Ghosts stirring – Oct 25

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Where’s FDR when you need him?
Conrad Black, Globe & Mail
As the current financial crisis has unfolded, Franklin D. Roosevelt has been frequently mentioned, both for his talent at rallying and reassuring the nation in crisis as well as for the economic policies he used to lead the country out of the Great Depression. In this second category, his name and record have often been traduced. Roosevelt’s historic reputation has suffered from his dying abruptly in office, leaving relatively uninformative archives, and not having a literary executor.

… In 1933, there was great disagreement about how to deal with an economic recession or depression, and Roosevelt’s administration, and he himself, had conflicting impulses. Herbert Hoover had made the worst possible selection of policy options: higher taxes and tariffs and a shrunken money supply. The unemployment rate was 33 per cent, about five times what it is now, and there was no direct relief for the unemployed. They could beg, steal or starve, though Hoover claimed that they prospered selling apples.

On Inauguration Day, 1933 (then March 4), there were machine-gun nests at the corners of the great government buildings in Washington, for the only time since the Civil War. All banks in 32 states had been closed sine die. Six other states had closed almost all their banks. In the other 10 states and D.C., withdrawals were limited to 5 per cent of deposits, and in Texas to $10 a day. The New York Stock Exchange and Chicago commodity exchanges had also been closed indefinitely. The financial system had effectively collapsed, and was threatening to take the life savings of millions of people and what was left of the world’s financial system with it.

In a fever of activity, Roosevelt guaranteed bank deposits, made the federal government a temporary non-voting preferred shareholder in thousands of suddenly under-capitalized banks – more than half the banks in the country – refinanced millions of residential and farm mortgages, tolerated cartels and collective bargaining to raise prices and wages, increased the money supply, effectively departed the gold standard, repealed Prohibition of alcoholic beverages (wrenching one of America’s largest industries out of the hands of the underworld), and legislated reduced working hours and improved working conditions for the whole work force. In the next two years, in what became known as the Second New Deal, he set up the Securities and Exchange Commission, created the Social Security system, and broadened the powers of the Federal Reserve to equal those of other national central banks.
(23 October 2008)

Hoping for a new New Deal
Andrew Nimelman, Energy Bulletin

Many liberals, including commentators such as Paul Krugman, have expressed hope that the 2008 election will mark a progressive political watershed in the US, like the 1932 election that swept Franklin Roosevelt into the White House, and large Democratic majorities into both houses of Congress, setting the stage for the New Deal.

I’ve suggested in a previous post (see Al Gore, Media Pariah) that the recent “Draft Al Gore” boomlet is reflective of this quite understandable widespread longing for a “new FDR” on the part of the liberal electorate.

Lately, I’ve noticed that peak oilers, too, are increasingly citing the New Deal as a hopeful instance of the US political system responding constructively to an enormous challenge facing American society (in that case, of course, the Great Depression). It is not surprising that thinking people are groping for a positive historical reference point, given that we are faced with a bleak contemporary reality characterized by

1. more and more experts declaring the apparent arrival of Peak Oil;
2. signs (in particular the 2007 Arctic ice melt) that global climate change may have reached a tipping point, with potentially catastrophic consequences down the road; and
3. the growing likelihood that the resource wars in Iraq and Afghanistan will shortly be expanded to Iran, possibly even involving the first use of nuclear weapons in more than 60 years, and potentially unleashing World War III.

In this context, it’s no wonder that any sliver of hope that we might be able to find our collective way out of this mess – – and, thereby, avoid Richard Heinberg’s apocalyptic “last one standing” scenario – – is eagerly seized upon.

I’m all for hopefulness, if it’s warranted. But, when we make use of a historical example to build a case for a hopeful outcome to our current dilemma, it is essential that we have an accurate understanding of that history. In this case, before we can posit the emergence of a new New Deal, we had better understand the nature of the old one. Having spent the past couple of years researching the response of business elites to the Great Depression and the New Deal for a history dissertation I’m currently at work on, I think I can offer some insight in this regard.

