The Twilight of Capitalism by Michael Harrington (Part I: The New Karl Marx, Chapter 1)

This book is set in the mid-1970s during recessions and oil shocks, recently following the fall of Nixon but before the rise of Carter and Reagan. In Part II of the book, Harrington shows how Marxist theory can help understand what was going on and what may be done about it.  We know from hindsight that few were interested in such a contribution, although the coming years showed how wrong the Supply Side Austrian Model was and how right Keynes and Marx were, but more about that in the conclusion of this review.  The first part of the book was designed to recapitulate exactly what Marx meant (sounds like a title for Garry Wills to take on), despite the comments of his detractors and his supporters, and even Marx himself.

This book is not an easy read. There are a great many discussions in the first part that are essentially inside baseball involving scholars who are not generally known outside those who comment on Marx, both for and against. I will not detail each argument nor summarize each section of each of the nine chapters (OK, I lied), nor will I endeavor to examine what is said in Marx’s Capital (aka Das Kapital), which is in three volumes with multiple chapters and sections with a huge number of sources. It is not a polemic, but rather is a deep study of industrial capitalism and its history that deserves to be more widely read and studied for its value to both economics and industrial engineering.

Harrington is correct that it applies to the questions of the day. Indeed, a reading of the introduction alone brings to mind our current debate over trade and outsourcing.  Not much has changed in almost 150 years of mercantile capitalism. A true study of Capital could not be done in one book review. To do it justice would take a review of each part within each volume, if not each chapter. It is easier just to read the volumes, just as it is easier to read Harrington’s book that to try to do a full summary.

This essay is more summary than review, but it includes nuggets I find interesting and the addition of some further thoughts from the perspective of forty years later, where unexpected events have occurred and different forms of analysis have emerged, namely the  Grid-Group Theory of Douglas and Wildavsky, as well as a new focus on cooperative economics among Marxians.

Harrington starts out distinguishing the Marxism we know from Marxist Philosophy. That he still uses the word is a way to mark Marxist territory, but to avoid confusion I will call Marxist Marxian Philosophy instead.  It is not about a collection of facts but a frame of reference or paradigm. John Donne started the movement to do this, which was completed by Nietzsche, whose comment on the death of God had more to do with the death of ideal types.  Weber was also value free and Marx shares his “functional rationality.”

Marx created a new frame, noting the “systematic bias” of fact, which Einstein agreed with in that our system of reality is dependent on our frame of reference, at Thomas Kuhn noted when he applied this philosophy to scientific paradigms.  Such a past paradigm shift is how oxygen was discovered to be an element rather than a different kind of air.

Engels first noted that which became the Marxian frame of reference, that Capitalists extracted unpaid labor from their workers for their own profit.  This evolved into a new set of natural laws to analyze economics and society, primarily through understanding Capitalism.  Adding flesh to Socialism is still much needed and is now the focus of much Marxian thought, including my own.  See my work and the work of Alperovitz and Wolff for further details.

The next section is on Hegel, to avoid turning this into a dissertation, I will simply note that Marx is Hegelian in some respects and not others. An interesting point of departure is Marxian atheism and Hegel’s Theodicy, the latter of which has nothing to do with how God really is, but the idea of God throughout history. Daniel C. Dennett has perfected that analysis.

Those of us who are believers (recall that this essay is first posted on a Christian Left blog) concede the point. How God may or may not actually be cannot be known in the present life, only in the next (if there is such a thing). I will leave the rest of Chapter One for the reader to mine, including all the references to various other economists and how they relate to Marx.  Read it if you need help falling asleep. It is not easy if the names are unfamiliar.

The Twilight of Capitalism by Michael Harrington (Part I: The New Karl Marx, Chapter 2-3)

Chapter Two is about Marxism Misunderstanding Itself.  This is probably true of all systems of thought, particularly religion, including Christianity and especially Catholicism, whose moral philosophy is promulgated by wealthy asexual bishops, which is not good if you are talking about either fiscal equity or sexuality.  This is where the difference between Marxism and Marxian Philosophy matters.

Socialist point out that Stalin misunderstood Marx, although I doubt he ever really understood Capital. What he did understand was the Marxian elevator speech, which he replicates and which focuses on militancy. Mao makes the same mistake.  This results in what Harrington calls Bureaucratic Authoritarianism. Whatever that is, it is not Marxian Philosophy, which attempts to understand history, economy and social relations systematically.

It is up to us to take that knowledge to political and economic change, although having to read three dense volumes is not particularly easy, although this may be blamed on translation errors.  Even the first preface is so applicable to the international economics  of today that the microcosm proves the theory in just those pages.

As for the rest of this chapter, it gets bogged down with even more debates about Marxism with various authors, including Engels. It then traces the history of how Marxism was accepted for the first hundred years, including its use in Communist countries, which transformed the Marxian into the Marxist. Scholarship on Marxian thought over this period is equally wrong. Again, there is a litany of sloppy understanding in the Academy about Marxian thought. 

Chapter Three, “ The Pervasive Light, The Special Atmosphere emphasizes that Marxian Philosophy is not simply about economic systems, but instead is about the social relationships in which system exists. Again, there is an explication of arguments with Marx by his contemporaries, including his friend Proudhun, on this matter, although systems matter in Marx, especially in analysis of the problems of today, including automation and even the Twitterverse. 

At heart, Marx is not about organizing the factory floor, either in terms of industrial engineering or payroll systems.  It is about the social relations which underlie these arrangements, including how class systems work. This is especially true when discussing the social domination of workers by the Capitalist culture. 

Capitalism is not as the capitalists portray it. It is not simply the free market system that is held up by conservatives as a refutation of socialism. Socialists like buying things too. Small businesses do not practice capitalism the way large industrial firms do, even if the small business owner profits from the labor of his employees. Most small businesses have no employees, so they cannot be capitalist.  Capitalism is about the social relations between the capitalists and the workers. It is about social dominance, not simply economics

Marx is not averse to socialist making money. Neither are socialists. His writings on Capitalism in his volumes by the same name could be used to teach modern production.   If fans of Donald Trump really understood Marx, they would be storming their local union hall demanding membership or insisting on employee ownership of their workplaces. The Marxian view is that such understanding is the necessary element in accepting socialism.

The Twilight of Capitalism by Michael Harrington (Part I: The New Karl Marx, Chapter 4)

Chapter Four is about the Mode of Life. Originally, Marx and Engels saw production as the main feature of all civil society. Later, they realized the Capitalism is its own systems.  This is especially the case in discussing labor rent, where in feudalism, the worker pays a certain amount to the lord.  In capitalism, the worker is paid a certain amount and the capitalist gets the rest, even though in Marxian thought, the worker is the main driver of production. While that is not necessarily the case now in automated factories, in the developing world, automation is still more expensive that peasant slave labor.  Also, the service sector, including sales, is mostly worker based, even if the worker is developing content for Internet advertisements.

