Tuesday, November 11, 2008

The Road to Hell is Paved with Free Market Capitalism, Imperialism, and Psychopaths

By Simon Davies and Donald Hunt

From SOTT.net

Last week, Barack Obama was (we presume) elected president of the United States as the country fell deeper into recession. Nearly 300,000 jobs were lost in October in the United States as the official unemployment rate rose almost a half percent since September to 6.5%. The Dow fell 4% last week despite all the good feelings. When he takes office in January 2009 the new president will surely face an economic situation as dire as Franklin Roosevelt faced in 1933 Not only the United States, but the rest of the world, is looking to him to find a way out of economic disaster. Will he deliver?

Obama appears to be as gifted as any U.S. president in a long time. In addition, he seems far more balanced and lacking in personal demons than most presidents. Like Franklin Roosevelt, Obama's talents fit the times well: he appears calm, intelligent, and compassionate, and projects a sense of competence and being in control. Finally, he has, in these hopeless times, given many people, especially young people, hope. Even one of our darkest, most pessimistic poets, Bob Dylan, was moved to remark at a performance in Minnesota that "I was born in 1941, the year they bombed Pearl Harbor. I've been living in darkness ever since. But it looks like things are going to change now." Then he danced a jig. Yes, Bob Dylan danced onstage. Maybe Obama really can work miracles.

But can a president, even the most gifted, really change things? Not by himself, of course, only the people can, and only if they and their leaders have a clear and accurate understanding of the situation, especially the role of Israel in the world today. They also need a clear and accurate understanding of human nature, both the nature of normal humanity and of the intra-species predators, the psychopaths (more on that later). In that regard, one wishes Obama would read more Andrzej Lobaczewski and less Reinhold Niebuhr.

It is easy, and not a bad thing, to be cynical of all the talk of hope and change. Many in the "foreign policy establishment" (American Imperialists in other words) see Obama as a "rebranding" of the U.S. internationally. Obama's talk about "winning" the war in Afghanistan is particularly repellant. Obama's pick of the rabid Zionist (and rabid generally) Rahm Emanuel as Chief of Staff, was a stomach punch to many. One hopes that Obama is following the principle of keeping your friends close and your enemies closer. Even if the ideal president was trying to move away from Zionism, how could that president possibly do it given what the United States is now? You would only get one shot and it would have to be right between the eyes. The same goes for abandoning imperialism. If you miss, you're dead. Just have a seance and ask John Kennedy.

So the jury is out. Time will tell if Obama is just an eloquent front man for the same old death machine or if he is another naïve reformer in over his head in shark-infested waters. In any case, someone needs to get him a copy of Political Ponerology.

Troublingly, Timothy F. Geithner, president and chief executive officer of the Federal Reserve Bank of New York is being tipped as a possible candidate to succeed Paulson as Treasury Secretary.

In the news

More details emerged of the Bush gang's wholesale looting of the US Treasury via their 'bailout plan'. The terms on which the Treasury has injected fresh capital into the banks would be laughable if they were not so transparent, not to mention the purchase of worthless junk from the banks in exchange for valuable Treasury Securities. Naomi Klein calls it The New Trough. To compound matters it emerged that the Fed is refusing to disclose who it has lent the money to and against what collateral security.

The G20 met, in closed door talks, in Brazil this weekend ahead of the crisis meeting in Washington next weekend (November 15th). There are ever greater calls for coordinated action to address the real world effects of the 'financial crisis' and the global recession it is exacerbating. As hedge funds, banks and other investors in emerging market nations rapidly withdraw their funds, the markets in these countries plunge as do their domestic currencies, their banks have almost no access to external funding and their economies literally hit the wall. As always it is the poor who suffer most in these circumstances.

The US, UK, G20 and China have joined the clarion call for "fiscal stimulus"; China announcing a package worth $586 billion. Unsurprisingly, but troubling none the less, key policy framers in the US and UK are calling for tax cuts rather than public spending. Tax cuts benefit the rich, do not generate jobs and fail to provide any relief to the poor.

On the currency front, it looks like there may be moves to justify the US dollar as a reserve currency in a new currency system. European banks cut interest rates, the Bank of England by 1.5 percentage points, causing commentators to refer to a world of zero interest rates ahead.

Markets


The markets this week
Previous week's close This week's close Change% change
Gold ($) 718.20736.1017.902.49%
Gold (€)564.40578.7914.392.55%
Oil ($) 67.8161.046.779.98%
Oil (€)53.2947.885.4110.15%
Gold:Oil10.5912.061.4713.88%
$ / €0.7858 / 1.27250.7863 / 1.2718 0.0005 / 0.00070.06% / 0.06%
$ / ₤0.622 / 1.60770.6393 / 1.5642 0.0173 / 0.0435 2.78% / 2.71%
$ / ¥98.465 / 0.01016 98.235 / 0.01018 0.23 / 0.000020.23% / 0.23%
DOW9,3258,9443814.09%
FTSE4,3774,365120.28%
DAX4,9884,938500.99%
NIKKEI8,5778,58360.07%
BOVESPA37,25736,6655921.59%
HANG SENG 14,70914,2434653.16%
US Fed Funds 0.12%0.25%0.13108%
$ 3month 0.38%0.28%0.1026.32%
$ 10 year 3.96%3.79%0.2174.29%


It is very apparent from all we have written and said on Sott.net that we are in a very serious situation here on the Big Blue Marble. A situation devised by those in control of the affairs of man. In order to have any chance of extracting ourselves we have to take certain concrete steps, the first among them being that we have to face the truth however incredible and terrifying it may seem. This means that we have to face the truth about our predicament, our controllers and ultimately ourselves. Only then, armed with truth and surrounded with suitable allies and friends, can we formulate our survival and eventually our escape.

To better understand our economic predicament we have been exploring how the system that we know as 'Free Market Capitalism' works and how it manifests from week to week. Let's take a quick look at how this system originated, the role that we are expected to play in that system according to the masters of the system, how this came to be "the system" and what type of being dominates it.

Once we understand these we should be better equipped to explore alternatives on a macro and micro economic scale.

Free Market Capitalism

Hannah Arendt's Origins of Totalitarianism delineates the features of what started as the new mercantile social class of the 16th and 17th centuries and became the defining political class of the 20th and now 21st centuries, the bourgeoisie or financial/capitalist elite.

"As long as the mercantile class fulfilled the basic function of being producers and stimulators of production (ie. a community of producers), its wealth had an important function for the nation as a whole."[1] However, "the owners of superfluous capital were the first section of society to want profits without fulfilling some real social function - except that of exploitative producer - and whom no police could ever have saved from the wrath of the people." [2]

By the 19th century there arose in Europe the confluence of surplus labour and surplus capital; both originating from the social and economic changes brought about by the Industrial Revolution. At the same time the existing political and social structures of Europe were under considerable threat. This led to an imperialist alliance between the "mob" (the masses) and capital, often resisted by the governments in power at the time but supported by a large section of the educated classes; for imperialism, the expansion of capitalism beyond the borders of the nation state, seemed to be the universal panacea to sweep away all troubles.

