Schweickart's Economic Democracy

David Schweickart says he knows one big thing, rather than many small things. The Loyola University professor of philosophy proposes a theory of market socialism in which he seeks to overcome the flaws of the Soviet command economy as well as those of what he calls Chinese “bureaucratic market socialism”.

In his 2002 book After Capitalism, Schweickart outlines a plan for a transition to socialism in a modern democratic society which remains true to Marx’s vision of working class political rule and control of the economy. Worker self-management, the market, and social control of investment, are the three main elements of Schweickart’s model, which he calls Economic Democracy.

With worker self-management, enterprises are owned and controlled by their workers, who elect management and receive the profits of the enterprise’s activity. Schweickart argues that worker controlled enterprises will be more efficient than capitalist companies because of better decision making and motivation. The Mondragon network of cooperatively owned enterprises in Spain is a key exemplar.

Companies will still produce commodities for sale on the market and will strive to maximize their profits in Schweickart’s model. Since the fruits of innovation and efficiency will go to those firms that achieve them, the economy will be dynamic like that of capitalism. However, Schweickart believes that firms under Economic Democracy won’t be driven to expand ceaselessly as they are under capitalism. That is because ED firms will strive to optimize profits per worker, while capitalist forms optimize profits per firm. Once the economic benefits of division of labor have been exhausted, the firm will no longer grow merely for the sake of growth. Schweickart also envisions a way for entrepreneurs to start privately owned firms and provide for more innovation, while placing a cap on their impact by preventing them from bequeathing their profits to heirs.

Investment and banking will be controlled by the state. In place of interest and dividends that are paid by capitalist firms, ED companies pay taxes on their capital which they hold in trust, generating a social investment fund. The investment fund is allocated by elected bodies at the national, regional, and local levels, eliminating regional inequality and providing funeds to start new businesses or expand old ones. Control of investment by the state rather than by the private financial system is the most significant difference between ED and capitalism, and it is surely an appealing one, as the financial turmoil of late 2008 reminds us.

Schweickart also makes the case that ED will address inequality, unemployment, overwork, poverty, racism, ecology, and sham democracy.

Is ED too market-oriented to provide a stable socialist system? Some cooperatives will do better than others; can bankruptcies lead to centralization of ownership? Will worker control become a sham, with managers in effect controlling their enterprises’ production, acting like a new version of the Soviet nomenklatura? Will private savings and entrepreneurship provide an alternative path to accumulation, outside of and ultimately more dynamic than the socialist state? While these questions deserve more examination, I believe they are not fatal and can be solved through additional measures.

How about the transition? Schweickart envisions that the transition to ED could happen peacefully by a few specific reforms of the system. The reform agenda starts with support for cooperatives, green taxes, regulation of international capital flows, a financial assets tax, and a fair trade tariff to assist poor countries. When the financial market crashes, nationalization of the financial system is the result; the assets tax is increased, and the banks are put to work allocating the investment funds. Publicly traded corporations become worker-controlled, and payment of interest and dividends are forbidden. “Production and distribution of goods and services need not be disrupted. Workers still work, managers still manage, businesses still compete….[T]he productive infrastructure of the nation will remain wholly intact…. Life goes on – after capitalism.” A state-provided annuity compensates the capitalist class for the wealth which has been nationalized; while unfair, this allows them to continue to enjoy their consumption, their yachts and mansions, and employ the many workers who provide these things, without interfering in the productive side of the economy.

At one level After Capitalism is a return to the socialist vision of Marx, as Schweickart illustrates using quotes from the Communist Manifesto. The problem with capitalism is – capital. Expropriate capital, manage investment socially, change wage labor to cooperative labor, and we have a qualitatively different system, but one that can be set in place without the wrenching violence, the economic dislocations, of the Soviet experience.

Is it real? The political strength to enact the initial non-revolutionary reforms is not presently at hand for U.S. progressives, but there have been many times and places when they were within reach in advanced capitalist countries. Uniting a section of the population behind them is not in any way an unreasonable political goal. It is the implementation of the second stage, the core economic tenets of ED (elimination of interest and dividends, worker ownership of enterprises) that are unlikely to proceed smoothly and peacefully. The 1973 overthrow of the Unidad Popular in Chile is but one of many examples that shows the capitalist class will respond with violence to any attempt to challenge its rule. It is the political process of winning the transformation that I believe is most in need of expansion in Schweickart’s analysis.

Give in or move in

After the collapse of the Soviet Union and the Soviet model of socialism, the capitalist model reigned in triumph. "There is no alternative!" (TINA), proclaimed British prime minister Margaret Thatcher, meaning that a free market economy and capitalism is the only way societies can be organized in the modern world.

But the unquestioned era of TINA lasted less than two decades. With the mounting disasters of Iraq and Afghanistan, with the planet spinning toward runaway global warming, and now with the biggest economic crisis since the 1930s threatening the livelihoods of millions, many people are wondering whether the capitalist system can ever again deliver peace, prosperity, security, and human development.

These people organized and voted in the hope that a modern, smart, energetic politician like Barack Obama will lead the way to fixing the problems and to a more humane capitalism. "President-elect Obama is a centrist at a time when centrism means energy independence and green jobs and universal healthcare and massive economic stimulus programs and government intervention in the economy," Katrina vanden Heuvel writes in today's Nation.

Perhaps so, but the fightback of capital against these measures will not be long in coming. For one thing, except for the national security apparatus the U.S. government has been so decimated by privatization that it would have to be radically overhauled before it could be used to supervise large scale projects. By the time capital agrees to take the government's money and build the projects the taxpayers are paying for, the rakeoffs, ripoffs and compromises are likely to so dilute the impact that there is a real danger of further disillusioning the supporters of the reform program.

To prepare for this struggle, the left must develop its vision of the transition to socialism. This statement may seem strange, because that transition is not at all on the horizon in the U.S. But it is precisely the awareness of possible alternatives that sharpens the struggle for implementation of the reform program. An example is the current discussion that nationalizing the auto industry is a viable alternative to bailout or bankruptcy. Nationalization of industries is not socialism, but it is the straitjacket of TINA that refuses to consider it. TINA leads to narrowness and defeat of the struggle for reforms.

The international left has struggled since the fall of the Soviet Union to learn the lessons so that it can answer and defeat TINA. Among many there is convergence on a view that Karl Marx' critique of capitalism is accurate, but that the Soviet model of planned, bureaucratic economy under vanguard party control is not a viable model for the transition to socialism. A discussion of socialist transition which is democratic, which builds from below, which addresses both economic and political development concurrently, is a requirement.

Michael Lebowitz offers one exposition of the new socialist project in Build it Now: Socialism for the Twenty-First Century. While a full evaluation of his arguments are beyond the scope of this article, his comments on "The Failure of Social Democracy" are directly relevant to the current situation of U.S. progressives as they prepare to engage in inside-outside struggle with the Obama administration.

"Understanding the responses of capital means that a capital strike can be an opportunity rather than a crisis. If you reject dependence upon capital, the logic of capital can be revealed clearly as contrary to the needs and interests of people. When capital goes on strike, there are two choices, give in or move in. Unfortunately, social democracy in practice has demonstrated that it is limited by the same things that limit Keynesianism in theory -- the givens of the structure and distribution of ownership and the priority of self-interest by the owners. As a result, when capital has gone on strike, the social-democratic response has been to give in.... The result has been the discrediting of Keynesianism and the ideological disarming of people who looked upon it as an alternative to the neoclassical wisdom.... With this acquiescence to the logic of capital, its hold over people was reinforced; and the political result was the popular conclusion either that it really doesn't matter who you elect or that the real solution is to be found in a government unequivocally committed to the logic of capital."

