Dissent - A NEW CRISIS OF CAPITALISM

...Moreover, I believe that capitalism will probably be able to surmount this crisis, at least in America, within the confines of the system...

...In short, it took billions of governmental dollars spent in promoting corporate goals in order to engineer us into the wasteful, inefficient, and vulnerable energy economy in which we now find ourselves...

...As long as one accepts the corporate infrastructure as sound, the demand for discrimination in favor of profits does make a certain inane and antisocial sense...

...Washington gave Big Oil a 100 percent tax write-off on levies paid to foreign governments (which was intended as a secret foreign aid program to conservative Arab powers when it was launched in 1950);there were depletion allowances and the “expensing” of intangible drilling costs, which add up to an investment tax credit of 50 percent...

...Moreover, I believe that capitalism will probably be able to surmount this crisis, at least in America, within the confines of the system...

...Total American foreign investment, accumulated over many decades, is only $90 billion...

...The latter, Schumpeter rightly holds, was to be found in Marx’s analysis-in all of the historical specificity of each case-in the process of capitalist accumulation...

...Since 1943 at least-when the United States used its power to secure the Saudi concession for Standard Oil of California and Texaco-the government has followed corporate priorities in this area...

...For both of them assert-and Chase Manhattan and the Stock Exchange concur in-that changes in the structure of the capitalist system are one of the reasons we find ourselves in our present situation...

...Wouldn’t it be more sensible to regard them as the judgments of fallible individuals rather than expressions of an underlying contradiction in capitalism...

...Rising levels of general education and rapid technological progress facilitated the sustained economic growth that conferred its benefits upon all economic classes except the very poor...

...This, certainly, is not true...

...These things, to be sure, did not have to be done in exactly this manner...

...but that it did not, and it brought us to this pass, is by no means an accident even if also not a fate...

...We have allowed the business sector to act as society’s National Economic Planning Council, and it simply wants to utilize the funds to get on with the job...

...Only in 1974, when the multi-billion dollar exporters discovered that they could make a killing on the world market, did we finally stop this policy of subsidizing scarcity...

...I also assume that every reader of DISSENTunderstands that in terms of immediate action, the democratic Left must support public employment programs for all who are laid off, redistributionist tax policies to finance them, and militant union action to permit organized workers to catch up with inflation...

...But isn’t it clear that the former is largely the result of the OPEC cartel and the latter a consequence of crop failure outside the United States (in turn, often caused by accidents of weather) and of growing global affluence...

...But what if we began to socialize investment, as Keynes proposed in a different context...

...The tendency persisted for the claims of labor and capital to add up to rather more than the value of national output at current prices...

...I am disturbed by some of the aspects of this analysis: it is based on data, from the Federal Reserve Bank of St...

...Roger Revelle of Harvard’s Center of Population Studies tells us that the life expectancy of children in the developing countries is lowered by undernutrition while that of adults in developed countries is reduced by overnutrition...

...In any case, my central point does not require that I pick and choose between the details of these competing theories...

...But it is a typical abomination of our antisocial economic system...

...and so on...

...In short, the food crisis is not a result of such “natural” factors as population, fertility, and the like (themselves social products)but of corporate-governmental policies in the United States that saw our enormous agricultural productivity, not as a means of satisfying human needs at home and abroad, but as a source of profit...

...The general “anarchy” of capitalist society was a condition of crisis but, since it persisted through good times and bad, not its cause...

...Barbara Ward estimates in a recent issue of the Economist that one-third of the world’s increased demand for food over the last several years is a result of increased eating on the part of the affluent, and not of population growth...

...Still, were Nixon’s devaluation and Johnson’s war in Vietnam expressions of some structural tendency within the system...

...In his monumental History ofEconomic Analysis, he described a series of very important distinctions in Marx and thereby illuminated a point ignored, not simply by antiMarxists, but by a surprising number of Marxists as well...

...For exactly what one means in speaking of a “crisis of the capitalist system” is not immediately obvious...

...They threaten the social and class harmony that has accompanied and stimulated Western prosperity in the three decades since the conclusion of World War 11...

...The Chase Manhattan Bank and the New York Stock Exchange have been claiming that profits are too low to provide the necessary financing for corporate expansion in the next period...

...It cost roughly $10 billion that year for the United States to eat less and to produce less thaa it could have easily produced...

