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Forum Post: They're Fast-Tracking the Future, TPP Style, but We Can Stop Them

Posted 6 years ago on Jan. 26, 2014, 3:19 p.m. EST by LeoYo (5909)
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They're Fast-Tracking the Future, TPP Style, but We Can Stop Them

Sunday, 26 January 2014 10:10 By Richard Eskow, Campaign for America's Future | Op-Ed


The "TPP," or Trans-Pacific Partnership, is our nation's newest proposed trade deal. It was negotiated without democratic input, and they're trying to ram it through Congress the same way. Like NAFTA before it, the TPP would kill jobs. It would also cause lasting harm to democracy, here in the United States and around the world.

There has been an understandable sense of outrage over the Obama administration's attempt to ram the most extreme trade deal yet through Congress with a "fast-track" provision that forbids amendments or filibustering. Representatives who have had very little chance to review the bill will be expected to vote on it without the chance to change it.

Dave Johnson has rounded up some of the latest reactions from across the political spectrum, including objections from House Democratic leader Nancy Pelosi and other Democrats in Congress over its lack of "transparency" (Leader Pelosi's term). And it's true that the treaty's provisions have been kept secret from everyone – everyone, that is, except for the 600 corporate lobbyists and executives who've been reading it all along.

The imbalance of power which this reflects doesn't end on our nation's shores.

In this insightful analysis of TPP negotiation records released by WikiLeaks, doctoral candidate Gabriel Michael illustrates the ways in which the United States has been at odds with the rest of the world – or, at a minimum, has held substantially different positions from other nations in a number of key areas.

When it comes to this deal, "We Are Not the World." As Mr. Michael notes, "the TPP is anything but an agreement amongst 'like-minded' countries, as the United States trade representative has described it."

The U.S. differs most sharply from the other nations on matters of intellectual property. The WikiLeaks documents show that every other country in the negotiations stood against American intellectual property demands. But the U.S. also has significant disagreements with the other nations on matters of law, rulemaking, and the environment. There's evidence that the United States is pushing back on climate change and resisting other forms of environmental protection. Sen. Elizabeth Warren has expressed concern that the United States may be attempting to restrict financial regulations, and has taken a position on the topic of tobacco.

President Obama's negotiators also fought for the right of corporations to sue foreign governments over their laws and regulations. Australia has objected to this provision on the grounds that it gives corporations equal status with independent nations – but, as we will see, that's implicit in much of the TPP process.

Our government isn't just trying to push through a draconian treaty. It's working to make it even worse.

But why is the U.S. so sharply out of alignment with the other countries negotiating this treaty? Probably because it's the nominal home of some of the world's largest corporations. (They're "nominally" American because, although they're typically run by Americans, they tend to employ most of their workforces and pay their taxes – if at all in – other nations.)

The U.S. negotiators' hard-line positions conform closely to the interests of these nominally American corporations. Whether it's Big Tobacco, Big Pharma, tech, Hollywood, major polluters like the oil companies, or risk-taking financial institutions on Wall Street, the American negotiators have been fighting for their interests – while disregarding the interests of the taxpayers who pay their salaries.

Although these negotiators were appointed by Democrats, their positions don't seem to differ from those taken by Republican Administrations. That reflects a political system which is increasingly being corrupted by campaign cash, and by the post-political work opportunities which American-run multinationals can offer sitting politicians.

It's not unfair to say that the flaws in this treaty reflect the flaws in our democracy.

It's easy to understand why President Obama and his team want to "fast-track" this deal. Not only are its provisions unpopular with the general public, but any changes that Congress might make would then have to be negotiated with all of the treaty participants. And that list of participants isn't restricted to the nations who will become this treaty signatories if it is passed.

The real negotiations, the toughest give-and-take, has almost certainly not been among sovereign nations but among "sovereign" corporations. That's why hundreds of corporate representatives saw this treaty before any elected representatives did. In many cases, they were the ones doing the wheeling and dealing. Rice producers, dairy corporations, financiers, corporate beef, Big Pharma, and manufacturers of textiles, footwear, and technology ... they had to negotiate with their governments, and perhaps with each other as well.