The soul of the settler state

"Among the most powerful and persistent of all the myths that Americans invoke about themselves is the myth that America is a chosen nation and that its citizens constitute a chosen people," writes religion professor Richard T. Hughes in Myths America Lives By.

The combination of democracy and religion is a potent one. When thousands of Puritans, fleeing persecution in their native England, founded New England in the early 17th century, it allowed them scope to develop their culture unfettered in a way that they could not in England. Pious, righteous and self-absorbed, they saw themselves as a new Israel, a chosen nation, in covenant with God.

Unfortunately, when the chosen nation needs to push other people aside to establish its heavenly kingdom, the results are neither pretty nor Godly. The Puritans faith defined the native inhabitants of New England as heathens who could be destroyed with impunity. From their massacre of the Pequots in 1637 to the genocidal King Philip's War in 1675, the Puritans showed their native neighbors more steel and lead than humanity.

The birth of New England as a settler state had profound consequences for America, as I have previously written. The expropriation of native lands provided the material basis for the growth and prosperity of the colonies. The pattern of driving off and killing the native peoples which continued for the next three centuries was justified by a racist worldview that it is (white) Americans who deserve the land, who have a manifest destiny, who are modern and advanced. This worldview is derived from Puritanism, but it is alive and well today. John Judis traces the impact of the "chosen nation" thesis on American foreign policy, and particularly on the George W. Bush administration.

The Thanksgiving myth captures the identity of the settler state. The Indians join with the Pilgrims and teach them how to hunt American turkeys and cultivate American crops such as corn and pumpkins. Yet we know, even as we contemplate the peaceful Thanksgiving scene, that it is the Pilgrims, not the Indians, who are chosen to rule; it was those who came on the Mayflower whose descendants are in charge, while the Wampanoag stubbornly assert that they are still here.

So it is with Israel today. Fleeing the Holocaust, they migrated to Palestine; rising up in 1947, they expelled most of the Arabs and formed their state. Unlike the Puritans, most of the founders were not religious; but like them, many Israelis today do look to a Biblical covenant to justify their claim to the land. And the state of Israel has always behaved with the self-righteousness of the chosen.

The First Parish Unitarian Universalist Church in Bedford, Massachusetts, heir to the Puritan tradition, recently presented Jerusalem: East Side Story, a film about the tactics used by Israel to dispossess and drive Palestinians out of East Jerusalem. The Israeli settler state uses residence permits, home demolition, innumerable checkpoints, and the Wall, to divide, harrass, and intimidate Palestinians in the hope that they will leave the holy city. They hope that the Palestinians will scatter like the Wampanoags and Pequots before them. But the East Jerusalem Palestinians, though pushed seemingly beyond endurance, are hanging on for dear life, they do not move, and they do not leave. The film is available for $25 and it is a great educational tool.

The just struggle of the people of East Jerusalem to preserve their life, land, and nationhood in the face of the settler state deserves our support. 30 or 40 modern New Englanders came out on a cold night last week to express that support. And, as filmmaker Mohammed Alatar reminded them at the film screening, it is U.S. aid of $10 million a day which allows Israel to build its settler state. The American chosen nation is spending freely to aid the Israeli one, despite its continual violation of U.N. resolutions calling for the neutrality of Jerusalem. Unless Americans cut off the aid, Alatar said, Israel will not stop.

Discussion of nationalizing GM

In the last few days, multiple commentators are starting to explore the idea of nationalizing GM, or setting up a structure with significant government control over it, instead of bailing out its owners with a loan. Some excerpts:

Bob Herbert, NY Times columnist: "This whole matter needs some intensive thought. At the moment, Washington has tremendous leverage over the failing auto industry. The government should craft a rescue plan that is both tough and very, very smart. That means dragging the industry (kicking and screaming, no doubt) into the 21st century by insisting on ironclad commitments to design and develop vehicles that make sense economically and that serve the nation’s long-term energy security requirements."

Jeffrey Sachs, Columbia University economist: "A government-supported restructuring of the auto industry is urgently needed for our economic and energy security....[T]his is an opportunity to embark on a major industry restructuring to position the United States to lead the world in producing cars that get 100 miles or more per gallon."

Dan Bertolet, hugeasscity: "We should nationalize GM. Because we need a revolutionary change in motorized transportation, and we need it now. And because the free market is not up to the task."

35 authors, Soot and Ashes: Reinventing America After the Crash: "Should the United States nationalize or bail out GM, Ford and Chrysler?" Some say yes to nationalization, others no.

Carl Bloice, Rx for 'Ailing' Auto Industry: Take it Over. "So, what is to the done about the ailing auto industry? Here's one answer: nationalize it.... let's face it; radical innovation and planning is the only thing that could get us out of the current mess and lay the base for a healthy economic future. "

Nationalize auto

The drive is on to bail out General Motors. With US sales down 33% this year and the automaker hinting that it may face bankruptcy before the end of the year, Nancy Pelosi and Harry Reid are proposing a $25 billion bailout of the Big Three automakers, GM, Ford, and Chrysler, and the Obama team has signaled its support.

The Big Three and their suppliers, dealers, and related industries employ as many as three million workers, many unionized and located in the heartland states around Michigan and Ohio. The United Auto Workers supports the bailout, arguing that the wage and benefit concessions in the 2007 labor contract make the automakers competitive, but for the current economic slump. Non-union Honda, Toyota and VW auto factories in the South also account for a significant share of U.S. vehicle production.

Everyone claims they do not want to see the auto industry liquidated. The right proposes to let GM file for Chapter 11 bankruptcy, and Chris Dodd said this afternoon that the Senate doesn't have the votes to pass the bailout in the lame-duck session due to Republican opposition. Rightists reason that it would then drive for further concessions from the UAW, disciplining labor and shrinking the unionized share of the industry. However, many commentators are saying that customers would not buy cars from a manufacturer in bankruptcy, fearing that the warranty may not be honored or parts and service would not be available. Unfortunately, the same is likely to be true of the Democrats' plan, giving life support to preserve the current failing companies a little longer.

To keep the industry moving and preserve jobs, I propose nationalization as an alternative to bankruptcy and bailout. For its $25 billion, the government would acquire all the equity in GM and Ford, which together are worth a mere $6.1 billion, plus a negotiated price for the privately owned Chrysler, and still have most of the money left over to invest in retooling their operations. The government's commitment to run the auto companies will eliminate any doubts that they are going concerns.

This move is also smart politics for the Democrats. With a "Buy Green - Buy American" sticker on every car and a PR message on the importance of preserving union jobs, working class voters will support the move, and the Democrats will buy themselves a lock on the heartland vote for a generation, picking a great issue to rebut the right's free enterprise fury.

The national auto company will be a formidable enterprise. The UAW will participate in managing the business. The government would merge the three companies into one to eliminate waste, then shift the industry strongly towards green, fuel efficient designs. Partnerships will be set up with the national research labs and NSF to move innovative products quickly to market. The government would use its stake in the banks to ensure that credit is available to auto purchasers.

