Good Morning Friends,

There is another anthropological observation of the bourgeoisie, which, I think helps to account for what are called the "contradictions-in-capitalism." This observation comes from the areas of architecture and interior design. This is important to keep in mind as we talk about capitalism's tendency to "binge and purge" of overaccumulation and subsequent deindustrialization.

Various observations led us to the conclusion that the capitalist class, here and everywhere (left to themselves), are only ever interested in a minimal level of production upon which they can build their pyramids of financial speculation; and we talked about the underlying ideological reason for this: Man is the Desire to Become God - who owns all wealth not thorugh striving but merely by being "God."

The observation we shall make points to a seemingly strange relationship the bourgeoisie has to modernity, which as we will see, has implications for production and "progress" in society.

In his useful book, Class: A Guide Through the American Status System (1983), Paul Fussell cited an authority called Russell Lynes - who wrote in his book, The Tastemakers:

"...despite the facade of modernity a corporation erects to impress the proles (1), behind the scenes the upper business classes cleave to flagrantly archaic effects" (2). Interesting usage there, "flagrantly archaic."

Lynes continued, "...the sheer glass box that sits handsomely on Park Avenue to house the offices of Lever Brothers, you will find that the higher the echelon the more old fashioned the surroundings. The public front is one of daring modernity. The offices of the clerks and department managers are in the functional tradition. But when you reach the offices of top management you will find that there are open fireplaces and chandeliers with an Early American flavor... If you will visit the executive dining room of the J. Walter Thompson Company... you will find yourself in what appears to be a Cape Cod house furnished with Windsor chairs and rag rugs. It has casement windows" (3).

Conclusion: the bourgeoisie - and this is one of my take aways from Paul Fussell's book, whether he meant to convey this specific message or not - as a class, are only ever interested in engaging modernity to the extent that they can use it as a time machine by which they can propel themselves into and maintain themselves in the past. Yes, the past.

Fussell's book looked at class as distinct social and cultural systems, with ingrained patterns of thought, behavior, style, taste, manner of speaking, that remain more or less constant from birth until death. One point he made about class, is that it is not about wealth in absolute terms. Indeed, we have said that becoming Old Money is not about having absolutely the most wealth, but having it arranged for the benefit of your family, on a seemingly automatic, magically self-sustaining basis.

Fussell recognized nine classes: top out-of-sight, upper, upper-middle, middle, high proletarian (he believed the inflationary period of the 1960s and 1970s wiped out the true lower middle class), mid-proletarian, low proletarian, destitute, and bottom out-of-sight.

The upper classes love the old. We all do to a certain extent, of course, and we all use modern technology to transport us to the past [think about how modern camera technology is used to digitally remaster old black and white movies, and digitize and electronically store family photos, and so forth]. We are interested in the way the ruling class uses modernity as a platform to fuel their God-drive to stay in the past; and the contradictory impulses that become embedded in capitalism itself.

The first principle, Man is the Desire to Become God, is operative. "God" is said to be eternal, changeless, perfectly serene. The world changes but the Almighty God remains constant. Indeed, I think that deep down, in the collective unconscious, if you will, of the bourgeoisie, they see "progress" as a kind of weakness, since it is ungodlike.

To continue, Fussell made the point that, if one has to work as a salesman (remember the traditional disdain that the elites have always had for the merchant class) it is better to sell old, archaic things: real wine, unpasteurized cheese, bread without preservatives, Renaissance art objects, or rare books (4).

Indeed, according to Fussell, "[s]elling something old,..., almost redeems the class shame of selling anything at all" (5). Furthermore, "[i]t is in part because Britain has seen better days that Anglophilia is so indispensable an element in upper class taste, in clothes, literature, allusion, manners, and ceremony" (6).

Fussell said that this was why riding lessons were/and still are so cherished among the top classes, because the socially best outfits and accessories were imported from England. In addition to this, top class food was "bland and mushy, with little taste and no chances taken" (7).

There is one more idea I want to leave you with. Fussell pointed out that among the upper classes, it was considered bad form to give them compliments. Fussell wrote:

"It is among members of the upper class that you have to refrain from uttering compliments, which are taken to be rude, possessions there being of course beautiful, expensive, and impressive, without question. They paying of compliments is a middle class convention, for this class needs the assurance compliments provide" (8).

The assurance compliments provide.

I raise this point for two reasons.

A) The first principle, Man is the Desire to Become God, is operative. The further up your position is on the socioeconomic scale, the more and more you are removed from the view, as well as need and desire for the "assurance" (or 'justification' remember that word? [Man exists without justification] of the majority of the population.

B) We might draw a connectrion between this seemingly innocent idiosyncracy of the bourgeoisie and the fact that both major parties, Democrats and Republicans are largely unresponsive to the wishes of the vast majority of the people (9). For example, once again, just consider how Mayor Bloomberg and others in the city council, unimpressed with two public referenda to the contrary, went ahead and changed the law allowing them to supercede term limits voted for by the public.

Fussell gave an amusing anecdote about a British peer of a very old family. One day he invited "an artistic young man" over to his estate. Upon entering the house the young man declared that he had never seen a finer set of Hepplewhite chairs. The lord had the artist removed immediately, saying, "Fellow praised my chairs! Damned cheek!" (10).

What is going on here?

The peer took the compliment (especially coming from the source) as an insult. This is because the compliment itself suggested that the peer was not sufficiently high above the rest of humanity, such that praise or condemnation is only credible coming from "God" (this is so whether or not this peer was a nominal believer or not).

There is an in-built class barrier in political communication between the population (11).

wingedcentaur

1. 'proles' is short for proletarian.

2. Fussel, Paul. Class: A Guide Through the American Status System. Summit Books, New York, 1983. p.72

3. ibid, pp.72-73

4. Fussell, p.73

5. ibid.

6. ibid.

7. Fussell, P. p.73

8. Fusell, Paul. Class. p.32

9. I use as my authority, Noam Chomsky, who always says that both the Democratic and Republican parties have been well to the right of the public on a host of issues, especially on healthcare, for decades, according to polling data he is familiar. He brings up this point on almost any speech readily available on the Internet, when he discusses the domestic American political system. There an interview he gave on a show called Inside U.S.A, in which he makes this point.

10. Fussell, Paul. Class: A Guide Through the American Status System. p.32

11. See footnote #9

Good Morning Friends,

Today we're talking about finance (as an organism) likened to an alien, intelligent, slug-like creature that needs to move from host to host, to survive; and, you may remember, it is our intention to do our best to evaluate this in terms of what I would call a left libertarian (in the American sense of the word 'libertarian,' let us be clear) analysis that believes that, what they call the financial oligarchy, wants to create a world government.

We said before that there is much science fiction about an intelligent slug-like creatures inhabiting humanoid bodies. Think about Star Trek Deep Space Nine, Jadzia Dax is a Trill (humanoid species of the planet Trill) who was one of the lucky ones to get her own symbiot called Dax, a species of incredibly long-lived, sentient slug creature. There's the Stargate series featuring the Tokkra and Go'ould.

But there are also stories in which the slug creatures give superhuman strength and speed to the humanoid host. It does this by making the nervous system and metabolism work in a different way, somehow. I believe there was an episode of the original Star Trek (with William Shatner as Captain James T. Kirk) with this feature.

In this way, finance can make an economy unusually dynamic and strong, even while it undermines the internal health of the same economy. I suggested that there is a difference between a strong and dynamic economy and a healthy one. An economy can be strong but internally unhealthy. I gave as examples of this ill health but outward strength, in the form of the breaking of the levvies in New Orleans when Hurricane Katrina hit and the bridge collapse in Minnesota. The bones of the state had been weakened at the expense of profit making.

Think about an NFL player, a great mountain of a man who also uses steroids* with all the short-term benefits that come with their use. Indeed, his musculature makes him appear to be the "picture of health," but the steroids are undermining his kidneys, changing his hormones, and so forth.

The thing about these slug creatures is that they are parasites. Yes, they endow their hosts with superhuman capabilities, but they simultaneosly drain the body's resources in order to produce those results. Because of this the slug cannot remain in one body for very long, nothing like a natural life-span. It has to keep moving from host to host to host and so on and so forth.

I also mentioned that there are two novels by Octavia E. Butler, "Wildseed" and "Mind of My Mind" which feature a character called Doro, who is something like this but not precisely but similar.