Here's food for thought: Fast-tracking could become the model for a new and profoundly subversive model of governance – one in which elected government becomes little more than an afterthought to corporate-backed deal-making. It's not hard to imagine a dystopian future where this becomes the norm.

In the right hands it might make a good science-fiction novel: a world in which individual governments, treaty organizations and even the United Nations have been replaced by a new governing body comprised entirely of corporate representatives. Think of it as a World Financial Parliament or a Global House of Corporate Lords, where the only "voting" the rest of us do happens when we watch a movie, play a video game, or take a prescription medication.

And even when we do, we don't really have much of a choice at all.

But the fight isn't over. Congress is reluctant to pass this unpopular bill, especially in an election year. That makes public pushback especially important right now. An impressively broad coalition of organizations, including the Campaign for America's Future, has come together to oppose fast tracking the TPP. You can get more information and take action here. http://www.stopfasttrack.com/#fulllist

This piece was reprinted by Truthout with permission or license.



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[-] 5 points by LeoYo (5909) 6 years ago

"Our Food Is Dishonestly Priced": Michael Pollan on the Food Movement's Next Goal of Justice for Food Workers

Sunday, 26 January 2014 00:00 By Amy B Dean, Truthout | Interview


Industry plays up the image of the food snob to keep us divided, but the stereotype hides a much more diverse and savvy movement, says best-selling author and food activist Michael Pollan.

Take a stroll through most grocery stores, and many of the products claim to be organically grown or locally sourced. The foodie movement has swept America in the last decade, thanks in no small part to the work of journalists and intellectuals who have championed the cause online, in print and on the airwaves.

Michael Pollan is inarguably one of the most influential of these figures. Pollan is most famous for his books, especially In Defense of Food: An Eater's Manifesto (2008) and The Omnivore's Dilemma: A Natural History of Four Meals (2006). He also contributes regularly to publications such as the New York Times Magazine, where his work has received numerous awards, and is a professor of journalism at the University of California, Berkeley.

As organic, locally grown food has emerged as a cultural and economic counterforce to industrialized agriculture, critics have claimed it is elitist and accessible only to those with the resources to pay more for their nourishment. Pollan and his allies have responded, in part, by drawing the public's attention to the low-wage workers who work in the field, behind the counter, and in the kitchen. In recent years Pollan has supported the efforts of the Coalition of Immokalee Workers, an organization dedicated to improving working conditions and wages for tomato pickers' in Florida; in December 2013 he sided with fast food strikers and their demand for a $15 dollar per hour wage. In an email missive for MoveOn.org (received by 8 million subscribers), Pollan wrote: "If we are ever to . . . produce food sustainably and justly and sell it at an honest price, we will first have to pay people a living wage so that they can afford to buy it." In his words, fair wages must be part of the push to democratize food.

I recently connected with Pollan to discuss equitable food pricing, farm worker rights, and industrial agriculture's role in casting the food movement as elitist. (What follows is a condensed and edited version of our conversation.) I began by asking Pollan about his evolving personal interest in the plight of food workers.

"I've been really paying more attention to it over time than I did at the beginning," he said. "When I wrote my first book about the food system, The Omnivore's Dilemma, I didn't talk in detail about labor. It was much more from the point of view of the eater than the person behind the counter.

"But the food movement is all about connecting the dots," Pollan continued. "Both the farm workers and the fast food workers are very important in the food system. I think Eric Schlosser did this better than anyone in Fast Food Nation (2001), where the focus was very much on food workers, slaughterhouse workers and farm workers. I think he's helped to sensitize a lot of people in the food movement who perhaps weren't paying as much attention to this part of the puzzle as they should have been. You definitely find the interest spreading and accelerating as social inequality has gotten so much worse in the last few years."

Why, I wondered, is there this impression of the food movement as an elite venue? And why is it that the only people who can afford local, organic options are generally those who don't have to worry about their pay?