There is nothing far-fetched about this plan, except to American free market fundamentalists and their Democratic lap dogs. Renault was a state enterprise for 50 years from 1946 to 1996 and the French government still owns a 15% share of it; it is the leading brand in Europe and in alliance with Nissan it is now the world's fourth largest automaker. Nationalization of industries that their capitalist owners have run into the ground is in the interests of the workers, the taxpayers, the economy, and the environment. Nationalization is not socialism, but it is a step towards economic stability and away from the free market extremism that has created the current crisis.

What kind of stimulus?

President-Elect Obama stated at his press conference yesterday that passing an economic stimulus package is his top priority, providing for “immediate efforts to create jobs and provide relief… a further extension of unemployment insurance benefits… [and] jump-start economic growth”. Keynesian doctrine, favored by liberal and moderate economists, calls for fighting recessions by putting money in the pockets of people who will spend it, thereby increasing sales and, indirectly, employment. Te figure of $100 billion has been mentioned for these purposes, although it is unresolved whether the package will be passed by a lame-duck Congressional session or wait until the new term begins in January because of Bush administration opposition.

However, everyone knows that $100 billion is a drop in the bucket compared to the hole the U.S. economy is in. Last spring’s $150 billion stimulus, which came in the form of tax rebates, did little to improve the economy, which was not nearly in such bad shape than as it is now. The reason for the modest size of the current plans is that the Obama team’s real economic decisions still lie ahead.

Arthur MacEwan, U. Mass professor and author of the “Dr. Dollar” column in Dollars and Sense , pointed in a talk last night to the confusions already being spread in the mainstream media about the economic options open to the new administration. With a trillion dollar budget deficit already expected in 2009 due to the Wall Street bailout on top of the Bush tax cuts and war spending, can Obama carry through on his campaign promises to expand health care, education, green energy, and cut the taxes on the working class? MacEwan pointed out that these projects will stimulate the economy as much or more than the short-term spending usually included in so-called stimulus packages.

When Wall Street needs a bailout, the government quickly found $85 billion for AIG, $200 billion for Fannie Mae, and $750 billion for the banks. But when the people’s needs call for spending, the conventional wisdom counterposes long-term economic improvement projects to anti-recession spending.

In fact, mainstream economists have often acknowledged that so-called stimulus spending is often ineffective. It may come too late to impact the recession, or people may save it or use it pay off debts rather than spend it, as was the case this spring. The same is true for the bank bailout, much of which is being spent on multi-million bonuses for executives and on acquiring smaller banks, rather than on new lending as promised by the bailout’s promoters.

The most effective thing the government can do to improve the economy, as MacEwan pointed out, is to provide support for the working class. Education and job training, health care, housing programs, infrastructure projects, retooling the energy sector, and increases in the minimum wage, can be enacted fast enough to have an impact in 2009. They will also bring permanent benefits by reducing inequality and strengthening the class which underpins consumption in the economy – the working class. Even a mainstream economist should be able to get behind that. Obama reaffirmed support for several of these projects in his press conference. However, the candidates being mentioned for Treasury secretary, Sommers, Volker, and Geithner, are not likely to agree. Judging from their records, they will support only temporary deficit spending and not long-term commitments, and they will increasingly emphasize deficit hawkishness in opposition to Obama's program if and when the recession appears to bottom out.

The government acquired an ownership stake in the banks during the bailout, but Treasury Sec. Paulson promised not to use it, specifying the stock cannot be voted. The Obama administration can reverse this policy, take the seats on the boards which the taxpayer money entitles it to, and direct Wall Street to invest in the long-term projects that Obama says he supports. Similarly, as part of the auto industry bailout which is coming, the government should take an ownership share in the auto companies. It can then directly supervise the long-term investments needed to make fundamental improvements in the economy. In addition to getting a better economic result, use of the economic instruments the taxpayers have paid for will begin to change the ideological climate and begin to prove that free-market fundamentalism is not the only long term route to prosperity.

Progressives Must Build on Obama's Organizational Breakthrough

While Obama's foreign and economic policies position him as a moderate Democrat, many progressives hope that if he wins, his administration will be more open to progressive policies than were the preceding Clinton and Carter regimes. The greater the size of his win, the more that is likely to be true. The more Democrats in Congress, the more wiggle room progressives will have to craft majorities on problems such as economic regulation, health care, taxes, climate change, and military spending.

Regardless of the exact balance of power that emerges in Washington over the next two years, however, the Obama campaign has already created a shift in the balance of power in U.S. politics which is likely to last a generation. I am referring to the qualitative changes in organizational effectiveness which the campaign has brought to the Democratic party. In voter registration, mobilization, and fundraising, the Obama effort has displayed a seriousness that the national Democratic party has not shown in my lifetime. The latent energies gathered by this mobilization can be used by progressives to ensure that an Obama victory is not mired in the politics of centrist compromise.

"The Obama campaign has united web and field recruitment to wage one of the largest voter registration drives of a modern campaign," Ari Melber wrote in The Nation recently. Democrats in the battleground state of Pennsylvania have 500,000 new voters this year. "Election officials throughout Illinois are digging out from under a record number of last-minute voter registration requests," wrote the AP last week. "Democrats Hope to Defy Odds in Mississippi", the The New York Times headlined, on the strength of 170,000 new voters. As for the youth vote, "Rock the Vote alone has recruited 2.3 million under-30 voters - more than double the number it helped register in 2004 - while other groups including Student Public Interest Research Groups, HeadCount and Declare Yourself expect to add millions more." Latinos, Blacks, and others have been targeted up to the last minute to increase the voter rolls.

Throughout the country, the campaign has mobilized volunteers on an unprecedented scale with the focus on turnout. With hundreds of field offices open, it has deployed volunteers volunteers are deployed to canvass neighborhoods and identify Obama-leaning voters. In the blue state of Massachusetts, hundreds of volunteers are dispatched to neighboring New Hampshire every weekend, reports The Boston Globe. The massive voter databases that are resulting from this effort will not only help Democrats turn out support for Obama but will form the foundation of turnout efforts for national and state races going forward.

The Obama campaign also uses extensive Internet mobilization efforts, reaching voters through Facebook, MySpace, email , TouTube, and text messaging. Building on the methods developed by MoveOn, supporters are urged to donate, to hold debate watching parties in their neighborhood, and to make outreach calls to voters in swing states from their homes, using convenient lists and scripts provided by the campaign.

The campaign's fundraising has surpassed all records. The campaign announced that it added 632,000 new contributors in September for a total of 3.1 million contributors. It took in $150 million in September alone and $600 million total. By comparison, the Kerry campaign in 2004 had only 2.6 million names on its e-mail outreach list and raised $249 million in the whole campaign.

Needless to say, a donor base of 3.1 million people is a formidable political force. "The party that spent decades stifling voter turnout, from illegal suppression to court-sanctioned ploys like ID requirements, could find electoral salvation depends on the ability to register its own new voters. Couple that grassroots pressure with an economic crisis stoking intense bipartisan populism, and a 'new politics' might really be on the horizon," concluded Melber.

Obama's effective campaign organization and disciplined message build on his personal skills as an organizer. His track record as a community organizer in Chicago has frequently been discussed, and he got his start in voter registration as director of Project Vote in Chicago in 1992. The contrast with the campaign methods of Bill Clinton, whose politics were based on a "triangulation" strategy that distanced him from the Democratic party and its Congressional representatives, could not be more stark.

