Good Evening Friends,

Before continuing, let me take issue with one observation made by Kevin Phillips. In his Wealth and Democracy, he wrote: "Class warfare, however, is a false description, a perverse conservative borrowing from Karl Marx. In the United States, the pro-wealth policies of the right have enjoyed substantial low and low-middle-income support, particularly among religious voters enlisted by the cultural facets of conservatism (1)."

He's saying, here, that a class analysis does not work, because low and low middle income folks, at least, did not perceive themselves to be at "war" with the bourgeoisie, since their policies enojoyed support from sections of the proletariat - therefore it is impossible to say that the financial oligarchy are or have been consciously working against the interests of the rest of us.

First of all, let me cede a point to Mr. Phillips. I stipulate that, indeed, pro-wealth policies of the right have enjoyed "substantial low and low middle income support." I know this is so from directly related anecdotal evidence. Phillips says this is especially so "among religious voters enlisted by cultural facets of conservatism."

This sounds like a description of the so-called "prosperity gospel," the interdenominational pro-wealth doctrine of evangelical Christianity. In fact, I would refer you to Sarah Posner's excellent book on the subject, God's Profits; as well as an article in the December 2009 issue of The Atlantic, "Did Christianity Cause the Crash," by Hanna Rosin.

But these two facts do not defeat a class analysis of the economic situation. In fact, they strengthen it. The first thing to remember that the behavior of any class, as a whole, is never monolithic. And as for the second thing, please consider the following. What if President Ronald Reagan had thought of himself as a Republican Prometheus? Prometheus, of course, was the Greek god who gave man fire, against the wishes of most of the other Olympians, and was punished for it by Zeus.

A couple of things to keep in mind. Stay with me, but both Ronald Reagan and George W. Bush - who seemed to think of himself as more the political heir to Reagan than his own father - were both criticized by "movement conservatives" [the Conservative Party proper, which is not necessarily synonymous with the Republican Party] for the dramatic growth in the size of the federal government that occurred under their regimes. Ronald Reagan and George W. Bush have both been called "big government liberals" by conservatives.

If Ronald Reagan - and George W. Bush - are the Prometheus character, then we can think of critical conservatives as the majority of the disapproving Olympian pantheon.

Moreover, we must remember that George W. Bush did not run, in 2000, on a platform of hardcore conservative austerity. His Republican campaign for the presidency did not say, poor and downtrodden, be damned! He proposed a different way to deliver social services to "low and low-middle-income" folk, through the agency of "faith-based initiatives."

Now, back to Reagan. For those of you old enough to remember, let me ask you: What did Ronald Reagan mean "supply side" economics, and how did he conceive of the prosperity "trickle down" to the rest of society, especially those most in need of relief? I hope you will stipulate that there was probably a difference between the vision of Ronald Reagan and that of the technocrats that surrounded him.

Forgive me for mixing my metaphors, but have you ever seen Lord of the Rings? Beware the ring of Sauron! Sauron is the evil sorcerer supreme terrorizing "Middle Earth." Sauron made a ring which contained a portion of his power. He lost the ring, it had been cut from his hand in battle long ago. The ring fell into the hands of the good guys.

The sides of good and evil were going to have it out on the battlefield, once and for all, and so forth. But the hobbit, Frodo (the custodian of the ring after his uncle, Bilbo guarded it) and the team assembled around him, had the task of taking the foul thing to a certain volcano and dropping the trinket into it thus "unmaking" it. Gandalf, the wizard and one of the heroes, and naturally an authority on all things magical and enchanted and so forth, is absolutely clear and unequivocal about the necessity of this. "You cannot wield it," Gandalf says.

Fantasy literature is full of scenarios like this. You have a god or sorcerer or somekind of enchanted cosmic of other dimensional being of some sort, who creates a jewel or ornament of some kind which contains a very tiny portion of his power. And then he loses it! And an individual from a lower evolutionary order finds it. These tales never, ever, ever end well for the mortal who finds this ornament, whatever it might be. Recall the insanity of the homicidal Golem!