"Although there's a kernel of truth in that image [of a foodie elite]," he responded, "it's also a part of the rhetorical strategy used by the [agricultural] industry to fight the food movement: that it's elitist; that this kind of food can't feed the world; that only industrial agriculture can get the job done and put lots of cheap meat in front of us. It's a bludgeon used in a very serious ideological battle.

"Often stereotypes have some kernel of truth behind them, and this one did, but it's been way overplayed by the media, in particular. They love this idea that the food movement is merely elitist. But if you dig in, there's an inner-city dimension of the food movement. Urban agriculture is all about access, underserved communities and the whole discourse around "food deserts."

"When you buy cheap food, the real costs have been externalized," Pollan continued. "Those externalized costs have always included labor. It is only the decline over time of the minimum wage in real dollars that's made the fast food industry possible, along with feedlot agriculture, pharmaceuticals on the farm, pesticides and regulatory forbearance. All these things are part of the answer to the question: Why is that crap so cheap? Our food is dishonestly priced. One of the ways in which it's dishonestly priced is the fact that people are not paid a living wage to process it, to serve it, to grow it, to slaughter it."

I said that Pollan made a great point about the devil's bargain of cheap products for cheap wages, but noted that state farm bureaus and other agricultural industry representatives across the country would no doubt disagree. Opponents of fair wages claim that increased farm worker pay will result in higher food prices. I asked Pollan if this kind of scare messaging resonates with his base of supporters in the food movement.

"That argument has been used to thwart all kinds of reform in the food industry," he replied. "If we clean up our act, in any way, we're going to have to pay more at the register. There's a kernel of truth. If you raised the price of wages to people in the food industry to, say, $15 an hour in fast food, no doubt it would add to prices - although the claims of how much it would add to prices are exaggerated. However, those people would be able to afford more. That's why we need to pay people more so they can afford it. There's a virtuous circle of paying people more so that they can afford better stuff."

I absolutely agree, of course, but will those higher prices, or the threat of higher prices, scare off support for workers among eaters who consider themselves part of the food movement?

"It's a politically potent argument," Pollan admitted. "It needs to be repelled by pointing out that we need to pay people a living wage so they can afford to pay the real cost of food. Cheap food is really an addiction for an economy and for a society. Cheap food is one of the pillars on which our economy is based. It is what has allowed wages to fall over the last 30 or 40 years, the fact that food was getting cheaper the whole time. In a sense, cheap food has subsidized the collapse in wages that we've seen. Part of repairing the whole system will involve paying people more and internalizing the real cost of producing this food."

I next asked Pollan to point to some of the bright spots around the country where fair wages and working conditions for food workers are being successfully promoted. He flagged the Coalition of Immokalee Workers(CIW), labor activists who are based in the corner of southern Florida that provides a third of America's tomato harvest. Farm laborers in the region have been subjected to almost every indignity and injustice imaginable, including slavery.

"The Coalition of Immokalee Workers has been a real beacon on this issue," he said. "That has been a very successful movement to pressure the food industry into improving, not just the earnings, but the working conditions of some of the most exploited workers in the country. The way it was done was through the creation of a pledge, The Fair Food Agreement. Then they applied pressure through everything from negotiation, boycott, shaming - every tool in the political kit - to move several big companies to sign on. I think that that's an interesting model. There's the model of obviously legislating higher wages, and that's one way to do it. But this has been a boycott led by activists and consumers and has received a lot of support from the food movement over quite a number of years."

The innovative and comprehensive tactics utilized by the Coalition of Immokalee Workers is an excellent example of food workers taking the fight to the companies. While they initially utilized the strike as a primary tactic, the group has had far greater success with secondary boycotts and other kinds of public pressure campaigns targeting brand-sensitive companies. Walmart just signed onto their Fair Food Program, which sets an industry standard of higher wages by charging one penny more in wages per pound of tomatoes picked.

I asked Pollan what other groups can learn from CIW's example.