Capital was invested abroad with large numbers of the mob similarly exported to extract resources from those foreign lands and protect and exploit the invested capital. Imperialism was and remains the export of free market capitalism in its most extreme form. It is also theft on a grand scale. This latter point should not be forgotten for while the people of the western capitalist economies sit at home raging about the dreadful economic times or the theft of billions from the public purse it seems opportune to resurrect a few home truths:-




* The comparative comfort of those in the 'West' is built on the theft of the resources of the nations which have been subject to our imperial rule and on the blood, sweat and tears of the inhabitants of those nations. No nation has, and never has had any right, divine or otherwise, to invade, occupy and pillage lands belonging to other peoples.

* The blood, sweat and tears currently being shed by our generation and that shed by those that came before us in the defense of 'freedom' were in fact shed in the defense of capitalism and for the principle benefit of those at the top of the capitalist/financial tree. (see writings of Douglas Reed who railed against what he saw in Britain).

* Your governments, run as they always have been for the benefit of the elite, whether aristocratic or financial/capitalist, have always been stealing from you to line their own pockets - they call it 'taxation' and 'regulation'.



During this period the bedrock of the creed of free market capitalism became established; the equating of private interest with public interest; the rights and protections associated with private/individual property; the view that political institutions, including the police at home and the military abroad, exist exclusively as an instrument for the protection of individual property and the legalisation of theft, in the form of rampant exploitation, given an almost moral authority.

Business was transformed into a political issue and the narrow economic interests of a relatively small group became equated with national interests, where the common good became identified with the sum total of individual interests and expansion, that is imperialism, appeared to be a common interest of the nation as a whole. "Since the [financial and capitalist] classes had convinced everybody that economic interest and the passion for ownership are a sound basis for the [operation of the state], even non-imperialist statesmen were easily persuaded to yield when a common economic interest appeared on the horizon." [3]

Expansion became an end in and of itself and its protagonists became "nothing but functionaries of violence [who] could only think in terms of power politics. They were the first who, as a class and supported by their everyday experience, would claim that power is the essence of every political structure."[4]

The perpetual cycle of accumulation of property/capital begetting the accumulation of power begetting the accumulation of property, onwards forever, requires perpetual expansion. The great waves of change of the Industrial Revolution, the age of Imperialism and the age modern empire, whether under the guise of Cold War or War on Terror, have led to the ceding of all power to the financial/capitalist elite. Since the age of colonial imperialism this elite has succeeded, in complete accordance with its creed of perpetual accumulation of property and power, in gathering ever greater amounts of both.

Recall if you will two small parts of US history. The first, that part of the United States Declaration of Independence which declares that man has certain inalienable rights, "Life, liberty and the pursuit of happiness" may previously have read "...and the pursuit of property", although whether and when such a change was made is a matter of some debate. The second, that originally only property owners were eligible to vote as was the case in England.

Since power is normally a means to an end, a society based solely on power must decay in the calm of order and stability. Only by acquiring more power, by constantly extending its authority, and only through the process of power accumulation can it remain stable. Thus, such a society "must always provide itself with new props from outside [new avenues of expansion and ever more property] otherwise it will collapse overnight into the aimless, senseless chaos of the private interests from which it sprang." Hence the attributes of Free Market Capitalism that we see today. It is not that the system is necessarily collapsing but that it must continue to expand, to consume all, to survive. Should it run out of space in which to expand, or property and labour to consume, then it will implode. If we were to refuse to aid this system in its voracious consumption of peoples and nations and of our own wealth, if we were to stand firm and say "NO" and really mean it, be prepared to suffer together the consequences of starving the predator then it would indeed "collapse ... into the aimless, senseless chaos of the private interests from which it sprang".

Such an analysis certainly seems to fit geopolitical history and the current power struggles we see before us. The same can be said of the state of Israel and any other system governed by the same psychology as Free Market Capitalism.

The role of man

The English 17th century philosopher Thomas Hobbes depicts in his work Leviathan , a totalitarian state based on a certain structure of society in which 'Man' would have to attain certain attributes. Hauntingly, despite being published in 1651, Leviathan depicts our modern society and the view of normal people held by our ruling elite.

Normal people are viewed as being without reason, without the capacity for truth and without free will, that is without the capacity for responsibility. We are seen as essentially a function of society and judged therefore according to our value or worth, our price; that is to say "so much as would be given for the use of our power." This price is constantly evaluated and re-evaluated by society depending upon the law of supply and demand (and within the confines of our ability to act collectively, an ability severely restricted since the mid 1980s).

We are considered equal, not because of some inherent value of human life or our possessing a divine spark but because of our mutual ability to kill. The state exists as a result of our need for security from each other as we feel ourselves threatened by our fellow man. Exactly today's fractured societies where we accept unprecedented levels of state interference on the basis that we are being protected for the outcasts of our own societies, whether professional criminals or young thugs (a recurrent theme in European politics), or outsiders in the form of the ubiquitous 'terrorist' or 'immigrant'.

"The state is based on the delegation of our power and not of our rights. It acquires a monopoly on killing and provides in exchange a conditional guarantee against being killed. Security is provided by the law, which is a direct emanation from the power monopoly of the state (and not established according to human standards of right and wrong). As this law flows directly from absolute power, it represents absolute necessity in the eyes of the individual who lives under it. In regard to the law of the state - there is no question of right or wrong, but only absolute obedience, the blind conformism of [capitalist] society."[5]

The delegation of our political power to the state and the loss of real political rights means that we have lost our rightful places in society and our natural connections with each other. Bereft of political rights we are reduced to focus only upon ourselves and our private lives which we can only judge by comparison with others and thus we are driven to compete. We have been reduced to a society of individual competitors. For many even the notion, let alone the actuality of being part of a community, of something larger than ourselves in which we have rights and to which we are responsible is beyond comprehension. In our society those that 'fail' in this competition are barred from competition and thereby from society; one look at how we treat the disadvantaged, the poor and the weak confirms this. This has even become a virtue in current US and Western social models.

As well as assigning our political rights to the state, as individuals we have also delegated our social responsibilities to it; we have in effect asked the state to relieve us of our obligation to our fellow man just as we have asked the state for protection from our fellow man. This process of delegation of power and abdication of responsibility is ongoing. We are left in the position of having no responsibility for those things over which we have, or at least should have control while we are held responsible for matters outside our control - consider modern US and UK law relating to legal liability in contrast to our freedom to educate or vaccinate our children as we see fit.

For Hobbes, "power is the accumulated control that permits the individual to fix prices and regulate supply and demand in such a way that they contribute to his own advantage." "Man driven by his individual interests will have a passion for power."[6] Hobbes might just as well have been writing a first hand account of the situation we find ourselves in today.

As Arendt puts it, "It seems as though Hobbes's picture of man.....gives...a consistent pattern of attitudes through which every genuine community can easily be destroyed".

Imperialism

Imperialism, in the 19th century the new phase of free market capitalism, was to change not only the exploited colonies but also the nation states form which it sprang.