There was a difference of opinion within Frodo's team about the ring of Sauron. Some agreed with Gandalf, that the ring had to be destroyed and that there was no other way. Some thought that the good guys could use Sauron's ring against him, against all evil in Middle Earth.

So, when Mr. Phillips speaks of "substantial low and low-middle-income support," we have a disagreement among the proletariat about whether or not the Ring of Sauron (instruments of credit/debt) can be used against evil (poverty/the decreasing ability of the working class and poor to consume).

I agree with Gandalf. You cannot use Sauron's ring against him. Its probable that as soon as the ring comes anywhere near Sauron's person, the ring would fly off your hand, of its own accord, and onto the hand of the dark lord, Sauron.

Similarly, I am of the opinion that the instruments of credit/debt (Ring of Sauron) cannot be used against evil (poverty and/or the decreasing ability of the working class and the poor to consume). Credit - the need for it to maintain consumption - is the creature or ornament of poverty. Credit (this form of it and by extension, all exotic financial instruments) is poverty's own!

Let's return to the analysis of Dr. Rick Wolf, the Marxist professor of economics. Recall how he told us that from 1820 to 1970, real wages for workers as well as profits for the capitalists rose without fail every decade, as the productivity of the American worker continued to go up and up.

Then in the mid-seventies all of this stopped. The profitability of capitalism hit a wall, to which they responded by holding wages of workers flat, in relation to inflation. Wages have remained flat and decreased slightly, in relation to prices, since the late seventies - even, by the way, as the productivity of the American worker continued to increase unfailingly up to the present moment you are reading this.

Now, the American industrialists flattened wages by various means, which we do not need to go into here. They did it, is the point. This flattening of wages combined with steadily increasing worker productivity, produced intoxicatingly staggering profits for American industrialists. But this windfall was exponentially amplified for them, when they came up with the bright idea to offer the money - that workers should have been getting as wages - to them as loan, which they had to pay back with interest.

So, you cannot fight poverty or the decreasing ability to consume, which comes from stagnant wages with credit. Because without the ability to earn a living wage, where will the money come from to pay off the debt? You take out another line of credit, don't you? You open another credit card, and another, and another.... and so on and so forth, in addition to other means the working class found to maintain consumption.

But wait, there's more. We're not quite finished yet. You know, those Ring of Sauron-type stories never end well for the mortals, for the very simple reason that normal human beings do not have the intrinsic immortality or inviolability which might shield us from blowback, in case anything goes wrong with the powerful dark forces we try to control. Hold that thought.

Now I'm going to engage in an incomplete speculation. I have wondering if there was a connection between the deregulation of finance at the top of society, the federal government and the lower order magic made available to "low and low-middle-income" people. I'm talking about those infomercials about selling real estate with no money down, buying and selling... items that some warehouse will send you, placing ads in various venues, making money through the Internet, in one way or another, and so on and so forth.

The danger, from a Lord of the Ring point of view, is not that these programs don't work or are a hoax. Quite the contrary, the danger is that these approaches actually work!

However, just as it is never safe for mortals to manipulate the power objects of greater beings, it is not a good idea for "low and low-middle-income" people to manipulate the financial power objects of "greater beings," because the former do not have the political and legal armor to protect them from blowback, that is available to the latter. If the former make a mistake or misstep or try to do something that there is any legal question about, they could end up fined into bankruptcy, put in jail, or both. But Tim Geithner can apologize to the senate for not paying his taxes, and instead of suffering any penalty we, the public, heard anything about, he gets to go on to become Treasury Secretary of the United States.

So there is disagreement in the company of Frodo about the desirability of using the ring of Sauron. But what if Reagan - one of many who gave us the ring of Sauron - saw himself as giving us the gift of fire. Sauron was at war with all the folk of Middle Earth, who were not aligned with him, despite the fact that they had different opinions about how to fight the dark overlord: to use the ring or not to use it.

What if George W. Bush had a similar vision? What if the thought this could become an "ownership" through deregulated finance and privatization (of Social Security, for example, turning into interest-bearing private investment accounts; and suppose he, George W. Bush, never wanted to "destroy" or even reduce government, as much as make it portable?) could just about give all Americans a relatively, universal luxurious standard of living, with the only ones being left out - temporarily - being the undocumented workers from Mexico - that is, until they, themselves, became citizens (remember Bush was for a "guest worker" program, and so forth), and then the cycle would start again.......?