"They didn't appeal to any government - state, federal or local," Pollan responded. "They created a model pledge, [The Fair Food Agreement] that they thought would be just, and then they moved everybody there. They understood something very important. In today's world, where government is knotted up, corporations can unilaterally make important concessions when their brands are under attack. Brands are their most important assets. When activists understand that and figure out clever ways to threaten their brands, they can achieve important gains. I think that's the lesson of the Coalition of Immokalee Workers. They really did take the high road, but it was also unrelenting pressure. If you talk to people [in management] at Burger King or Chipotle, I think you'll find they felt besieged for a long time."

[-] 2 points by LeoYo (5909) 6 years ago

I finished by asking about the fast food workers struggle that is dominating the media these days, which Pollan has also given his support to.

"It's long overdue," he said. "It has been driven by the fact that the identity of the fast food worker has changed. We tolerated these wages when it was our kids working in these places. You walked in, and you saw a fast food worker, and he was a 17 year old. Now you walk into a fast food outlet, and you find adults holding these same jobs. That's a measure of what the economy has become.

We're catching up in our recognition that a lot of special exemptions were made for fast food companies because they were employing teenagers, students and part-time workers.

"Then there is the fact that has really caught people's attention, which is how much public money goes to keeping those people whole," Pollan concluded. "There is an implicit subsidy of McDonald's or Walmart, when their workers need food stamps and Medicaid. Once again the real cost of having those workers is not paid by the corporations or by consumers. It's being paid by the taxpayer. The recognition of that has driven an enormous increase in support for the fast food workers. It's an important movement to watch."

Copyright, Truthout.

[-] 2 points by gnomunny (6819) from St Louis, MO 6 years ago

What can other groups learn by CIW's example?

"They didn't appeal to any government - state, federal or local," Pollan responded. "They created a model pledge, that they thought would be just, and then they moved everybody there. They understood something very important. In today's world, where government is knotted up, corporations can unilaterally make important concessions when their brands are under attack. Brands are their most important assets. When activists understand that and figure out clever ways to threaten their brands, they can achieve important gains. I think that's the lesson of the Coalition of Immokalee Workers. They really did take the high road, but it was also unrelenting pressure. If you talk to people [in management] at Burger King or Chipotle, I think you'll find they felt besieged for a long time."

I think that's important enough it bears repeating. And for reference:


[-] 3 points by LeoYo (5909) 6 years ago

Scientists Speak Out Against Canada's "War on Science"

Sunday, 26 January 2014 12:00 By Peter Rugh, Waging Nonviolence | News Analysis


Seven of Canada’s most prized scientific libraries are being shut down and some of their contents have already been burned, thrown away or carted off by fossil fuel consultancy firms. This development is part of a Harper administration plan to slash more than $160 million in the coming years from the Department of Fisheries and Oceans, or DFO — an agency charged with protecting the country’s vast waterways.

The Harper government has portrayed the move as necessary in order to reduce the country’s deficit and provide Canadians with greater access to scientific information through the Internet. But alongside the cuts, the Harper administration has doled out billions in subsidies to the fossil fuel-dominated energy sector — $26 billion in 2011, according to a recent International Monetary Fund report. As for accessing the information at the shuttered libraries, an internal DFO document labeled “secret” obtained by Postmedia News in late December, along with the scientists who utilize the research facilities, tell a different story.

The once-secret DFO document speaks of “culling” materials in the libraries, a term that critics believe to be far more devastating than it sounds. Much like its original meaning — the killing of animals with undesired genetic traits — they see the budget cuts as a way to do away with undesirable science.

“The Harper government is not simply influenced by the fossil fuel industry, it is the fossil fuel industry,” said Brad Hornick, a lead organizer with of the Vancouver Ecosocialist Group.

The Harper administration has long been known for its anti-environment stance. Harper’s environment minister, for instance, has publicly cast doubt on research documenting Arctic sea ice melt. Observers have also complained of a revolving door between the government and industry that has effectively placed Canada’s natural resources at the disposal of fossil fuel corporations supporting hydraulic fracturing, carbon-rich tar sands extraction and pipeline projects. In the process, a host of conservation laws and sovereignty treaties with Canada’s First Nations population have been unwound at the behest of oil and gas lobby groups. The Center for Global Development ranks Canada last among wealthy nations in terms of environmental protection.