J.A. Hobson in Capitalism and Imperialism in South Africa (1900) and Imperialism (1902) called imperialism a perversion of nationalism "in which nations...transform the wholesome stimulative rivalry of various national types into the cut-throat struggle of competing empires". Again, an accurate depiction of the world today, in which the mob (or masses) are easily swayed into confusing the economic interests of their ruling elite with their own and their nation's interests. Hobson referred to the financial/capitalist elite as "Parasites upon Patriotism" 100 years before the flag waving jingoism of the present wars in Afghanistan and Iraq.

The coming to power through imperialism of the financial/capitalist elite had a debilitating effect upon the political institutions of the home nation. In Britain Hobson noted the shift in power away from Parliament to the Cabinet; "Imperialism was the chief cause ... which led to ... a growth of "power of the Cabinet as against the House of Commons". This is a process that has reached its current zenith in the US with the wholesale 'privatisation' of the US government and the accumulation of all power within the Executive.

As Arendt put it, "That the authority of the nation-state itself depended largely on the economic independence and political neutrality of its civil servants becomes obvious in our time; the decline of nations has invariably started with the corruption of its permanent administration and the general conviction that civil servants are in the pay, not of the state, but of the owning classes."[7] Interestingly, she also referred to "High society's admiration for the underworld....its step-by-step retreat on all questions of morality, and its growing taste for the anarchical cynicism of its offspring".

100 and 50 years ago respectively, Hobson and Arendt clearly saw the detrimental effects of imperialism and by definition free market capitalism. They foresaw where we are today; the private interests of the ruling elite, the arch capitalists, are being presented as the interests of us all upon which our very national survival depends. That none of this is for your benefit, none of it, did not escape them just as it should not escape you.

Keen readers of history understand that the vast majority of wars have been conjured, financed and facilitated by the financial/capitalist elite. This is entirely logical when looked at from the perspective of the need for perpetual expansion and perpetual violence to keep the financial/capitalist machine going. The wars in Afghanistan and Iraq, the occupation of Palestine and the subjugation of peoples from Latin America to Asia are no different.

Psychopaths

The system within which we find ourselves is the natural result of the evolutionary success of a sub-species of the human race. This sub-species is an inter-species predator, preying upon the bulk of humanity. This sub-species, the Psychopath, has been the subject of much recent research a good deal of which has been published on Sott.net.

From The Psychopath - The Mask of Sanity




Imagine, if you can, not having a conscience, none at all, no feelings of guilt or remorse no matter what you do, no limiting sense of concern for the well-being of strangers, friends, or even family members. Imagine no struggles with shame, not a single one in your whole life, no matter what kind of selfish, lazy, harmful, or immoral action you had taken.

And pretend that the concept of responsibility is unknown to you, except as a burden others seem to accept without question, like gullible fools.

Now add to this strange fantasy the ability to conceal from other people that your psychological makeup is radically different from theirs. Since everyone simply assumes that conscience is universal among human beings, hiding the fact that you are conscience-free is nearly effortless.

You are not held back from any of your desires by guilt or shame, and you are never confronted by others for your cold-bloodedness. The ice water in your veins is so bizarre, so completely outside of their personal experience, that they seldom even guess at your condition.

In other words, you are completely free of internal restraints, and your unhampered liberty to do just as you please, with no pangs of conscience, is conveniently invisible to the world.

You can do anything at all, and still your strange advantage over the majority of people, who are kept in line by their consciences will most likely remain undiscovered.



We are told that as a political philosopher Hobbes was in theory not attempting a psychological portrait of man but merely setting out how man would need to be to meet the needs of his political form, the Leviathan. Leviathan, published in 1651, would seem then to be either the work of a psychopath or an extraordinary analysis of the traits of the psychopath that would make such a psychopath successful in the new world of the financial/capitalist society.

The 'Man' Hobbes describes is a psychopath. Whether he intended it or not he was describing how the world was to become when dominated by that particular breed of homo sapiens that excels in free market capitalism, itself the construct of psychopathy.

Andrzej M. Lobaczewski wrote the seminal work on the role of the psychopath in modern political structures - Political Ponerology: A science on the nature of evil adjusted for political purposes - which we highly recommend to readers together with the material here , here and here

What Lobaczewski explicates is the existence, among us, of psychopaths that are not "failed", in the sense of having committed a violent crime and been caught, so remain hidden from our obvious view. These beings are able to act entirely without conscience, are often charismatic and inspirational, with an almost preternatural cunning and depth of understanding of the psyche of normal people.

These features make them extraordinary manipulators of normal people. So much so that they infect many people who are not psychopaths with their callous and self-serving mindset, a process Lobaczewski calls 'Ponerogenesis'. A process that Michael Lewis captured in Liar's Poker, his account of his experiences as a bond salesman on Wall Street, and more particularly with Salomon Brothers (now part of Citigroup), in the 1980s. Salomon Brothers's Lewis Ranieri ran the mortgage department which essentially invented Mortgage Backed Securities leading ultimately to the creation of the sub-prime market. Mortgage Backed Securities and the sub-prime market became so over inflated that they precipitated the current 'financial crisis'. It is instructive to see how the psychopathic predatory nature operates on Wall Street and how the cancer spread outwards in an orgy of unmitigated greed.

People with an existing weakness in their psychological make up are easily infected by the psychopathic pathology, becoming sociopaths and characteropaths. These pathological types create socially influential groups ('ponerogenic associations') or infiltrate existing social groups, allowing them to further spread the underlying pathology and infect normal people. These 'ponerogenic associations' "..cunningly avoid collision with the law while seeking to gain their own advantage. Such [associations] frequently aspire to political power in order to impose their expedient legislation upon societies in the name of a suitably prepared ideology, deriving advantages in the form of disproportionate prosperity and the satisfaction of their cravings for power".[8] Does that not fit exactly with the description of free market capitalism set out above?

An additional part of this process of assimilation of the world of normal people to the world of the psychopath is the necessary conversion of people who are not psychopathic to the pathological creed through the creation of false morals or values ('paramoralisms) which are then used to justify what would otherwise be immoral behaviour. The doctrine of free market capitalism is full of such paramoralisms related to the fleecing of ordinary people, the "rightness" of greed, "might is right" and so on. In this way a false morality is built. Indoctrinated with this false morality, generation after generation has become the cannon fodder and slave labour of the world's financial elite and remains ripe for the picking whenever our master choose.

The entire fabric of Free Market Capitalist societies is governed by fear, an all pervading, overwhelming fear. A world where one is perpetually in competition, where what ever one has can be taken by the next man in his pursuit of property or through crime, where the fundamental basis of society is based upon the accumulation of unlimited capital and unlimited power for their own sakes, that is a world based on unlimited fear. A world entirely reflective of the psychopaths manipulation of the psyche of normal people.

It is essential to our mission or survival and escape that we face this reality - that we are subject to the predations of beings that appear human but are not. These beings have infected normal people and even our own minds to a greater or lesser degree. If we do not understand this then any attempts we make to change our situation will fall under the influence of the power of the psychopath and lead to "every genuine community" being destroyed. We have to face this fact and face that all pervading fear.