We also found useful, an article in the Monthly Review by John Bellamy Foster called The Age of Monopoly-Finance Capital. monthlyreview.org/100201/foster.php

It just occurred to me that capitalism can be thought of as a kind of manic-depressive system. Keeping in mind the bubble-making nature of capitalism (the euphoria phase) - for our own edification - Foster wrote:

"Economic stagnation, in this sense, should not be confused with technological or consumer product stagnation. Indeed, the constant development of the technology of production that characterizes capitalism in general (including its monopoly stage) only increases the productive potential of the system, intensifying its overaccumulation tendencies.** The system could conceivably be rescued from its economic doldrums under these circumstances by the appearance of an epoch-making innovation on the scale of the steam engine, the railroad, and the automobile, in terms of total economic-geographical effects - generating a vast demand for new investment, independent of existing income constraints. Yet no such epoch-making innovation, Baran and Sweezy (two writers whose work Foster referred to) argued, was on the horizon."

Where can new dynamism come from? What is there to bubble? If there is nothing, what then? What will American finance do then? Where will they go? I am making a shaky assumption that Foster is talking about American finance capital, which of course, is a part of global finance capital, by his mention of the steam engine, automobile, and railroad.

From this narrow perspective, if we were to evaluate what left libertarians (don't accept this term as gospel; it's rather thrown together) call the New World Order (which is different from what they seem to think that mainstream politicians pretend to mean by it), which is, according to left libertarians, sovereignty killing world government, in terms of a parasitical slug, then the question would be: where can American finance move to?

This is a nonsensical question. There is no other single country which American finance could move to - even if such a thing were possible - that provides any better prospects for dynamic innovation.

For this reason, left libertarians might argue, the financial oligarchy needs to feast on whole blocks of nations. The Alex Jones documentary Fall of the Republic talks about this. The film speaks of plans for a North American Union, the complete political and economic fusion of Canada, the United States, and Mexico, and NAFTA as a first step to this.

Fall of the Republic sees the ultimate goal of the international bankers as complete world fusion, which from the perspective of parasitical slugs, might provide the ultimate body for the organism to be able to live on forever.

One way we might think about this is Brainiac. Brainiac is the arch-nemesis of Superman (next to Lex Luthor). Brainiac was the living computer of the planet Krypton, who deliberately allowed the destruction of the planet. His twisted justification for this: the more rare knowledge is, the more precious it is. One of the things he always does is to make newer, stronger bodies to house his intellect.

Or we might think about the thirties radio play "Donovan's Brain" starring Orson Welles [Donovan's Brain was an episode of a radio mystery anthology series called Suspense that ran from 1930 to 1960], which was based on a novel by a writer called Kurt Siodmak. William H. Donovan was critically injured in an airplane crash. Patrick Curry was a surgeon obsessed with keeping disembodied brains alive for as long as possible.

Donovan comes into his hands, and Curry decides that the mistake he's made before was that his previous subjects had been dead at the time of the removal of the brain. This is a mistake he intends not to make again, and so on and so forth.

Curry's treatments of the brain, both to keep it alive and develop a means of communication with it, awaken its self-consciousness and confer upon the brain extraordinary telepathic powers. The brain now wants a body, a young and strong body in which to house itself, so that the brain that was once William H. Donovan (and which is now much more) can live on, potentially for thousands of years. And then Donovan's Brain might go on to take over and rule the world.

So, the potential designs of the American branch of the global financial oligarchy might be compared to Donvan's Brain. The world would be the ultimate body.

But it seems to me that finance already has the benefits of global access with the way the world is now, with over a trillion dollars a day of financial capital moving all about the world at the speed the Internet.

It is called a virtual parliament or virtual senate (1).

As Marx said that capitalism only exists as a part of many capitalisms, I would say that world governments can only exist within a framework of many world governments - other all-encompassing planetary governments. I'm being serious about this. I think we can thankful that the international bankers are not going for world government, simply because we seem to be alone as sentient life in this solar system, and as far as we know, the galaxy; otherwise I think it credible that the international banker set might well move to cohere the Earth into a unified structure under their outright control, as a base from which to launch an interplanetary venture of financial imperialism; and to the extent to which imperialism abroad depends upon repression at "home" we can be thankful that we, the people of the Earth, are spared this additional dimension of suffering.

wingedcentaur

Good Evening Friends,

Believe me, I didn't want to do this. I tried my best to avoid it. I'd give all the change in my pockets not to have to do this. But it simply can't be avoided.

Later on we're going to have to talk about reason. What is reason? Do human beings actually have reason? If not, can we acquire reason?

We shan't use an elaborate definition of reason. We are going to define the term like this...
Reason: the characteristic of being both persuasive and persuadable. There must exist the possiblity of being persuaded (not on the basis of "facts," necessarily because there is so little agreement, oftentimes, about what a fact is [we're talking about social reality]; but rather we will be concerned with what I shall call patterns of experienced social reality by the variously disadvantaged social and economic groups, suggesting, of course, that there is something wrong with the social reality.

In addressing the question of whether or not human beings have reason, we are going to think about how "paradigm shifts" occur. I doubt we'll actually be able to answer the question. But then again, who knows? Insight may come from surprising places. Perhaps the Democratic pollster, Mark Penn, with his theories of "micro-trends," may be of assistance to us. You never can tell.

As we do this you should also keep in mind the remarks I cited from a Noam Chomsky book, which cited the remarks of Nobel Prize-winning economist, Paul Krugman - who talked about how economic orthodoxy is created. Conventional wisdom is not stable, he said, but rather like that of a herd mentality.

The question we'll have to pose is: Do human beings, in general, achieve their worldview by thinking or reacting (being "reactionary," which I will argue is a synonym for reflexive, automatic class solidarity of the bourgeoisie. This is an area of inquiry we might call moral philosophy, I suppose.There is a related matter that come from legal philosophy.

The question we will ask is: What is stealing?

Friends, if I've said this once, I've said it a thousand times... In the glorious novel, The Godfather by the immortal Mario Puzo, Godfather Corleone said to his son, Santino, "A lawyer can steal more money with a briefcase than a thousand men with guns and masks." And in Puzo's novel, The Last Don, Don Clericuzio sent his eldest son, Giorgio, to a fancy high-priced business school with the expressed purpose of learning the intricacies of stealing money while staying within the confines of the law.

To what extent is capitalism a system of lawyers stealing money with briefcases? Is this what David Harvey calls "accumulation by dispossession?"

You know, pre-Castro Cuba under Batista should be considered every bit as much a "neoliberal" project as Chile under Pinochet in the seventies. T.J. English wrote an excellent book on this called Havana Nocturne: How the Mob owned Cuba... and Then Lost It to the Revolution (2007, 2008).

Under the heading of what can only be called "It Takes One to Know One," English wrote:

In the early thirties " A new kind of Mob was born, based more on the philosophy of robber barrons like Cornelius Vanderbuilt, J.P. Morgan, Henry Ford, and the Rockefellers than on rural Mafia societies back in Sicily. Luciano, Lansky, and a few others in New York were seen as the masterminds of this dramatic new direction and were therefore established as prominent members of the Commission, a governing body composed of like-minded Mob leaders from Chicago, Cleveland, Kansas City, Philadelphia, Boston, New Orleans, and just about anywhere else where the American underworld enforced its will" (English, T.J. Havana Nocturne. p.15).

Suggested translation: The Mafia modeled themselves on the "robber barrons," like Ford and the rest of them, because the former (the Mob) thought the latter ("robber barron") were better thieves than they were, because the big industrialists had the aura of legality around themselves. They were part of the system.

Good Night,

wingedcentaur

By the way, we'll pick up with finance as an organism likened to an alien, intelligent slug-like creature that moves from host to host, next time.

Finance as Metabolism.

We also talked about finance's relationship to the real economy, as analagous to the metabolism's relationship to the body. The metabolism is the mechanism by which the body converts nutrients into energy.

The same is true of finance, which is the metabolism of the body of the real economy. Credit allows capitalist enterprises to function and carry out its various projects; as well as individuals who buy homes and fill them with families; buy cars, which they drive to work; and start their own small businesses. And so on and so forth.

When the quality and/or quantity of nutrient input is restricted, the metabolism has to work much harder to extract anything of value to keep the body going. The same is so with finance. When there is deindustrialization, and the mass unemployment and casualization of labor, and the downward pressure on wages (coupled with the fact that real wages stopped growing since the seventies), and you have finance having to worker harder and more "creatively." This may include coming at new ways to look at people previously seen as not creditworthy in traditional terms, as ideal borrowers for sub-prime home loans.

wingedcentaur

Good Morning Friends,

Many, many, many posts ago, we started to look at different ways that finance - as an organism - could be viewed. I said that finance seems to stimulate the anorexia/bulimic cycle.

Bulimia: Capitalism tends to "binge and purge." The "next big thing" (also known as the latest bubble) comes along and capitalism goes crazy. But understand what is involved. The goal of capitalists, here, is always to expand as massively, as quickly as possible so that they can actually grow out of the system. Remember, they view capitalism as an inferior state of existence. The New Money/Old Money dynamic is involved here, and all that goes with it.