Meanwhile, 2,000 government scientists have been fired over the past five years and hundreds of environmental programs that monitor food, water and air quality, study and prevent oil spills, as well as track atmospheric changes have been shut down for lack of funds.

Dr. Katie Gibbs with Evidence for Democracy, a grassroots organization composed of scientists mobilizing against the culling, said it is only the latest development in a “long trend.”

“Over the past few years we’ve seen huge cuts in funding for science, layoffs for scientists who work for the government and reduced funding for academic scientists,” Gibbs said. “Some are calling it a war on science.”

British Columbia’s independent online news magazine The Tyee detailed the scope of the latest assault, citing several research hubs where scientific literature has been trashed, burned or picked apart. According to The Tyee, they include, “[The] Maurice-Lamontagne Institute, which housed 61,000 French language documents on Quebec’s waterways, as well as the newly renovated $62-million library serving the historic St. Andrews Biological Station in St. Andrews, New Brunswick.” Also shut down, were “the famous Freshwater Institute library in Winnipeg and one of the world’s finest ocean collections at the Northwest Atlantic Fisheries Centre in St. John’s, Newfoundland.”

In a fitting addendum to this assault on science, the magazine noted that Rachel Carson — a founder of the modern environmental movement — corresponded with researchers at St. Andrews while writing her pioneering book on environmental contamination, Silent Spring, half a century ago.

According to Gibbs, whose group is circulating a petition against the cuts, “There’s no way this information was digitized. Many scientists have spoken out and said that everything is being done in a huge rush, completely disorganized. Private companies came and picked up truck loads of this material. They saw the value in it.”

The gas and dam powered-utility, Manitoba Hydro, plus North/South Consultants — a firm that counts oil and gas corporations among its clients in the heavily-fracked Manitoba province — obtained troves of research documents pertaining to water treatment and aquatic habitats from Winnipeg’s Freshwater Institute. Scientists have also reported witnessing the incineration of literature at DFO libraries and one researcher at the Maurice Lamontagne Institute in Mont Joli, Quebec posted a photo online of a dumpster full of discarded books and journals. Although, scientists have done their best to salvage the research, more federal libraries are slated for culling.

Like the indigenous-led Idle No More movement and the climate activists who raised a sign that read “climate justice” over the prime minister’s head at a Vancouver Board of Trade meeting earlier this month, scientists are increasingly standing up to Harper, though doing so comes with great risk to their careers.

Last fall, Evidence for Democracy staged “Stand Up for Science” rallies in 17 Canadian cities against legal restrictions to their ability to share research and communicate with the public — one of the first steps in the so-called war on science taken by the Harper administration upon its ascent to power in 2006.

“The restrictions play into the library closures,” said Gibbs. “When scientists have spoken out they’ve had to do so anonymously because they fear for their jobs.”

According to critics of the Harper administration, such attacks on science are part of the prime minister’s small government, big business ideology, which assigns a negative value to any science that adversely impacts the production of fossil fuels.

“If you are going to be in favor of fossil fuel expansion, and tar sands in particular, and you are going to try to sell that to the Canadian public — part of doing that means dulling the awareness and importance of science,” said Rodger Annis, a Vancouver-based environmental activist and writer. “Science tells us in stark terms that if we want to prevent the very serious consequences of climate change then we have to leave the tar sands in the ground.”

While the Harper administration may be able to dull, or even subvert the science behind such a message, it’s the scientists who are proving difficult to silence. And perhaps that’s just what’s needed. After all, science is only as strong as the scientists behind it.

This piece was reprinted by Truthout with permission or license.

[-] 3 points by Nevada1 (5843) 6 years ago

Book burning, a bad sign.

[-] 1 points by MattLHolck (16833) from San Diego, CA 6 years ago
[-] 2 points by LeoYo (5909) 6 years ago

Costas Lapavitsas Discusses the Financialization of Capitalism

Sunday, 26 January 2014 00:00 By CJ Polychroniou, Truthout | Interview


The neoliberal capture of the state has laid the ground for the financialization of capitalism, a stage of capitalism that cannot be reversed without developing new methods of public provision in housing, education, health, pensions and the other sources financialization has used to create profit.