The 'financial crises', including 1906, 1920/21, 1929/33, 1997/98 and today's are simply the times chosen by the financial elite to gather ever greater property/capital and power in accordance with the laws governing the system that is modeled in their image. A system designed for periodic, engineered "failure". Despite what economists are inclined to believe, economies are not subject to 'natural laws' and therefore outside the control of man but rather to mechanical laws that are quite within the control of man if you happen to have the power and influence to pull and push the necessary levers.

Herman Daly

The US economist Herman Daly, delivered a paper to the Sustainable Development Commission in the UK in April this year in which he reiterated his idea of a Steady State Economy that can replace the "failed growth economy".

In this paper Daly was challenging the basis of free market capitalism as summarised by Arendt, the perpetual accumulation of property/capital. He implicitly acknowledges the fact that free market capitalism has to consume to grow and has to grow to survive. Logically this is not possible perpetually when one looks at the world as a finite system. He therefore proposes that a move away from the growth economy of the last 300 years to an economy that is stable, one that does not grow. On a global basis this would mean that the developed economies would have to use their resources more efficiently, allowing the developing economies a greater share of the world's resources until such time as they had achieved a reasonable quality of life amongst their citizens.

Daly proposes:-




A more equitable sharing of basic global resources

Reform of the tax systems to an ecologically based tax system

Limit the range of inequality in income distribution-a minimum income and a maximum income. Without aggregate growth poverty reduction requires redistribution. Complete equality is unfair; unlimited inequality is unfair. Seek fair limits to inequality.

Change the way we work so as to provide work for everybody rather than slavery for some and unemployment for others.

Re-regulate international trade. Limit the freedom of movement of capital, restrain globalisation.

Downgrade the IMF, the World Bank and the World Trade Organisation to a new model designed for equality amongst nations.

Abolish fractional reserve banking. Give the control of money back to governments and away from banks.

Put scarce resources under public control and remove the private control on knowledge and information. Stop treating the scarce as if it were non scarce, and the non scarce as if it were scarce.

Stabalise world population.

Change national accounting to reflect reality so as to be able to see when growth ceases to benefit a nation as a whole.



Whether all Daly ideas are good ones is not really the point. What they serve to illustrate is that serious economists, (Daly used to be at the World Bank), do have ideas as to how our world could be run differently. So when you hear the liars telling you that this and that 'reform' is necessary to keep the existing system running hopefully now you can see through their lies and can tell anybody else who'll listen.

Micro-economic matters

The first thing we all have to do is get over our fear because fear shackles us. It shackles our minds, our emotions and our actions. To break the shackles is much easier if approached with friends and allies. The society in which we have been conditioned to live, as described above, has made us competitor and not collaborators. This is the first thing to change; learn to collaborate, gather people around you who see the world in the same broad terms, see the same problems and see the need for change.

As you start to collaborate understand each others weaknesses and remember that among the things we need to learn are new ways of being based on open communication and greater comprehension. When you are with your 'friends and neighbours' observe how the discussion tends to devolve down to differences of opinion regarding details while the broad principles upon which you agree become forgotten. These differences in detail can derail many team efforts and can be easily exploited by the unscrupulous.

Understand the weaknesses and foibles of your fellow humans and work with them to cover their backs. Do not make people afraid to fail, for without the ability to fail how will we learn to succeed? There is nothing wrong with failing. Learn to communicate - it's a lot harder than it sounds as we all mask what we really need behind our false personalities - allowing our real message to often be lost in the need to be right or in a flood of emotions.

Once you have the basis of a team then move on to practical matters. One big change that will help you through the tough times ahead will be to live together as a group. You will find that large properties are cheaper per bed than many small ones combined. You will be able to share the burdens, risks and expenses of life amongst yourselves. You might even consider setting up some sort of business in which some of you can work while others remain in paid employment, at least while there is employment.

A house with 15 adults might need 3 cars, a couple of washing machines, two fridges and so on - far less needed that 15 adults living separately. Sure, it will take some cooperation to work out schedules but that shouldn't be beyond you. You'll need just one broadband and/or phone connection for the entire house. The bills for a big place (barring property taxes which you will need to take into consideration) split among a group tend to be cheaper per head. This includes insurance should you have it.

You will find that there are people always around to help you, and you them. If you find yourself laughing at such an idea then ask why that is - it may well be that you, like most people, have been conditioned against the idea of people living in communities; either that or you don't know how serious the situation really is.

Next, take a long hard look at how you spend your money. Look at your food bill and consider a complete change in diet to a very simple, cheap and healthy approach. Stop buying processed foods, research about detoxifying your body and take the recommended steps as far as possible and start eating brown rice, beans and pulses, and green vegetables. No more supermarket juices, cheese or prepared foods of any sort.

Does that sound too radical? Perhaps but it would undoubtedly help you in a number of ways - you will be healthier and you will spend far less on food. As rice and beans are simple to cook, can be cooked in bulk and kept in the fridge you would also save a bunch of time. If you really understand what we have pointed out about the way the system works, ask yourself whether that same system is likely to have been encouraging you to eat good foods or profitable foods. You know the answer.

Beyond your living arrangements, if you have any savings think about this - if they are in a bank or a fund or anything of that nature - who has the benefit of that money, you or the people who hold it? They do of course, and if 'they' are a bank they are using your money to turn a profit. So how about taking most of that money away from them? What about getting together with friends and allies and seeing whether you can make that money work for yourselves - the world has endless possibilities. You might get together, buy a plot of land and turn it into a group vegetable garden - really making your money grow.

In due course the things of real value in society will be those things that have a function that people are willing to pay for. If you can operate some of those things then so much the better. Prepare yourself for being able to barter and trade. Obviously, this will be easier if you are working in a group but even if you are alone, find a skill and get good at it while you can. For example, it might be that you can fix things so make sure you have good tools.

Take a look at the system, understand how it works and learn how to work within it. You can refuse to be controlled by it, bit by bit, but that does not mean cutting loose. There are ample reports of the extent of surveillance and the consequences of standing out so research and learn how to keep below the radar while being able to take active steps to help yourselves. Clean up your credit history as best you can so as to ensure that you have access to credit should you need it. If you are in debt with high interest see what you can do to lower the interest payments.

Basically, take a good hard look at the realities of your life and think - what could I do if I had a group of friends and allies I could really work with to improve this situation?

We have been conditioned to be 'individuals' for our entire lives now is the time to become communities again. You'll find that you'll laugh a whole lot more too.