The Howard Dean 50-state strategy helped lay the groundwork for the current mobilization. By "expanding the battlefield" to the formerly red states of Indiana, Missouri, Georgia, and North Carolina, the effort energizes Democrats who not only put their own states in play for Obama but become a factor in Congressional, state and local races.

Obama has recreated a Democratic party machine in which progressives can play a significant part and which has mobilized a potentially progressive-leaning base of new voters. It is now up to us to master the new organizational methods and use them to appeal to that base to mobilize support for progressive politics on a national scale.

Echoes of inspiration

In the past week I had the opportunity to hear two speakers and see a movie that reminded me of the richness of the many waves of progressive struggle I have been privileged to witness and support in my lifetime.

What happens when aging revolutionaries turn into hippies? Kendall Hale, whom I remember as a singer in New Harmony Sisterhood, a popular Boston women's political band of the 1970s, has now written Radical Passions, a memoir of her life in the antiwar, new communist, women's, housing, and solidarity movements. As became apparent when she read from her book at a Boston event last week, she has now discovered her spiritual side. "We didn't have the tools back then to deal with the problems we faced," she says. "We didn't know about mindfulness." Hale has not given up on the socialist ideals of her youth, but is striving to fuse them with the soulful energies that are the flip side of the 60's consciousness which formed our generation.

A italk by Helen Caldicott reminded me of the anti-nuclear struggles of the 1980s which ended the cold war, tellingly recounted by James Carroll. She was hosted by WAND, the liberal women's peace group, which drew an affluent suburban crowd. Caldicott showed her familiar incisive, fearless ability to analyze the dangers and opportunities in the current situation. The baby which she held aloft to dramatize the instinctive human desire for peace in a memorable photo years ago attended the talk, now a young adult. To tell you the truth, my sharpest memory of Helen Caldicott from the 80's was her verbal assault against kleenex. I have carried a cotton handkerchief every day of my life since I heard those words.


The movie Battle in Seattle memorably dramatizes the anti-globalization protests at the 1999 WTO conference. Can tree-huggers, turtle-lovers and anarchists stop the rape of the planet by governments doing the bidding of amoral corporations? In this film, protest rallies are treated as an extension of the war-movie, cop-show genre. Both sides are humanized as a plot weaves together protesters with a love interest, a policeman and his pregnant wife, the mayor, the Medecins sans Frontieres representative, and the African statesman who angrily denounces the developed world's monopoly on trade. After fiercely resisting daily police assaults on the right to protest, the demonstrators win as the WTO summit adjourns in disorder. The scenes of violence against protesters seem all too real after what we saw last month at the Republican Convention in St. Paul. While the political issues at stake are not examined in depth, they are presented, and the movie site links to Who Controls the World?, which is rich with anti-globalization resources.

With this rich legacy of struggle as a backdrop, the battles of today are pressing. The rejection by the House of Representatives of the Wall Street bailout, then its passage four days later, are a memorable series of events that indicate the fluidity of the political situation. A "teachable moment", says Dennis Kucinich. "The American people are bitter. They are angry, and they are confused," says Bernie Sanders. The confluence of a presidential election and a financial crisis are bringing to the surface questions about the nature of the capitalist system which have rarely before been debated so openly. An economic system which cannot stabilize itself and cannot provide for the well-being of the people who live under it, is suddenly exposed as irrational, ungovernable, and unreliable. There is much to discuss.

Financial socialism or progressive corporatism?

The American people are furious about Treasury Sec. Henry Paulson's requested $700 billion bailout of Wall Street. But it appears Congress will pass the plan in some form, as everyone believes government intervention is required to prevent the credit market seizure from causing a recession. The crisis has brought the system to a turning point.

"Gone is the faith, shared by the nation's leadership with varying degrees of enthusiasm, that the best road to prosperity is to unleash financial markets to allocate capital, take risks, enjoy profits, absorb losses. Erased is the hope that markets correct themselves when they overshoot.... Also scrapped is the notion that government's role is to get out of the way," wrote Wall Street Journalist columnist David Wessel.

"The government will be much more active in economic management (pleasing a certain sort of establishment Democrat). Government activism will provide support to corporations, banks and business and will be used to shore up the stable conditions they need to thrive (pleasing a certain sort of establishment Republican). Tax revenues from business activities will pay for progressive but business-friendly causes — investments in green technology, health care reform, infrastructure spending, education reform and scientific research," predicted David Brooks of the
New York Times, who called the emerging stage "progressive corporatism". By "progressive", Brooks did not mean the anti-capitalist, pro-people's needs sense in which the term is often used today, but was referring to the Teddy Roosevelt model of bringing activist management to control capitalism's excesses and deflect popular unrest.

The left opposes the bailout and demands the funds be redirected to human needs. For example, the National Priorities Project's handy calculator reports that Massachusetts's $19.8 billion share of the bailout would build 68,703 affordable housing units. That project would provide an alternate and effective solution to the housing problem which caused the financial crisis. The antiwar coalition United for Peace and Justice called for local actions tomorrow afternoon to "Stop the Bush Bailout".

But due to the weakness of the left, the strongest opposition to the bailout plan is coming from the free-market right, who are calling the bailout "financial socialism". Mainstream liberal Democrats such as Chuck Schumer, Barney Frank, and Barack Obama are looking for ways to attach conditions to the plan, exemplified by Obama's feeble proposals, as window dressing before they capitulate and push it through. On the other hand progressive Democrats such as Dennis Kucinich and Sherrod Brown are too few to block the bailout.

Since the left cannot stop the emergence of progressive corporatism at this time, the best option is to struggle for influence within it and transform it into financial socialism. In the current situation we should demand the Schumer/Frank/Obama liberals attach a demand for equity ownership of financial firms to the bailout. (Nationalize the banks, in short) This "Swedish model" of financial bailout allowed the Swedish state to obtain an ownership stake and board seats when Swedish banks had a crisis in the 1990's. The U.S. left would then demand that the government not return the financial shares to the private market after the crisis, but rather use them to drive towards investment in health care, green energy, public/worker control of businesses, and international cooperation, i.e. towards a highly regulated U.S. capitalism instead of another round of free market cowboy capitalism in the next business cycle.

A New Deal for the 21st Century

In the past two weeks the Fed has committed hundreds of billions of dollars to bail out Fannie Mae, Freddie Mac, and AIG, following up the March bailout of Bear Stearns. This evening, Bloomberg reported that "Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke will seek support from Congress for an agency to buy bad debt to address the deepening credit crisis," a move which could further increase taxpayer commitments to business bailouts. The rapidly developing situation carries a serious risk that the future of the U.S. economy will be mortaged to pay off the costs of the spreading financial crisis.

Robert Kuttner, liberal economist and editor of The American Prospect, sees the crisis as a historic turning point and calls for Obama to project a transformational message. On WBUR's On Point yesterday when a caller proposed "a New Deal" as a slogan, Kutter took it up, said FDR was his hero, and used it as a theme for the rest of the show. I would like to take up the slogan of a New Deal and spell out what it would mean.

Kuttner bemoaned Obama's caution, but by this afternoon his Huffington Post entry saw improvement, and approvingly quoted Obama's new campaign rhetoric on the economy. However, a campaign ad on the economy distributed by the Obama campaign today contains only a repetition of the modest proposals he made in his convention speech. Obama continues to avoid proposing anything that will cost real money.