Let me close with this. Again, Kevin Phillips wrote: "Part of what Bad Money deals with that I have not touched on before is the financial sector's massive use of private debt and leverage during the 1990s and then again in the first decade of the twenty-first century to expand its size, global reach, and extraordinary profitability. This is less a market-based Adam Smith brand of triumph than a mercantilist joint venture with U.S. government authority, strategic direction, funding support, and periodic Federal Reserve or U.S. Treasury bailouts of overextended financial institutions. This is certainly in keeping with the mercantilist flavor of policies gaining traction elsewhere in the world. Some have labeled these apparent policies the '"socialization of risk"' or '"Wall Street socialism."' I think a better explanation is that elements of the U.S. government decided, back in the 1980s, that finance, not manufacturing or even high technology, had to be the sector on which Washington would place its strategic chips - would '"pick as a winner"' in the parlance of the era. Farms and factories were expendable, but certain banks and other financial institutions could not be allowed to fail" (2).

Now, these words were published in 2008 and the first quote comes from 2002. I could almost wonder if Phillips has had a change of heart, somewhat, on the question of class, except that he does not accept the idea of "socialization of risk," or "Wall Street socialism." He cites mercantilism from a national perspective. What about class mercantilism? What is "periodic Federal Reserve or U.S. Treasury bailouts of overextended financial institutions" but "socialization of risk" by definition?

He says that he thinks elements of the U.S. government, back in the eighties, made a strategic decision to "pick [finance] as a winner" over every sector of the economy. Let me say, that as far as I am aware, all "warfare" is full of strategic decisions and considerations. One cannot help the vast difference in the way that both the George W. Bush and Barack H. Obama administrations, dealt with the tailspinning finance sector and the automotive industry.

It looked to most of us that when Wall Street needed help, they got it, no questions asked. The Federal Reserve chairman, Ben Bernanke, didn't even want to reveal the names of the overseas institutions that got the bailout money, that went to AIG, that had to financial institutions that had bet correctly on sub prime mortgages, and the like. I can't even pretend to understand all of it. The banks got trillions (I heard that quantity one trillion is literally one hundred times the age of the universe) with no strings attached, as it were.

But as for the big three auto companies. Congress and the president kept asking these corporations for credible restructuring plans before they would get any money. Obama kept giving them deadlines to present credible plans and insisted on the removal of one of the auto company CEOs. And so on and so forth. These companies, like Pahlovian dogs, kept cutting jobs and forcing unions to do "give backs," of benefits and so forth. By the way, this brings up the issue of Wall Street bonuses.

The AIG matter actually provoked some outrage in Congress, of all places. Charles Schumer, the senator from New York said that if the executives didn't do the right thing and give back those bonuses, the Congress would pass legislation to "tax virtually all of it." Remember that?

But the usual route regarding Wall Street bonuses, was that the United States is a country of laws and that contracts are sancrosanct. But, of course, this was not the case with the contracts of auto workers.

Now, again, Phillips says that the strategic decision of elements of the U.S. government - going back to the eighties - was that farms and factories were to be considered "expendable," while "certain banks and other financial institutions could not be allowed to fail." Different "classes" of the population work in farms and factories and banks and financial institutions.

So, are the bourgeoisie waging class war against the rest of us? Are they doing it deliberately, consciously as a group? I would answer the first, yes. The second is more complicated. Some probably have a quite self-conscious antagonism toward the "unwashed masses," others act on a more unconscious level. Organizational behavior can be thought of as a train, leaving one station and heading for another. Along the way, people get off and get on at different points, or what we might call points of access. But the train is ultimately headed for the last stop, the station at the endpoint of the route. I'll leave it there for now.

1) Phillips, Kevin. Wealth and Democracy: A Political History of the American Rich. Broadway Books. New York, 2002. p.xiii

2) Phillips, Kevin. Bad Money: Reckless Finance, Failed Politics, and The Global Crisis of American Capitalism. Viking (Penguin Group), New York, 2008.

wingedcentaur