****

[1] Hannah Arendt, Origins of Totalitarianism (1951), Chapter 5
[2] Hannah Arendt, Op cit
[3] Hannah Arendt, Op cit
[4] Hannah Arendt, Op cit
[5] Hannah Arendt, Op cit
[6] Thomas Hobbes, Leviathan
[7] Hannah Arendt, Op cit
[8] Andrzej M. Lobaczewski, Political Ponerology

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Monday, January 21, 2008

Signs of the Economic Apocalypse, 1-21-08

From SOTT.net:

Gold closed at 885.20 dollars an ounce Friday, down 1.4% from $897.40 for the week. The dollar closed at 0.6843 euros Friday, up 1.1% from 0.6768 at the close of the previous week. That put the euro at 1.4613 dollars compared to 1.4776 the Friday before. Gold in euros would be 605.76 euros an ounce, down 0.3% from 607.34 at the close of the previous Friday. Oil closed at 90.62 dollars a barrel Friday, down 2.3% from $92.73 for the week. Oil in euros would be 62.01 euros a barrel, down 1.2% from 62.75 at the close of the Friday before. The gold/oil ratio closed at 9.77 Friday, up 0.9% from 9.68 at the close of the previous week. In U.S. stocks the Dow closed at 12,099.30 Friday, down 4.2% from 12,606.30 at the end of the week before. The NASDAQ closed at 2,340.02 Friday, down 4.3% from 2,439.94 for the week. In U.S. interest rates, the yield on the ten-year U.S. Treasury note closed at 3.63%, down 15 basis points from 3.78 for the week.

The continued fall in the stock market has frightened the general public and the insiders, it seems. Hardly anyone now says there won’t be a recession. Predicting recession seems to be a bullish position now, with the bears predicting a depression or even a collapse.

US bank losses intensify recession fears

Patrick Martin

15 January 2008

Two more major banks reported heavy mortgage and consumer-loan losses Monday for the fourth quarter of 2007, reinforcing fears that that US financial crisis will likely trigger a recession, not only in America, but worldwide.

M&T Bank, based in Buffalo, New York, reported a 70 percent decline in earnings for the fourth quarter, largely due to losses on Collateralized Debt Obligations, the financial instrument widely used to transform home mortgages into tradeable securities.

Sovereign Bancorp of Philadelphia said it would take a $1.6 billion write-off for the fourth quarter, much of it related to mortgage lending. However, $600 million of the loss was due to defaults on consumer loans, an indication that the financial crisis is spreading. Sovereign said it had stopped issuing auto loans in seven of the 15 states in which it does business—Nevada, Utah, Arizona, Florida, Georgia and North and South Carolina.

Also on Monday, CNBC reported that the biggest US bank, Citigroup, will announce a colossal write-off of as much as $24 billion and the elimination of as many as 24,000 jobs. The bank is to report its fourth-quarter earnings Tuesday, and is also expected to announce a cut in its dividend.

Citigroup has been scouring the Middle East and Asia for investors in a position to take multi-billion-dollar stakes. Among those said to be involved is Prince Alwaleed bin Talal of Saudi Arabia. The bank is seeking to raise as much as $15 billion in new capital. On Monday, the state-owned China Development bank decided not to go ahead with a proposed investment of $2 billion in the company, forcing Citigroup to seek other benefactors.

The Financial Times reported Monday that Merrill Lynch, the largest US stockbroker, is seeking to raise an additional $4 billion in new capital, with the Kuwait Investment Authority as the leading candidate. Merrill Lynch is expected to write off as much as $14 billion in losses and lay off up to 1,000 workers.

The spectacle of giant US financial institutions going hat in hand to the oil sheiks and the government investment agencies of China, Taiwan and Singapore is one indicator of the deteriorating world position of American capitalism.

Another is the continued fall in the dollar, both against the currencies of rival capitalist powers, and against gold and other precious metals. Gold topped the $900 an ounce mark Monday in London trading, at one point hitting $914, an all time record. Platinum set a new record of $1,587 an ounce, while silver hit $16.58 an ounce, the highest figure in 27 years.

The dollar dropped to a record low of 1.0912 Swiss francs, while also hitting seven-week lows against the euro and the yen. At $1.4890 to the euro, the dollar is near to breaking the 1.50 barrier. That is widely regarded as a psychological milestone which could produce a much wider sell-off of dollars as countries currently accumulating dollars—especially the oil states and Asian exporters—seek to shift their surpluses to euros, yen or a basket of currencies more likely to retain their value.

The latest dollar plunge was said to be in response to comments last week by Federal Reserve Board chairman Ben Bernanke, in which he pledged “substantive additional action” to prop up the US economy, a statement widely viewed as a pledge to continue cutting US interest rates by at least a half percentage point this month.

Further cuts in US interest rates, carried out at the behest of Wall Street to stave off a collapse of confidence in the financial system, ultimately make the crisis even worse, since reducing the rate of return impels foreign investors to dump their dollar-denominated assets and shift their holdings into other, more lucrative, investments.

Exerting continuous pressure on the value of the dollar is the gargantuan US trade deficit, which hit its highest monthly total in 14 months last November, according to figures released by the US Commerce Department January 11. The trade deficit shot up 9.3 percent to $63.1 billion, much more than expected, driven by a 16.3 percent rise in the cost of imported oil. Oil imports hit $34.4 billion, accounting for more than half the net deficit.

Retail sales figures from December, to be announced publicly on Tuesday, are expected to show the combined impact on consumer spending of higher gasoline and home heating costs and plunging home values. An actual decline in retail sales in December, compared to the same month the year before, would be the first such negative reading since June.
Sales reports from individual retailers already suggest the dimensions of the downturn in consumer spending, with Macy’s reporting a 7.9 percent decline in same-store sales in December 2007, compared to December 2006. Kohl’s reported an 11 percent drop and Nordstrom a 4 percent drop. The broad decline is an indication that upscale as well as middle-income consumers are cutting back.

Other figures detailed the expanding dimensions of the home mortgage crisis, which is becoming a more generalized crisis of consumer credit:

* A Mortgage Bankers Association survey found that a record 18.81 percent of the nearly 3 million sub-prime adjustable-rate loans issued by its members were already past due.

* Freddie Mac, the big mortgage finance company, found that homeowners refinancing their mortgages were able to extract $20 billion less in the third quarter than the second. The $60 billion in home equity extracted was the lowest since the first quarter of 2005, and indicates that far less such cash will be available for consumer spending.

* The American Bankers Association found that delinquency rates for home equity lines of credit had climbed to their highest level in 10 years at the end of September.

* The Federal Reserve Board reported last week that total outstanding credit card debt rose at an 11.3 percent annual rate in November 2007. For the year, credit card debt is up 7.4 percent to $937.5 trillion, compared to increases of from 2 to 4 percent between 2003 and 2005.

The growing indebtedness of consumers, combined with the falloff of spending, demonstrates that millions of households, working class and middle class, are going further into debt just to finance their day-to-day expenses. Any new expenses can lead to major financial difficulties.

In the face of these figures, the sudden flurry of proposals by the political representatives of big business—the Bush administration, Congress, and the Democratic and Republican candidates—resemble nothing so much as the reorganization of the deck chairs on the Titanic.

White House officials told the press last week that Bush would propose a stimulus package for the US economy in his State of the Union speech scheduled for January 28, although no details had been worked out yet. Treasury Secretary Henry Paulson said January 11 that the US economy had slowed “rather materially” and that “time is of the essence” in initiating any stimulus package.

