By Gene Ruyle
Posted on October 29, 2011 by the Website Workers Council
In his recent op-ed piece in the New York Times, Nobel Laureate Paul Krugman seems to have borrowed the ideas of an obscure anthropologist in advocating that governments should let the banks fail if they can't manage their money. Krugman cites the case of Iceland with approval, noting that "Where everyone else bailed out the bankers and made the public pay the price, Iceland let the banks go bust and actually expanded its social safety net." (Longer excerpt below as Item 2)
Anthropologist Gene Ruyle published his theoretical piece, "Let Them Fail! Anthropological Musings on Capitalist Crises," in ON THE CURRENT CAPITALIST CRISIS: Marxist Essays from the ICSS Crisis Group (April 2009). Ruyle's paper is included below as Item 1.
Let Them Fail!
Anthropological Musings on Capitalist Crises
By Eugene E. Ruyle
As a socialist, I endorse the Workers Economic Recovery Campaign and their proposals to bail out working people instead of Wall Street. At the same time, as an anthropologist, I believe it is important to place the capitalist system itself in perspective, and view it against the broad backdrop of human history and diversity. Capitalism has created multiple inter-related crises in economy, politics, and ecological sustainability that threaten the well-being and even survival of our species.
Viewed anthropologically, two features of the capitalist system require particular attention: the profit motive and the wages system. Both of these are unique to capitalism and both underlie the crises of capitalism.
The Profit Motive
For most of human history, people worked to satisfy their own needs and support the ruling classes of nobles, priests, landlords, slave owners, and the like. Merchants might seek profit, but this was almost universally decried by social philosophy as corrosive of the social order. It was not until about 500 years ago that the profit motive came to dominate economic life. As the economic historian, Karl Polanyi, put it in his essay, “Our Obsolete Market Mentality:”
"Markets occur in all kinds of societies, and the figure of the merchant is familiar to many types of civilization. But isolated markets do not link up into an economy. The motive of gain was specific to merchants, as was valor to the knight, piety to the priest, and pride to the craftsman. The notion of making the motive of gain universal never entered the heads of our ancestors."
We must stress that the profit motive is not just about gain, but a specific form of gain: the gain that comes from the expansive force of capital. Marx quotes one T.J. Dunning on this inner drive of capital:
"Capital is said to fly turbulence and strife, and to be timid, which is very true; but this is very incompletely stating the question. Capital eschews no profit, or very small profit, just as Nature was formerly said to abhor a vacuum. With adequate profit, capital is very bold. A certain 10 per cent. will ensure its employment anywhere; 20 per cent. certain will produce eagerness; 50 per cent. positive audacity; 100 per cent. will make it ready to trample on all human laws; 300 per cent. and there is not a crime at which it will scruple, nor a risk it will not run, even to the chance of its owner being hanged. If turbulence and strife will bring a profit, it will freely encourage both. Smuggling and the slave-trade have amply proved all that is here stated."
Both Dunning and Marx would have understood what Bernie Madoff said as he was led off in handcuffs to begin his 150-year sentence for financial fraud: “I realized that my arrest and this day would inevitably come." Somehow, he couldn’t stop.
As the data of anthropology clearly show, the profit motive is not essential to economic life. Our species got along without it for most of our existence, during the period of ancestral communism as well as the historic empires of Asia and Africa. Even within contemporary capitalism, it is only the banks and corporations that are driven by the profit motive. Other key institutions such as schools, churches, the post office, government, and the military are not run on a “for profit” basis, however much they may be corrupted by the dominant capitalist corporations. The entire working class works to live, not for profit.
If the banks can’t make a profit, LET THM FAIL! Then they can be taken over and we could have centralization of all credit in the hands of the state, i.e., of the proletariat organized as the ruling class, as advocated in the Communist Manifesto.
Clearly, the Manifesto was not advocating a capitalist style “nationalization,” in which the capitalist state takes over the banks and makes them profitable again so they can be sold off to the bankers, what the Manifesto might call “bourgeois socialism.”