...The general “anarchy” of capitalist society was a condition of crisis but, since it persisted through good times and bad, not its cause...

...Only in 1974, when the multi-billion dollar exporters discovered that they could make a killing on the world market, did we finally stop this policy of subsidizing scarcity...

...As the Joint Economic Committee pointed out in a 1972 Staff Study, the government paid farmers $5.2 billion in 1970, most of it for not growing crops-and the consumer paid an extra $4.5 billion because of the artificially jacked up high prices this planned and subsidized scarcity brought about...

...Food supplies have failed to keep pace...

...To explain why, it is first necessary to carefully circumscribe what is being said here...

...The second theory is more classic,ally Marxist...

...Barbara Ward estimates in a recent issue of the Economist that one-third of the world’s increased demand for food over the last several years is a result of increased eating on the part of the affluent, and not of population growth...

...der fields and kill off animals in order to maintain income for the producers...

...One can make a slightly more plausible case for my opening assertion by pointing to the way in which Washington’s policies promoted our disasters...

...It could have acted otherwise (but then, those other options would have involved characteristically capitalist contradictions too, albeit different ones...

...Now, however, that speculative conditions on the world agricultural market are so favorable, one might expect the Farm Bureau, perhaps the most effective reactionary organization in the United States, to revert to type...

...All importing countries suffer from huge balance of payments deficits which for rickety economies like the Italian are a blow too heavy to be borne, except with emergency aid from the West Germans...

...In the O OS, there were farmers who desperately wanted to till the soil, and there were millions of people with empty stomachs...

...In the 1950s, but apparently not in the 197Os, the CIA was able to put mutinous Iranians in their place by ousting Mossadegh and substituting politicians with more “enlightened” views on oil prices and oil company profits...

...In each of these three cases, all of them prime sources of our recession-inflation, there is a characteristically capitalist process at work...

...The response was a governmental policy of planned scarcity...

...But what if we began to socialize investment, as Keynes proposed in a different context...

...Low commodity prices reduced the cost of finished goods...

...One can make a slightly more plausible case for my opening assertion by pointing to the way in which Washington’s policies promoted our disasters...

...Our plight was not exactly preordained by some systemic inevitability, and it is certainly not the result of a bourgeois plot...

...The portents of impending global calamity are numerous...

...Even though the argument against my thesis seems to have common sense on its side, I do not accept it...

...To explain why, it is first necessary to carefully circumscribe what is being said here...

...What if we set up our own National Economic Policy Planning Council, run by the people instead of by the corporate rich...

...Food for Peace, as the Farmers’ Unh points out, might better be called Food for War or Food for Politics...

...Yet there is no question that big business believes the case to be as Boddy and Crotty describe it, and that is a powerful economic fact...

...ENERGY...

...bushels, was sacrificed at a cost of $15.5 billion...

...If I am right, and such a capitalist crisis does exist, then there is a political corollary to my analysis that I will note but not argue here: that structural changes within the American economy are required if we are to find a tolerable way out of our current calamities.* To return now to my central proposition: our crisis, including its food, energy, and governmental policy components, is characteristically capitalist...

...In 1973, 31 percent of the total went to Vietnam and Cambodia-and over half the total to military-related recipients...

...Since October 1973, the terms of trade have dramatically deteriorated for Americans, Western Europeans, and Japanese...

...Total American foreign investment, accumulated over many decades, is only $90 billion...

...Yet, even under these favorable circumstances, mild inflation was chronic in Western society...

...If I am right, and such a capitalist crisis does exist, then there is a political corollary to my analysis that I will note but not argue here: that structural changes within the American economy are required if we are to find a tolerable way out of our current calamities.* To return now to my central proposition: our crisis, including its food, energy, and governmental policy components, is characteristically capitalist...

...This expresses another characteristic of present-day capitalist society : consumption, if profitable, is expanded without any thought of social consequence...

...We have, thank God, abandoned the irrational rationality of periodic depressions as a way of reestablishing economic upsurge, but we have yet to find a substitute for depressions that will work within the system...

...Produced for the most part in highly concentrated industries, these manufactures were sold at pleasantly profitable prices to raw material exporters...

...Is the great and final crash of capitalism at last at hand...

...At first glance, this proposition may seem absurd...

...Thus the government promoted concentration in the fields and spent billions of taxpayers’ funds aiding agribusiness and assaulting the small farmers...