Individuals afflicted with the condition of bulimia, binge and purge. They over eat and then throw up. I think I heard, somewhere, that this process brings up stomach acid that eats away at the lining of the throat, and so forth. Capitalism, I suggested, behaves precisely this way.

What is happening, psychologically, with someone afflicted with bulimia? Let me hasten to say that I do not have firsthand knowledge. I don't think I have ever consciously known a person with this condition. I hope I do not give offense, but clearly what is involved is that a bulimic desires to have the benefit of eating large quantitities of rich foods he enjoys. But on one level he is motivated by an irrational fear of gaining weight, so he throws up.

With capitalism the "binge" (or bubble) can be anything: railroads, automobiles, planes, the electric light bulb, computers and the Internet, housing.... anything. Everybody gets hysterical and enormous industrial capacity is built up to take advantage of the opportunity presented. For a while, things are relatively good for a relatively broad sector of society. But then capitalism hits the wall of overproduction - not from a perspective of social need, of course, but from the perspective that the capitalists eventually run out of paying customers.

Then the deindustrialization (the purge) goes into effect. Productive capacity is sent abroad in search of cheaper, or more "flexible" labor markets, and so forth. The capitalist class also put downward pressure on workers wages and benefits. The capitalist class always claims this is necessary to remain competitive with foreign industry and so forth. But remember, the finance and investment sector have benefitted enormously and come through the "purging" process, almost invariably, unscathed.

All of this is true enough, but I speculated that there is something else involved. Here, we should remember that finance is a process as well as a thing. Industrial firms, as well as financial institutions, engage in finance.

Why did "[m]aking things [become] unfashionable, as Wall Street Journal reported in a November 1999 front page article[?] For example, "Enron, the Houston-based energy firm, financialized itself into a company that traded energy like stock options, becoming '"more akin to Goldman Sachs than to Consolidated Edison"' (Phillips, Kevin. Wealth and Democracy. 2002. pp. 143-144).

Why did this happen?

I suggested that there were limits to what "immediately available rationality" (1) can tell us. As I mentioned, it seems to me that capitalism only ever wants just enough real production - just enough - upon which they can build their complexes of speculation. We said that financialization was a process by which New Money attempts to become Old Money. It is not entirely about increasing their wealth in absolute terms, but in putting their wealth on a seemingly self-sustaining, God-like basis. They want just enough real production for this, and the rest is fat to be shed.

What about the collapsed automotive industry of America?

Many commentators have made the observation that the auto plants could be remade into building something else for social need, namely high-speed rail and so forth. Why is it that the American ruling class have no enthusiasm for this? Why was the Secretary of Transportation, Ray Lahood, going abroad to give out contracts to do this (2)?

Two things. I suggested that bourgeoisie class solidarity, in domestic terms, was indeed operative with the stance both the Bush and Obama administrations took with respect to the ailing financial sector and the ailing automotive sector. They rushed in to rescue the former and basically said of the latter: Let them eat cake!

But remember, finance is a process as well as a thing. And industrial corporations have (perhaps always have) engaged in finance - that is, the executive layer of these corporations, of course.

Take Ford Motor Corporation. Suppose it had gone permanently bust, liquidated and so forth. Ford had (I would imagine still has) the "Ford Credit Corporation, heavily involved in global hedging" (Phillips, Kevin. Wealth and Democracy. 2002. p.143).

I suggested that the finance arm of the Ford organization represented an escape hatch for the executive layer, while workers are left bewildered, on the unemployment line, and sometimes left desperately grasping at panaceas like "retraining," and the like.

So, when the bubble pops, there comes the anorexia cycle. The system looks at itself in the mirror and says "I'm too fat," and places the society on an austerity regimen, namely, draconian cuts in social spending. As with the anorexic individual intake (or production itself) is severely restricted, as punishing "fat" trimming measures proceed.

In this way working people are pauperized, and have to resort to increased borrowing to keep the consumption going. It is upon this increased borrowing that the capitalists can and do build their complexes of speculation. And here we have a core ingredient of the sub-prime housing debacle.

1) Even from the point of view of capitalism itself, doesn't this realization underpin the whole field of what is called "behavioral economics?"

2) I cited an article about the Transportation Secretary going abroad looking to hand out contracts to foreign firms to build a high-speed rail in America. China particularly interested me. Remember, there comes a point in global capitalist competition in which a reverse competition occurs: Which bourgeoisie society can benefit the most from the least involvement with production?

I went on to counterintuitively infer that this solicitation is an attack on the vanity of the Chinese bourgeoisie by the American bourgeoisie, in two ways. First is the reverse competition dynamic I already alluded to.

The second. As I said, the Chinese were one of the exploited groups who helped build the railroads in America in the nineteenth century. I suggested that for actually racist elements of the American bourgeoisie, this would represent a marvelous symmetry, a completion of the circle. They would not view this as China "pulling ahead" of the United States in terms of transportation technology and so forth; because leading world economic powers who globalize (largely renounce manufacturing in favoring of getting these needed and desired goods from other countries) tend to reduce the world or large parts of the world to a servant status.

I said that the Chinese bourgeoisie must know this. This is why I said that if Chinese firms were to get the contracts to build the high-speed rail in the United States, we should look for massive subcontracting. Indeed, they would want to put an "American face" on the enterprise, in effect, to kind of partially deflect the insult back at the American bourgeoisie. We would not look for these firms to attempt to bring over large numbers of Chinese workers. But note this, Chinese firms would subcontract out the jobs while profiting from them.

Quite the opposite happened in Iraq. After the American invasion in 2003, U.S. firms went in to do reconstruction work. But very few Iraqis were hired, if you remember. American firms imported large numbers of foreign workers.

Why?

I would suggest this is because the American ruling class was not in "competition" with the Iraqi bourgeoisie, elements of which had advocated for the invasion. The Iraqi bourgeoisie was also largely scattered by Paul Bremmer's implementation of the "de-Baathification" process.

When American firms with American personnel went over to Iraq, what happened?

There was a barrage of succesive scandals of war profiteering. Leaving aside the "no-bid" contracts and all the rest of it, those firms basically just did not do the work they contracted to do, while profitting enormously anyway.

Take a look at two documentaries that are available to be viewed in full, online: "The New American Century" and "Iraq for Sale." Apparently, the U.S. government had a policy of "cost-plus" with regard to these firms. This was a financial formula which guareented a profit for these firms.

These firms, in Iraq, spent millions of American taxpayer dollars on luxury consumption. Cost-plus also encouraged. For example, if you receive an eighty thousand dollar truck without an oil filter, you don't try to get an oil filter. No, you blow up the truck and order another truck.

Is this corruption? Yes and no. But it just shows that capitalism itself tends away from production. All it wants is enough upon which to build their speculation upon speculation on.

wingedcentaur

Good Evening Friends,

You know, I was wondering something. Remember I made reference to the relatively new form of offshoring, Naomi Klein makes us aware of, which I called "ghost" factories? What is the relationship, if any, of these spirit workshops to the financial structure called "micro-credit?"

I could be wrong, but I suspect that these financial structures enable - perhaps unintentionally but nevertheless inevitably - the God-fantasies of the multinational corporations, in that they make the ghost factories possible. If you're a CEO of a multinational, having a ghost factory is great. No carbon footprint is traceable to you; and no "sweatshop" working conditions are traceable you either, why, people are just leisurely "working from home;" and, more than ever before, the products you want to sell, appear to materialize out of thin air - at your command. Man is the desire to become God.

Now, I think it will take a real effort of economic anthropology to make the relationship clear. But here's what I was thinking. You know how, in the advanced capitalist world, millions of people work for different companies - and every once in a while, someone leaves their company to start their own firm? They develop a business plan, a proposal to pitch to a bank in application for a loan....

It is my understanding that recipients of micro-credit loans are people living in the developing world. Do the recipients of these loans also tend to be former employees of these ghost factories?

If that is so, then we can see why capitalism is so tenacious, durable, and adaptable. This would be - if my understanding is correct - what Slavoj Zizek calls the "chocolate laxative" effect; because capitalism takes with one hand and gives with the other - or at least appears to. Some people say that God is a lot like that.

Lastly, if one argues against globalization (really, capitalism itself), there is a counter-argument people can make against you: that you are against "progress" ( a problematic word and concept, which we may discuss at another time).

wingedcentaur

Good Morning Friends,

Some of you might think my analysis of the economy bizarre. That's understandable.

But I would point out much about economic growth is unknown. Noam Chomsky cited economist Paul Krugman, from a publication of the Royal Institute of International Affairs in London, in which Krugman made five basic points (Chomsky, Noam. Profit Over People: Neoliberalism and Global Order. Seven Stories Press. New York, Toronto, London, 1999. p.25).