Here are some elements of a New Deal to address the financial crisis:

• Suspension of foreclosures and restructuring of mortage debt to allow homeowners to stay in their homes on reasonable terms
• Comprehensive regulation of hedge funds, private equity, investment banks, and derivatives, so that they are fully transparent and leverage is strictly controlled.
• No more bailouts of Wall Street using taxpayer money without full compensation to the Treasury
• Businesses taken over by the government as a result of the financial crisis will remain in the public sector and be operated in the public interest, not returned to the private sector.
  

In addition, the New Deal must propose how to reconstruct the American economy in the people's interest.

• Enact a universal health care program based on a single payer model.
  
• Improve and expand K-12 education and support students' college education. Free tuition at state universities.
• Fund science and technology research to develop green technologies and improve health, not to build weapons.
  
• Fix America's infrastructure, creating hundreds of thousands of construction jobs and giving priority to green transportation. Instead of hiring construction monopolies like Bechtel, these projects should be directly managed by public sector entities like state Departments of Public Works and the like.
• Develop green energy through construction of massive wind, solar, cellulosic biomass, and tidal projects, and transmission capacity, by public entities, not subsidies to monopoly corporations. No bailouts for Detroit, but re-employ workers on new projects.
  
• No to balanced budgets. Deficit spending to reverse the economic downturn.
  

Wallerstein and his world

After the wave of decolonialization of the 1950s and 1960s gave rise to independent states in Africa and Asia, some expected the new nations to develop capitalist systems like those in Europe and North America, with national industries, capitalist and working classes, and a rising standard of living. "Dependency" theorists Samir Amin and Andre Gunder Frank sought to explain why this was not the case, locating the problem in unequal trade relations between the "core" and the "periphery" of the capitalist economic system.

Building on dependency theory in the 1970s, U.S. sociologist Immanuel Wallerstein synthesized a theoretical analysis of capitalism, "world-systems theory", which can be seen as a kind of compromise between Marx and Adam Smith. Rather than seeing capitalism as based on the extraction of surplus value in the wage labor relation, he sees the essence of capitalism as a worldwide trading system in which no state is powerful enough to dominate the capitalist economy.

Over the last ten or so years Wallerstein, now at Yale, has updated his analysis with a prediction that we are entering the terminal crisis of the capitalist system. Wallerstein thinks the capitalists are running out of labor to exploit, resources to consume, and that the cost of taxation is killing them.

"There simply isn’t enough surplus-value to go around, and give the top people significant income. The world simply can’t sustain a situation in which 30-40% of the world population is living at the income level of, say, Denmark," he said in a recent interview.

Wallerstein thinks that capitalists can only make real money when they are exploiting newly proletarianized, low wage labor recruited from rural areas. But when the rural sector of the world has largely disappeared, there will be nothing to stop the workers from driving the price of labor so high that it eliminates all profit. Similarly, when there is no more nature to exploit, the cost of resources and cleaning up pollution will increase greatly, and when workers demand increasing social services such as retirement, health care, and education, taxation will further erode profits. (The Decline of American Power, pp. 58-63)

What will replace capitalism? "It's intrinsically impossible to predict what the outcome will be.... Basically there will be people trying to create a new world-system which will replicate certain basic features of the existing system but not be a capitalist system. It would still be hierarchical and exploitative. The other direction would be to create an alternative system that is relatively democratic and relatively egalitarian."

Wallerstein writes regular analyses of world political developments which are worth reading and generally in line with left opinion. But I find some problems in his theoretical positions which I fear may make them an unreliable guide to the struggles ahead.

First, it is extremely mechanistic to posit that an economic crisis alone can cause one social system to give rise to another one. Economic crisis may weaken the ruling class, but only a political challenge by a rising class representing a new system can overthrow it and end its system. How can it be otherwise? While I share the feeling that the capitalist class is losing its unity, its grip, and that we are entering an increasingly chaotic period, there must be a political force powerful enough to replace it and erect an alternative system, or there will be no fundamental change. At this time no such force has yet coalesced.

I find it equally hard to understand Wallerstein's view that while capitalism is doomed, the nature of the two potential replacement systems can only be dimly grasped and that the outcome is unpredictable and will be determined purely by political struggle. While the future is indeed hard to see, it can only take shape from the contradictions of the present, and as a solution to those contradictions.

If a global financial meltdown shakes the foundations of capitalism, only a socialist movement will be able to replace them, or they will be reconstructed. If rival states contend for influence in a geopolitical game, only their people can redirect their policies towards a peaceful alternative. If climate change accelerates hurricanes and tsunamis, it may drive peoples to insist on some form of world government to provide an effective response. Surely only a socialist world can provide a stable replacement for the current madness, but that world can only emerge through a wide-ranging realization that the current system will continue to flounder without direction until the world's people take the necessary steps to replace it.

While Wallerstein politically aligns with progressive movements, in the last analysis he does so only as a preference- not as a result of his theory. I approve of his forecast of the end of capitalism, but not of his view on the way capitalism works, the process that will bring it down, or the forces that will give rise to the new world.

From Pilgrims to Americans

Everyone knows the story of the Pilgrims, right?   They were the humble, devout Protestants who fled oppression and in 1620 founded the first English colony in Puritan New England.   After passing through bitter hardship, they celebrated the first Thanksgiving in fellowship with the Indians.

Americans' view of the Pilgrims has passed through several stages.    For future president John Adams growing up in Quincy, Massachusetts in the 1750's, the Pilgrims were his ancestors, the bedrock of his world.   The author of the Massachusetts Constitution and Declaration of Rights recognized in the zealous, hardworking, rigid, and righteous ethos of the Pilgrim Fathers, the foundation of a democratic American society.

Nineteenth century modernists could dismiss the Pilgrims as intolerant religious fanatics.  But for Harvard historian Samuel Eliot Morison in the 1950s, there was a need to rescue them from this opprobrium.   While he reassures us that "their faith is not my faith," Morison identifies with the Pilgrims.   Their struggle to colonize a new land is the start of the American project.

But no settler state can exist without dispossessing the natives, and Puritan New England was no exception.    Though they long maintained relatively peaceful relations with the Wampanoag sachem Massasoit, the Pilgrims soon joined the other New England colonies in exterminating the Pequots in 1637, a tale movingly retold at the Pequot Museum in eastern Connecticut.  By 1675, the steady encroachment of white settlement caused King Philip's War, a New England-wide war of racial annihilation in which all Indian tribes united under the leadership of Massasoit's son Philip, and after a hard, bitter fight, were destroyed; many of the  survivors were sold into slavery in the Carribean.

While in 1957 Morison could describe the murderous Indian policies of the Pilgrims without apology and without any effort to see events from the Indian side, in 50 years times have changed.  The 2006 bestseller Mayflower by Nathaniel Philbrick presents the Native point of view and depicts King Philip's War as a tragedy.   However, it is still necessary that we believe in the mastery of the settler.  "The great mystery of this story is how America emerged from the terrible darkness of King Philip's War to become the United States.   A possible answer resides in the man who has been called America's first Indian fighter, Benjamin Church".   Church, as much the hero of Philbrick's account as judicious Plymouth governor William Bradford, is the rugged frontiersman, recruiter and leader of friendly Indians, who matches Indian methods of unconventional warfare and, by tracking and killing Philip, ends the conflict.  