The neoliberal capture of the state has laid the ground for the financialization of capitalism, a stage of capitalism that cannot be reversed without developing new methods of public provision in housing, education, health, pensions and the other sources financialization has used to create profit. This is the crux of the argument advanced in Costas Lapavitsas's latest work, Profiting without Producing: How Finance Exploits Us All, recently released by Verso Books.

With this book, Lapavitsas sheds much light into one of the most misunderstood processes in the evolution of capitalism, correcting in the process the tendency on the part of many "progressive" economists to regard regulation as the ultimate solution to the exploitative nature of finance capital. For Lapavitsas, the struggle against finance capital is simultaneously a struggle against capitalism and for democratic socialism. This interview is also appearing in the Greek Sunday newspaper Eleftherotypia.

Costas Lapavitsas is a professor of economics at the School of Oriental and African Studies, University of London. He is the author, co-author and editor of scores of books, including Financialization in Crisis, Crisis in the Eurozone and Development Policy in the Twentieth-First Century: Beyond the Post-Washington Consensus. He has published hundreds of articles and is a regular contributor to The Guardian.

C.J. Polychroniou: The landscape of contemporary capitalism has been shaped by neoliberalism, globalization and financialization. Your new book deals with the financialization of capitalism. First, what does financialization mean for you, and in what ways does it represent a new feature of capitalism?

Costas Lapavitsas: For me, financialization represents a new historical period in the development of capitalism. Marxist political economy typically recognizes three great periods: laissez-faire capitalism around the middle of the 19th century, monopoly capitalism toward the end of the 19th century and imperialism that lasted perhaps until the Second World War. The 70 years since the war have been very difficult to categorize, not least because of the extraordinary Long Boom that lasted until the early 1970s, with unprecedented growth rates, rising incomes and greater equality. The Long Boom has been followed by four decades of indifferent growth, often stagnant incomes and rising inequality. In my view, financialization is a term that adequately characterizes this period. Its dominant feature has been the extraordinary rise of finance, which has come to penetrate areas of economic and social activity previously relatively distant to it.

More specifically, I understand financialization as a historical period characterized by three closely related tendencies at the molecular level of capitalist accumulation. First, big industrial and commercial capital has become "financialized," i.e. it has ample retained profits to finance investment but often uses the funds to engage in financial transactions with a view to extracting financial profit. Second, big banks engage less in lending to big capital, while seeking profits by transacting in financial markets as well as by dealing with individuals and households. Third, households have been drawn into the orbit of formal finance, both to borrow and to hold financial assets. A key reason is the retreat of public provision in housing, education, health, pensions, and so on, typically replaced by private provision. Private finance has emerged as the mediator of access to these very important goods and services for households and individual workers.

How does finacialization relate to the other two forces in contemporary capitalism - neoliberalism and globalization?

I see neoliberalism as an ideological framework that has critically shaped economic theory and policy during the last four decades. It has determined the institutional setting of financialization through, above all, the deregulation of financial and labor markets. I find Mirowski's argument that neoliberalism is not the enemy of the state and nor does it genuinely ascribe to the simple opposition "state versus market," very persuasive. Neoliberalism is, rather, about capturing and using the state to achieve pro-market changes across society. The neoliberal capture of the state has laid the ground for the financialization of capitalism. To be more accurate, financialization would have been impossible without the state. Globalization, on the other hand, is much more difficult to pin down either as force or as concept. There has certainly been growth of global commodity markets and considerable foreign direct investment during the last four decades, facilitating the internationalization of production. The most striking aspect of globalization, however, has been the explosion of financial markets and lending. Even foreign direct investment to a large extent refers to establishment of banking facilities abroad. Globalization, then, appears to me as a notable feature of the historical period of financialization.

The rise of financialization coincides with the deindustrialization process in the United States in the early 1970s. Do you see a link between the rise of financialization and the decline of industry?