Krugman's five basic points.

1) Knowledge about U.S. economic development is very limited. For the U.S., two-thirds of the rise of per capita income is unexplained..... (certainly as of 1999).

2) Conclusions with little basis are constantly being put forward to provide doctrinal support for policy.

3) "Conventional wisdom" is unstable, regularly shifting to something else, perhaps the opposite of the latest phase, though its proponents are again full of confidence as they impose the new orthodoxy.

4) In retrospect, it is commonly agreed that they economic development policies did not "serve their expressed goals and were based on "bad ideas."

5) "Bad ideas" flourish because they serve the interests of powerful groups.

So, again, there are limits to immediately available rationality. As we saw, for example, with the case study of Sara Lee in the late nineties, ".. Wall Street,..., is guided by spiritual goals as well as economic ones" (Klein, Naomi. NoLogo. 2000, 2002. p.199).

I want to say a word about dialectical materialism or dialectical determinism. Anyway, dm is an approach to studying history that gives primacy to the means of production and changing means of production. And this analysis sees the means of production as central to informing the political, economic, social, legal, philosophical, artistic, and perhaps even scientific life of a given society. Politics, economics, social customs, law, art, and science do not arise independently of the dominant means of production.

I imagine the main objection to this is that dialectical materialism seems to reduce human motives to the crass material, potentially offering a rather robotic view of humanity. This is a wrong path it can take. But as I have been trying to show: materialism is not just materialism; money is not just money; and wealth is not just wealth. These things are for us, all of us to greater and lesser degrees, symbolic in this respect, to our nearness to "God." Man is the desire to become God. Money has spiritual ideology bound up within it, which is the invisible or real "virtual" source of its value.

I'll say a little bit more about this later.

wingedcentaur

Good Evening Friends,

As I say, my starting point for the reflections in this blog is: Man is the desire to become God - as Jean-Paul Sartre informed us. I think we're quite right to invoke "God," due to the literally astronomical sums of money handeled by global financial and investor sector.

You may have heard that the U.S. government committed 23.7 trillion dollars to reconstitute the American finance sector. And remember when I told you how, by 1995 trading volume on global financial transactions had come to over a trillion dollars a day?

Did you know that a trillion, the quantity of one trillion is one hundred times the age of the universe (1)?

Let me just very, very briefly pick up the thread from yesterday. In the 1980s there was a pop group, a sibling act called The Jets, and one of their greatest hits was a tune called Rocket 2 U. The song is about a young man whose girlfriend has taken to treating him like her guy Friday. It seems she is constantly calling him up, asking him to come over and tend to various utilitarian matters: her pipes in her kitchen sink might be clogged up; her car won't start; the cabinet door creaks; her cat is stuck up a tree, and so forth.

In other words, the young lady in question, is treating the protagonist of this story like an instrument, a tool. She is objectifying him. The young man singing the song is pleading with her to understand that he is not her handyman, but one thing he can do is "Rocket 2 U, baby."

I was saying yesterday that globalization, always started by leading world economic powers, creates this very dynamic. What we call globalization is a way of a leading world economic power to say to the rest of the world: "You grow it for us. You make it for us. You fix it for us. You do all the mundane little things that we, in our serene majesty, simply cannot be bothered with. We'll do the thinking, planning the global order." Remember the connection we made to rich individuals and their addiction to services, paying to have people tend to them in every conceivable way - which is a mark of social status far more so, these days, than the clothes you wear of the gadgets in your utility belt.

This is why I said that capitalism actually undermines international relations in a subtle way. The New Money/Old Money dynamic is always at work to drive the system away from production. We talked about this, but basically the world's bourgeoisie come to a point when they treat productive capacity like a hot potato. Remember the game "hot potato?"

Oh, and I wanted to mention this. What do we hear concerning countries of the developing world, with respect to the global order? They want a "seat at the table." What is this "table?" It is the proverbial and real conference table around which sits the most important countries plan the galactic order for the next few years. This evoked desire to have a "seat at the table" is an expression of the desire to graduate from the perceived status of objectified handyman to global thinker on par with the other important powers. I suppose they need to become "knowledge-based" societies as quickly as possible.

Friends, isn't global warming also a factor? One can see how the idea of anthropocentric climate change might also give an impetus to deindustrialize - which is what the capitalist ruling class want to do anyway (2). If we are warming the planet through burning fossil fuels and by our methods of production in general, why then, we just have to cut back dramatically on nasty factories and such.

We might note, here, that Naomi Klein identified another form of offshoring. She wrote:

"For some corporations a plant closure is still a straightforward decision to move the same facility to a cheaper locale. But for others - particularly those with strong brand identities like Levi Strauss and Hanes - layoffs are only the most visible manifestation of a much more fundamental shift: one that is less about where to produce than how. Unlike the factories that hop from one place to another, these factories will never rematerialize - Mid-flight, they morph into something else entirely: "orders" to be placed with a contractor, who - may well turn over those orders to as many as ten subcontractors, who - particularly in the garmet sector - may in turn pass a portion of the subcontracts on to a network of home workers who will complete the jobs in basements and living rooms" (Klein, Naomi. NoLogo. Picador. New York, 2000, 2002. p.201).

Note this, friends, and note this very carefully. First, in this way, multinational corporation x seems to have completely relieved itself of its "carbon footprint." Second, this highly diffuse and dispersed, yet controlled production network seems to come as close as the laws of physics will allow, to the effect of the products they want to sell, appearing out of the air, by magic (a fantasy no doubt many such "green" CEOs indulge in, for Man is the Desire to Become God, as I may have mentioned once or twice).

This is an amazing thing when you think about it. I'm being quite serious. Consider it, a factory disappears from the face of the Earth, and yet its production activity continues - the very factory that disappeared. What does this remind you of?

It reminds me of an amputee who intially claims to be able to still feel his missing limb.

Just a disgusting, but I hope, amusing sidenote from the world of literature. In Clive Barker's novel, The Great and Secret Show, the psychopathic antihero encountered an old man who was an amputee. The man claimed to be able to feel the missing limb, years after he lost it. Not only that but he said that he could still jerk off with it, the "ghost" limb. He did so in demonstration for our protagonist.

Anyway, back to the factory. This might be what Slavoj Zizek calls the reality of the virtual (you should see this seven part video of this title, The Reality of the Virtual, on YouTube). The idea is that things that are not fully actualized in the physical world, nevertheless, having efficacious impact in the real world, and indeed, something must be virtual to be effective in the real world. And so on and so forth. Watch the video, it's fascinating.

In any event, global warming is a concern of the liberal wing of the bourgeoisie, not the conservative wing, broadly speaking. Despite their rhetorical and doctrinal differences on the subject, this does not alter their behavior as a class. The tendency is always to turn away from production.

Remember, "Instead of seeking to restore the older manufacturing industries or build the new technological sector, Washington authorities steadily protected and advanced banking and finance, providing rescues from perils, insolvencies, and crises hitherto regarded as being hazards of the marketplace. The continual eminence of both the treasury and the Federal Reserve furnished a central continuity between the eighties and nineties and the Republican Bush and Democratic Clinton eras. Finance was in a bipartisan catbird's seat" (Phillips, Kevin. Wealth and Democracy. p.97).

As you know, the Bush and Obama administrations rushed to rescue the financial institutions and let the auto corporations go bust. I understand they have staggered out of Chapter 11, reorganized, made public pronouncements about how they're going to make better cars, recommit to excellence and customer satisfaction, yada, yada, yada.

Some people might point to this as proof that bourgeoisie class solidarity is not operative. They'll say its not about class at all. Other people talk about how there's been a morphing of who the ruling class is - it's all about finance, legal services, and information services, and the like. I think the research we've looked at suggests that the ruling class morphs what they do but pretty much the same people stay on top.

Finance is a process not a thing or a specific group of the bourgeoisie. Industrialists, as well as bankers, practice the dark arts of finance. General Motors has GMAC, a bank or something.

General Electric sold off its consumer appliance division to emphasize huge profits of its General Electric Credit Corporation, and by 2000 GE credit banks were as far afield as the Czech Republic. Ford Motor Corporation came to rely on enormous profits from its subsidiary, Ford Credit Corporation, which was heavily involved in global hedging (Wealth and Democracy, p.143).

Now, suppose the federal government forced the Ford Motor Company into liquidation, never to be a viable organization again. Tough luck for the workers, of course. But the Ford Credit Corporation seems, to me, like an escape hatch for the executive layer. You see, elite class solidarity is still operative.

1) I heard Istvan Meszaros say that in a talk he gave called Marx and the Credit Crunch part one. He said he had asked an astrophysicist friend of his, how to put the huge numbers involving the bailout in perspective. That the quantity of one trillion is one hundred times the age of the universe, is the answer he said he was given. On YouTube.