American exceptionalism is with us still.   While we now respect and consider the feelings of the Others, the resilience of Bradford's Puritan faith can be read in the confident verities of George Bush, indeed of all mainstream American political culture, particularly apparent in this election year.   We will be a light among nations.  We will bring democracy to the world.  (And of course, if you do not accept our version of democracy, we will bring to you a fire the like of which you have never seen.)

As Barack Obama said on PBS this evening, "We imagine a world, not as it is, but as it should be."  The Pilgrims said the same, and acted boldly on their belief.   The Pilgrims did not die.   Their messianism is the foundation of Americanism.   Conservatives, liberals, and radicals, we are Pilgrims still.  

Opportunity for peace movement in Afghanistan debate

While the U.S. war in Iraq has been widely opposed since well before it was launched, its intervention in Afghanistan in the fall of 2001 was opposed only by the left and peace movement. But now, for the first time since then, space is opening up for a broad debate on the U.S. war in Afghanistan. The trigger, ironically, is the pledge of a so-called "peace candidate" to further escalate that war.

In his debate with John McCain about Iraq policy over the last two weeks, Barack Obama has reaffirmed his promises to withdraw U.S. combat brigades, except for a residual force, from Iraq by 2010. While the residual force, and failure to mention Blackwater's mercenary armies, gives enough wiggle room for him to betray his promise after taking office, his criticism of a "misguided desire to maintain permanent bases in Iraq" indicates that a struggle to reduce U.S. expenditures and reclaim the ability to redeploy U.S. interventionist armies elsewhere is really underway.

Obama makes clear that one main reason he favors force reductions in Iraq is to be able to expand U.S. military operations in Afghanistan, calling for "more troops, more helicopters, better intelligence-gathering and more nonmilitary assistance". He also repeated his reckless call last week for intervention in Pakistan to attack Al Qaeda targets. Obama's escalation plans for Afghanistan and Pakistan continue the Democratic tradition of trying to out-hawk the Republicans, instead of tapping the deep well of popular revulsion to war to support a non-militaristic foreign policy. In no other way than this do the Democrats exhibit so clearly their allegiance to U.S. empire rather than to the will, and the interests, of the American people.

Liberal bloggers Dan Kovalik and Robert Scheer criticized this stance in the Huffington Post today. In an "Open Letter to Barack Obama", Kovalik pointed out that Obama's call for "changing the mindset which leads us to war" is inconsistent with his call for escalation in Afghanistan (as well as with his pledge to increase the size of the armed forces and expand the "drug war" in Latin America).

Yesterday, centrist foreign policy expert Zbigniew Brzezinski, purported architect of U.S. support for the Afghan anti-Soviet resistance in the 1980's, also came out against Obama's call to expand the U.S. military presence in Afghanistan . "We run the risk that our military presence ... will gradually turn the Afghan population entirely against us", he told the Financial Times. Brzezinski cautioned Obama to avoid a four-front "war in Iraq, Afghanistan, Pakistan, Iran at the same time." The realist Brzezinski's decision to criticize Obama from the left illustrates how limited is Obama's break with establishment foreign policy doctrines.

With Obama calling for escalation and Brzezinski suggesting caution, there is now an opportunity for the peace movement to get a hearing if it calls for withdrawal of U.S. and NATO troops from Afghanistan in opposition to the Obama escalation plan. However, the peace movement is currently focused on heading off a Bush administration strike on Iran. While the danger of such a strike has recently receded somewhat, it does remain a possible last-ditch move by neocon hardliners. But it would be shortsighted for us to oppose only the administration's Iran saber-rattling and ignore the hawkish plans of the Democratic frontrunner.

Nuclear Supremacy as Morality Tale

The United States, which developed the atomic bomb, is the only nation that has used it in war. During the cold war, the U.S. initiated each round of escalation in its nuclear competition with the Soviet Union, and several times brought the world to the brink of Armageddon.

In House of War: The Pentagon and the Disastrous Rise of American Power, James Carroll traces the development of U.S. military strategy in the nuclear age. The emphasis is on the presidents, secretaries of defense, and other key leaders who built the U.S. into the world’s undisputed superpower, but many of whom who also had second thoughts about what they were doing. Its drama is the internal struggle within these leaders between nuclear weapons as instruments of strategy but also as morally unacceptable destroyers of civilian life.

Carroll is the son of an Air Force general and founding director of the Defense Intelligence Agency who broke with his father over the Vietnam war, became a Catholic priest, and then left the priesthood to write. As a child of the 1950s nuclear terror, his method is to use his personal roots in a Catholic, Air Force family to humanize and shed light on his historical analysis.

Curtis LeMay is the villain of the story because he has no doubts. After launching the incendiary bombing of German and Japanese cities, killing hundreds of thousands of civilians, in the last years of World War II even before the invention of the nuclear bomb, he repeatedly returns in later decades to threaten nuclear war in the Berlin crisis, Korea, and Vietnam.

Henry Stimson, secretary of war from 1940-1945, proposes after the war to turn nuclear weapons over to an international body. James Forrestal defeats the proposal, replaces him as the first secretary of defense, and leads preparations for war with the Soviets during the early years of the cold war, only to crack under the pressure and commit suicide.

John F. Kennedy, the tragic hero, is Carroll’s emotional reference point. After blundering in the Bay of Pigs and nearly exploding the planet in the Cuban missile crisis, Kennedy articulates the danger and calls for an end to the arms race in his speech at American University in June, 1963, considered by Carroll to be the turning point of the cold war. The speech leads to ratification of the Partial Test Ban Treaty, but progress ends after Kennedy’s assassination in November.

Robert McNamara, Kennedy’s Secretary of Defense, changes the Air Force’s strategy from massive retaliation to flexible retaliation, but then approves a new generation of missiles. After guiding the Vietnam war for several years, he testifies to Congress in 1967 that the bombing of North Vietnam is futile. Two months later he is out of office.

Richard Nixon, days from removal in the Watergate scandal, threatens to launch an unprovoked nuclear strike while in an alcoholic haze.

Jimmy Carter proposes to the Joint Chiefs that the U.S. reduce the number of nuclear weapons to a few hundred, but his plan is stopped by the “generals’ revolt” and by Paul Nitze, “Cassandra of the nuclear age”, who exaggerates the Soviet threat. Carter, the would-be disarmer, ends his term by approving the MX missile and the Carter Doctrine, in which the U.S. asserts that it will defend access to Persian Gulf oil “by any means necessary, including military force”. Carroll draws the lesson that “good intentions are not enough. Ideals are not enough…. Those of us who bathe in the soothing water of virtuous intentions, eschewing the gritty challenges of political struggle and bureaucratic infighting, imagining that the call to peace is enough to bring it, must acknowledge Carter as our character ideal. His [lack of] achievements stand as our rebuke.”

Clinton is equally ineffective at bringing the generals to heel. Losing credibility with the “don’t ask, don’t tell” fiasco, he cannot control the Pentagon.

To explain the force behind the U.S. military buildup, Carroll speaks of a “Niagara current” pushing the U.S. towards war. But what is the source of this current? The quest for military contracts, rivalry between the U.S. armed services for preeminence, and virulent anti-Communism, are mentioned as reasons, but Carroll offers no study of these factors or how they may be turned around -- and of course, he misses the biggest factor underlying the U.S. military establishment.

