[OPE] Letter from Silvia Federici and George Caffentzis: "Notes on the Wall Street 'Meltdown'"

From: Gerald Levy <jerry_levy@verizon.net>
Date: Fri Oct 10 2008 - 02:30:06 EDT

Distributed on aut-op-sy list.

> Dear Midnight Notes Friends,
> The breakdown of the Wall Street financial machine makes the task that we
> outlined in our June meeting more urgent. In June we planned to rethink
> Midnight Notes in view of the restructuring of the accumulation process
> and
> class relations carried out through the neoliberal turn and Structural
> Adjustment. We can now define this project more precisely: what do the
> current
> crisis and restructuring of the financial system imply for us as we join
> the
> rest of the world in the dog house of structural adjustment in the
> twilight of
> the American empire?
> In response to these questions, it
> is important, first, that we realize that the so-called Wall Street
> ?meltdown?
> is certainly the end, but also the completion of the neoliberal program.
> Let us
> be clear about it. To think otherwise is to ignore the lesson taught to us
> by
> the event that opened the present capitalist era: the 1973 coup again the
> Chilean working class experiment with socialism, that led to the victory
> of
> strong state backed market economy. Karl Polanyi?s theory that the single
> most
> important cause of the rise of fascism and Nazism in Europe was the
> inability
> to control the financial market after the 1929 crash also resonates here.
> In
> other words, we should not read the restructuring taki ng place as a turn
> to
> socialism/Keynesianism, to the extent at least that Keynesianism was an
> intervention by the state into the economy aimed at increasing the state?s
> investment in social reproduction, starting with the reproduction of the
> working class, in exchange for an increase in the social productivity of
> labor.
> Despite the adoption of regulatory mechanisms, the operation presently
> conducted by the US government bears little resemblance to the Keynesian
> program launched with the New Deal.
> Behind the $700 billion bail-out
> and the many others that will follow--some already in the pipeline-- is a
> massive transfer of funds from the US working class to capital, inevitably
> leading to an assault on the last remaining entitlements (like Medicare,
> Social
> Security) and a general program of austerity the like of which we have not
> seen
> yet in a long time. The fact that there is no organized response to this
> assault makes us fear the worst. For things would never have reached this
> point
> if over the last decade the US workers had responded to the repeated
> thefts of
> their money and benefits, through the Enron scandal and the many other
> ?crises?
> that have followed it. That despite the ?instability? of the market,
> despite
> its usage as a means to expropriate thousands of small/working class
> investors,
> US workers continued to trust their livelihoods and future to it is
> certainly a
> key factor in what we are presently witnessing and Washington/Wall Street
> confidence in launching=2 0the new austerity program. It is our argument
> that
> in the same way as September 11 served the US government to shed the last
> remains of? ?democracy? and move to a model of government where
> militarization is always around the corner (apparently Representatives
> were
> threatened with the proclamation of martial law if they did not pass the
> bailout bill), so the Wall Street crash will serve to shed the last
> remaining
> elements of working class ?socialism? in the US political economy,
> starting
> with Social Security, Medicare, a thorn in capital?s flesh, but so far
> demonstrating a great resilience, the last shore for working class
> struggle in
> the nation.
> 2. Lessons from the Debt Crisis.
> There is a important parallel here, not sufficiently noted, between the
> present
> crash and bail-out and the ?debt crisis? of the 1980s, which engulfed most
> Third World nations (except for China) and was the start of the
> globalization
> process. Both have been engineered in the same fashion.
> The? ?debt crisis? was the outcome a financial campaign conducted by
> Washington and Wall Street, to practically force Third World nations to
> take
> cheap development loans --liberally dished out at the lowest interest
> rates--
> at a time when capital was refusing to invest in Europe and North America
> in
> the face of the most successful working class attack to its profit-rate
> since
> the 1920s, and a new generation of Africans, Asians etc. were organizing
> to d
> emand a global redistribution of wealth and a program of reparations, that
> is,
> in the language of the Bucharest Conference of 1974 : A NEW WORLD ORDER. ?
> Through the lending mechanism, the massive flow of petrodollars that had
> been
> amassed in the aftermath of the 1974 embargo (the first attack on US
> wages,
> organized through a stiff inflationary wave) was redirected to the coffers
> of
> Third World nations, which, attracted by the bait of cheap loans, were
> soon
> hooked to the global economy, all dreams of an independent path to
> development
> foregone.