2) The natural tendency is away from production, once enough of it is established upon which the economic elite can build their complexes of financial speculation. This is thoroughly "bipartisan." Just because "conservatives" or Republicans, on the whole, do not subscribe to global warming, this does not mean that they are, even theoretically, in favor of more domestic production. The Republican "side of the aisle," as you know, are much more interested in drilling for oil and nuclear energy, and so forth - energy not things or production necessarily. But Oil is a commodity and much investment is built upon it as a commodity (commodities trading, which is surely engaged in by brokers who are both Democrats and Republicans); but liberals still feel compelled to decry our "growing dependence on foreign oil," and so forth.

Here, we begin to learn of another operative dynamic, in which the bourgeoisie feel compelled to condemn something while at the same time benefitting dramatically from it. This principle seems to be operative in terms of undocumented Mexican workers, Iran and nuclear weapons, as well as fossil fuels. I my talk about this another time, but this is related to what Slavoj Zizek calls the "chocolate laxative" effect, or what we might think of as a splitting of the Self.

Chocolate laxative refers to the way capitalists spend the first half of the day "grabbing" all the money they can (Remember Don Corleone who said, "A lawyer can steal more money with a briefcase than a thousand men with guns and masks"), and the last half giving part of it away - charity. This is part of the logic of capitalism today, says Zizek. This is they way in which capitalism tries to redeem itself.

Chocolate - and I never knew this - is apparently identified with constipation. A laxative, well... Anyway with chocolate laxative we have something which is the antidote to itself. We are not talking about hypocrisy or insincerity at all. But I'll go into that another time.

Anyway, getting to the subject of this footnote, I want to just cite Kevin Phillips again. He identified four great engines that spurred economic growth starting in 1982, when Reagan was president (Wealth and Democracy, pp.91-92).

1) Military spending

2) Corporate investment, which was favored by the 1981 tax law. A lot of this money went into computers, but far more of it went into new office buildings and construction.

3) Debt: governments, corporations, and indivduals borrowed as never before.

4) Financial activities: mergers, leveraged buyouts, dealmaking, and steady growth of bank and investment sector employment.

Furthermore, much of the money made in this way was spent on luxury consumption or "held liquid for trading in assets rather than being invested in capital equipment for production," (Wealth and Democracy, p.92).

wingedcentaur

Friends, at first capitalism engenders competition in a way we can understand rationally. It is the competition among individual capitalists for market share, and so forth. We're skipping a lot of steps, but then this competition becomes embodied in nation-states, and the economies of nation-states seem to compete with each other for global market share. At first, this competition seems to be based on the real economy.

And then (always remember the New Money/Old Money dynamic) the competition takes a strange turn. The competition among the bourgeoisie classes of the nation-states of capitalist powers seems to be: who can profit the most by having the least to do with production, the real economy?

Remember we talked about how elite education gives us some clues to deciphering the motivations and behavior of the ruling class? I said that their system of education seems to teach them two things: failure is not failure and reality is what they say it is. I gave examples and suggested a link between this and the CEO pulls down astronomical compensation that is unconnected with performance or how high officials who seem to have demonstably failed in their duties but keep resurfacing and being given more responsibility and power. I told you about a classmate of mine from Canada who started college at sixteen -he was promoted because he was failing his classes in highschool. The interpretation wasn't that he needed extra help, but that he was being bored and needed more of a challenge.

Let me give you a link socialistworker.org/2009/07/29/who-does-obama-answer-to

This is an essay by Brian Jones. He tells us that he had gone to one of the elite highschools in Ohio, on scholarship. The game was soccer. According to Mr. Jones, when they played against a public school and one of their youngsters scored a goal against Jones's school, the team of that school would chant "That's alright. That's okay. You're gonna work for us someday."

A very strange chant. What this shows is that those young soccer players barely had their minds on the game. We can say that they were completely unconcerned with "production" in terms of the score. They had their minds on, in a "mark-to-market" sort of way, on a time literally decades away.

You know, I heard the historian Webster Tarpley say - on an Alex Jones documentary called "Fall of the Republic" say that the "oligarchy," which is the term he prefers, have "values that are almost the reverse of human values." It was out of his mouth that I first heard that Fitzgerald had said to Hemmingway that the rich are different from the rest of us. Hemmingway quipped, yeah they got more money. Fitzgerald said no, it's more than that.

I'm sorry to say that I accept that view a lot more than the one that they "put their pants on one leg at at time" just like you and me. Not really.

After all, why did the Bush and Obama administrations both effectively say of the auto industry "Let them eat cake!" but rush to the aid of the financial institutions?

And in the midst of abandoned car plants in America, why is the U.S. looking to outsource the job of creating high-speed rail in this country? www.huffingtonpost.com/2010/03/13/us-highspeed-rail-china-t_n_497854.html

www.blnz.com/news/2009/07/15/us_looks_private_investment_highspeed_5754.html

Asian and European firms are being looked at. But the case of China interests me the most. Remember, immediately available rationality has its limits in analyzing human behavior. In addition to everything else, this solicitation of China to build our high-speed rail is an attack on the vanity of the Chinese bourgeoisie by the American bourgeoisie.

Remember, the Chinese were one of the exploited groups who helped build railroads for America in the middle of the nineteenth century. I bet there are racist elements of the American oligarchy who would get a real kick out of the symmetry. No doubt the Chinese bourgeosie know this and will engage in much subcontracting, if they get the contract.

Goodnight.

wingedcentaur

To continue then,

The following are a couple of quotes we might describe as economic triumphalist poetry, which capture the "cocksure" attitude of the Spaniard and the Brit during these periods of their history in which finance dominated those economies at the expense of manufacturing.

Let London manufacture those fine fabrics... Holland her chambrays, Florence her cloth; the Indies their beaver and vicuna; Milan her brocades; Italy and Flanders their linens... so long as our capital can enjoy them. The only thing it proves is that all nations train journeymen for Madrid and that Madrid is queen of parliaments, for all the world serves her and she serves nobody (Phillips, K. Wealth and Democracy, p.195)."

We notice a couple of things. The globalizaing power, Spain here, sees its capital as commanding the "service" of "all the nations [that] trains journeymen for Madrid..." The Spanish elite clearly sees themselves in a relation of power with respect to the rest of the world that "serves her" while "she serves nobody." Furthermore, it seems as if capitalism, here, has recreated the dynamic that had been know to the ancient Near Eastern "divine" kings, who received "tribute" on a regular basis from all his vassals, allies, subjects peoples, and those nations recently conquered by the force of his arms.

Consider this. In the excellent book, Class Matters: Correspondents of the New York Times (2005), which talks about - class in America. It turns out the Times thinks there is such a thing as the class divide. Anyway, one chapter talks about the fact that the real demarcation of class involves services (products and clothes don't work so well in visually delineating who belongs to what class because of easy credit and so forth): how many people do you pay to tend to you. We're talking about use of nannies, educational tutors for the children, personal shoppers, personal assistants, pet grooming services, what have you.

The point is that the richer and more powerful one is, the less he has to do for himself. The quote we just looked at, concerning Hapsburg Spain's financialization, evokes this.

The plains of North America and Russia are our cornfields; Chicago and Odessa our granaries; Canada and the Baltic are our timber forests; Austalasia contains our sheep farms, and in Argentina and on the western praries of North America are our herds of oxen; Peru sends her silver, and the gold of South Africa and Australia flows to London; the Hindus and the Chinese grow tea for us, and our coffee, sugar, and spice plantations are all in the Indies. Spain and France are our vineyards, and the Mediterranean our fruit garden... (Phillips, K. Wealth and Democracy, pp.195-196).

We see here, a tendency on the part of the financially globalizing power, to regard land and resources sat on by other peoples as "ours." This, of course, is and has been a central ingredient for imperial adventure of capitalist powers into the developing world; and has been, and, scarily enough, possibly is in the future, an impetus for conflict between advanced capitalist powers (1).

I trust none of this is too controversial that capitalism undermines international relations, in the usual ways we're used to thinking about the matter. I want to argue that capitalism undermines international relations in a more subtle way also.

Remember how we defined globalization. It is the process that happens when the economic elite sharply reduced emphasis on manufacturing in favor of wealth creation by finance and speculative investment. If a country is not going to make certain products for themselves anymore, so much, they have to get these good from other countries with cheaper labor, of course. Hence, globalization.

American-led globalization of the last thirty-five years was, in a sense, effectively in fact, a way of America saying to the rest of the world: We'll do the thinking around here, planning the global order, keeping the galaxy in one piece and so forth. You all just make our Nike and Addidas sneakers, tennis clothes, cheap knock-off boutique brands and the like. You just make our computer chips, and so forth, and we'll do the thinking.