Chapter 1 of Capital is not a prescription or even a full theory of capitalism, rather it is an explication of the central themes of capitalism with what is external to the analysis omitted. In welfare economics, this is known as ceteris paribus, or all things being equal.  If welfare economics can do it, so can Marxian.  Marx describes a system that is self-contained and in equilibrium – in other words, a limited model, not the entire picture of capitalism. 

The development of capitalism from free labor (i.e. the ability to buy and sell) is essential, because free labor and money had to exist before feudalism and capitalism could bind that labor to land or capital.  Capital could not subsist on urban workers, it had to bring them in from the countryside by taking land from farmers and consolidating it into larger estates.

Commerce has evolved, but its main contribution is in understanding Capitalism in its modern form. Capitalism did not start when the Dutch invented the corporate form).  Other historical events, such as the colonization of Central and South America provided the gold and silver as a precursor to capitalism, but were not capitalism itself.  Indeed, that was simply biological warfare. Such colonialism also applies to current events, as the second part demonstrates in regard to oil.
Marx is not deterministic. Conditions like capitalism and technological change were found other places before and after the beginning of the Industrial Age. Control of workers by capitalists is what makes capitalism Capitalism. 

What Marx calls capitalism is determined by the commodification of goods and services and the creaction of surplus value.  Commodities are not things you make for yourself, whether labor or products, but what is sold to others.  For workers, this leads to devaluation as human beings and alienation from what is produced at the profit of others.

Surplus value is taken from the worker. In technology, the machines and computers cannot feel alienation and are certainly owned by the capitalists, however the makers of those machines are alienated from what they produce. Employee-ownership is the answer to this, since workers control machines as well and the distribution of rewards (thank you Richard Wolff for your emphasis on this). Capitalism is when workers do not.

These points are often misunderstood by Marx’s critics who think that the post-industrial society negates their usefulness. In the fullness of time, the transfer of labor to the third world (and nominally communist China) and to the services sector shows alienation and surplus value is alive and well (indeed, even maids, who would work and live in a household are now employees of cleaning services).    The same relationships occur in the post Industrial world and the modern.

Where Harrington believed that capitalism is in its twilight, these developments argue that it will keep going as long as we let it.  The question is how do we stop letting it? See Part II for some examples. See recent texts for others involving cooperation and consumption (Wolff and Alperovitz and Bindner). Marx would undoubtedly agree.

The Twilight of Capitalism by Michael Harrington (Part I: The New Karl Marx, Chapter 5)

Marx analyzes economics, but it is not an economic theory, as Chapter 5, “The Anti-Economist” shows.  Capitalism is about relationships between individuals and, and among, classes.  It is not isolated from the rest of life. It is part of it. Social relations exist in human history and develop in their own epoch. Money is different under capitalism, which is not based on free exchange (the economic ideal) but domination.

Marx wrote about production with society, however his theories never encompassed all of the social sciences.   A good modern vehicle for such analysis came a century later.  Marx and everyone else are put into perspective by  the Grid-Group Theory of Mary Douglass and joined by Aaron Wildavsky. They have different purposes but equal value in understanding the world and society, including capitalist systems and feudalism (and its modern retro counterpart, distrubutism). Marx and Douglass can be used to reinforce each other. They need not compete. I suggest further reading on that theory if one seeks a way to pull the social sciences together.

There is much misunderstanding of Marx, particularly on his theory of value.  As Harrington reminds us
Marx’s labor theory of value argues that commodities exchange at prices proportioned to socially necessary labor time spent in their production (the “socially necessary” being simply that which corresponds to the average efficiency of work in its particular industry. Labor is thus primarily a measure of value and, in a complex way, the ultimate regulator of prices. (109)

Many of Marx’s critics focus on their understanding, or rather, misunderstanding of the concept and its impact on prices. It is part of his analysis of his models of value, not its actual existence in the economy and society, which is found in Volume III. Volume I describes the model, all things being equal, not reality. Most critics, even academic ones, rarely read to the end.

I will spare the reader the details except to say that even Marx disagreed with the concept of the labor theory of value in society, stating that “it would never occur to the capitalist to think in terms of labor value.” Of course, the joke was on the workers, since they had no idea how much a surplus was taken from them, even though the capitalists did. This is a very brief explanation. For better results, read the chapter in Harrington, or better, the original Marx, including the difference between labor value and natural value, “which is not social wealth (117).

Marx was an early critic of how capitalism resulted in the horrifying conditions found in some factories. Still, he did not argue for an end to innovation, especially as it would lead to shorter working hours. Capitalism will not impoverish workers, just the opposite, but it is still abusive of their rights to the surplus value that they produce and its ownership by others.

Technology is a tool of capitalism. It is capitalism that subjugates workers, not machines. Without profit, of course, there would be no investment. Profit is a function of capitalism, not a flaw. Modern cost analysis and new concepts of employee ownership may get around these problems.

Some welfare economists are now coming around to Marx, especially regarding imperfect competition in labor markets, which actually estimate the amount of surplus value taken from the workers and how to fix it, which aside from employee democracy, is an increase in the minimum wage. Feel the Bern.

The analysis of productivity shows that capitalism desires to drive labor costs lower and lower. Non-Marxian economists and capitalists fail to realize that expanding surplus capital makes it impossible for capitalism to destroy itself as science replaces production units  but class relationships remain the same.

Marx did not believe that wages will constantly go down, that there was no “iron law of wages” and that labor unions could make a difference for the worker and could even give a share of surplus value to the working class (although he did not predict employee-ownership as an intermediate step). Again, Marx was concerned with the social relationships in labor rather than wage levels themselves. 

Marx (and later Schumpeter) wrote about capitalist crisis and the business cycle, which is driven by commodity surpluses and scarcity. Modern finance has a new way of looking at such cycles. It has turned out that most of these cycles, at least from the Gay 1890s to now, come from the inflation of assets, especially financial assets like stocks, mortgage securities and commodity futures (like oil) and the offshoring of labor.

In my analysis, an abundance of goods is rarely the cause of systemic failure in the modern world. Rather, it is the abundance of bad investments that add nothing to consumption by households or the government or supporting investments thereof.  The cycle of overproduction, crisis and recovery result from the mechanizations of asset speculation,  they do not cause them. Even corporate investment managers will admit as much. In the end, of course, capitalism is not about either finances or technology (money or machines) but social and class relations.

Marx identified the trinitarian formula of capital land and labor, each, theoretically with its own rewards. Marxian analysis shows this is not the case. Capitalism captures surplus value from each sector for itself. Indeed, any decent modern cost analyst can tell you that much, even as they calculate depreciation allowances that are outside the trinitarian system. It is better to calculate which sector actually contributes to total cost, based on its contribution to production, not its market price.