(6 November 2007)

On Robert S. McElvaine’s “The Great Depression”
Carolyn Baker, Energy Bulletin
… One cannot thoroughly appreciate the catastrophic nature of the Great Depression without understanding what preceded it. The decade of the 1920s, not unlike the economic milieu of the 1980s and 90s, was a time of dizzying, unrestrained, and frantic consumption. It was the apotheosis of the “conspicuous consumption” about which Thorsten Veblen wrote in his turn-of-the-century classic The Theory Of The Leisure Class. Threading his tapestry forward, McElvaine writes that, “Put simply, most Americans late in the twentieth century have adopted the consumption ethic that was rising in the 1920s, but was temporarily reversed during the Great Depression.” (xviii) McElvaine, of course, wrote this book in the eighties, but certainly the consumption ethic has not abated but rather intensified since then.

Ironically, one factor that contributed to the onset of the Depression and that eventually pulled the nation out of it was consumption. Franklin Roosevelt’s stellar accomplishment in the engineering of New Deal policies was the emphasis on “purchasing power” for average Americans. McElvaine occasionally draws parallels throughout the book, and also in recent articles, between the twenties and the late-twentieth century, not only with regard to consumption but also to a stock market index that seemed during the 1920s to reach unprecedented heights. Clearly, the consumption on steroids that we have been witnessing the past sixty years in the United States is no longer capable of “curing” an economic depression, but it is certainly capable, along with mountainous debt, of contributing to the occurrence of a Second Great Depression.

Elevated levels of consumption are almost always attended by an increase in “individualism” and a decline in a sense of community. The Great Depression reversed this trend in America dramatically, and for me, that is perhaps the most riveting feature of McElvaine’s book as he writes, “…the most significant fact about the Depression era may well be that it was the only time in the twentieth century during which there was a major break in the modern trends towards social disintegration and egoism.” (xxiii)
(4 June 2007)

Brother, Can You Spare A Dime? (YouTube – audio, photos)
Bing Crosby (singer), Yip Harburg (lyrics), Jay Gorney (music)
They used to tell me I was building a dream, and so I followed the mob,
When there was earth to plow, or guns to bear, I was always there right on the job.
They used to tell me I was building a dream, with peace and glory ahead,
Why should I be standing in line, just waiting for bread?

Once I built a railroad, I made it run, made it race against time.
Once I built a railroad; now it’s done. Brother, can you spare a dime?
Once I built a tower, up to the sun, brick, and rivet, and lime;
Once I built a tower, now it’s done. Brother, can you spare a dime? …
(1931)
Many other artists have recorded the song.

-BA

Karl Marx’s guide to the end of capitalism: a primer
Stuart Jeffries, The Guardian
Sales of Marx’s Capital are reportedly soaring as the world realises that this was where he prophesied how capitalism will destroy itself. So it’s time for a Capital primer, time to talk fetishism (yay!) of commodities (d’oh!).

1. Commodities. A chair is a commodity – not because you can sit on it, but because it was produced by humans to be traded. Each commodity has a use value, measured by its usefulness in satisfying needs and wants.

2. Exchange value. How, you’ll be asking, can one measure the difference in value between, say, a 80GB iPod, and a new copy of Capital? It’s the exchange value, stupid. This is measured by the amount of labour that goes into making each commodity – such is the Marxist labour theory of value, and the source of what Marx called the fetishism of commodities.

3. Literary value. As Francis Wheen stresses in his biography of Marx, Capital is partly a racy gothic novel, a Frankenstein-like tale of how we created a monster from which we are alienated and which, by means of class struggle, we will slay.

4. Capital. This is money used to buy more money. Like God, capital seems mystical and immutable, but is really only a function of social relationships (Rowan Williams, a Marx fan, disagrees with the God bit). Capitalists think capital has magical significance. Socialist revolution will disabuse them of that.
(21 October 2008)

British Marxist historian Eric Hobsbawm, “arguably our greatest living historian” (audio)
Today, BBC
Is the intellectual opinion of capitalism changing? British Marxist historian Eric Hobsbawm, “arguably our greatest living historian” according to the New York Review, discusses the current economic crisis and the problems with a free market economy.
(18 October 2008)
I ran this a few days ago, but it’s worth re-posting since Hobsbawm is worth listening to. In his 91 years, he has seen it all, moving politically from support of the Soviet Union to Eurocommunism to a more pessimistic view. (Wiki) -BA