In historical terms, there is little doubt that financialization has been accompanied by lower rates of both accumulation and productivity growth. During this period, real accumulation has been plagued by difficulties, while financial accumulation has had explosive growth. Yet, I do not think that the difficulties of real accumulation are fundamentally due to the explosion of finance. They have deeper roots related to the "forces of production," including new technologies in information and telecommunications, changing labor skills and new forms of corporate organization. In the course of financialization, the new "forces of production" have not contributed to dynamic and sustained expansion of real accumulation, but they have encouraged the explosive growth of finance.

I do not subscribe to the view that "good" industry is opposed to "bad" finance. Relations between the two are far more complex and nuanced, reflecting mutual dependence as well as opposition. I sympathize with Hilferding's and Lenin's classical Marxist approach to imperialism claiming that industrial and financial capital have developed a symbiotic relationship in advanced capitalism. At the same time, I do not find that during the period of financialization, industry and finance have melded together to form "finance capital," i.e., the special form of capital that was thought to characterize the period of imperialism. Rather, contemporary industrial capital is increasingly independent of banking capital - certainly among large enterprises - and is able to finance investment out of retained profits. Yet, big business has become "financialized," that is it engages in financial transactions on its own account with a view to extracting financial profit. The "financialization" of big business has affected its internal organization and its long-term investment strategies in negative ways.

While financial transactions have increased substantially in the past 30 or so years, the contribution of the finance industry to GDP is in single digits. Yet finance capital, as the subtitle of your book blatantly states, exploits the rest of society. What makes financial markets so inefficient and finance capital so exploitative?

Finance is an intermediary and does not, strictly speaking, contribute to the fresh flows of value. More than that, it currently makes a limited contribution to employment and thus to the standard measurement of GDP. In my view, this is related to the extraordinary role of new technologies that have transformed the operations of finance without commensurately expanding employment. Furthermore, the internal organization of the private banking firm and the mobilization of the labor of bank workers leaves a lot to be desired in terms of efficiency. The image of private finance being at the frontier of progress because it deploys new technology is deeply misleading - it operates inefficiently on the whole. Last, but far from least, what exactly is the commensurate benefit to society from placing highly skilled labor and expensive technology at the disposal of financial markets? What is the great benefit from being able to arbitrage and set derivatives prices in split seconds across the world?

The remarkable thing about finance, however, is that it is not simply inefficient but also exploitative in ways that industrial capital cannot be. It is a primordial capitalist activity that long predates the establishment of industrial capitalism and has retained its ancient predatory outlook. Finance can extract profits from any money income and stock of money - its profits are not limited to the fresh flows of value produced annually. During the past four decades, it has become expert at making zero-sum profits that involve transfers from one economic agent to another. Financial profits have become an incredible proportion of total profits - particularly in the USA for which we have relevant data. The exploitative outlook of finance in relation to households and individual workers is also evident. This is a characteristic feature of financialization and marks it out as a historical period in the development of capitalism.

[-] 2 points by LeoYo (5909) 6 years ago

In some of the literature on financialization, there are hints of the emergence of a particular class grouping with the power to shape the direction of mature capitalist economies in ways conducive to the interests of that social class. In post-Keynesian analysis, for example, financialization is based on the concept of the rentier, and the regulation of banks and the finance industry is seen as the only viable solution to avoiding future financial crises. Your financialization thesis, however, which draws its insights mostly from Marxist political economy, implies that what is going on is something more profound and with far more serious implications for policy making than the regulation remedy suggests. Could you elaborate on the question of class analysis and financialization from the perspective adopted in your book?

The rentier is a very old category found in Classical Political Economy, Keynesianism and other currents of thought, even in Marxism. The term essentially refers to a section of the capitalist class that does not engage in production but makes its money capital available for lending. Rentiers draw their remuneration primarily in the form of interest, which is part of the profit generated in production. It is natural to assume that this type of remuneration would create an opposition between the "functioning" capitalist and the rentier and between "good" industry and "bad" finance.

