-Claude Juncker holds up Treuhand (which incurred a 250 million euro debt German taxpayers are still paying off) as a model for the Greek Asset Development Fund. The latter has been steadily selling off (at bargain basement prices) Greek railroads and municipal power and water systems.
The Dismal Track Record of Privatized Utilities
The filmmakers end the film by highlighting the disastrous outcome of Britain’s decision to privatize its railroads in 1993, the city of Paris decision to privatize its water service in the 1980s (it’s recently been re-municipalized due to massive public unrest – like privatized water systems in Bolivia, Ecuador and Argentina) and California’s experiment with electricity deregulation in the 1990s (leading to the Enron scandal).*
*The Enron scandal involved massive securities fraud and a deliberate conspiracy by power companies to withhold power to drive up electricity prices.
The latest news from Greece is that Prime Minister Tsipras has resigned and called a new election. This follows a rebellion by 1/3 of Syriza MPs, who voted against the IMF bailout Greek voters rejected in the 5 July referendum. According to the The Guardian, 25 Syriza MPs have broken away to form the anti-austerity party Popular Unity, led by former energy minister Panagiotis Lafazanis. Some analysts predict the new party will call for Greece to exit the euro monetary union: see Senior Syriza MP Greece Must Exit Monetary Union
The following documentary lays out some of the economic and social realities that led to the rise of Syriza.
Greece on the Brink
Manuel Reichetseder (2014)
Film Review
Greece on the Brink is a 2014 documentary about brutal living conditions in Greece that led to the rise of the left wing Syriza government. At the time the film was made, 65% of Greek youth age 15-34 were unemployed. Millions of Greeks had no income at all and were scavenging food out of garbage cans. Twenty thousand were homeless and one third had no access to privatized health care.
The film documents that only a tiny proportion of the $206.9 billion bailout Greece received between 2010-2013 went to public services:
48% went to European creditors
28% went to Greek banks
22% went into the national budget (of this 16% went to interest payments, most of the balance went to the Greek military)
In addition to bolstering Syriza’s rise to power, the Greek economic crisis has led to numerous experiments in worker self-organization: solidarity clinics run by health professionals volunteering their services, solidarity networks that provide free food, a journalist cooperative in which journalists run their own newspaper, various worker co-ops which have occupied and taken over shuttered factories, and TV journalists and engineers who took over the state broadcasting service after the Greek government shut it down.
Most of the commentators featured in the film are militant Syriza members who predicted a year ago (based on compromises Tsipras made to propel his party into power) that Syriza wouldn’t solve the problems faced by the Greek working class.
The most interesting section is a Marxist analysis by British economist Allen Woods about the real cause of the 2008 “credit crunch” that triggered Greece’s sudden economic collapse. According to Woods, debt is the mechanism capitalists use to avoid the crisis of overproduction. Marx believed that overproduction was an inevitable structural defect of so-called free market capitalism. By its very nature, capitalist production always overshoots the ability of the market to regulate it.
As Marx noted 150 years ago, capitalism tries to make up for this defect by expanding credit (ie debt). Woods gives the current 30% overcapacity of the global automotive industry as an example. This is illustrated by an article that appeared in Zero Hedge a year ago about new car graveyards – see Where the World’s Unsold Cars Go to Die
Woods predicts that there will be no solution to the current global economic crisis until overproduction (and the debt that supports it) are eliminated.
One way I’m opting out out of the debt-based Wall Street banking system, is by joining a local interest-free savings pool. A group of neighbors is investing their savings in a savings pool – rather than a bank – and to use the savings pool to loan money to one another. We’re using a model designed by the (New Zealand-based) Living Economies Trust. The model is based on the Swedish JAK members’ Bank, founded in 1965. The Jord Arbete Kapital (Land Labor Capital) Bank doesn’t charge or pay interest on its loans. With its loans financed solely by members’ savings, it operates outside of the Wall Street capital market.
As of November 2011, the JAK Bank had a membership of 38,000 and accumulated savings of 131 million euros. Of this 98% had been loaned out to members.
How Savings Pools Differ from JAK Bank
Savings pools maintain the JAK Bank’s tradition of interest-free transactions but differ from the Bank’s model in several respects:
• Savings pools are private arrangements between members with regular personal contact.
• Executive decisions are made by pool members themselves rather than a paid management team.
• Pool costs and charges are virtually zero.
• Each member’s savings are held in trust for that member – they don’t become joint property and can only be spent if the member agrees.
Our local savings pool meets monthly, and all savings pool decisions are consensus-based. Individual members may abstain on special loan proposal they disagree with by declaring their own balance unavailable for that specific purpose.
Tracking Savings as Dollar-Months
Savings are tracked as dollar-months rather than balances. In other words, pool statements reflect both the amount a member has contributed and the length of time they have made the funds available.
A member wishing to borrow other members’ money proposes a payment schedule and offers something of value as security to make sure the debt is covered. If the group agrees, the pool transfers to the borrower the loan amount and any balance the borrower may have saved. One month later, the borrower begins a series of installment payments, with half going to repay the loan and half going to reciprocate the pool’s contribution
When borrowers ask the pool to accept interest-free installment payments, it’s not enough to merely repay the loan. They must also make their own savings available for long enough to match the consideration other members have accorded them. This is called reciprocity.
The Advantage of Reciprocity Over Interest
Despite this reciprocity contribution, the amount repaid to a savings pool is always far less than the compound interest charged on a bank loan. With a mortgage, for example, the interest paid is usually more than the original loan. Although the borrower ends up with a house, they have nothing to show for all their interest payments.
In contrast, a savings pool borrower ends up with the purchased asset and savings, which may be withdrawn as soon as the loan agreement is complete.
Supported borrowing is also encouraged. Pool members may gift their reciprocity points to ease a borrowers reciprocity contribution
The Most Revolutionary Act 