Instead, we need socialist socialization, where the banks are expropriated and their legitimate functions taken over by credit unions run by and for the people.
Similarly with industrial corporations, if General Motors can’t make a profit, LET THEM FAIL, and put them under the direct control of the workers, as was done in Argentina and depicted in film, The Take.
In all of these cases, financial and industrial enterprises will be run on a not-for-profit basis, serving first of all to provide essential goods and services to society and secondly, to provide employment for members of society, and to do so without endangering either workers lives or the environment. Once the profit motive is eliminated, the most powerful motive for destroying and polluting the environment is also eliminated.
The profit motive is only half of the equation, however. We must also consider the other unique feature of capitalism, what Marx called The Wages System.
The Wages System
The fact that people have to work is indeed a universal feature of human life. Hunters and gatherers must hunt, gather, cook, care for their children, work on their gear, and perform other essential tasks. Peasants in the historic empires also had to produce and reproduce themselves, while also supporting predatory ruling classes. None of these tasks, however, involved sale of their labor power. In capitalism, workers do not have direct access to the earth and the machinery of production and cannot, therefore, support themselves except by selling their labor power as a commodity for wages. And they can only sell their labor power if some capitalist can make a profit from hiring them. They must starve unless they are hired by some capitalist, directly or indirectly. This is what Marx called the wages system and his revolutionary slogan was: “Abolition of the Wages System.”
It is not entirely clear what this means, or what is to replace the wages system. I suggest that a reasonable first step would be to guarantee everybody a job. The federal government should institute a program, similar to an expanded WPA, which will hire all workers that want jobs. This is NOT impossible. The Soviet Union had achieved full employment by the 1930s, and Cuba has less than 2% unemployment, even today.
According to government statistics, the average annual pay, with benefits, of workers in America is about $40,000 per year. So, with the $700 billion wasted in the bank bailout, we could have hired 17.5 million workers, at the average levels of pay and benefits. In January 2009 there were about 13 million unemployed workers in the U.S., plus another nearly 6 million who wanted a job but were not counted as unemployed, a total of 19 million jobs that need to be provided. So, the government could have provided jobs for nearly every worker in the United States with the money they handed over to the banks. Factor in shutting down the war machine, and we have money to spare.
This brings us to a further advantage of guaranteeing jobs for all. In capitalist society, the merchants of death who profit from the “defense” industry form a powerful interest group lobbying for continued and expanded military spending. Their employees join them since, under the wages system, their jobs are dependent upon military spending. Their support for military spending would be undermined if they were guaranteed jobs, say in rebuilding our infrastructure, building mass transit or working in solar energy. The profits of the merchants of death could be eliminated, but the jobs of workers would be secure. This is also the case in other industries that are polluting or environmentally destructive, such as mountaintop removal, clear-cutting of old growth forests, and making gas-guzzlers. The same is true of prison reform. All non-violent drug offenders should be released, but they must be guaranteed jobs and training. Free education and child-care should be guaranteed from birth through graduate school.
In other words, the guarantee of jobs must occur within a framework of total social reconstruction, similar to the lines indicated by the Workers Economic Recovery Campaign and many others on the left: a freeze on firings and layoffs, a moratorium on evictions, a halt to the Wall Street bailout plan for bankers and speculators, a Special Prosecutor to investigate fraud in the banking and insurance industries, a moratorium on all home foreclosures, utility shut-offs, evictions and rent hikes, a universal, single-payer healthcare plan similar to H.R. 676, fully funded pensions for retirees, guarantee union organizing rights as in the Employee Free Choice Act (EFCA), so that every worker can have union representation, end the ICE raids and deportations, stop scapegoating immigrant workers, enact a massive national reconstruction public works program to rebuild the nation’s schools, hospitals and crumbling infrastructure and to put millions of people back to work at union-scale wages, and enact the Gulf Coast Civic Works Act (H.R. 4048). We must end all funding for the U.S. wars in Iraq and Afghanistan and for the Israeli attacks on the Palestinians. We must bring our troops home now so that all war funding can be redirected to meet human needs.