Capital could be divided into a capitalist hour, its components being land rent per hour, depreciation per hour, material processed per hour and labor utilized per hour less the wage paid. This can be used to restore value to workers.  Of course, employee ownership gets around these questions, as workers would own all capital.

A society divided into investors and workers who cannot afford to invest cannot stand. When progressive income taxes were maintained, labor and labor unions guaranteed a decent lifestyle for workers. After this book was published (but before Harrington’s book Socialism was revised shortly before his death), taxes were greatly reduced in stages. At every instance, lower taxes on the wealthy resulted in a boom followed by a recession, or worse in 2008. Harrington had predicted bad times in the 90s, but Clinton’s tax increases, as well as Obama’s restoration of them, resulted in stable growth and better times for families.

Trump’s cutting of business taxes and minor temporary adjustments to income tax rates could produce a recession, however increased government spending is drawing down available speculation capital, so we have a temporary reprieve until fiscal conservatives demand entitlement cuts. The insanity of King Donald and his criminality may truncate that for now, although the CEO and donor class will still reap the rewards of the class warfare that is capitalism. 

Another thing Marx definitely missed, or did not understand correctly is the evolution of Capitalism to Consumerism and Social Democracy, which diffused the demand for political revolution, although later Marx admits that things did not work out in advanced industrial nations as his paradigm predicted. 

Marx saw production as more important than distribution. Production is not everything, however. Simply put, enterprises are not made up of single industries. If you count production, marketing, transportation, services, (consumption of goods and services, including finance) and management as separate industries within an enterprise, the theory of value still holds.

The labor value concept can be strengthen when my concept of the supply cost of labor is included in the analysis, that is, what do various workers require to sell their labor to others at all stages of life and including childbearing. Marx hints at this, but has left much of the detail to those of us who follow him. The simple fact is that the supply cost of labor is equal to the total demand curve for a worker for goods and services, so it must have a negative slope. The greater the wage, the more the worker is satisfied and the less labor is sold. This argues for socialism, not capitalism.

It is interesting that capitalist economists found themselves out of ideas on how to deal with capital, both in the 1970s and now. Marx has come to the rescue both times, recently with Richard Wolff explaining Marx on, of all places, FoxNews. 

Democratic Socialists, especially supporters of Bernie Sanders, are making the Democratic Party feel the Bern as we win key primaries and face Trumpster Republicans.  Let us see who wins the day, although Trump’s obvious corruption may overtake economics this election. Governing is another matter. Advancing social democracy or democratic socialism will not be enough, however. It simply locks us into a Nordic social welfare model. Workers need more.

The key ingredient to overturning  capitalism is not about production at all, but in emphasizing (as Marx mentions but does not dwell on) that workers control the means of consumption, which leads to control of the means of production. That control is lessened in monopolistic capitalism.

When workers understand the that in accepting payments rather than social goods, which today come through taxation or the market, not cooperation, they will be ready for the social revolution that finally conquers capitalism.  Would Marx mind this development? No. Marx, unlike some Marxists, was not a dogmatist. As long as the analysis is class based, it is Marxian.

The Twilight of Capitalism by Michael Harrington (Part I: The New Karl Marx, Chapter 6)

Chapter Six described Marx as “The Spiritual Materialist.”  Marxian thought is not mechanistic. Indeed, the young Marx was a humanist, interested in the usual philosophical questions about the nature of man and society. He was hardly totalitarian, as much as hard core revolutionaries and condemning reactionists would portray him.  Both Stalin and the Popes were dogmatists, convinced of their own intellectual superiority. 

When push came to shove, Stalin reopened the Orthodox Churches during the Great Patriotic War, although afterwards he reverted to type and persecuted religion. Marx the humanist would not have done that, not because he was secretly religious, but because humanism is not dependent on religion.

The reverse is true, any religion that is not also humanistic, especially those Christians with anachronistic ideas of sin and authority.  Marx’s humanism uses Hegel’s questions, but finds different answers. Perhaps the same questions can be used to reform religion, from Theodicy as a meme and democracy as a practice.

The Grid-Group Theory is proving useful in discovering the anachronism in Christian thinking.  I wonder how Marx would respond to it.  The ideals of Marx are useful here as well, but that is a topic for another day which is covered in my books on the subject.

Marxian humanism rescues man from being an object of capitalists to a higher, self-aware species.  It is a departure from idealizing the world, instead having the world be the source of ideals. This focuses moral theory on man’s experiences. Religion should do the same and even acknowledge Marx when doing it.

Humanistic thinking will overcome the tendency toward populism to create useful idiots of the masses, the latest incarnation of that being Trumpism.  Populists believe in the evil of their enemies (as sectarians often do). Guevara was over optimistic, which led Cuba to an unworkable Communist system that still maintains today, although some free market activities have improved maters. One of the factors that led me to my Inter-Independence was the failure of the Cuban system, and other bureaucratic systems, to provide basic needs adequately.

Man needs to be seen as he is and Marxian theory helps do that, as do others who rely on experience over ideals.  For example, one could use Grid-Group theory to develop a sense of the Heroic way of life, which moves people from one way of life to another. 

Marxian relativism is not relativistic at all. Dogmatic absolutism can only be applied to members of the group, not to mankind as a whole. Marxian thinking sees the potential of man and even religious socialists share that optimistic viewpoint, however it is one that will not materialize without action.

The Twilight of Capitalism by Michael Harrington (Part I: The New Karl Marx, Chapter 7)

Part I concludes with Harrington’s view of the “Marxist Paradigm.” Sociologists debate whether Marx and others are present in modern sociology or whether the discipline has freed itself.  Any analysis of sociology finds that Marxian analysis is alive and well, even more so with advent of the Grid-Group Theory (which by now you can tell that I really like).

The theory divides social relations by group v. individual and rules or grid v. liberty. It results in four ways of life (five if you include a mediating class of heroes that have the characteristics of all). They are hierarchy (high group, high grid), fatalism/despotism (low group, high grid), individualism (low group, low grid) and egalitarianism (high group, low grid). If Capitalism is seen as despotic (rather than the libertarianism it imagines itself to be), then Marxian Philosophy will lead to a combination if real liberty and equality.

The old anthropology served the interest of the hierarchs, who sought to prove their racial theories. It is now basically egalitarian with individualist overtones. Meanwhile, welfare economists and social choicers assume that all economic and social relations live in a libertarian framework (including hierarchy).  Grid-Group shows that this is not the case, as does Marx. Harrington describes the Marxian paradigm using a number of questions. For the analysis of each, read the book. They are as follows (I will use the authors term Marxist rather than my own Marxian as well as his own words).