...In this, they once again prove that the American bourgeoisie is our most (sometimes our only) class-conscious class...

...In the 1950s, but apparently not in the 197Os, the CIA was able to put mutinous Iranians in their place by ousting Mossadegh and substituting politicians with more “enlightened” views on oil prices and oil company profits...

...and so on...

...Second, the UAW Research Department has convincingly shown that, since 1970, prices have risen much faster than labor costs and “manufacturing workers are getting a substantially smaller share of the value of their output” than at any time since the Department of Commerce began to keep books on this ratio in 1947...

...Roger Revelle of Harvard’s Center of Population Studies tells us that the life expectancy of children in the developing countries is lowered by undernutrition while that of adults in developed countries is reduced by overnutrition...

...Still, were Nixon’s devaluation and Johnson’s war in Vietnam expressions of some structural tendency within the system...

...They threaten the social and class harmony that has accompanied and stimulated Western prosperity in the three decades since the conclusion of World War 11...

...Joseph Schumpeter was a profound conservative-the greatest of the century-and one of the few critics of Marx who troubled to read him carefully (and, more often than not, fairly...

...But isn’t it clear that the former is largely the result of the OPEC cartel and the latter a consequence of crop failure outside the United States (in turn, often caused by accidents of weather) and of growing global affluence...

...Therefore, when I say that the current crisis is a product of the capitalist system, I do not mean that it is inevitable, in the sense that the system had to function precisely as it actually did...

...Marx, as Schumpeter noted, carefully distinguished between the general institutional conditions permitting cyclical movements in the economy, the specific causes actually producing such a movement, and the symptoms accompanying this causation...

...In short, it took billions of governmental dollars spent in promoting corporate goals in order to engineer us into the wasteful, inefficient, and vulnerable energy economy in which we now find ourselves...

...Wouldn’t it be more sensible to regard them as the judgments of fallible individuals rather than expressions of an underlying contradiction in capitalism...

...These things, it may be said, are hardly products of the American economic system...

...0 Robert Lekachman Is Capitalism Finished...

...The Chase Manhattan Bank and the New York Stock Exchange have been claiming that profits are too low to provide the necessary financing for corporate expansion in the next period...

...For both of them assert-and Chase Manhattan and the Stock Exchange concur in-that changes in the structure of the capitalist system are one of the reasons we find ourselves in our present situation...

...That would be sterile reasoning, and I will leave it to the theologians of the Left who focus on general conditions and ignore immediate causes...

...In 1972, the govern6 COMMENTS AND OPINIONS ment paid to keep 62.1 million acres out of production...

...But it is quite right to emphasize that, in the postKeynesian environment, the competitive forces that are supposed to drive prices down are not working...

...This is nearly a billion bushels more than the actual total harvests of 7,668 million bushels of wheat in the U.S...

...It is all but universally agreed, Left, Right, and Center, that two of the most important causes of our present dismal plight are energy‘ and food prices...

...This expresses another characteristic of present-day capitalist society : consumption, if profitable, is expanded without any thought of social consequence...

...These things, it may be said, are hardly products of the American economic system...

...In short, the food crisis is not a result of such “natural” factors as population, fertility, and the like (themselves social products)but of corporate-governmental policies in the United States that saw our enormous agricultural productivity, not as a means of satisfying human needs at home and abroad, but as a source of profit...

...The bargain implicitly struck between owners and workers ratified existing distributions of income, wealth, and power (everywhere extremely unequal) in return for high, steady employment, a flood of consumer goods, and steady improvement in average standards of life...

...The latter had become, quite literally, a “fetter” on production, and during a decade of hunger it was necessary to plow un* I do not present the programmatic, political conclusions in this article because I have developed them extensively in an essay that will accompany a resolution I am submitting to the Second National Convention of the Democratic Socialist Organizing Committee in January...

...Each year the world’s population rises by some 70 million souls...

...Under these circumstances, when unions make demands, they are readily accepted since, it is said, they can simply be passed on to the consumers anyway...

...In 1973, 31 percent of the total went to Vietnam and Cambodia-and over half the total to military-related recipients...

...The Farmers’ Union summarizes the impact of Washington’s actions between 1969 and 1973: An enormous volume of potential food production was sacrificed during these five years, which could have been used for providing adequate reserves and greatly expanded food aid shipments...

...To be fair, agribusiness discovered under Nixon that it could profit from Food Stamps and began to back the program that was rapidly expanded to meet some of the needs of the poor...