> In other words, loans at the
> lowest interest rates were key to the creation of a global debt and the
> process
> of primitive accumulation (through structural adjustment) that was imposed
> on
> most of the workers of the world.
> As we know, within less than a
> decade, the rise of the interest rates in the US, turned manageable debts
> into
> a long-term process of economic and political subordination. Debt became
> the
> hook for a massive restructuring of Africa?s, Asia?s Latin America?s
> political
> economies, re-establishing a colonial dependency that for three decades
> has
> served to promote a massive transfer of funds from the Third to the First
> World
> and defeat the organizational efforts of TW nation for an independent road
> to
> development.
> Under the guise of the ?debt
> crisis,? portrayed as a case of ?mismanagement? by backward countries,
> requiring First World-style fin ancial responsibility, countries across
> the
> world were forced to open their books to Washington--via the IMF and World
> Bank--accept any terms of repayment imposed on them. They were forced to
> freeze
> wages, terminate all social spending, open their markets to foreign
> investors
> and products, devaluate their currencies and so forth. The consequences of
> these policies are well known. While Washington and NY built forests of
> skyscrapers, sucking on the blood of Africans, Asians, Latin Americans,
> Caribbean
> people, such levels of impoverishment and expropriation were imposed on
> the
> people of the world that millions took the road out of their countries,
> unable
> to survive in them, while those remaining witnessed epidemics, elimination
> of
> schools, famines, wars, the loss of ancestral lands, waters and forests,
> brutal
> wars of privatization, all directly related to the debt.
> This is history now, though the politics of SAP have set back for decades
> the
> project initiated by the anti-colonial struggle, reformulated and
> reasserted,
> as I mentioned, at the Bucharest Conference of 1974, where TW nations
> emboldened by the defeat of the US in Vietnam, demanded a NEW WORLD ORDER,
> i.e.
> the redistribution, return of the wealth that Europe and the US have
> robbed
> from the colonial world.
> ?? ?
> With the debt crisis,
> international capital obtained three major objectives.
> ?i) It disciplined the working class in Europe and the US, by dismantling
> its manufacturing structure and refusing for years to enga ge in any
> serious
> investment in these regions [remember ?zero growth??]
> ?
> ii) It destroyed the attempt of
> the former colonial world to escape a dependent/subordinate position, as
> demanded by the new generation of Africans, Asians, etc., who, infused of
> the
> spirit of Fanon, were keen on import substitution schemes, were pressing
> for
> REPARATIONS, and pushing for some form of socialism (in Angola and
> Mozambique).
> (iii). In addition to defeating revolution in First and Third World, the
> ?debt
> crisis? built the infrastructure for the new global economy. It forged the
> mechanisms by which industries and offices could be relocated, companies
> could
> run around the globe, the work process could be computerized and
> streamlined
> and the working class thereby could be flexibilized and re-divided.
> Against this background, we must note some basic similarities between the
> engineering of the debt crisis and the engineering of the Wall Street
> crash and
> must assume these similarities will extend to the social consequences of
> the
> crash. The housing bubble was the result of loans made at very low though
> adjustable credit rates, redirecting the influx of capital coming from
> abroad
> (China and other countries) toward the US market.
> Is it possible that investment
> banks, credit rating agencies, the head of the Federal Reserve all FAILED
> to
> realize what would be the inevitable result of an ?easy credit,? lending
> policy
> that reversed decades of reg ulatory principles and rules? Unless we want
> to
> revel in the nonsensical tale of a blinding surge in human greed, the
> answer
> must be a negative one. Thus, we must stop using the concept of ?failure?
> to
> describe the absence of regulations and the reasons for the crash. We must
> rule
> out that the architects of the housing/mortgage crisis did not know it
> would end
> in a financial disaster and cascade of foreclosures for the home owners,
> in the
> same way as banks are partly responsible for the debt of the US working
> class
> ($45.000 on average per capita).
> ?
> Continuing with the parallel, we have to conclude that with this 700
> billion
> dollar ?bail-out,? coming straight out of our pockets and hides, the
> ?structural adjustment? that since the 1980s has been imposed on countries
> across the world, is going to be extended to the US territory and the US
> working class. This time (after many beginnings and many deferrals) we too
> are
> being ?adjusted.? I will discuss later what adjustment will mean at this
> time
> for us. For the moment we only want to stress that we are witnessing not
> only a
> financial meltdown, but also a great robbery, a macro-process of
> expropriation,
> an immense transfer of labor, this time siphoning funds to the US banking
> system not only from the Third World, as in the Debt Crisis of the 1980s,
> but
> from our households, through the classic maneuver of increasing the
> national
> debt. What we are witnessing is a capitalist coup, an exa mple of
> capital?s
> historic readiness to destroy itself in order to regain the initiative and
> defeat resistance to its discipline.