Compared to Joseph Gerson’s Empire and the Bomb, another peace activist's history of U.S. nuclear might, Carroll’s political analysis is almost nonexistent. He does not mention empire, does not explain that the Pentagon serves the U.S. drive to global domination, does not see that it serves the interests of a ruling class against those of the great majority.

In fact, Carroll does not agree that there is an “us” and a “them”. When the 1967 March on the Pentagon chants “Out, demons! Out!”, Carroll replies, “whatever the men in the Pentagon were to me by then, they were not demons.” Instead of following the vision of Catholic liberation theology which seeks to mobilize the victims to change unjust institutions, Carroll’s focus is on individual choices and morality, on acceptable use of force in national policy. “Every notion of a ‘just war’ presumed ‘proportionality’, the idea of consonance between ends and means… But nuclear weapons would never be ‘proportional’, which is, at bottom, why the American embrace of them was wrong…. “ “New choices can rechannel the current in another direction.”

Nuclear weapons are immoral; James Carroll's is a powerful moral voice against them, and he appears to be developing a critique of U.S. domination. While his account of the roots of nuclear policy and of the way to end the nuclear arms race is vague and untargeted, Carroll is an eloquent critic of the insanity of global domination through nuclear weapons.

Their foreign policy debate ... and ours

Joseph S. Nye, prominent foreign policy academic and former dean of Harvard's Kennedy School of Government, writes in the Harvard Magazine that the United States should "become a smart power once again by investing in global public goods-- providing services and policies that people and governments in all quarters of the world want but cannot attain in the absence of leadership by the largest county. That means support for international institutions, aligning our country with international development, promoting public health, ... maintaining an open international economy, and dealing seriously with climate change." Nye calls this agenda a "liberal realist foreign policy".

Except for the "open economy" part (for open, read free-trade capitalist), this sounds not so bad. But is such a policy on the foreseeable agenda?

For the past decade, the conventional wisdom has portrayed a struggle between two wings of the U.S. ruling circles -- a neoconservative wing and a realist wing. The neoconservatives want to exploit U.S. hegemony while it has it to expand our dominant influence, while the realists caution that overreaching will alienate potential supporters and leave the U.S. isolated.

Yesterday, the Boston Globe published a comparison illustrating that the McCain and Obama policies on Iraq and Afghanistan correspond to this lineup. According to the article, the two candidates differ on where to fight Al Qaeda. Obama wants to withdraw troops from Iraq partly in order to send them into Afghanistan, while McCain wants to stay the course in Iraq to fight Al Qaeda in Iraq. So what's the big difference?

The neocon/Bush/McCain strategy sees U.S. domination of the Middle East as critical. Having taken a stand by occupying a major Arab and oil-producing country, the U.S. must hold its position. The McCain remark about staying 100 years is not an inaccurate summary of this group's goal. Its aim is still to build a centralized Iraqi state (except for Kurdistan) -- one balanced between Sunni and Shi'a and therefore controllable by the U.S. In this view, the U.S. must also confront and contain Iran and hold the line in Pakistan and Afghanistan, as well as prepare to fight in other areas.

The realist agenda evidently embraced by Obama sees the Mideast as only one front of the struggle to sustain U.S. hegemony. In this view, the game is lost in Iraq, and the U.S. must draw down its forces, allowing the country to split up along sectarian lines. The Shi'a, who control the oil, are allied with Iran, so many realists favor reaching an accommodation with Tehran, acknowledging its increased influence.

The "heart" of the realist position then hopes to follow along the lines of the Nye proposal, in which America would use its strength more wisely and widely, combatting world problems, earning it goodwill, client states and markets. Many parts of the world are in motion, and U.S. world domination could qualitatively slip away if it does not engage the restive forces on multiple continents.

But the realists' "head" knows that the conflict in the Middle East is not over. No U.S. hegemonist policy could accept a nuclear-armed Iran, which would give it qualitative parity with nuclear-armed Israel, or the loss of Afghanistan and Pakistan. Thus the realists are thrown back from their lofty, "liberal" aims to what appears to be merely a tactical refinement of the Iraq 100-year-war plan: fight Al Qaeda in Afghanistan instead of in Iraq.

Does the difference matter to the world's people? It matters in two ways. If the U.S. is forced to retreat from Iraq, it matters (much as McCain says it does) because it means the U.S. has had to back down, because it would give aid and comfort to those everywhere who want to resist U.S. domination of their own countries. This is true even if the war rages next in Afghanistan.

The other reason it matters is that the "international development ... public health ... climate change" agenda, while it will never be adequately realized by realists (be they liberal or otherwise), provides an opening to debate a genuinely democratic foreign policy agenda. As long as these objectives are acknowledged as legitimate, it breaks up the super-patriotic consensus that has a stranglehold on U.S. foreign policy debate. It creates space for popular forces to enter the foreign policy discussion in a way they have not generally been able to do, to link up with forces in other countries, and to demonstrate the inability of the realist agenda to truly tackle the problems of the world's people. Popular forces must take care to preserve independence from the liberal realists so that they continue to advocate their program when the liberal agenda is jettisoned, as it unavoidably will.

For Obama to articulate a liberal realist agenda would be a step forward relative to the history of the Democratic Party. The more detailed the program, the better. Although as president, the imperatives of capitalism would make it impossible for a President Obama to carry most of it out, the political space it would open up would be significant.

Is the Multipolar World Already Here?

Geostrategists have been debating for some time how long U.S. world hegemony will last and what will replace it. For example, Zbigniew Brezinski foresees a generation-long soft landing in which the U.S. will gradually transition its dominating role to a group of powers.

But as I previewed in January, Parag Khanna of the New America Foundation argues that this transition has already occurred - that we are living in a world dominated by three main power centers, the U.S., Europe, and China. In his recently published book The Second World: Empires and Influence in the New Global Order, Khanna expands on his thesis. In his view, both Europe and China are working off independent agendas, building influence over many countries, and that the U.S. is no longer in any position to control much of the world's agenda. Though its military is still without peer, its spiraling indebtedness, ignorance of the rest of the world, stark inequality, and political paralysis are making the U.S. less and less able to sustain its advantages.

Does it matter to the world's people whether there is one dominant power or several? One reason Khanna thinks it does is that, in the words of one reviewer, "the empires use their power in very different ways. The U.S. works on a 'coalition' model, building alliances on an issue-by-issue basis — counterterrorism, democratization, economic liberalization. The E.U. employs a 'consensus' model, slowly working toward agreement on domestic issues, then using its huge market and attractive economic and social policies to draw countries into its orbit. And China uses a 'consultative' model, depending on other nations’ belief that doing business with China is advantageous economically and politically, and that it is necessary to put off other, more controversial issues involving labor rights, the environment, and governmental transparency."

In other words, a nation in the European or Chinese orbit will have a very different experience than one in the U.S. orbit. The mixed economies and the equal relationships between member countries of the EU, and the economic development programs and trade opportunities found in the Chinese sphere, contrast with the free market fundamentalism and plain neglect brought by the U.S. to countries under its wing. In an article published yesterday in Dawn, Khanna also pointed out that the EU's model of regional economic integration is being widely emulated, and he elsewhere points out that China's emergence marks the first time in the modern era that a non-Western power has done so. However, Khanna's arguments on all these points are sketchy. Since his account is essentially political, lacking any real analysis of exploitation or imperialism, the long term development of the countries within the three spheres of influence remains for others to address.