House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid, the two leading congressional Democrats, sent a joint letter to Bush Friday saying, “We want to work with you.” The letter received a favorable White House response, and Pelosi met with Fed chief Bernanke Monday to discuss what concrete actions could be taken.

Some combination of tax cuts for business, tax rebates for the working poor and a limited extension of unemployment benefits or home heating assistance is the likely outcome of such discussions, with a total amount estimated at $50 to $100 billion. Even these proposals are problematic, however, since congressional Republicans could block such measures, particularly those targeted to lower-income families.

The presidential candidates have chimed in, with the Republican candidates proposing more tax cuts for business and the wealthy—which would do nothing to alleviate the spreading economic distress among working people—and the Democrats offering stimulus packages that would amount to little more than band-aids.

Hillary Clinton’s plan, released Friday, calls for $70 billion in stimulus, including relief for homeowners facing foreclosure and an extension of unemployment benefits. Barack Obama slightly outbid her, offering a $75 billion plan, but with more targeted to business interests in the form of tax incentives.

None of these plans amount to more than a drop in the bucket compared to the vast dimensions of the social and economic crisis in the United States. By one estimate, the $30-a-barrel increase in oil prices over the past five months has by itself cost US consumers $150 billion—double the amount of “stimulus” proposed by the Clinton and Obama plans. It goes without saying that no big business politician is proposing that the oil companies disgorge any of their massive profits. On the contrary, the energy bill adopted by the Democratic Congress last month retains $12 billion in federal subsidies to the oil giants.

More fundamentally, a minor boost to consumer spending will do nothing to offset the spreading financial contagion or restabilize debt markets. The bursting of the housing bubble is only the initial stage of a financial crisis of unprecedented dimensions, one that will call into question the viability of the capitalist system worldwide.


It is probably past time to be worried much about the markets and high time to be worried about essentials like food. Talk of serious global food shortages has been increasing recently. High energy costs and conversion of food production to biofuel production are making food shortages a real possibility, even in developed countries which have had an abundance of food in recent generations.

An Oil Quandary: Costly Fuel Means Costly Calories

Keith Bradsher

January 19, 2008

KUANTAN, Malaysia — Rising prices for cooking oil are forcing residents of Asia’s largest slum, in Mumbai, India, to ration every drop. Bakeries in the United States are fretting over higher shortening costs. And here in Malaysia, brand-new factories built to convert vegetable oil into diesel sit idle, their owners unable to afford the raw material.

This is the other oil shock. From India to Indiana, shortages and soaring prices for palm oil, soybean oil and many other types of vegetable oils are the latest, most striking example of a developing global problem: costly food.

The food price index of the Food and Agriculture Organization of the United Nations, based on export prices for 60 internationally traded foodstuffs, climbed 37 percent last year. That was on top of a 14 percent increase in 2006, and the trend has accelerated this winter.


In some poor countries, desperation is taking hold. Just in the last week, protests have erupted in Pakistan over wheat shortages, and in Indonesia over soybean shortages. Egypt has banned rice exports to keep food at home, and China has put price controls on cooking oil, grain, meat, milk and eggs.

According to the F.A.O., food riots have erupted in recent months in Guinea, Mauritania, Mexico, Morocco, Senegal, Uzbekistan and Yemen.

“The urban poor, the rural landless and small and marginal farmers stand to lose,” said He Changchui, the agency’s chief representative for Asia and the Pacific.

A startling change is unfolding in the world’s food markets. Soaring fuel prices have altered the equation for growing food and transporting it across the globe. Huge demand for biofuels has created tension between using land to produce fuel and using it for food.

A growing middle class in the developing world is demanding more protein, from pork and hamburgers to chicken and ice cream. And all this is happening even as global climate change may be starting to make it harder to grow food in some of the places best equipped to do so, like Australia.

In the last few years, world demand for crops and meat has been rising sharply. It remains an open question how and when the supply will catch up. For the foreseeable future, that probably means higher prices at the grocery store and fatter paychecks for farmers of major crops like corn, wheat and soybeans.

There may be worse inflation to come. Food experts say steep increases in commodity prices have not fully made their way to street stalls in the developing world or supermarkets in the West.

Governments in many poor countries have tried to respond by stepping up food subsidies, imposing or tightening price controls, restricting exports and cutting food import duties.

These temporary measures are already breaking down. Across Southeast Asia, for example, families have been hoarding palm oil. Smugglers have been bidding up prices as they move the oil from more subsidized markets, like Malaysia’s, to less subsidized markets, like Singapore’s.

No category of food prices has risen as quickly this winter as so-called edible oils — with sometimes tragic results. When a Carrefour store in Chongqing, China, announced a limited-time cooking oil promotion in November, a stampede of would-be buyers left 3 people dead and 31 injured.

Cooking oil may seem a trifling expense in the West. But in the developing world, cooking oil is an important source of calories and represents one of the biggest cash outlays for poor families, which grow much of their own food but have to buy oil in which to cook it…

Growth in Biofuels


Biofuels accounted for almost half the increase in worldwide demand for vegetable oils last year, and represented 7 percent of total consumption of the oils, according to Oil World, a forecasting service in Hamburg, Germany.

The growth of biodiesel, which can be mixed with regular diesel, has been controversial, not only because it competes with food uses of oil but also because of environmental concerns. European conservation groups have been warning that tropical forests are being leveled to make way for oil palm plantations, destroying habitat for orangutans and Sumatran rhinoceroses while also releasing greenhouse gases…

Demand Outstrips Supply

As the multiple conflicts and economic pressures associated with palm oil play out in the global economy, the bottom line seems to be that the world wants more of the oil than it can get.

Even in Malaysia, the center of the global palm oil industry for half a century, spot shortages have cropped up. Recently, as wholesale prices soared, cooking oil refiners complained of inadequate subsidies and cut back production of household oil, sold at low, regulated prices.

Street vendors in the capital, Kuala Lumpur, complain that they cannot find enough cooking oil to prepare roti canai, the flatbread that is the national snack. “It’s very difficult; it’s hard to find,” said one vendor who gave only his first name, Palani, after admitting that he was secretly buying cooking oil intended for households instead of paying the much higher price for commercial use.

Many of the hardest-hit victims of rising food prices are in the vast slums that surround cities in poorer Asian nations. The Kawle family in Mumbai’s sprawling Dharavi slum, a household of nine with just one member working as a laborer for $60 a month, is coping with recent price increases for palm oil.

The family has responded by eating fish once a week instead of twice, seldom cooking vegetables and cutting its monthly rice consumption. Next to go will be the weekly smidgen of lamb.

“If the prices go up again,” said Janaron Kawle, the family patriarch, “we’ll cut the mutton to twice a month and use less oil.”

We often focus too much on the problems of the various free trade agreements for the developed countries involved in them. In the United States, that takes the form of complaining about jobs going to Mexico, or about Mexicans coming to the U.S. for jobs. But agreements like NAFTA also damage the poorer partners. The following piece about Mexico, where the government has for generations subsidized the price to consumers of staple food items like beans and corn, while putting tariffs on imported food, shows what happens when trade is “liberalized” with a wealthy partner.