> 3. Where does this resistance come from? How is the collapse of the
> financial systems
> a response to it?
> We cannot understand the Wall Street crisis unless we read it in class
> term as
> a means to negotiate a different class deal and response to class struggle
> and
> resistance. However, in dealing with these questions, I also want to
> distinguish this approach and the growing tendency to view every
> development in
> capitalist planning as a realization of working class struggle and
> demands, the
> Negrian perspective on capital?s response to class movements.
> This perspective is dangerous,
> because besides turning even defeat into a victory, (such as: we wanted
> globalization, we wanted flexibilization, etc), it ignores the fact that a
> capitalist response must use working class demands against themselves, use
> them
> to drive part of the working class out of the struggle, turn it against or
> away
> from the other half, use them in such a way as to spark off forms of
> development that decompose the class.
> Let us look now at the crisis as a disciplinary tools and strategy. There
> are
> at least three areas of resistance to the neoliberal accumulation project
> that
> the Wall Street collapse has to respond to. I will list them without an
> attempt
> to establish an order.
> First, the c rash and the bail-out must defeat the attempt of the US
> working
> class to circumvent class discipline by using financial markets, rather
> than
> struggle, sweat and labor, to increase their wages. While strikes and
> struggles
> have died out over the last two decades, workers have tried to increase
> their income
> in three ways: investing in the stock market, buying on credit, now even
> for
> everyday expenses, getting equity money through housing, and defaulting
> student
> loans. These tactics have clearly failed and now millions of workers are
> now to
> pay twice for them, in terms of their individual losses and in terms of
> the
> losses that will be inflicted on the US proletariat as a class through the
> bailouts. If successful, these bail-outs will in fact be conducive to a
> new
> regime of low wages and zero entitlements the like of which we have not
> seen
> since the last part of the 19th century.
> The new regime will not be the end
> of market fundamentalism. It will be a revitalization of market investment
> through the injection of our social security money, and it will be a
> revitalization of some parts of American industry now presumably taking
> advantage of the fact that workers are desperate enough to accept any
> conditions just to have a job and a roof over their heads. A large part of
> capital has for a long time been lusting to bring back America to the
> situation
> before the New Deal, when employers had the upper hand. The ?crisis? is
> giving
> them a chance to return to that era.
> That this time Social Security is
> at stake is due to various factors. First, Social Security is the last pot
> of
> money available to re-launch the US market, in a context in which workers
> have
> no savings and monetary flows from the outside are drying out. It is also
> the
> last ?scandal? on the list of US capitalists who have relentlessly for
> years now
> told us it must go. Most important of all, Social Security affects
> primarily
> the old, the retired, and it is therefore an easier target than
> entitlements
> affecting the whole working class.
> So far workers in the US have
> resisted the privatization of Social Security despite many governmental
> attempts. But cuts in pensions have already gone a long way in the private
> sector, where employers have given stocks of their companies to workers,
> or
> stopped putting any money in their pension funds. The present crisis will
> extend that to government backed pensions. And the road to it has been
> cleared
> by years of false statements to the effect that Social Security is
> unsustainable. Though it is a colossal lie, younger generations have,
> however,
> accepted it. By cutting Social Security, capital undoubtedly hopes to pit
> the
> young against the old, who (as in Africa today) are being pictured as a
> crew of
> selfish gerontocrats sucking up the funds the young need to build their
> future.
> The second target of the attack is the global resistance to capital?s
> appropriation of natural20resources beginning with oil and gas extraction.
> The
> defeat in Iraq is the peak of it. To this day, despite an immense
> expenditure
> in war funding, the US has not been able to put its hands on Iraqi oil.
> Resistance to international capital control over global energy resources
> has
> also come from Venezuela, Bolivia, and Ecuador. Many more countries are
> also
> refusing the neoliberal packet, especially in Latin America. These
> refusals,
> not peak oil, are the true limits to capital?s energy plans.