A second reason it matters is that the next tier of partially developed, partially poor nations - the "second world" - are increasingly able to play the major powers against each other, maneuvering for advantage as the hegemons seek allies and markets. Most of the book is devoted to a whirldwind tour of dozens of countries. These chapters are fun, informal, and useful, providing updates from many places we don't read much about, drawing comparisons and contrasts, and commenting in particular on the impact of the three major powers on each country. Europe and China are both extending their power geographically - the EU in East Europe and Northern Africa, China in East and Southeast Asia, and the two contending in the Middle East and in ex-Soviet Central Asia. Since the U.S., on the other hand, is still trying to dominate the whole world, it is spread too thin to achieve much and is even neglecting its own geographical backyard, Latin America.

Khanna is scathing about America's problems. "Empires collapse not long after they reach their fullest extent," and he says the U.S. may very well fall to second world status if it does not pull itself together and combat the inequality, collapse of public services, fear of the future and political dysfunction which are eating away at its sense of cohesion.

Khanna is vague about timelines. Are we really talking about three superpowers that are working independently and at cross purposes now? Is there danger that the struggle of three powers will lead to the next world war? Many times Khanna refers to "the West", acknowledging that the U.S. and EU still often operate as a unit, and it does not seem that this is out of a temporary tactical alliance but rather is based on fundamental shared goals. As for China, Khanna says that he does not expect it to move its main attention beyond the Asian region for decades. Khanna concludes by calling on the three powers to form a G-3, a managed equilibrium that replaces the current Western-dominated "international community" with a new division of labor.

I find much that rings true in this view. The U.S. is no longer operating as an effective hegemon as it has done for the last 60 years, but seems to be blocked at every turn. When Venezuela proceeds to build a Bolivarian socialist and pan-Latin-American project for eight years with little effective interference from El Norte, when Israel loses a fight with Hezbollah and signs a ceasefire with Hamas, and when Pakistan- yes, Pakistan!- publicly defies the U.S. over military policy and gets away with it - then this is no longer the U.S. imperialist world system we have long been accustomed to. This is a world in major transition.

A tale of two disasters

It's hardly a novel observation to point out that the U.S. government response to Hurricane Katrina was feeble, uncoordinated, wasteful, and racist. We can start with George Bush's own web site, whitehouse.gov, which posted an analysis of the failures. "[F]our critical flaws in our national preparedness became evident: Our processes for unified management of the national response; command and control structures within the Federal government; knowledge of our preparedness plans; and regional planning and coordination," according to The Federal Response to Hurricane Katrina: Lessons Learned.

"The disastrous response to the aftermath of Hurricane Katrina was like watching a train wreck in slow motion. Katrina exposed the weakness of existing emergency management and response policies on all political levels - local, state, and federal," concluded William L. Waugh, professor of public administration at Georgia State, in Shelter from the Storm: Repairing the National Emergency Management System after Hurricane Katrina.

"[A] hastily improvised $10 billion effort by the federal government has produced vast sums of waste and misspent funds, an array of government audits and outside analysts have concluded," wrote Spencer Hsu in The Washington Post in April 2006.

In The Shock Doctrine: The Rise of Disaster Capitalism, Naomi Klein argues that none of this is accidental. The ineffectual government response, coupled with enablement of unfettered capitalist power grabs, in New Orleans is of a piece with capitalist grabs after the Chile coup, the Sri Lankan tsunami, and the Iraq invasion, among other examples.

Recently, Scott Tong of "Marketplace" on American Public Media illustrated a very different kind of governmental response to a natural disaster - the earthquake in Sichuan, China, last month, which left 11 million people homeless. In its response to the earthquake, China reminded us that it retains some characteristics of a socialist economy.

Chen Juxiang, plant manager of Yangfan, which usually makes tents for outdoor equipment companies like Eureka, got a call the day after the quake. " '[G]overnment officials called us and asked us to send everything we had, so we worked until 2 in the morning to airlift more than a thousand tents.' Yangfan put its U.S. and European clients on hold and it shifted hundreds of workers from other product lines over to tentmaking," reported Tong.

" 'They moved so many people and so much assets right away. They commandeered every airplane to make this happen. It's something to kind of stand back and admire, kind of be in awe of, how fast they were able to go from zero to 60' ", summarized Richard Brubaker, a logistics coordinator who runs a charity doing earthquake relief.

Tong's conclusion: "It's the benefit of an economy that still retains its central planning roots -- in this case, cranking up the world's workshop for disaster relief."

Katrina and Sichuan, disaster capitalism and central planning. Which system would you like to see take charge of the next relief operation?

What's behind the world food crisis?

World food prices rapidly increased in late 2007 and early 2008, above all the prices of grains such as rice and wheat. As hungry people take to the streets, the press reporteded on food riots in Somalia, Haiti, Mexico, and Egypt, as well as other countries. President Bush is asking Congress for $770 million in food aid, and the UN Food and Agriculture Organization (FAO) will hold a conference on world food security in Rome next week.

What is the cause of the current food crisis? Dominique Baillard of Radio France Internationale surveys a number of commonly repeated theories in the May 2008 issue of Le Monde Diplomatique. Economic growth in emerging nations such as China, diversion of corn to ethanol production, and weather problems in Australia and other countries, have all affected the market. As prices of agricultural commodities become more volatile, speculators have entered as well, amplifying price swings.

Keith Bradsher and Andrew Martin of The New York Times point to cutbacks in agricultural research as the culprit. In their recounting, "during the food surpluses of recent decades, governments and development agencies lost focus on the importance of helping poor countries improve their agriculture." Yet, while focusing on the real damage done to agricultural research programs, their article mentions in passing the reason for this "lost focus". "Many poor countries, instead of developing their own agriculture, turned to the world market to buy cheap rice and wheat. In 1986, Agriculture Secretary John Block called the idea of developing countires feeding themselves 'an anachronism from a bygone era', saying they should just buy American." Since they leave the matter here, the NYT reader would think that the change to global agriculture was simply a result of market developments.

In "Manufacturing a Food Crisis," an article in the June 2 issue of The Nation, Walden Bello of Focus on the Global South gives the details on why developing countries "turned to the world market" in the 80s and 90s. They were forced to by the rich countries. The IMF and World Bank demanded Mexico "eliminate high tariffs, state regulations and government support institutions, which neoliberal doctrine identified as barriers to economic efficiency", and peasant production of corn was further assaulted in 1994 when NAFTA eliminated agricultural tariffs. "Mexico's status as a net food importer has now been firmly established." Similarly, the Philippines went from a rice exporter to a rice importer as a result of IMF-imposed economic restructuring and its membership in the WTO.

Bello points to resistance such as that of the government of Malawi, which supported peasant agriculture, as well as to peasant movements such as La Via Campesina. Peasants "are now leading the opposition to a capitalist industrial agriculture that would consign them to the dustbin of history .... With environmental crises multiplying, the social dysfunctions of urban-industrial life piling up and industrialized agriculture creating greater food insecurity, the farmers' movement increasingly has relevance not only to peasants but to everyone threatened by the catastrophic consequences of global capital's vision for organizing production, community and life itself."