...during those five years...

...In his monumental History ofEconomic Analysis, he described a series of very important distinctions in Marx and thereby illuminated a point ignored, not simply by antiMarxists, but by a surprising number of Marxists as well...

...THESE THOUGHTS move in the direction of the “Policy and Program” article I am not writing in these pages...

...Finally, the cyclical movements that resulted from these general conditions and particular causes did generate symptoms, such as the expansion or contraction of credit, which the simplifiers often mistakenly thought were basic to the whole process...

...The response, however, would not have been quite as irrational as the one that actually took place...

...The petrodollars slosh around in American and European banks, most of them subject to immediate withdrawal or withdrawal upon notice measured in days...

...oil import quotas from the late ’50s until the early ’70s drained American resources at a high cost to the consumer and kept out cheap Arab oil without political strings...

...According to Walter Levy’s estimates, OPEC‘s coup is worth $70-80 billion extra to the oil producers each year...

...during those five years...

...At first glance, this proposition may seem absurd...

...Second, the UAW Research Department has convincingly shown that, since 1970, prices have risen much faster than labor costs and “manufacturing workers are getting a substantially smaller share of the value of their output” than at any time since the Department of Commerce began to keep books on this ratio in 1947...

...The advanced nations benefited as well from highly favorable terms of trade between themselves and commodity-producing nations...

...a federal highway program massively subsidized the private passenger car and effectively helped to destroy mass transit, the railroads, the central city, and thereby worsened the lot of the minorities and the poor...

...Assuming yields of only two-thirds of the actual national average for the grain bestsuited to the various lands held out of production, the five-year total would have reached the equivalent of 8,609 million bushels of wheat...

...It is all but universally agreed, Left, Right, and Center, that two of the most important causes of our present dismal plight are energy‘ and food prices...

...Let’s try round first...

...The petrodollars slosh around in American and European banks, most of them subject to immediate withdrawal or withdrawal upon notice measured in days...

...There were, of course, hungry people, some of them eating cat food while all this was taking place, and there were staFving men and women in the Third World...

...I also assume that every reader of DISSENTunderstands that in terms of immediate action, the democratic Left must support public employment programs for all who are laid off, redistributionist tax policies to finance them, and militant union action to permit organized workers to catch up with inflation...

...and in the area of government economic management itself, we are learning that capitalism tends to function poorly if we deny it the right periodically to COMMENTS AND OPINIONS 9 of this view, and James OConnor its advocate on the Marxist Left) that the new class structure of managed capitalism allows oligopolies to administer prices...

...and in the area of government economic management itself, we are learning that capitalism tends to function poorly if we deny it the right periodically to COMMENTS AND OPINIONS 9 rationalize itself at the expense of the millions...

...I would only add that if this turns out to be the case-if the Left once again fails politically 5 and programmatically to offer a workab!e, progressive alternative-then the people of this society, and of the world, are likely to pay a high price for such a “solution...

...FOOD...

...If anything, the food situation is even grimmer...

...ENERGY...

...What seems wrong about this analysis is that it tends to equate “Big Labor” and “Big Business,” even though there is no empirical evidence that the best-organized workers have improved their rehtive position in either the society or the working class itself...

...While the American and the world poor were paying with malnutrition and starvation for our policy of planned and profitable scarcity, agribusiness, like every other capitalist sector, was busy trying to upgrade the diets of the affluent...

...Well, as Lyndon Johnson’s legendary job aspirant answered the school board member who inquired about his views on cosmology, I can teach it .round or flat...

...I would follow Marx’s lead in developing an analysis of what is happening today...

...And, though the thought would horrify Keynes, these events suggest that one look for a solution outside of the system...

...a federal highway program massively subsidized the private passenger car and effectively helped to destroy mass transit, the railroads, the central city, and thereby worsened the lot of the minorities and the poor...

...What seems wrong about this analysis is that it tends to equate “Big Labor” and “Big Business,” even though there is no empirical evidence that the best-organized workers have improved their rehtive position in either the society or the working class itself...

...Food supplies have failed to keep pace...

...in 1973, when the handwriting on the wall might have been clear to all, it managed to idle some 19.5 million acres...