In my view, financialization does not represent the return of the rentier, if there ever was a period during which capitalism was dominated by rentiers. The financial system has grown enormously by mobilizing idle money across the face of society, not simply by drawing funds from a putative rentier section of the capitalist class. Moreover, financial profit - based on interest - accrues to broad social layers and not primarily to a rentier group. There is no persuasive evidence that contemporary capitalism is dominated by rentiers, and certainly not in the classical mold.

At the same time, the explosive growth of finance has led to profound changes in social stratification. Enormous incomes accrue to a thin layer of people associated with finance, but not necessarily through the lending of money or by making money capital available to accumulation in other ways. Instead, financial profits accrue due to the beneficiary's function in relation to the financial system and often take the form of income from work, rather that payment for ownership of capital. Bonuses are the most egregious - but far from the only - form of such remuneration. There is an aspect of "rent" to such returns, but they derive in good part from function relative to the financial system rather than simply the ownership of money capital.

These modern rentiers, if we can call them that, rely on the state to maintain their ability to extract financial profit. Mere regulatory change would not dislodge them. They have positioned themselves pivotally in relation to policy making and actively shape it to serve their interests. It is far from accidental that the main concern of the US state in 2008-09 was to restore financial profits, which it did successfully. The ability of the state to control the issuing of legal tender and to mobilize tax revenues has been placed at the disposal of this group. Moreover, modern rentiers, precisely because they are not related to the classical ones, can make enormous profits even when the rate of interest is driven to zero by the central bank. This appears to be one of the great paradoxes of financialization, but the paradox disappears when financial profit is conceived in the way I am suggesting.

If regulation is an ill-conceived approach to deal with the problem of financialized capitalism, what other realistic alternative are there?

The period of financialization, contrary to what is often believed, has been characterized by a surfeit of regulation. It is true that there has also been extensive deregulation, mostly by removing controls on the level of interest, on the functional specialization of financial institutions, and on the international activities of finance. Lifting these controls has been instrumental to finance expanding enormously, both domestically and abroad. But at the same time there has been a great deal of fresh regulation of the activities of individual financial institutions, particularly of banks. The Basel Agreements, focusing on capital adequacy, are typical of this trend.

The characteristic feature of the new regulation is that it has been shaped by the financial institutions themselves, and its purpose has been to ensure the ability of the financial system to grow and extract profits. It has not contributed in the slightest to avoiding financial bubbles nor to imposing the costs of financial crises onto those responsible for them. On the contrary, contemporary regulation has led to society bearing the brunt of financial disasters, while private individuals associated with finance have reaped the benefits of expansion. Society has little to expect from more regulation of the type we have known for four decades now.

In confronting financialization, it is vital to start with the recognition that it does not represent "progress" in human affairs. Financialization does not amount to a socially productive expansion of the forces of production that could potentially benefit society, if it was brought under control through a series of bold measures and interventions. Financialization ought to be reversed. To this purpose, regulation alone is not enough, particularly when one bears in mind that financialization is a historical period of capitalism. Confronting it inevitably raises issues of ownership, but also of broader policy and social relations.

There is, of course, no question that regulatory controls ought to be applied to the international flows of capital as well as to the activities of banks. Regulatory controls must also be applied to interest rates. But it is clear that for such regulation to be effective, there must also be intervention in the sphere of international money to control exchange rates. If interest and exchange rates were controlled, a body blow would be delivered to financial markets, particularly derivatives markets. It is apparent, however, that this kind of intervention would be impossible without also expanding public ownership in the economy, including among financial institutions. I do not mean simply nationalizing banks, but introducing new public financial institutions that would operate on a communal and associational basis and would be democratically controlled and permeated by a spirit of public service. It follows that changes of this kind would go directly against the core of capitalist relations in society. Opposing capitalist relations would be vital to reversing the financialization of households, which clearly requires new methods of public provision in housing, education, health, pensions and so on. In short, reversing financialization is no less than reshaping economy and society in an anticapitalist direction. For me, it is an integral part of the struggle for socialism today.

Copyright, Truthout.