1. The Marxist paradigm is critical about its own definitions and data. Unlike other social sciences, it looks for class bias in its reasoning.
2. Marxism makes no pretense of being “value free”; yet it seeks to be rigorously scientific.
3. Men and women are both creatures and creators of their society.
4. Again, it is helpful to recall the Marxist paradigm of the essential determinacy of the economic element in the structure of society, with reciprocal interaction, at the same time, of the political, social and cultural.
5. The Marxian paradigm uses contradictions as a key element in the social dynamic.
6. The economic takes social form in the shape of the classes which, under capitalism, are determined in the production process.
7. In the Marxian paradigm, technology is an extremely important variable. It is not, however, determining for a social system as a whole.
8. Clear distinctions must be kept in mind, as Schumpeter insisted, between Marxian possibilities, symptoms and causes. The possibility of crisis is inherent in the very structure of capitalism, in Marx’s analysis.

While my analysis differs a bit in some particulars, especially regarding the business cycle and how to move forward, the analysis of the issues in Part II which address the welfare state in the modern America of the 1970s. (or 6 B.R. – before Reagan).

The Twilight of Capitalism by Michael Harrington (Part II: The Future of Karl Marx or The Secret History of the Contemporary Crisis, Chapters 8 and 9)

Chapter 8 is a brief summary of what is coming. Simply put, it is an analysis of the welfare state with a Marxian twist – that it is a creature of capitalism, from aid to the poor to what Nader later called corporate socialism and libertarians call crony capitalism.  It shows how Marxian tools described in Part I can better understand what was happening in the 70s. Of course, he did not predict Reagan, who doubled down on the worst features of capitalism in the most reactionary of ways.  The American situation, which starts with the least adequate benefits and has only gotten worse with this time, will be the frame for Harrington’s analysis.

As in Part I, I summarize and add comments using 20-20 hindsight from the past 40 years. It is amazing when reading this how much I remember of those now halcyon times. In the 25th Anniversary Edition of Socialism: Its Past and Future, Harrington does describe life under Reagan, projecting a crisis in the 80s which Clinton prevented – although he was hardly anti-capitalist on the whole. That crisis came about in 2008 and sidetracked the promising presidency of Barack Obama – which led to a racist counter-revolution under Trump.  His efforts to reverse all of Obama’s actions, even those he would otherwise do himself, can only be explained by Trump’s hate for his predecessor.

Chapter 9, “Bourgeois Socialism” starts out with a delicious quote from the Manifesto which few read and that predicts social welfare system to “lessen social grievances” and prolong Capitalism, but may reduce, with administration improvement, “reduce the cost of bourgeois domination and reduce its public budget.” 

This sounds like what we now call social democracy and those improvements sound like a rather libertarian way to shift these costs to employers, as I have suggested.  These passages are not commonly known, and perhaps we should keep it that way, lest reactionaries call all social welfare Marxism instead of a Marxian prediction.  Of course, it may be that the outgoing Speaker of the House is aware and taking steps accordingly.  Still, there is no doubt that both social welfare and consumerism take enough pain away from Capitalism to preserve it, at least for now.

Welfare state thinking is said by mid-century economists to be present in the mixed economy of the post-industrial society by some mainstream economists. It also mirrors what is predicted in the Manifesto. Of course, they call this a revolution, but it is nothing of the kind. It merely gives capitalism a reprieve from revolution. It does not prevent it.

A detailed history of how this evolved from Bismarck to all of Europe in support of the European War (World War I), through the Great Depression and the State Capitalism of Hitler and Stalin, et al, the Great Patriotic War (which it was, even in America) and the post-war period, although the huge investment in armaments and the permanent military make the term quite ironic.

Hitler and Stalin were the least socialist of them all. Hitler was Potemkin Village socialism that led quickly to capitalist totalitarianism.  In the post-war and post-industrial world, it is amazing to see how the new capitalist ruling class is described technocratically. It almost reads like von Mises or Hayek. Funny how this all fits together (as in funny tragic).

Marx and Engels to Proudhon believed that cooperatives and small business might be provided by the government, leaving finance to large business. The Distributists may agree, but I believe we need to go after the big fish as well and replace the whole financial system with a self-funded cooperative one.

This gets us beyond the crony/social welfare capitalism that brought us both attempts to control inflation, interest rates and their relationship to the price of oil, which is examined in Chapter 10.  Housing is a particular example, where funds went more to the middle class exodus, supporting the racial status quo, then to the people who need it the most. The recent tax reform did little on this, making housing policy more favorable to the rich. The 1975 New York financial crisis was the natural outcome, when according to the New York Post, President Ford told New York to Fuck Off.

Food subsidies are the same way. They help large farmers, processors and grocery chain, but do nothing for the hungriest poor or small family operations (unless they sell lottery tickets and booze).  In recent history there is a new term for this: Food Dessert. This is the result of capitalist social welfare, not attempts to feed the poor.

In the 1970s, Harrington spoke of how the tax system favored capitalism.  He cites wealth distribution figures, which have only gotten worse since then, aided by capital gains tax cuts, which fuel asset inflation by do nothing for the economy.

After the  Reagan tax cuts (going the opposite direction from what Harrington would recommend – but very predictable using Marxian theory), the 1986 tax reform and the Bush adjustments, the tax system (including payroll taxes) was almost entirely proportional except for very low income families. Clinton offered a reprieve through higher tax cuts. Sadly, he eliminated Glass-Steagall, refused to regulate hedge funds and cut capital gains taxes. These cuts, plus the tax cuts by Bush, Jr., largely favoring investors, led us to the Great Recession of 2008.

Obama offered temporary remedies (they only lasted two years and gave nothing to underwater borrowers – just subsidies to the big banks), His improvement in health care (which was initially a Republican plan) gave all the capitalist sectors their share.  Medicare is secure so far, but conservative states, which have never been friendly to Medicaid, even as their populations need it the most, have for their own political reasons refused an expansion of Medicaid funds under Obamacare.

Trump’s latest tax cuts, which included attempts to cut social welfare to pay for a tax cut on the wealthy affirm Marxian predictions.  I will spare readers the details and say that reading this chapter is a worthwhile endeavor. It may add to the debate or it may give ammunition to the reactionaries. How and if we reveal this analysis is key to our future success.

Until the rich realize that their children and grandchildren will be liable paying off the debt crisis accumulated, mostly in Republican Administrations over the last four decades, nothing will change. The rich will get richer, although if the financial system does collapse due to such debt, the rich will lose the most on paper, but the working class and the underclass will have the monopoly on suffering.