What happens here is that other nations and other peoples are objectified, reduced to the "dumb blonde," and children role: they are to be seen not heard. So, when productive capacity is sent from an advanced capitalist economy to a developing nation, the bourgeoisie of the latter country - paradoxically, although they are the prime beneficiaries of that country, at some level, they also see this, on an unconscious level, as a bit of an insult.

They, the bourgeoisie of the developing nation, are therefore eager to see the insult lifted as soon as possible. And this is why, I think, they are happy to see those plants relocated to another country with even cheaper labor costs. All they need (and I say, want) to remain is a little "dab" of productive capacity, upon which they can build their own complexes of financial speculation.

1) I heard Tariq Ali speak to this point in a talk available on the Internet called "On War, Empire, and Resistance."

wingedcentaur

Good Evening Friends,

It seems I lost some of my post last time. So I'll just have to create it now in this new post. We ended last time with a quote from Kevin Phillips, who quoted Foreign Policy magazine, which talked about state policy that focuses on financial assets is all about wealth creation, with the manufacture of goods and services not considered except as a secondary consideration. We started to refer to chapter four of Phillips's book, Wealth and Democracy (2002), "The World is Our Oyster: The Transformation of Leading Economic Powers."

This chapter talks about financialization, what happens when national economies become dominated by finance and wealth creation based on speculative invesment at the expense of manufacturing: what this means for the gap between rich and poor; what this means for the middle class; what this means for societal health; and so forth. In fact I would say that this is a central theme of Mr. Phillips's writing as a whole. The tendency of capitalism always renounces production - as strange and counterintuitive as that might sound - after an intial period of industrialization (always, always, always remember the New Money/Old Money dynamic here) before the inevitable turn to deindustrialization.

New Money always wants to become Old Money or God-Money, just as quickly as possible. Financialization is a long established method the bourgeoisie uses to try to achieve this. Phillips (in the same chapter referred to previously) says that financialization is nothing new in the history of the world. He implies that the same thing can be seen in the medieval and even ancient periods, no less so in this era of capitalism (the latest expression of elite class solidarity and wealth accumulation.

For example, in 1971 90% of international financial transactions were related to the real economy - trade and long-term investment. 10% were speculative. By 1990 the percentages were reversed. By 1995 about 95% of vastly greater sums were speculative and about 5% were related to the real economy. The trading volume had reached to over a trillion dollars a day, and they tended to be very short term, 80% of them with round trips of a week or less (Chomsky, Noam. Profit Over People: Neoliberalism and Global Order. Seven Stories Press. New York, Toronto, London, 1999. pp.23-24)

You see, a little dab'll do ya. The international finance/investment sector do not require (and I argue do not want) a lot of production to get the wealth machine churning. Five percent out of more tha a trillion dollars a day is more than enough for them, thank you very much. They can take real production and build complexes of speculation on top of it, and build additional speculation on top of the first round of speculation, as we have all come to know.

And now some quotes from Kevin Phillips's Wealth and Democracy: A Political History of the American Rich, 2002.

As societies consolidate, they pass through a profound intellectual change. Energy ceases to vent through the imagination, and takes the form of capital. Brook Adams, The Law of Civilization, 1896 (Phillips, K. p.171). Pretty self-explanatory.

History repeats itself, but only in outline and in the large. We may reasonably expect that in the future, as in the past... that new civilization will begin with pasture and agriculture, and expand into commerce and industry, and luxuriate with finance. Will and Ariel Durant, The Lessons of History, 1968 (Phillips,K. p.171).

I like that phrase, "luxuriate with finance," which, of course, is the goal of the ruling block - to come as close to God-like inevitability with respect to wealth as possible. Although I am not even going to summarize Phillips's argument at all, I will just mention in passing that he provides three historical mini case studies in Chapter Four of his book "The World is Our Oyster." These are Hapsburg Spain of the 1500s and early 1600s, Holland of the 1600s and early to mid 1700s, and Britain of the 1800s and early 1900s.

We'll go to another post and look at two more quotes.

wingedcentaur.

Good Evening Friends,

I am going to try to persuade you that globalization should be properly thought of: as the process that occurs when the economic elites (with the political elites being pulled along in tow) of leading world economic powers (in this case the United States) restructure the national economy in such a way that gives a severely disproportionate weight to finance above all other sectors of the economy including manufacturing. The economy, in this way, becomes more about financial services, legal services, information services, and the like.

I could be wrong but I believe it was former vice president, Al Gore, who, in the nineties, said that the United States was evolving into or had become a "knowledge-based" society. Remember that, please, for later.

If a country is going to be increasingly more about making money by moving it around, than making things, well, we have to get those things we aren't making anymore from someplace else, other countries.... Globalization.

In his book, Wealth and Democracy: A Political History of the American Rich (2002), Kevin Phillips quoted a 1996 article in Foreign Policy magazine called "Securities: The New Wealth Machine," explaining that securitization is the issuance of high quality stocks and bonds, generally, which had become the most powerful wealth creation engine in the world. According to the article, while societies used to acquire wealth slowly, they can now do so quickly and directly, but we must keep in mind that "the new approach requires that a state find ways to increase the market value of its productive assets." And, according to Phillips, the article made itself more explicit by saying -again, talking about state policy - that "an economic policy that aims to achieve growth by wealth creation therefore does not attempt to increase the production of goods and services, except as a secondary objective (p.104)."

In other words, when you liberalize finance, you tend to correspondingly restrict trade - and still you have globalization (notice, I say that last part without irony; no quotation marks around the term 'globalization').

Chapter four of Wealth and Democracy, is called "The World is Our Oyster: The Transformation of Leading World Economic Powers." In that chapter Phillips talks about the financialization of the economy and what that has meant in terms of social stability, income inequality between rich and poor, deterioration of public health, squalor, mass pauperization of the working class, and so forth.

I'll continue this next time.

wingedcentaur

Good Morning Friends,



It has only recently occurred to me that capitalism is merely the latest expression of class solidarity (of the bourgeoisie or ruling block as a whole with each other) and class control of the rest of us. This dynamic, obviously, had expressed itself in other forms throughout history.



Capitalism is only a few centuries old, four hundred years or so, which is a small span of time in the entire recorded history of humankind. Class hierarchy was not brought to us by capitalism. So, all of the "distortions," "problems," "corruption," "government interferences," and so forth, are an expression of a simple truth: class solidarity* trumps capitalism, socialism, communism, or any state-directed economic system that nominally orders a given society.



I think that is what I've saying all along. With this understanding we can turn our attention to the former Soviet Union. I don't need to tell you all that a lot of energy went into asking the question: What went wrong? A lot of energy went into the more fundamental question: Was the Soviet Union a real communist system.



As you know, upholders of capitalism, "left, right, and center," say, yes it was, and the collapse of the Soviet entity is proof that socialism doesn't work. Cut and dried. Sections of the far left, in and out of the former Soviet Union, say that that system was not true communism, or that at some point the dream had been corrupted. Other parts of the radical left, in the last fifteen years, have said, no, in fact, the Soviet Union was a state capitalist system, after all.



"Communism has never been tried." That's a phrase I remember hearing a lot in the 1990s.



Conversely, as you know, when there is a problem in capitalism, the domestic and international political consensus that upholds capitalism, say that there are technical problems in the system that can be worked out with new regulations, or by allowing the system to work the way it is supposed to - "market discipline," I think this is called. Left, right, and center (mainstream analysis) also accuse the system of having morphed into an unholy hybrid of itself and the other.



They throw around populist phrases like "Socialism for the rich," "crony capitalism," and so forth. People are always complaining that certain special interests are not "playing by the rules," and all the rest of it.

I don't think we are served making assumptions that somehow, in some way, the United States is not really capitalist or capitalist enough; nor does it do us any good to say that the former Soviet Union was somehow, in some way, not communist enough. The United States was and always has been a real capitalist (at least in the way that the accumulation of wealth is openly stated as the goal and celebrated by the general society; it is a separate question as to whether we live in a "free market"* society and globalized world) society. The Soviet Union was a real (as it is possible for a state system) communist society.

In the 1990s Russia experienced an economic catastrophe that many people blame on neoliberalism (it certainly didn't help). Boris Yeltsin was president and the country was subjected to a regimen of structural adjustment which called for privatization of state industry and the removal of price controls. The price of food skyrocketed, and the average Russian found themselves having to sell their possessions just to eat.

For a discussion of all of this, see the Adam Curtis documentary film The Trap, part three "We Will Force You To Be Free," starting at about the thirty five minute mark. You should watch the film in its entirety, it's very enlightening and instructive. It is, of course, available for viewing in full on YouTube.

