[OPE] Paul Craig Roberts revisits Marx and Lenin

From: GERALD LEVY <gerald_a_levy@msn.com>
Date: Thu Oct 08 2009 - 10:01:10 EDT

Marx & Lenin Revisited


by Paul Craig Roberts

October 6, 2009

"Capital is dead labor, which,
vampire-like, lives only by sucking living
labor, and lives the
more, the more labor it sucks." -Karl Marx

If Karl Marx and V. I. Lenin were alive today, they would be leading
contenders for the Nobel Prize in economics.

Marx predicted the growing misery of working people, and Lenin foresaw
the subordination of the production of goods to financial capital's
accumulation of profits based on the purchase and sale of paper
instruments. Their predictions are far superior to the "risk models"
for which the Nobel Prize has been given and are closer to the money
than the predictions of Federal Reserve chairmen, US Treasury secretaries,
and Nobel economists, such as Paul Krugman, who believe that more
credit and more debt are the solution to the economic crisis.

In this first decade of the 21st century there has been no
increase in the real incomes of working Americans. There has been a
sharp decline in their wealth. In the 21st century Americans have
suffered two major stock market crashes and the destruction of their
real estate wealth.

Some studies have concluded that the real incomes of Americans, except for
the financial oligarchy of the super rich, are less today than in the 1980s
and even the 1970s. I have not examined these studies of family income to
determine whether they are biased by the rise in divorce and percentage of
single parent households. However, for the last decade it is clear that
real take-home pay has declined.

The main cause of this decline is the offshoring of US high value-added
jobs. Both manufacturing jobs and professional services, such as software
engineering and information technology work, have been relocated in
countries with large and cheap labor forces.

The wipeout of middle class jobs was disguised by the growth in consumer
debt. As Americans' incomes ceased to grow, consumer debt expanded to take
the place of income growth and to keep consumer demand rising. Unlike
rises in consumer incomes due to productivity growth, there is a
limit to debt expansion. When that limit is reached, the economy
ceases to grow.

The immiseration of working people has not resulted from worsening
crises of over-production of goods and services, but from financial
capital's power to force the relocation of production for domestic
markets to foreign shores. Wall Street's
pressures, including pressures from takeovers, forced American
manufacturing firms to "increase shareholders' earnings." This
was done by substituting cheap foreign labor for American labor.

Corporations offshored or outsourced abroad their manufacturing
output, thus divorcing American incomes from the production of the
goods that they consume. The next step in the process took advantage
of the high speed Internet to move professional service jobs, such
as engineering, abroad. The third step was to replace the remains of
the domestic work force with foreigners brought in at one-third the
salary on H-1B, L-1, and other work visas.

This process by which financial capital destroyed the job prospects of
Americans was covered up by "free market" economists, who received grants
from offshoring firms in exchange for propaganda that Americans
would benefit from a "New Economy" based on financial services, and by shills in
the education business, who justified work visas for foreigners on the basis
of the lie that America produces a shortage of engineers and scientists.

In Marx's day, religion was the opiate of the masses. Today the media is.
Let's look at media reporting that facilitates the financial oligarchy's
ability to delude the people.

The financial oligarchy is hyping a recovery while American unemployment and
home foreclosures are rising. The hype owes its credibility to the high
positions from which it comes, to the problems in payroll jobs reporting
that overstate employment, and to disposal into the memory hole of any
American unemployed for more than one year.

On October 2 statistician John Williams of shadowstats.com reported that the
Bureau of Labor Statistics has announced a preliminary estimate of its
annual benchmark revision of 2009 employment. The BLS has found that
employment in 2009 has been overstated by about one million jobs.
John Williams believes the overstatement is two million jobs. He
reports that "the birth-death model currently adds [an illusory] net gain
of about 900,00 jobs per year to payroll employment reporting."

The non-farm payroll number isalways the headline report. However, Williams
believes that the household survey of unemployment is statistically sounder
than the payroll survey. The BLS has never been able to reconcile the
difference in the numbers in the two employment surveys. Last Friday,
the headline payroll number of lost jobs was 263,000 for the month
of September. However the household survey number was 785,000 lost
jobs in the month of September.

The headline unemployment rate of 9.8% is a bare bones measure that greatly
understates unemployment. Government reporting agencies know this and
report another unemployment number, known as U-6. This measure of US
unemployment stands at 17% in September 2009.

When the long-term discouraged workers are added back into the total
unemployed, the unemployment rate in September 2009 stands at 21.4%.

The unemployment of American citizens could actually be even
higher. When Microsoft or some other firm replaces several thousand
US workers with foreigners on H-1B visas, Microsoft does not report
a decline in payroll employment. Nevertheless, several thousand
Americans are now without jobs. Multiply this by the number of US
firms that are relying on "body shops" to replace their US
work force with cheap foreign labor year after year, and
the result is hundreds of thousands of unreported unemployed Americans.

Obviously, with more than one-fifth of the American work force
unemployed and the remainder buried in mortgage and credit card
debt, economic recovery is not in the picture.

What is happening is that the hundreds of billions of dollars in TARP money
given to the large banks and the trillions of dollars that have been
added to the Federal Reserve's balance sheet have been funneled into
the stock market, producing another bubble, and into the acquisition
of smaller banks by banks "too large to fail." The result
is more financial concentration.

The expansion in debt that underlies this bubble has further eroded the US
dollar's credibility as reserve currency. When the dollar starts to go,
panicked policy-makers will raise interest rates in order to protect the US
Treasury's borrowing capability. When the interest rates rise, what
little remains of the US economy will tank.

If the government cannot borrow, it will print money to pay its bills.
Hyperinflation will hit the American population. Massive unemployment
and massive inflation will inflict upon the American people misery
that not even Marx and Lenin could envisage.

Meanwhile America's economists continue to pretend that they are dealing
with normal postwar recession that merely requires an expansion of money
and credit to restore economic growth.
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