The central problem posed by the debate in Gonzo Times: how to build an anti-statist movement in a political environment almost entirely populated by supporters of the state?
We have no choice but to assume this is the situation faced by anti-statists who hope to construct a society based on voluntary association. A voluntary association isn’t a product of anti-statist ideologies, but a result of actions by people who employ the state in their interest.
In my opinion, the fight against austerity on the Left, and the fight against the incessant expansion of state spending on the Right, are identical. To realize either aim, you must realize both of them. This practically resolves into a fight against the most wasteful state spending. The profligacy of the fascist state can only be addressed if it targets those expenditures which satisfy no human need whatsoever. And, austerity can only be addressed if it addresses the relentlessly expanding absorption of real social resources by the fascist state.
Poverty and fascist state military expenditures are not two different problems — stated this way, this is self-evident. But, why this is true is often lost on those who oppose the fascist state: and this lack of clarity severely hurts our cause.
Those who oppose the state have their feet in both sides of this debate; some are in movements against wasteful spending and some are in movements against austerity. However, there is no coordination of message among all opponents of the fascist state working in these two movements. In both movements opponents of the fascist state should be showing how poverty and state domination of real social resources are identical.
This domination of real social resources is not just an ideological construct; it consists of productive capital, and labor power diverted from productive use. It is the same capital and labor power that, were it productively employed, could abolish all poverty in short order. Bringing this truth to both sides of the social debate is important, but not easy — both sides are dominated by fascist state parties and organizations. Both sides are played off against one another for the purpose of maintaining existing political and economic relations.
The opponents of the state have a task to turn what are now two camps battling for control over the state into one camp aiming to abolish it. To do this we need tools and arguments: tools that strip off the veil hiding real relations, and an argument based on those real relations.
I want to propose one tool available to us and it is based on what I think is a basic truth: the lies of the fascist state begin with money.
If you look at the chart in my post to Gonzo Times from yesterday, Sorry progressives, the Bush tax cuts did not kill the economy, you can see why this is true. That chart shows there has been two depression since World War II — the economy suffered depression in 1970-1981 and for the last 10 years. Not a single economist admits to this. Not the Fed or a single government agency has ever discussed this, but all know this to be true. The reason why you do not know it to be true is that your attention is focused on dollars, rather than the price of gold.
(In the following part of this post, I don’t want you to get me wrong. I am not arguing for a return to the gold standard — I am just laying out the history.)
States learned pretty early on in the 1800′s that their paper token of money could within limits serve the same function as commodity money. During the Civil War, Congress issued tokens to fund war against the slave states; in World War I, Britain did the same to fund its effort. The Confederacy employed the same token issue to make up for its lack of gold to fund its rebellion. And, it is common knowledge everyone from banksters to states routinely debased money to siphon off whatever portion of wealth they could. Manipulation of the metal content of coin, or excess creation of paper tokens were so routine, we had a habit of biting a coin to test it.
However, this “counterfeiting” was always held in bounds by the fact that these coins and paper were only tokens of a definite quantity of gold or another metal. The state issued a paper token and received real goods in return, but this eventually led to the collapse in purchasing power of the token. The paper tokens were only a claim on gold, and when people cashed in this claim for gold, banks suffered a loss of their real assets. At the same time, you or I could only verify that a paper token of a dollar really was worth a dollar by cashing it in for a gold dollar.
The possibility existed, however, that the paper dollar we accepted in return for our commodity, was not actually equal to a gold dollar.
The possibility that a paper dollar is not actually the equivalent of a “real dollar” is the basis of the discrepancy in the chart I posted. In what now serves as a dollar, there has never been a year over year contraction in the US economy since the Great Depression until now. However, the same data measured by the yardstick of the price of an ounce of gold shows there has been two severe depressions during that time.
The first was the Great Stagflation of the 1970s — an event so severe even today we fear inflation more than unemployment. The second, began in 2001 and has continued uninterrupted until now. The Great Stagflation of the 1970s saw real economic activity collapse by 82% — far more severe than the Great Depression and lasted more than twice as long. This depression has lasted as long as the Great Stagflation, with real economic activity falling some 75% so far.
Just as we saw in the Great Stagflation the collapse of classical Keynesianism, now we see the collapse of neoliberalism. The collapse of the neoliberal consensus stems from the fact that what worked to end the crisis of the 1970s is not working now. The neoliberal consensus was: “free trade agreements”, stable deficit spending, consumer debt, and export of manufacturing. Capital was exported to the low wage periphery, and the excessive profit took the form of consumer debt and US Treasuries financed with artificially low interest rates. This is not working any longer, and the political crisis of the moment consists entirely of a debate over what replaces it.
The fascist state can no longer function in the old way, and a new way of rationalizing Capital has yet to emerge.
Personally, I don’t understand most of this, but I do understand that all statistics regarding the actual economy are a lie. All economic and political analysis that proceeds from the dollar already accepts the Fascist State’s lie in its totality. Exposing the Fascist State on the Left and the Right, begins with ripping off the veil of money and revealing the true state of affairs.
The most important piece of information implied by the chart posted yesterday is the great gap between real and dollar denominated activity. Simply stated, on the chart you can see how far the economy can fall, should the collapse in fiscal and monetary policy continue.
The next most important piece of information provided by analysis based on gold is how deeply the wages of the average worker has been cut. It is not the least bit true that wages have stagnated over the past three decades; the real case is far more horrific: at the highest point in the expansion coming off the Great Stagflation, the average hourly wage was just 40% of what it was in 1970. Measured in dollar terms, the wages of the average worker have never fallen year over year, in gold terms they fell to about 10% by 1980. And, as I stated, they only recovered to about 40% of the 1970 level by 2001, when the economy was again plunged into depression. The real purchasing power of wages right now is about 10% of the level in 1970, and still falling.
These are just 2 examples of how money is providing a cover for Fascist State policy by confusing working people about their own reality. I should be clear at this point: this confusion is not an accident; it is not an artifact of otherwise natural money relations. It is true, as historical materialism argues, that money acts as a veil to hide real relations between individuals in society. However, we are not dealing with money in its “natural form”, i.e., in the form of commodity money. We are dealing with an entirely fictitious form of money; deliberately created to hide from the worker her relation to the state itself. A form created to conceal from her that her exploitation is now managed directly by the fascist state, which acts as the social capitalist.
This effort is best explained by one of the two geniuses who first described how it worked, Lord John Maynard Keynes:
Thus it is fortunate that the workers, though unconsciously, are instinctively more reasonable economists than the classical school, inasmuch as they resist reductions of money-wages, which are seldom or never of an all-round character, even though the existing real equivalent of these wages exceeds the marginal disutility of the existing employment; whereas they do not resist reductions of real wages, which are associated with increases in aggregate employment and leave relative money-wages unchanged, unless the reduction proceeds so far as to threaten a reduction of the real wage below the marginal disutility of the existing volume of employment. Every trade union will put up some resistance to a cut in money-wages, however small. But since no trade union would dream of striking on every occasion of a rise in the cost of living, they do not raise the obstacle to any increase in aggregate employment which is attributed to them by the classical school. – Keynes, General Theory, 1936
This is the entire political-economy of the fascist state stated concisely in the words of one of its most profound thinkers: working people will respond to gradual starvation through inflation by working more and longer to make up for the loss of real wages.