Anyway, all state industry was to be privatized (1), and Russian citizens were given vouchers for shares in the newly created private companies. Remember, they had to sell the lamps, tables, chairs, and what have you, to earn the money to eat; oh yes, did I mention the rampant inflation that eventually rendered the currency near worthless?

And they had to sell the vouchers for shares for food as well. Russian businessmen stepped forward to buy up the vouchers. Through this way and by direct negotiations with Yeltsin's administration, these businessmen bought up perhaps half of Russian state industry, sometimes at less than two percent of its value (but still running into the millions and far beyond what an average Russian could afford, I'm sure).

These businessmen became the so-called "oligarchs." The question is simply this: How is it that these businessmen had the power and wealth to buy up Russian industry, this way, when the chance presented itself. In other words, they had to have been previously empowered, in confirmation of the fact that (state) Communism was but a way of bourgeoisie solidarity and wealth accumulation.

Anyway, Vladimir Putin was elected after Yeltsin. Putin is a former KGB man and as such, a representative of the national security/military/intelligence. Putin jailed or exiled most of the oligarchs. This was seen as a popular move at the time, but I think this action has at least as much to do with the traditional, historical distaste of the elites for the merchant classes.

I'll leave it there. At some point we will need to say a word about what David Harvey calls "uneven geographical development," in relation to state-driven economic systems are different faces of the expression of class control, but not today. Later. Today I want to talk about something else.

wingedcentaur

Good Morning Friends,

You know, you can simply Google the terms 'grade inflation,' and 'Harvard,' and you will be referred to numerous articles about the matter. Go through some of them and one thing you find is that - among those that accept that grade inflation exists and is a problem - they all identify the starting period of this issue as the 1970s. This is important because the late seventies is commonly identified as the period when neoliberalism (which is simply the resumption of pre-New Deal capitalism, modernized; and neoliberalism has many more techniques of 'virtual' capitalism at its disposal).

Roughly, the New Deal (Roosevelt), Fair Deal (Truman), Great Society (Johnson) period went from the late 1930s to 1974. Remember, even Nixon (1968-1974) signed a whole raft of anti-corporate legislation (such as the Environmental Protection Agency, instituting wage and price controls and so forth; but he did so with a sigh, saying "I guess we're all Keynsians now."

Neoliberalism is about the elite shaping reality by decree. Remember we talked about the documentary movie, Enron: The Smartest Guys in the Room. A central feature of Enron's operations in the 1990s was "mark-to-market" accounting. Bethany Mclean, a writer for Fortune magazine, co-authorof the book, Enron: The Smartest Guys in the Room, showed up on camera to explain the term.

Mark-to-market was an approach brought to the company by Jeff Skilling. Being able to "write his own ticket," it was one of the conditions he set for agreeing to come to work for Ken Lay. Mclean said that Skilling really believed that one should be able to come up with an idea and immediately "book" the future anticipated profits from that idea. Otherwise, some "lesser" man could potentially profit from an idea that a "greater" man had had in the past. Mclean said that Skilling really believed the idea was everything.

That is mark-to-market accounting in a nutshell. Mclean said that Arthur Andersen, Enron's accounting firm, "signed off" on it and the SEC approved it. Yes, young divinity, we confirm your powers.

As you know, neoliberalism is very touchy about intellectual property rights. Its my idea and you can't have it! I thought of it first! See Nobel-prize winning economist, Joseph Stiglitz's discussion of this point (not quite in our language, of course) at Authors@Google: Joseph Stiglitz. You want to go to about the twenty-five minute mark.

The most disturbing manifestation of the God-drive is the desire of neoliberalism to patent genes.

You see, not only do corporations want gods of culture, as we discussed. Not only do they want to be gods of war with the privatized military. They want to be gods of learning with privatized schools and charter schools. They want to be elemental gods. And they want to be thought of as life-bringing gods.

Bechtel tried to compel the nation of Bolivia that they were a water divinity.*

One more piece about Bernie Madoff. There is a documentary piece about his Ponzi scheme scandal. It's a report done by Frontline. You can go to PBS.org to view it. Its called "The Madoff Affair."

Madoff had gone on, doing his thing, for at least forty years. From time to time eyebrows were raised but nothing ever came of it. There was a wonderful recollected moment when the correspondent interviewed a business writer, who had interviewed Madoff . This business writer had recalled Madoff as having been cool, too cool.

There were scattered remarks floating around about his returns being "Too Good to be True," and so forth. But the sheer amount of money he had under management was news in itself. At one point in the interview the business writer said that Madoff said, "Give me some credit for having been in business for forty years..." for having developed solid relationships, having access to proprietary information, having built a reputation for trust and so forth. You should go to the documentary to check it out.

The remark, as the business writer recalls it, is revealing. On one hand its was a plea: Please believe me! On the other hand it was a command: Don't you know who I am, you plebian?! Reality is what I say it is!

We can look at this, in retrospect, as Madoff's desperate attempts to invoke his waning powers. Some of them are luckier, for they become the Old Money.

wingedcentaur

* www.cbc.ca/news/features/water/bolivia.html

Good Morning Friends,

We have been talking about the discernible link between how the bourgeoisie are educated and how they exercise power in the real world. I have argued that the top one percent, generally, and the top level of that one percent, especially, are basically, in an institutional way, assured that they can reshape reality by declaration. I ended the last post by citing a line from The Godfather II when Michael Corleone, now the head of the "family" has a meeting with the powerful senator of Nevada about some licenses for some casinos. The senator insults Corleone first, in a most unfriendly, almost racist way, before saying yeah, you can have the licenses - for a huge fee payable to me, and so forth.

At one point Corleone said, "We're both part of the same hypocrisy, senator."

Bernie Madoff. I started flipping through a book on Madoff. But for our purposes I am interested in one tiny episode in his life.

You know, a lot investigative work, both journalistic and legal, presumably, is going into trying to figure out: Was Madoff's operation always a fraud or had it previously been legitimate before morphing into a racket; and if so, at what point did the operation become a fraud?

What I want to say is that the question, for our purposes, is rather beside the point; and this has certainly been so since the late seventies. The educational system trains the ruling block to think of reality itself as subject to their decree. One man comes out of the educational system and goes into the world and he is a prominent "law-abiding"* high-ranking government official or revered, un-indicted business tycoon, or an eventual white collar "criminal." It's almost a question of fate as which side of the line they end up on.

"In a sense, the fraud was a vast, unwitting conspiracy among Madoff, his colleagues, family, friends, and investors. The conspiracy perpetuated a fantasy. Madoff promised returns that were too good to be true, and everyone else conspired to believe his unbelievable promises. Madoff was a master illusionist (1)."

Those returns had to be true because Madoff was "gifted." Everybody said so, friends, family, colleagues, and investors. Red flags had been raised over the years, issues and inconsistencies brought to the attention of the government. But the SEC rejected those concerns, for whatever reason, said that Madoff was doing nothing illegal and that, in fact, he was "gifted." The institutional system had granted Madoff, as an individual of the ruling class, the sorcery powers of reshaping reality with a word. When those two FBI agents showed up at his door and asked him if there was an innocent explanation, the state took those powers away, and branded him a criminal.

Anyway, in the 1950s, Far Rockaway Highschool, where Madoff attended, had been considered one of the best schools in New York City (2). There, he was known as a bright guy who didn't work too hard, who was, at that time, "not going to his potential," (3) and so forth. There's a revealing espisode, while meaningless by itself, though some viewed this in connection with other episodes as ominous indicators as to how Madoff might proceed in business; we are interested in what the episode points to institutionally.

For one class in highschool, his class had to give oral book reports. As one classmates recalls the event, Bernie, who obviously had not read a book for the assignment, winged it. When Madoff's turn came he "smoothly" announced the title of the book as 'Hunting and Fishing' by "an author no one had ever heard of, Peter Gunn." Snickers emerged but the class suppressed outright laughter because "no one really wanted to see Bernie fry (4)."

We never learn what grade he got, but the feeling one gets from reading that episode, is that he "got away with it," unlike Bart Simpson.**

It is very well to cite statistics about grade inflation at Harvard and other Ivy League schools (and of course, this happens in other colleges, as the values generated at the top inevitably filter down and infect the rest of us) and highschools, but some concrete examples are called for to drive home the issue.

We'll confine our citations to Harvard. During the period, or overlapping the tenure of Lawrence Summers was president, an economics major had gotten an A on a final identifying "supply" and "demand" as two key elements in the law of supply and demand. A graduate student in classics received an A- for a paper in which he asserted that the Theban plays of Sophocles included Xena, The Warrior Princess (remember that show starring Lucy Lawless that came on after Hercules starring Kevin Sorbo?). And a history "concentrator" got summa cum laude honors for his thesis, Positive Identification of the Body in the Tomb of General Ulysses S. Grant (5).