> There have also been bottlenecks
> in the exploitation of forests, waters, minerals, and lands which
> structural
> adjustment was to remove. A new ?rurban? peasant movement has been growing
> that
> is fighting independently of unions, parties, ?civil society? and NGOs,
> using
> direct action tactics, to re-appropriate the lands and resources of which
> it
> has been robbed ---poaching, harvesting timber or produce in commercial
> plantations, mining diamonds and gold ?illegally,? or farming in the very
> lands
> from which they have been ?legally? excluded. When they move to the cities
> they
> squat on urban land and take over land not used, private or public to farm
> it
> for their needs. It is a vast re-appropriation movement that is redefining
> the
> fundamentals of social reproduction globally. It has put globalizers and
> adjusters out of government, it has forced the nationalization of local
> resources, and has redistributed wealth and political power, putting the
> World
> Bank and IMF almost=2 0out of business in Latin America. It has defeated
> the
> attempt to completely liberalize the economies of the TW through the rule
> of
> the World Trade organization. Though not sitting at the table, the specter
> of
> the rural/urban peasants of the world has guided the refusal of TW
> representative to comply.
> Third, global migration has developed in ways that make it difficult for
> governments to use it as a regulatory mechanism for the labor market. Far
> from
> being an easy device for driving wages down, migration is now an
> autonomous
> uncontrollable phenomenon, with a logic of its own that is not reducible
> to the
> needs of the labor market. It is important however to stress (against the
> idealization of the migrant and of Exit, Exodus, Flight as a the highest
> form
> of struggle) that the struggle of the migrants is not superior to the
> struggle
> of those who remain. In fact, migration can lead to the dissolution of
> local
> organizations, it can create new divisions among the locals, separating
> those
> benefiting from remittances and those deprived of them, it can boost the
> cost
> of living in the area of origin by the influx of new money and hook local
> economies more strongly to the international monetary system, fostering
> the
> expansion of monetary relations. These, of course, are not inevitable
> results.
> Actually, migrants have been able to use the wage against the wage, to
> refuse
> impoverishment, to create transnational networks, to move from country to
> country seeking a better deal and nullifying nation al boundaries and
> borders.
> The attacks on immigrants of
> recent months, which have seen the most massive factory raids and
> deportations
> ever in the US, are response to this autonomy. They are part of the
> attempt to
> create a population of rightless workers, to function as a safety valve
> for the
> labor market. Only if they have no rights can immigrants function as
> regulatory
> mechanism for the labor market (in the same way as mass incarceration and
> expansion of unpaid labor do). The redefinition of immigrant workers as
> outlaws
> and the criminalization of working class--historically a key strategy to
> devalue labor power--will continue to be a tool of the world order we will
> see
> emerging from the crisis. But the crash will intensify the divisions
> between
> ?natives? and migrants, attack the organizational strength of migrant
> organizations, unless there is strong opposition to this strategy.
> The Politics of the Financial Crisis and Our Response.
> Crises are always a threat and an opportunity as they break down business
> as
> usual, and reveal something of the inner workings and nastiness of
> capitalism.
> This one is not an exception and we can be sure that what will come out of
> it
> will be greatly a result of what people do in response to it. If the Great
> Depression is an indication, it took more than ten years for capital to
> organize a different social order. Much can happen in such a period.
> ?
> The problem for us today is that
> workers are only organized around electoral politics at best. And many
> still
> place more hope in a racist and imperialist stance than in working class
> solidarity. We certainly don?t have a communist or an anarchist movement
> organizing rallies of the unemployed, fight against evictions, or organize
> ?penny auctions? of farms as they did during the Great Depression. Nor do
> we
> have an anti-capitalist alternative as the Soviet Union was in the eyes of
> many. We also do not have the kind of solidarity that in the Great
> Depression
> led to invention of new commons, like the hobo movement and the creation
> of
> ?jungle cities.?
> Where to start then?? This is
> what we need to work on in the coming months and years. There is no clear
> path
> to this kind of mobilization.? But we need to start somewhere. On two
> things we can get people to agree with us: First, we better find
> alternatives,
> because, as things stand presently, we are so incestually connected with
> capitalism that its demise threats our own existence. Second, unless we
> organize to resist government planning, what lies ahead for us, after a
> cut of
> more than a trillion dollars of our ?entitlements,? looks much more like
> some
> variant of fascism than socialism. ?
> ?? ?
> With warm greetings,
> Silvia and George

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Received on Fri Oct 10 02:35:09 2008

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