A Discreet Capitalist Collapse?’ The Onset of Pre-Panics

Commentary No. 465, January 15, 2018

The New York Times has been suggesting that major bondholders – both national and private banks – are discreetly reducing their bond holdings, out of a fear of nominal inflation. How discreet can it be if it is discussed in The New York Times?

Everyone is hoping that no one panics and sells too rapidly. And if someone does that they do it one mega-instant after my discreet withdrawals. Of course, no one wants to withdraw too soon – and not too late. So, when one arrives at a pre-panic moment, no one can be sure, which more or less guarantees the sudden collapse of the bond market.

We know we’re in a pre-panic moment when we are discussing it. But why now and not before? Because so much paper money has been earned in runaway market profits based on no real increase in surplus-value that the market has caught up with the bond market, and therefore one discreetly withdraws from the bond market.

In addition, the paid workers seek higher wages, everywhere. So many workers have been forced out of the labor market that there is now a labor-available shortage. And this makes bonds still a safe haven. Confusion, confusion!

Everyone becomes more protective – of self, of country. And it is self-reinforcing. Even countries using strong anti-protectionist rhetoric like Canada practice it nonetheless or suffer internal political loss.

All this is what happens in a structural crisis of the world-system, in which wild swings of everything is the reality. Pre-panics are one of these wild swings.


Note: A correction was made on January 20, 2018.

Trump, Thump, Trump, Thump, Trump

Commentary No. 464, January 1, 2018

I was going to write either about the elections in Catalonia, or about debates in Australia on what they should do as a result of U.S.‑Chinese rivalries in southeast Asia. I consider both topics of compelling importance for the immediate future of our capitalist world‑system. But what everyone wants to discuss, it seems, is Mr. Trump ‑ what will he say next, and does it matter?

The question people are asking, friends and foes, is “Can he last?” I didn’t used to think so, but now I do, and here’s why. What is it we know about the present situation? Trump is vastly unpopular and his poll ratings, already extremely low, may well go even lower soon.

Trump claims that the low poll ratings are fake news. And he even seems to believe this himself. Trump acts to satisfy his ego. He measures his success by his ability to stay in office now, win re‑election in 2020, and stay in office until 2024.

Read More »

Trump Loses in Alabama: How Important?

Commentary No. 463, December 15, 2017

By now, the whole world knows that in one of the most conservative states in the United States, a Democrat, Doug Jones, defeated Judge Roy Moore, the Republican candidate, in a special election for a vacant seat.

In the analyses almost everyone is making of the election result, it is being called “stunning,” “a surprise,” and “a miracle,” among a long list of similar summary judgments.

Read More »

Left Social Movements: What Electoral Tactics?

Commentary No. 462, December 1, 2017

The central difficulty for left social movements is determining electoral tactics that will enable them to win both in the short run and in the middle run. On the surface, it seems that winning in the short run conflicts with winning in the middle run.

In the short run, the primary objective of a left movement must be to defend the urgent needs for survival of all the so-called 99% of the population, but especially those of the poorest strata. In order to do this, they have to control state institutions at all levels. This means participating in elections.

Read More »

The U.S. Elections 2017: The Unexpected Democratic Sweep

Commentary No. 461, November 15, 2017

Elections in the United States have one feature that almost no other country shares. They largely occur on mandatory fixed dates. Presidential elections are every four years. Senatorial elections are staggered. One-third of them occur every two years. Both of these elections occur in years ending in an even numeral. Gubernatorial elections tend to occur in the same even years. Local elections are more varied but very many also occur in the even years.

As a result, the so-called off-year elections (that is, years ending in an odd numeral) tend to be considered less important by the national parties. And voters participate at a far lower rate than in the even-year elections

Read More »

What about China?

Commentary No. 460, November 1, 2017

Very often, when I write about the structural crisis of the modern world-system, and therefore of capitalism as an historical system, I receive objections saying that I have neglected the strength of Chinese economic growth and its ability to serve as an economic replacement for the clearly waning strength of the United States plus western Europe, the so-called North.

This is a perfectly reasonable argument, but one that misses the fundamental difficulties of the existing historical system. In addition, it paints a far rosier picture of China’s realities than is justified by a closer look. Let me address this question then in two parts – one, the historical development of the world-system as a whole, and two, the empirical situation of China at the present time.

Read More »

The Presumed ‘Mystery’ of Frozen Wages

Commentary No. 459, October 15, 2017

According to neoclassical economic theorizing, the relation between wages and jobs is a simple one. When there’s not enough demand for work, wages suffer. Workers compete against each other to get a job. But when there’s high demand for work, wages go up. Employers compete against each other to get the now scarce work force. This shifting cycle is said to maintain the smooth functioning of the free market system, guaranteeing a constant swing back to a moving equilibrium.

What has happened is that this cyclical process isn’t working that way anymore, and for pundits and academics this is seen as a big puzzle to explain. The explanations are varied and multiple. What seems to be at their heart is to suggest that there is a new normal. But why, and how does it work? In the October 8 issue of the New York Times, the lead article in the Sunday Business section had the following headline: “Plenty of Work: Not Enough Pay: Even as job markets tighten in major economies, low unemployment is failing to spur robust salary gains.”

Read More »

The Myth of Sovereignty

Commentary No. 458, October 1, 2017

Donald Trump spent much of his speech to the United Nations asserting that he was elected to defend U.S. sovereignty. He said that every other member state was also seeking to defend its sovereignty. What did he mean by this?

There is probably no other word in the public vocabulary of both political leaders and scholarly analysts that have as many conflicting meanings and usages as “sovereignty.” The only other one that comes close in confusion is “liberalism.” It is therefore useful to trace a little of the history of the term.

Read More »