Democratic Socialism provides a path to end today’s crony capitalist social welfare system it by transferring retirement payment to stock in the employing firm, as well as shifting social welfare costs for family support at bourgeois levels, health, education and poverty reduction to these firms as a way to decrease both bureaucratic dysfunction and the public budget, as Marx and Engels suggest, possibly through the imposition of a subtraction value added taxes with credits or offsets to do just that. I believe this is the main path to the revolution we have all been working towards, which is why social democracy is part of the title of my latest manifesto.

The Twilight of Capitalism by Michael Harrington (Part II: The Future of Karl Marx or The Secret History of the Contemporary Crisis, Chapter 10)

Chapter 10 delves into how attempts at social welfare expansion through surrendering to the capitalists evolved into the energy crisis. Starting with World War II, American foreign policy was designed to find cheap foreign oil, which had the related effect of suppressing exploration at home. 

Of particular note were the events that evolved into the development of Aramco – the Saudi-U.S. oil venture. Of course, this led to the creation of OPEC as the Third World pushed back, largely over America’s support for Israel during the 1973 War and the resulting oil crisis, which repeated after the book was published when OPEC tightened the screws for profit and in response to U.S. efforts to prop up the Shah of Iran (who was a U.S. puppet). I will spare you the gory details describing who did what, but they do show the thoroughness of Harrington’s research and his clear findings on the role of the capitalist welfare state in the energy crisis.

The other result of WWII was Ike’s love of German highways and his desire to replicate them here. This bit of capitalist social welfare made goods and services mobile, as well as white citizens who moved and move to the suburbs for largely racial reasons (especially when their daughters start dating).

Highway projects are the go to solution to recessions, proposed by both parties when power, with Republicans blocking any increase in gasoline taxes to pay for them, leading to attempts at creative solutions and the inevitable decay of highways in conservative states while others pass gas tax increases when the roads and bridges start collapsing. 

There is nothing wrong with public works to stop a recession from deepening. Indeed, we have regularized such public works into the permanent bureaucracy so well that calls to bring back FDR style programs show the ignorance of the speaker, or his or her pandering.

Since Harrington wrote the book, much energy deregulation has occurred, which stabilized prices until the Bush, Jr. years.  Then tax cuts and the failure to enforce and repeal anti-trust laws in the oil sector and to regulate hedge funds led to rampant speculation in Oil Futures in NYMEX.  Projections of how oil resources were declining  and active hurricane season were the justification for these spikes, but the reality was that these markets had too much money due to the Bush tax cuts. The development of domestic and Canadian oil shale and to frack for natural gas were made possible by the futures market boom. Congressional action to make these markets honest crashed the price of oil and put attention on mortgage backed securities.

The houses of finance tried to use to cover their bets, showed that they were worthless because of abusive practices, not from attempts to raise up minority home buyers but instead to take them for any red cent they had, especially people whose homes were paid off. The TARP covered the crash in securities prices and the collapse of the global economy, also aided by the Federal Reserve, but the promised aid to home borrowers never came, even under Obama.

The refusal of Obama (largely at the promptings of Larry Summers) to help borrowers led me to put my hat into the ring in 2012 in Americans Elect to draw attention to this, but the group folded when it realized that an unknown like me might win their nomination (funded by capitalists) if they relaxed the rules on how many supporters one had to have.

Oil prices went down to 2001 levels as Obama took the oath of office and went up again, largely because the government now held the bad oil futures. TARP was commanded in the law not to lose money and Administration officials let prices go up to placate environmentalists in the administration, who could not get a carbon tax passed by the Republican Congress. Finally, the regulations subsequent to the Dodd-Frank bill led to price declines in oil and American started driving again. 

When Trump promises to eliminate regulations, this is what he means.  Not too coincidentally, Trump appointed Rex Tillerson, President of Exxon Mobil and friend of Russian President Putin, to the post of Secretary of State due to his experience in international oil company capitalism, which pays the leaders and oppresses the poor. Rumor has it that this appointment was suggested by Putin. Only the Special Counsel knows for sure. Tillerson left the Administration without propping the Russian oil market back up (and with it, Putin) largely because he could not deal with the madness of King Donald, at one point calling him a moron.

Surely the Congress will stop such abuses from occurring. Oklahoma is tired of its daily earthquakes due to natural gas fracking, and may elect a Democratic Governor. At this writing, the Republican Congress shows no desire to do oversight over the Administration, let alone impeach him for his Russia dealings. Of course, even the former Speaker, Democrat Nancy Pelosi, is soft pedaling impeachment (as she did with Bush over torture in the latest Middle Eastern wars). Lucky for us, the voters will not (especially in Oklahoma).  PAC money and dark funding by oil companies can only get you so far, but they do prove Harrington’s point about Marxian analysis of the many recurring energy crises (the plural of crisis).

In the end, we need social democracy and collaboratives to force development of electric, computer controlled car on buried and wired roadways. Cooperative membership will own all the pieces rather than the capitalists, from car production, to road building, to electrical generation (which is possible with fusion once big oil quits trying to sink it) and interlocking social ownership to help retirees travel without cost from their shares in these projects. It will also largely end auto fatalities, which the car companies don’t hurry to do so unless forced by consumer death being noticed. Imagine that.

The Twilight of Capitalism by Michael Harrington (Part II: The Future of Karl Marx or The Secret History of the Contemporary Crisis, Chapter 11)

Chapter 11 is about “Adam Smith’s Sociology” or how some economists and analysts went from liberalism or socialism to neo-conservatism.  Of course, time has shown neo-conservatism to be more related to Zionism and a muscular foreign policy in the Middle East and South Asia, including a great deal of Islamophobia – or a desire to impose American style democracy to justify going after resources. The people analyzed in the chapter would now be called Neo-Liberal. These are leftists who believe in free market solutions, are interested in not incentivizing poverty through social welfare and trust managers more than workers, which is not conservative – in some cases it is reactionary, but in a gentlemanly way.

Daniel Patrick Moynihan is one such neo-liberal, going so far as to co-chair President George W. Bush’s Committee to Strengthen Social Security, which proposed letting Wall Street work its magic to build retirement nest eggs faster and thus make the system solvent. Had they suggested equal employer contributions for all workers and funding cooperative socialist pension accounts owning one’s own firm (insured of course), they might have caught traction, although then the Republicans and their donors would have bailed.

As you might guess, I was active in the debate, even writing an issue in Labor and Corporate Governance, which drew the ire of the AFL-CIO Investment Management decision, who did not understand why I would interfere with politicizing the issue, which seems to have led to closing the journal permanently.  They especially did not like the second part, which detailed how a cooperative socialist or union controlled firm might operate, since big labor has their own corps of executives.