NAFTA and Mexico's Agrarian Apocalypse
Zero Hour

John Ross

January 15, 2008

At the stroke of midnight this past January 1st, a hundred or so farmers and day laborers from both sides of the border converged on the hump of the Cordoba Las Americas bridge that connects up El Paso and Ciudad Juarez, to mark the demise of Mexican agriculture. In accordance with the timetables set by the North American Free Trade Agreement signed by Mexico, the U.S. and Canada 14 years ago, as of January 1st 2008, all tariffs on corn, beans, powdered milk, sugar and 200 agricultural products were reduced to zero, setting in motion a doomsday scenario that farmers organizations here say will inevitably lead to crisis in the Mexican "campo" or countryside, mass abandonment of unsustainable plots, increased hunger, and even armed rebellion by the nation's beleaguered small farmers.

"If they build steel walls to keep our people from entering the United States, we will make walls of people to keep their products out of Mexico," a grizzled leader of the militant farmers' front El Barzon Popular growled into his bullhorn as the protestors spread out in the frigid dark to block the lanes of the bridge over the river the U.S. calls the Rio Grande and Mexico the Rio Bravo. But traffic was slow and few trailers were lined up to ferry the thousands of tons of U.S. agricultural products that pass over the Cordoba Las Americas into Mexico every day.

Strung across the roadway, each protestor carried a letter of the alphabet in his or her hand but despite the palpable fear and loathing afoot out in the Mexican countryside as the tariffs plummet to nothing, the farmers could barely muster enough troops to spell out "Sin Maiz No Hay Pais - Y Tampoco Sin Frijol", including the appropriate spacing between words ("Without Corn, There Is No Country - And Also Without Beans.")

Despite the midnight deadline, the immediate impacts of this premeditated apocalypse may be postponed for a while - at least until the spring planting when farmers have to calculate how many hectares they can afford to put under crops. Unlike the U.S., farm subsidies are a thing of the past here, stripped away years ago in the rush to NAFTA.

Reduction to zero tariffs is not in fact a steep drop. 14 years of incremental decreases had wiped out 90% of all protectionist barriers by 2007 and U.S. corn growers were only shelling out 18% of the value of their exports to get their grain into Mexico. Moreover, NAFTA-driven dumping by lavishly subsidized U.S corn growers that allowed them to drop their loads in Mexico below cost and still make a boodle is being blunted by skyrocketing ethanol subsidies as maize climbs to record quotes on U.S. commodity markets - the grain hit an all-time record $177 USD a metric ton last spring but has begun to slide as storage capacity for ethanol corn is saturated and distribution lags far behind production.

Meanwhile, the uptick in world corn prices ripples out in the global marketplace with tortillas topping out at nine pesos the kilo on New Year's Day here - tortilla prices in Mexico have risen 126% under NAFTA from 1994 to 2007 despite - or because of - massive corn imports from the U.S. (44 million tons in the same period.) The tortilla remains the household measure for basic food prices in Mexico.

According to the World Food & Agricultural Organization or FAO, the world has only 11 weeks of consumable corn reserves left, the lowest inventory since record keeping began. Corn prices will remain unstable until producers can sort out the relationship between food cropping and biofuels, the FAO cautioned in a recent report. Low reserves and high prices are a sure formula for social upheaval, underscores the U.N. organization, pointing out that grain riots broke out in Morocco, Uzbekistan, Yemen, Guinea, Mauritania, and Senegal last year.

Despite the farmers' New Years protest on the Cordoba Bridge, the truth of the matter is that formal notice of the death of Mexican agriculture is long overdue. The damage was done long before NAFTA (or the Treaty of Free Trade With North America - TLCAN - here in Mexico) was a gleam in Ronald Reagan's eyeball. As Mexico decapitalized the "campo" following the 1982 default crisis, which allowed the World Bank and the International Monetary Fund to annex the Mexican economy and initiate "structural readjustment" of the agricultural sector, the nation ceded its nutritional sovereignty to U.S. imports.

The migration of impoverished subsistence farmers from southern Mexico that swelled the Mexico City misery belt in sprawling slums like Nezahualcoytl was the first concrete evidence of the evisceration of the "campo", ventures Harvard professor John Womack in a recent e-mail.
Womack is the author of the definitive biography of Emiliano Zapata, the incorruptible farmer-general who remains emblematic of the campesinos' struggle for land.

NAFTA-TLCAN, which, after all, is an integral part of the same scheme of "structural adjustments" to globalize Mexico's agricultural sector and force dependence on export cropping, has only accelerated the stampede from the countryside and into the migration stream. By the trade treaty's 10th anniversary in 2004, NAFTA-TLCAN had driven 1.2 million farmers off the land, according to a Carnegie Endowment evaluation of the pact's impacts issued that year. Since each farm family averages out to six people, the total number of expulsees from the campo hovers around 6 million.

In 1993, just before NAFTA-TLCAN became fact, Mexico's Secretary of Agriculture contracted UCLA professor Raul Hinojosa to calculate the fallout amongst poor farmers. The researcher's worst-case scenario was the diaspora of 10 million campesinos. Now, with the reduction of NAFTA-TLCAN tariffs to zero, that "goal" is just around the corner.

Where do they go? During ex-president Vicente Fox's six year term in office, 2.4 million Mexicans, 70% of them reportedly displaced farmers, migrated to the U.S. despite the formidable barriers erected by Washington to keep them out. U.S. anti-immigration pundits like Lou Dobbs and Republican and Democratic presidential hopefuls that beat up on undocumented Mexican workers might do better to pin the tail on the correct donkey - the North American Free Trade Agreement.

According to CONAPI, Mexico's Council on Population, 29 million Mexicans and Mexican descendants now live in the United States, two million more than live out in the Mexican campo from which so many of them have fled. Ironically, those 27 million who remain on the land back home are sustained by the $22,000,000,000 USD in "remisas" that those who have gone north send back, Mexico's second source of Yanqui dollars behind $100 barrel petroleum. Which is to say the Mexican agricultural sector is supported by those who have abandoned it.

Since NAFTA-TLCAN kicked in January 1st 1994, the same night the Zapatistas rose in Chiapas to remind Washington just how desperately poor and unstable its new trading partner really was, four Mexican presidents - Carlos Salinas, Ernesto Zedillo, Vicente Fox, and now Felipe Calderon, apparently rendered dumb by Washington's dominance, have turned a deaf ear to demands by farmers' organizations to re-open the treaty-agreement's agricultural chapters for renegotiation. Indeed, leftist Andres Manuel Lopez Obrador's insistence on renegotiating NAFTA-TLCAN was a nuts and bolts factor in the campaign to deny him the presidency.

For Calderon, who was awarded high office amidst widespread fraud, NAFTA-TLCAN has been a net gain for Mexico's farmers. The president and his cohorts like Agriculture Secretary (SAGARPA) Alberto Cardenas never tire of chanting the mantra that the trade pact has nearly tripled Mexican agricultural exports to the U.S. But what these neo-liberal mouthpieces forget to point out is that Mexico has run a $2,000,000,000 USD deficit in Ag exports to the U.S. every year since the late '90s as U.S. imports overwhelm the Mexican market.