Abolition of the wages system, by guaranteeing jobs for everyone and thereby providing a basis for the dramatic reduction of poverty, homelessness, and crime, is therefore an essential step out of capitalist crises and toward a sane and sustainable socialist society.
The Slave Owners Rebellion
Capitalism, imperialism, and reckless disregard for our Mother Earth have created a situation in which the very survival of our species is threatened—a challenge we must confront as a species. At the same time, we have seen the emergence of what the New York Times has called the world’s second superpower: global public opinion. Individuals and groups within the Global Peace and Justice Movement have displayed truly incredible levels of heroism, dedication, and creativity in addressing the problems caused by the excesses of capitalist industrialization. They are truly the hope of the world.
Clearly, tinkering with the financial system will not solve the multiple crises facing our species. Real solutions will involve major changes in the property system of the United States, and such changes do not come gently. The last major change in the property structure of the U.S.—the abolition of slavery—involved the bloodiest Civil War in our history as the slave owners refused to acknowledge the democratic victory of the forces of liberation and moral progress. However much these changes may be essential for the well-being and even survival of our species, we must anticipate what Marx might call a slave-owners rebellion of bankers and speculators should these revolutionary changes be instituted.
As socialists, we acknowledge the difficulties ahead, but it is our obligation to advocate real solutions to our problems and follow the advice of Che Guevara: "Be realistic, demand the impossible!"
Marx, Karl, and Frederick Engels. 1848. The Communist Manifesto. I favor the 2005 edition by Haymarket Books, but also available online at the Marist Internet Archive.
Polanyi, Karl. 1947. "Our Obsolete Market Mentality: Civilization must Find a New Thought Pattern." Commentary 3:109-117. Available online here.
Beams, Nick. 2008. "The World Economic Crisis: A Marxist Analysis." World Socialist Web Site. Available online here.
Tabbi, Matt. 2009. "The Big Takeover: The global economic crisis isn't about money - it's about power. How Wall Street insiders are using the bailout to stage a revolution." Rolling Stone. Available online here.
The entire pamphlet from which this article is taken can be download at a link on the ICSS page
The Path Not Taken
By Paul Krugman
Excerpt from "The Path Not Taken", New York Times, October 27, 2011.
So bailing out the banks while punishing workers is not, in fact, a recipe for prosperity. But was there any alternative? Well, that’s why I’m in Iceland, attending a conference about the country that did something different.
If you’ve been reading accounts of the financial crisis, or watching film treatments like the excellent “Inside Job,” you know that Iceland was supposed to be the ultimate economic disaster story: its runaway bankers saddled the country with huge debts and seemed to leave the nation in a hopeless position.
But a funny thing happened on the way to economic Armageddon: Iceland’s very desperation made conventional behavior impossible, freeing the nation to break the rules. Where everyone else bailed out the bankers and made the public pay the price, Iceland let the banks go bust and actually expanded its social safety net. Where everyone else was fixated on trying to placate international investors, Iceland imposed temporary controls on the movement of capital to give itself room to maneuver.
So how’s it going? Iceland hasn’t avoided major economic damage or a significant drop in living standards. But it has managed to limit both the rise in unemployment and the suffering of the most vulnerable; the social safety net has survived intact, as has the basic decency of its society. “Things could have been a lot worse” may not be the most stirring of slogans, but when everyone expected utter disaster, it amounts to a policy triumph.
And there’s a lesson here for the rest of us: The suffering that so many of our citizens are facing is unnecessary. If this is a time of incredible pain and a much harsher society, that was a choice. It didn’t and doesn’t have to be this way.
Gene Ruyle recently retired from Cal State Long Beach after a 35 year career teaching Anthropology and Marxism. A longer version of Item 1 will appear in his forthcoming book, Capitalism and World Revolution In the Twenty-First Century. He can be emailed at eruyle - at - csulb.edu.