In the end, this issue did not win the Congress for the Democrats, who had sold their souls to Wall Street anyway for fundraising purposes – a trend that has not stopped. It took corruption, both in terms of seducing pages and interns and actual bribery to end the GOP majority. Neo-liberals, Mrs. Clinton among them, still dominate the leftist politics although the Sanders Political Revolution is showing progress for socialism, not cooperative, but democratic.

The text tears down the arguments the neo-liberals put out in the 1970s, though it seems that Bill Clinton helped put them into practice in welfare reform, which is a reason minority voters were not as enthusiastic supporters as they recently had been, staying home on election day.

The first neo-liberal argument was that government did too much, or tried to. It mirrors populism and, rather than going after the poor, goes after social welfare bureaucracy.  The reality is that the programs did not do too much. They did not do enough. If there is fraud  and social dysfunction in the system (and it does exist when to get cash, you have to sell food stamp befits for 50 cents on the dollar). Reform made things worse, punishing any hint of non-compliance with termination and reducing benefits while forcing women into training to do menial work in hospitals, stadiums and retail. In essence, reform helped cement the lower class. It is no wonder Marxian philosophy is more relevant than ever.

Even the criticism that welfare destroy families come from requirements that a man cannot be living in the home (he should be working) and any that instead find the only job they can get in the drug trade leads to violent death or purposeful incarceration.  Some classes, both white trash and blacks get prison, while nice middle class kids get treatment and probation for exactly the same thing. Marx again shows that class warfare is not dead, just that poor people are still losing.

Deliberate underfunding is not due to budgetary restraint, but to active class domination by reactionaries. The programs that get funded are the self-funded and tax subsidized programs for seniors – who now want the government out of their Medicare. This would be funny if it did not lead to a willingness to cut funds for the poor because of supposed dysfunction.

Housing was an area of focus, especially in terms of community development. Indeed, the latest attempts at this issue, both Enterprise Zones (favored by Jack Kemp) and the recent push for Opportunity Zones give more power to local capitalists than the people and have little to do with giving poor people good housing that is also affordable. Cooperative Socialists would have the cooperative do this rather than local business associations (unless they were socially owned, not owned by local capitalists in search of subsidy and even public schools which cannot desegregate itself because housing is segregated, as it is today. Socialism here does more than either regulation by the Courts, which only go so far, or the free market, which favors local developers.  Marxian analysis is validated again.

The second objection is that social welfare is too egalitarian. The reality of the late midcentury is that equality was not the goal for many, emancipation of women was, which rattled the cages of the religious as well, as it would lead to freedom in sexuality and demands for priestly ordination. These battles are still going on.

In school equality, the real answer is less about funding schools and more about improving the skills of parents. Parents who are undereducated cannot help their children. Of course, for those who need undereducated people for jobs no one else will do without a huge salary increase, this is a feature, not a flaw. Marxian reasoning triumphs again. 

Charles Murray likes to assert that such people are among the unworthy poor and are simply not that smart, rather than being underserved by a racist educational system.  Such reactionaries believe talent rises to the meritocratic top. Their ultimate goal was to have a billionaire CEO be president. The result was Trump, whose business accomplishments are illusory and his recent wealth seems to come from selling out to Russian oligarchs and their leader, Vladimir Putin, who recent reports say is really richer than Steve Bezos, the Amazon capitalist.  It seems that rigging the game is more important than merit. Marx is correct again.

Affirmative action is another issue where a great deal of resistance remains (as such preferences hurt legacy systems.  Minority hiring in business sometimes has more to do with tokenism than equality, as does the use of minority set aside firms. The solution is probably cooperative socialism, where employer paid subtraction VATs can be redirected to education of any student who is qualified based on work in their first two years of school, with a service requirement for some of those funds, which is supplemented with an ownership stake and full support, including spending money. Getting the right people could involve hiring the clearly superior, not hiring those out of their element, regardless of ability to pay or family connections (the Trumps of the world, et al) and selecting the rest using a lottery with no weighing, provided minimum qualifications are met.

Tax policy went the other way in 2017.  The beneficiaries are corporate executives that win bonuses for cutting worker pay and benefits and corporations, who pass any tax benefits to their shareholders rather than creating jobs. Job creation is based on consumer demand. Strike another blow for Marx and Keynes. 

The last neo-liberal view counseled moving slowly and timidly. That only let the opponent of reform get stronger, although some concessions were made, while some were given in Clinton’s part in welfare reform and continuing calls to cut entitlements, even for Seniors.

Bold action did happen in the first part of the Obama Administration, which passed health care reform, even though it had Republican origins (and featured counter arguments against their own creation), still the response to the underwater mortgage crisis was neo-liberal timidity, likely advanced by advisor Larry Summers.

The original recovery plan had to be watered down to mostly a tax cut to make work pay – essentially subsidizing low income employers rather than demanding higher minimum wages, which eventually would have resulted in higher spending, like right away. Business got its share of projects, although growth did not take off until tax rates on the wealthy were increased automatically as the Bush cuts sunsetted – sadly, Obama’s timidity about soaking the rich during a Depression delayed the recovery by two years. Score another for Marx and Keynes.

Income specific policies leave wealth undistributed. Short of a citizen’s dividend and wealth taxes, especially on land value, which the federal constitution does not permit on a national basis, the best such distribution is diverting social insurance to purchasing one’s own employer, then shifting to a standard labor hour currency, so that people who had low pay get more and those with huge salaries can only convert based on their per hour earnings.

Conservatives and neo-liberals adopted a Burkean reactionary view of social welfare as damaging moral fiber and preventing the meritorious from rising. The aforementioned writings of Murray debunk any value of those views.  Sadly, Moynihan’s attempts at a basic income fell flat in the Nixon Administration. Even then, free money does not necessarily upend capitalist authoritarianism. Employee ownership will. The alternative is benefit limits, especially in health and disability insurance, as well as retirement insurance, that provide a level when benefits faze out, providing a disincentive to work other than low paying jobs. Again, class analysis triumphs.

Recent education reforms like “No Child Left Behind” lead to teaching for the test rather than broad education, dispirited students who are not good test takers and, again the assurance of a permanent underclass.

The Child Tax Credit is more socialist than most policies, as it phases out only slowly and helps most families with children, although the need for a minimum wage remains so that tax credits don’t result in people working for free. Interestingly, libertarian economist Milton Friedman and Republican presidents are strong advocates for raising and enlarging this credit, along with the Democrats, but they have not gotten to adequacy yet.  Instead of paying $1000 per child per month, the $1000 is an annual benefit, often gouged out by tax preparers and used to catch up on bills rather than provide a higher standard of living. 