...The latter had become, quite literally, a “fetter” on production, and during a decade of hunger it was necessary to plow un* I do not present the programmatic, political conclusions in this article because I have developed them extensively in an essay that will accompany a resolution I am submitting to the Second National Convention of the Democratic Socialist Organizing Committee in January...

...COMMENTS AND OPINIONS Michael Harrington A New Crisis of Capitalism The current inflation-recession is a crisis of the capitalist system...

...Shortages of fertilizer and energy, the slowing of the Green Revolution, and the ominous Indian slide away from food 10 COMMENTS AND OPINIONS...

...Each year the world’s population rises by some 70 million souls...

...The advanced nations benefited as well from highly favorable terms of trade between themselves and commodity-producing nations...

...Shortages of fertilizer and energy, the slowing of the Green Revolution, and the ominous Indian slide away from food 10 COMMENTS AND OPINIONS itself at the expense of the millions...

...Not that its causation was preordained, but that it is a characteristic crisis of this kind of a society, one into which it is institutionally predisposed to blunder...

...Is the great and final crash of capitalism at last at hand...

...oil import quotas from the late ’50s until the early ’70s drained American resources at a high cost to the consumer and kept out cheap Arab oil without political strings...

...SO the equivalent of a five-year harvest of wheat, plus one billion extra...

...They therefore want preferential treatment for profits while wages are held down...

...SO the equivalent of a five-year harvest of wheat, plus one billion extra...

...All importing countries suffer from huge balance of payments deficits which for rickety economies like the Italian are a blow too heavy to be borne, except with emergency aid from the West Germans...

...0 Robert Lekachman Is Capitalism Finished...

...Now, however, that speculative conditions on the world agricultural market are so favorable, one might expect the Farm Bureau, perhaps the most effective reactionary organization in the United States, to revert to type...

...Assuming yields of only two-thirds of the actual national average for the grain bestsuited to the various lands held out of production, the five-year total would have reached the equivalent of 8,609 million bushels of wheat...

...We have carefully deprived capitalism of one of its few virtues...

...While we thus paid dearly in order not to produce 234.3 million metric tons of grain, we only shipped 32.7 million metric tons overseas under the Food for Peace Program...

...Indeed, this belief is at the very center of the current economic program of American capital...

...While the American and the world poor were paying with malnutrition and starvation for our policy of planned and profitable scarcity, agribusiness, like every other capitalist sector, was busy trying to upgrade the diets of the affluent...

...To be fair, agribusiness discovered under Nixon that it could profit from Food Stamps and began to back the program that was rapidly expanded to meet some of the needs of the poor...

...As the Joint Economic Committee pointed out in a 1972 Staff Study, the government paid farmers $5.2 billion in 1970, most of it for not growing crops-and the consumer paid an extra $4.5 billion because of the artificially jacked up high prices this planned and subsidized scarcity brought about...

...Our vulnerability to OPEC pressure is not a result of a throw of the geological dice but a social and political outcome...

...In any case, my central point does not require that I pick and choose between the details of these competing theories...

...Even though the argument against my thesis seems to have common sense on its side, I do not accept it...

...So much has been written about the energy crisis that I need only summarize the rudiments of a socialist analysis...

...It bears very much on an analysis of the inflation-recession of the 1970s...

...American agriculture, for a generation at least, has been the site of a “classic” Marxist crisis...

...Even that latter figure is deceptive...

...What, then, is left of my claim that the recession-inflation is a crisis of the system...

...So much has been written about the energy crisis that I need only summarize the rudiments of a socialist analysis...

...It holds that the Keynesian-induced boom subverts the conditions of capitalist profitability by undermining discipline in the plant and by allowing wages to bite into corporate earnings...

...All of this is far from ancient history...

...If anything, the food situation is even grimmer...

...While we thus paid dearly in order not to produce 234.3 million metric tons of grain, we only shipped 32.7 million metric tons overseas under the Food for Peace Program...

...At every point in this process, the decision-making was characteristically capCOMMENTS AND OPINIONS 7 paid to keep 62.1 million acres out of production...

...Accordingly, the Federal Reserve and other central banks expanded credit substantially enough to allow all claimants to collect what they demanded in monetary terms and slightly less than they wanted in real terms...

...There were, of course, hungry people, some of them eating cat food while all this was taking place, and there were staFving men and women in the Third World...

...It could have acted otherwise (but then, those other options would have involved characteristically capitalist contradictions too, albeit different ones...

...Right now, I simply want to reassert my main point...