Moreover, the Calderon-Cardenas happy stats disingenuously inflate the numbers - for example, Mexican beer on its way to transnational distributors who now invest heavily in breweries south of the border, accounts for 18% of $8.5 billion USD in Ag exports to the north through October 2007.
Under NAFTA, beer is considered an agricultural export.

Nor does the President and his cronies identify who it is that is actually benefiting from the NAFTA-TLCOM boom. According to the National Farmers Confederation or CNC, a creature of the once-ruling (71 years) PRI party and once gung-ho for the trade treaty, only 2% of all Mexican producers are sharing the largesse. The other 98%, including 3.5 million corn farmers, 85% of whom grow on five hectares or less (average U.S. corn spreads are 270 acres), have no access to the NAFTA-TLCAN market whatsoever. The big winners? About 20,000 corporate tomato growers, avocado and tropical fruit moguls, and specialty crop niche market sharpies (organic coffee -but organic anything) - plus, of course, the beer barons.

Meanwhile, on the other side of the ledger, two out of the three top chicken suppliers to Mexico are U.S. headquartered - Pilgrim's Pride and Tyson. Mexico now imports 22% of its corn, 55% of its wheat (which went to zero tariff in 2003), and 72% of its rice from U.S. growers. Wal-Mart, with over 700 megastores and now the largest employer and retail food seller in the country, provides a ready-made distribution system for getting U.S. Ag products into Mexican homes. Wal-Mart, now Mexico's leading tortilla seller, is the poster boy for the NAFTA-TLCAN credo of "convergence" - selling the same product in the same stores at the same price on all sides of the border.

But if Mexico's agricultural apocalypse has already come to pass, new ones are lighting up the radar screens. The zero tariff deadline will particularly play out on southern Mexico's mid-level sugar growers, mostly "pequenos proprietarios" or "small land owners" and their huge workforces of underclass campesinos. In respect to the beloved "frijol", although Cardenas's SAGARPA insists that Mexicanos no longer eat beans and the inundation of U.S.-grown legumes will have little impact on diet, beans are an emblematic commodity which combined with maiz form a protein that has sustained the Mexican "raza" (race) since its birth.

But the most lethal blow from zero tariffs will be a speeded-up abandonment of their plots by small corn farmers and their immersion in an already-swollen migration stream, a tale that does not presage a happy ending. Traditional migration routes to The Other Side are now shut down by U.S. militarization of the border, ICE raids in U.S. Mexican communities, and the anti-Mexican hysteria sweeping that northern neighbor as the presidential campaigns peak…

Violence has been pandemic in the Mexican campo ever since the European Conquest. Massacres and bloody land battles like Acteal in Chiapas (49 killed) and Rio Frio in Oaxaca (29) are contemporary expressions of the eternal war for the land here. Mexico's many guerrillas historically have incubated inside farmers' movements and still do. The Calderon-Cardenas strategy of deliberate denial of the crisis in the countryside is a little like whistling past the graveyard.

Secretary of Agriculture Alberto Cardenas, a former governor of Jalisco state, is an agro-tycoon from the central Mexican "Bajio", a fertile swatch of land from which big growers reap fortunes in export agriculture. A holdover from the Fox administration (Fox too made his fortune in Bajio export agriculture), he is a stocky, pugnacious and not very bright man who represents the right wing of the right wing PAN party, the "Yunque", a secretive Catholic cabal based in the Bajio from which Fox drew many of his cabinet members.

So when he had to sell Mexicans on the "benefits" of zero tariffs, Cardenas came up with the brilliant gimmick of getting Lorena Ochoa, the world's number one woman golfer and a Guadalajara native, to extol the health of the Mexican "campo" - an unfortunate play on words (a "campo de golf" is a golf course) - which has incited farmers' organizations to schedule a national march on Mexico City this January 31st.

For the Mexican underclass, "campos de golf" are the playgrounds of their "patrones" or bosses. 10 years ago, speculators secretly bought community land in Tepotzlan up in Zapata country in Morelos state to build a country club and golf course and began sucking up what little ground water the farmers still had left. Wild protests - the so-called "Golf War" - ensued. In the midst of flying rocks and burning construction machinery, a U.S. reporter asked the newly-elected mayor (the old one had sold out to the golfers) why the people were so agitated about a golf course. Lazaro Rodriguez paused, put his hand on the reporter's shoulder, and stared him in the eye like he was a nincompoop from Mars. "John," the exasperated mayor made it clear, "we don't play golf here."

Last week we looked at how capitalism works and how, by doing what it does, it ruins everything. What can we do about it? Marxism has been an indispensable tool for understanding capitalism, but historically has not been able to offer any solutions. Why is that so? If the diagnosis was so good why wasn’t the cure of revolutionary socialism effective?

According to Andrew Lobaczewski in Political Ponerology, most political movements are susceptible to what he calls “ponerization,” the infiltration of groups by pathological elements that end up twisting the original goals and motivations of the group to pathological purposes.

In order to have a chance to develop into a large ponerogenic association, however, it suffices that some human organization, characterized by social or political goals and an ideology with some creative value, be accepted by a larger number of normal people before it succumbs to a process of ponerogenic malignancy. The primary tradition and ideological values of such a society may then, for a long time, protect a union which has succumbed to the ponerization process from the awareness of society, especially its less critical components. When the ponerogenic process touches such a human organization, which originally emerged and acted in the name of political or social goals, and whose causes were conditioned in history and the social situation, the original group’s primary values will nourish and protect such a union, in spite of the fact that those primary values succumb to characteristic degeneration, the practical function becoming completely different from the primary one, because the names and symbols are retained. This is where the weaknesses of individual and social “common sense” are revealed. (p. 160)

To the extent that a social theory or movement has an incorrect view of human nature, to that extent is it susceptible to ponerization. For Marxism or revolutionary socialism, the erroneous view of human nature would be that human nature is a blank slate created by human practice. Its downfall was that it didn’t recognize the two types of humans: psychopaths and those with the potential to develop conscience. It shares that downfall with many other ideologies and religions.

Revolution, by overthrowing all traditional forms of order ended up creating the most fertile ground possible for the psychopath. We can see this historically in France, Russia, China and Cambodia. According to Lobaczewski, movements that start out with laudable goals are prime targets for pathological types because those movements can provide the perfect cover for the “other human race.”

Where does that leave us? In the position of learning from past mistakes and building movements that take the two human races into account. We would have to be able to limit the damage caused by the small percentage of psychopaths. That would involve being able to identify psychopathic behavior and being able to distinguish between genetic psychopaths for whom there is no hope (essential psychopaths in Lobaczewski’s terminology) and those who are not born pathological but made pathological. It would also avoid tactics used against the pathological borrowed from the pathological, for those tactics would only create fertile ground for ponerization.

The solution would be more evolutionary than revolutionary, because it would entail hard work on the part of those with the potential of conscience to develop that conscience while at the same time seeing both human nature and current events accurately.

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