An interesting strain of conservative thought are the Distributists, who rely on Catholic Social Teaching and Chesterton to reach their rather socialist ends. Their medievalism and their attachment to Church authority taking over for civil authority, which seems to be based on the kind of imminent crisis that joins them to many libertarians, Fundamentalists, environmentalists and even Marxists who know only the elevator speech. Of course, the crisis never comes. Capitalists are good at printing money and bailing out private interest when necessary, as in 2008 in a collapse largely predicted for a decade earlier by Harrington in Socialism.

The 1970s predicted the collapse of organized religion. He spoke before Falwell emerged and the initial popularity of Pope John Paul II and the revival of Christian humanism under both Pope Francis and the Emerging Church movement. Right wing religion is going into death throes, especially in its link to King Donald, the Moron, but believers, like me, still have something to add to the movement for equality and democracy and the defeat of capitalism.

Harrington did not foresee the Reagan Counter-revolution, which highlighted these trends.  That Neo-conservatives have abetted his legacy is a sad part of the history of the Left.

The Twilight of Capitalism by Michael Harrington (Part II: The Future of Karl Marx or The Secret History of the Contemporary Crisis, Chapter 12)

Chapter 12 examines “Some Dialectical Complications.” Is the welfare state simply a tool to pacify the masses or is it progress for the working class? Perhaps it is both.  It is an interesting argument, going back to the Poor Law in England and Speenhamland in the late eighteenth century. Ironically, Corey Robin cites the last in his analysis of The Reactionary Mind and how Burke and others responded to such experiments.  Social welfare continued progress in England, not necessarily in a straight line, but in fits and starts having to do with both stronger potential soldiers and compassionate impulses.

Until the Great Depression, there was no national social welfare tradition in the United States. When boom-bust cycles occurred, the only response was local. The union movement was rising and was not radicalized until the Depression, when workers wanted something done. Social Security was the main lasting result. It arguably saved Capitalism from itself, pacifying the working class which was looking more and more to Socialism.

World War II increased central planning in the western world and the Marshall Plan made it international, entirely for Cold War reasons.  It took twenty more years for Medicare and Medicaid to make the scene, when National Health Insurance in Britain appeared right after the war.

The United States was and is slower to adopt social welfare and is below other OECD nations unless you count American private health insurance, which is subsidized through both tax policy and Obamacare, which according to Bruce Bartlett, puts the US in the center of modern nations in regard to percentage of GDP. 

Coalition Democratic politics, which included Michael Harrington himself in his classic, The Other America, created the Great Society reforms. This coalition, especially the author, were no capitalist stooges.  Programs grew during the sixties. They did not result from the major urban race riots, but they were linked to them in the public mind.
Is, or rather was, the welfare state a capitalist endeavor?  Not directly, as Harrington points out, the welfare state makes the continuation of capitalism possible, but capitalism provides the jobs. It also provides the campaign funds, as recent evidence shows – and that fact is still prickly when dark money is examined and the reactionaries call foul, even though left wing dark money systems were also subjected to scrutiny.  Still, capitalists rely on government counter-cycle interventions.  New York in the 1970s and Flint, Michigan now, show how business does not want government to be too generous. 

The elections of Thatcher in the U.K. and Reagan in the U.S. definitely led to a change in tone on social welfare, and not a good one. The link between welfare and race led reactionaries to use racist code words in arguments on welfare reform, which was eventually signed by southern Democrat Bill Clinton. The American Public Welfare Association shed no tears when punishments for non-compliance were introduced or strengthened and the rolls shrunk, although disability rolls rose for the chronically poor.

Unions also took a hit, as in the United States when enforcement of labor rights declined dramatically from Reagan to Bush II.  Even public employee unions are targets of the reactionaries. Unions have lost their radical edge. Those that remain have CEO compensation packages that mirror their capitalist rivals. Capitalism has struck back, leading to the Bush tax cuts and the abuses of the 2000s and the Great Recession.

Many city and state retirement systems are were left scrambling after 2008, facing possible cutbacks in pension levels, most likely to create incentives to go to more lucrative defined contribution plans. Federal and corporate employees have already been victimized by this scam and future retirees who cannot afford to save millions of dollars will soon suffer for it. At least 2008 stopped talk of doing the same thing to Social Security, but capitalists are patient.

Capitalists get their money’s worth, as the 2008-2009 TARP bailouts show. Two auto companies were bailed out and any thought of transforming them into something more socialist was dropped in order to save member health and retirement benefits.
Liberal efforts to limit executive pay for bailout recipients did not have the intended effect of making more loans. Instead, loans were paid back faster and real relief abandoned until the market cleared out underwater borrowers most needful of assistance, including yours truly.  Meanwhile, CEO bonuses continue to rise. While most of the upper class used to live in fairly modest homes, the lead up to 2008 gave us the McMansion is some neighborhoods.

Often, capitalists use racist code words to get their candidates elected and their taxes cut for both themselves and their corporations. Soon after comes the push to pay for those cuts with cuts to entitlements. There are still those Randians, especially Speaker Paul Ryan, who would dismantle even middle class subsidies further. Luckily, they simply don’t have the votes, largely due to the unpopularity of Donald Trump.

Currently, most retirement plans can be called trust fund socialism. Workers have assets in pensions and retirement accounts and will be paid for the former because such pensions are insured. However, there is no management accountability to workers, while CEOs are insulated by both brokerages and corporate boards. Like the Soviet and Chinese systems, rising to power is about skill in politics, not performance. Trump is simply the grossest example of this.

In anticipation of impeachment, many are coming forward with options. We are still debating whether welfare must be tied to work and training (as opposed to higher education) and whether low wage work should be subsidized by the Earned Income Tax Credit. Is this a subsidy to capital or a victory for workers? 

What about raising the floor on Social Security contributions for workers (and lowering the ceiling) and taking the ceiling off of the employer contribution? Should the EITC be eliminated, with a higher child tax credit? Do we go from a payroll tax to a less regressive value added tax (VAT) or subtraction VAT, depending on whether or not it is tied to buying insured shares in the employing firm? Do we tie the employer contribution to income to avoid the smell of socialism or equally credit and distribute them, regardless of wage level?

The interesting question there is which is easier to pass and which is more Marxian?  Should Democratic Socialists take the easy route that keeps capitalism in the game or go after it directly? 

With the gains of the Sanders campaign, should we use that power to emulate European, especially Nordic, social democracy or can we go further by building employee ownership, occupying capitalism, which even in employee owned firms is largely hierarchical, and make a push for worker democracy over both production and consumption  (which then drives production decisions) and shifting tax funds from social welfare to increasing employee ownership?

Only we can answer how radical we want to be. The current dialectic is all about catching up. Can’t we do better?

The Twilight of Capitalism by Michael Harrington (Part II: The Future of Karl Marx or The Secret History of the Contemporary Crisis, Chapter 13)

In this chapter, I will follow the order Harrington used, but did not detail his arguments. Instead, I described the topics used in terms of present conditions and possible remedies.

Harrington believed that the Seventies were a time of economic depression. That is before they coined the term recession and abandoned the term depression. The Great Recession, however, really was a depression due to the number of people who owed more than their property was worth and the loss of asset values. All Depressions seem to be a failure of Austrian economics, although I suspect that they view them as a feature, not a flaw.

Real growth occurs with GDP growth, which Austrian economics does not provide. Indeed, the Reagan growth period was due to Keynesian deficit spending, not asset value growth.  Over production also fails as a measure, except of course, for the overproduction of financial instruments.

The welfare state crops up when the government props up banks and companies, like the car makers and banks, because they are too big to fail. It also provides some counter-cycle spending, but in the age of entitlement reform, it is not enough to bring the economy back. Indeed, when entitlements for the poor are cut, asset speculation returns with a vengeance, making up for lost stock value because investors are more credit worthy than consumers.

Fighting inflation also impact asset inflation for some, but not for people who receive interest payments, who make out well off the debt of others, even when some default. Dividends also increase, regardless of how firms are doing, in order to be competitive with bond returns, both government and private. Investors can also deduct interest costs from buying stocks and bonds on credit from their taxes, which also encourages asset speculation.

While this analysis is superior to the Marxian theory, it is still Marxian itself because it highlights class division in a new way. Finally, tax cuts for the rich, which the capitalists and CEO class argue are necessary for recovery give an incentive to companies to cut labor costs while CEOs enrich themselves with bonuses for such cuts. 

The new racism has less to do with people being forced off the land, which occurred not only from subsidies to farmers but also automation, which ended the back breaking work of cotton picking and other harvesting operations. It seems that only fruit harvests use humans, usually undocumented aliens or blacks held in peonage, often with the cooperation of the local sheriff, who brings back workers who have debts. Slavery is alive and well in American agriculture.

Meat producers are also victimized by food companies who insist on ever increasing debt to expand operations which are marketed as a way to get out of debt. Only cooperative effort can end this debt slavery.

Pollution’s externalities were actually addressed by, of all people, Richard Nixon. The air in the U.S. is cleaner as pollution controls are added to cars and factories, although some of the reduction is the result of shipping jobs overseas and marketing inferior cars without these controls. Emerging Chinese capitalism is by far the worst offender. At its Olympic games the reality of a populace who cannot breathe without masks was evident as the sky was full of soot.

A socialist pioneer in this area is the late Joel Kovel, who created eco-socialism, which also responded to global warming, although former Vice President Gore took his thunder. Joel will be missed. He also criticized Zionism and proposed, like many of us, a civil society in Israel and incorporation of Palestine into it.

The myth of economic growth is about more rather than better. Full cooperativism would take much of consumption off-line as workers control the means of consumption and chose to do more in-house, including finance in terms of standard labor hours, which decreases the use of money and monetized measures, especially if cooperatives replace government services and the welfare state.  As standard labor hours are made equivalent regardless of position while hierarchy is smashed due to open auction for management jobs, inequality decreases.

As companies and finance are shifted from the market to the cooperative, non-cooperative assets can be converted to labor hours, devaluing money for nothing. If a former CEO wants to buy from cooperatives, a standard labor dollar would be his last salary (unmanipulated). This turns their money into green toilet paper. Without paper investments, the boom-bust cycle, whether it be overproduction or financial asset inflation, will end. 

In the late1970s, inflation reduction was fought with interest rate hikes, as well as a hike in the minimum wage, as welfare was better than work and people left low wage jobs for higher salaries to afford more expensive goods, although credit also became more expensive.

This crisis helped bring about the Reagan Administration. The Federal Reserve suddenly reduced monetary tightening, although the biggest factor was tax cuts that rewarded CEOs and managers who were rewarded for cutting labor costs. In the past, such costs were not pursued because the higher tax rates essentially transferred any bonuses into government revenue.

The goal of full employment was abandoned and the concept of structural unemployment was created to justify a permanent cadre of workers to keep wages low. From the capitalist perspective, this has succeeded beyond their wildest dreams, as management salaries have skyrocketed with higher productivity while the working class has had to settle with salary increases which only cover inflation, not increases in productivity.

Management salary increases also cut jobs (and productivity improvement also include outsourcing to foreign factories), it is not all about automation, which does not produce the workers’ paradise because there is no mechanism, outside of cooperativism, to share productivity with the working class.

The latest tax cuts for the rich and corporations (who get an incentive to bring profits home, which lead to higher dividends, not relief for workers) is so unbalanced that Republican candidates don’t even stress it, which is why I call it the Tax and Job Cuts Act. 

Only a huge spending bill to make up for austerity insisted on by both Obama and the Congress has kept asset inflation to a minimum, although the Trump Trade War is cutting both jobs and stock values.

It is getting so bad that the GOP may eventually get him to resign or cooperative with impeachment, which the people want but Minority Leader, soon Speaker, Pelosi is reluctant to pursue as an issue, which does not stop candidates from doing so.

Would Marx and Engels approve of this analysis? Given the post-Reagan experience, I believe he would. Indeed, Harrington, in the 25th Anniversary of Socialism, his last gift to us, admitted that we were facing a crisis in the 1990s. It was delayed a decade to 2008, largely due to Bill Clinton increasing taxes on the wealthy, although cutting capital gains taxes and the later Bush cuts lead to the Great Recession, also aided by asset inflation and cheap money from the Fed which goosed the economy so that people could buy homes they could not afford.

President Obama eventually raised taxes further (he was argued out of doing it sooner because of the continued Great Recession), partly to pay for health care reform (as created and later renounced by the Republicans, who did so for entirely racist reasons), giving us growth that Trump takes credit for, and is ruining due to his polices, although Keynesian spending may save his hide, at least until Robert Mueller’s report is published and impeachment proceeds.

There is a new tool to predict this, which I entitled the financial margin. It is Deficit/Surplus offset by Net Interest, as expressed as a fraction of GDP and regressed on growth for the following year. In Democratic administrations, the slope is positive or flat at 3%. When Republican pass tax cuts, the slope is negative, meaning higher deficits are required to produce growth.

Of late, congressional financial agencies are looking into and seemingly using this technique, so that tax cuts cannot be justified by dynamic scoring. Indeed, only pressure from the majority republicans on the CBO mutes the use of this tool. If it were used, tax cuts could not be justified, which is why they are rushed through prior to analysis.

Marx also admitted that mature capitalist economies prevent revolution. The reason for this is that such economies adopt consumerism, which is a better cage to keep workers in line.  The other way is off-shoring jobs, but eventually they will run out of people to exploit, at which point real social welfare will distribute money to keep business profitable, or some kind of cooperativism will end capitalism altogether. I am betting on the latter.