Ross Douthat is an interesting conservative writer and he had a revealing article in a 2005 issue of The Atlantic called The Truth About Harvard. He is a graduate and he talks about the fact that despite its prestige and the difficulty of gaining admission, once there, one finds a general lack of academic seriousness pervading its halls. I was a bit shocked to read about "shopping week" and so forth. He discusses the different factors involved in grade inflation and content deflation, etc.

But what is of specific interest to us is one of the last papers he wrote while he was at Harvard. The course was "The American West, 1780-1930." The professor handed out two journal articles on the theory and practice of "material history," historical research based on the careful analysis of objects. The students were told to go to the Peabody, Harvard's museum of archeology and ethnology, where the professor had laid out three pairs of objects from the frontier era. One object in the pair was an Indian-made one and the other was made by Europeans. They had to write a ten-page paper comparing the objects and the significance, and so forth. Now, aside from the articles on material history and a general text, North American Indian Jewelry and Adornment, they were to use no sources. He chose a Sioux war club and an American revolver and carrying case (6).

At first he agonized over the assignment, he explains. How in the world was he supposed to crank out ten pages with such thin gruel? But then, sitting at his desk two weeks later, he realized that he had been wrong. The paper turned out to be "pathetically easy" to write." And this was "not despite the dearth of information but because of it. Knowing nothing meant I could write anything. I didn't need to do any reading, absorb any history, or learn anything at all." You should read the article, where Douthat gives an excerpt giving a clear indication of the kind of folderol he was allowed to get away with, and indeed, far more than that. He got an 'A' (7).

I wish a serious survey would be done cataloging all the nonsense test question answers and term paper balderdash, but I think the implication of this mini survey is pretty clear: the ruling class not only survive but thrive, even as they spout reams of literal nonsense and they learn from the institutional structure of the education system tells them that reality is what they say it is. I think one can draw a straight line of connection between what we've reviewed here and this:

On the trillion dollars a day of currency trades on the global markets of the late 1990s (of which only 2 to 3 percent had to do with actual trade in goods or services), done obviously with the aid the Internet. "Partially real and partially unreal, with day-to-day balance simply guesswork, the profits of these digital dances seeped into the real economy, and by the mid-1990s, the financial sector - finance, insurance, real estate - for the first time moved ahead of the manufacturing sector in U.S. national income and GDP measurement (8)." Reality is what we say it is! Now, we're talking about legal activity here.

You know, one has to think that one effect on young people who matriculate through the system of elite education, is to produce cynicism within them. They must come to be convinced that nothing is real, nothing matters, and that there are no lasting values; everything's negotiable and flexible. A certain amount of contempt for the world must be bred as well, even as the next generation of bourgeoisie leadership are given their powers and takes the field.

Bernie Madoff is described as a smooth guy with a crooked grin. We have a lot to learn but it seems clear that a lot of what his operation was about his asserting and getting all kinds of other people to believe that reality was what he said it was, and for a long time the state approved of his powers. We might ask the question: Why didn't he invest the money?

But why didn't Madoff read a book for that book report? Remember (and you should read his article) Ross Douthat did his Harvard assignment precisely to the specifications laid out by the instructor; but these guidelines provided so little foundation, that he, and no doubt everyone else in the class, found themselves largely having to bluff their way through the assignment.

Again, why didn't Bernie Madoff read a book for that book report?
Answer: Why should he? There was no need. They say hard work never killed anybody, but why take the chance?

I'll just leave you with this. After all the trouble we've had with derivatives, after all the trouble we're having sorting out the "toxic," derivative-based assets, after all the risk they had accumulated (not spread as the propaganda went) and after all the damage they've inflicted and may continue to inflict, as they explode like land mine traps; state governments are using derivatives to try to get their books in shape (9).

In addition to that, there is at least a twenty year history of "the warping, since the 1990s, by some arguments, intentional, of the collection and presentation of U.S. economic data to make it more market-supportive (10)."

We're both part of the same hypocrisy, senator.

wingedcentaur

1) Arvedlund, Erin. Too Good to Be True: The Rise and Fall of Bernie Madoff. Portfolio. Penguin Group, 2009. p.8

* This is not a new thought, but Bernie Madoff was a criminal because of the system empowered him in a certain way. He didn't invest the money in the stock market like he was supposed to; and yet even following the rules there is something predatory about the stock market itself - I'll talk about that in the next post, in which we'll invoke the case of Martha Stewart.

2) ibid, p16

3) Arvedlund, Erin. p17

4) ibid, p.18

** I'm talking about an episode of The Simpsons. You know, the cartoon? Bart Simpson tried to fudge his way through a book report. He wasn't nearly as "smooth" as Bernie Madoff, and so Simpson failed.

5) see article harvardmagazine.com/2002/03/grade-inflation-resolved.html The article is written by humorist, Andy Borowitz, and he was being ironic, of course, but I don't think the examples he gave were fabricated.

6) see Ross Douthat's article www.theatlantic.com/magazine/archive/2005/03/the-truth-about-harvard/3726

7) ibid

8) Phillips, Kevin. Wealth and Democracy: A Political History of the American Rich. Broadway Books. New York, 2002. p.138

9) This was reported by NPR (WNYC) the other day. Just Google the words state, governments, derivatives, and you will be sent to many relevant articles. But I heard this on the radio.

10) Phillips, Kevin. Bad Money: Reckless Finance, Failed Politics, and The Global Crisis of American Capitalism. Viking, 2008. pp.79-80.

Good Evening Friends,

I've been saying that a good way of contextualizing and understanding the behavior of the ruling block is to take an anthropological interest in how they are trained to relate to the world within the incubator of their education system.* I think the deferential treatment they demand and receive from the educational system is part of the broader institutional system, which is, for them, a marvelous, magical space in which reality is what they say it is.** As I mentioned, for me, this dynamic we've been discussing put other things into perspective.

The financial and economic crisis and The Obama Administration. As the president was putting his government together, and we got a look at the figures he was bringing into substantial authority, people who, according to a lot of people, failed miserably in other circumstances in terms of financial and economic policy planning; or indeed, came up with or loudly cheerleaded the bad ideas that seemed to bring this crisis about, the question came up: why are these people back in positions of authority, and in the case of one or two of them, not in jail? How is it that the CEOs and other top executives reap huge bonuses and pay packages, even as their companies are imploding around them?***

Friends, do you remember the scene in The Godfather II film, when Michael Corleone, the Don now (I can't call him Godfather... There was only one Godfather and that was Vito Corleone), moved the "family" operations out west to Nevada, and he had a meeting with a powerful senator about some casinos? The senator spoke to Michael in the most unfriendly, almost racist terms, in a way that clearly indicated that he thought he was better than Michael and his "family."

The senator told him that the Corleones and all their like disgusted him, as well as the terms for getting those licenses, what his cut was to be. Finding the proposed terms not to his liking, the Don made a counterproposal: nothing. Anyway, the senator leaves in a huff (he tries to affect easy amusement, as if listening to the rantings of a child, but he left in a huff). The senator's final insult is this: The Corleones are not to contact him, the senator directly ever again. "From now on you deal with Turnbull," said the lawmaker.

But at one point of their conversation, Michael had said, "We're both part of the same hypocrisy, senator." When I firts heard that line, years ago, I didn't think anything of it. I took it in very, very general terms: the whole world is a cold, cruel place in many ways. Like that.

I never imagined how literally true it could be. This brings me to Bernie Madoff and I'll continue with this tomorrow.

* The bourgeoisie, the top one percent in economic terms, in a sense, have a separate educational system from the rest of us. It is to train them to be the future intellectual and political leaders of society, and the rest of us to be their servants (I'm exaggerating but not by much). Students who matriculate through this elite apparatus, at times, say this openly: see essay by Brian Jones

socialistworker.org/2009/07/29/who-does-obama-answer-to

Even when they go to school with the rest of us plebians, they are somewhat isolated from the rest of us, through the mechanism of "Gifted and Talented" programs.

** You can just Google terms like 'grade inflation,' 'content deflation,' 'Harvard,' and so forth and you can read articles about the persistent problem of grade inflation at Ivy League schools and other colleges, as well as high schools (especially those considered 'feeders' for the Ivies, and so forth. Recall the young man from Canada, I told you about who started college at sixteen. He began failing his classes in high school and teachers and administrators decided he needed to be promoted, instead of held back or given extra help. Failure is not failure for the ruling block, and as I mentioned, this dynamic runs right through kindergarten through graduate school through politics and government and business. Why is it that discredited figures from the past keep showing up in positions of authority to help solve this financial and economic crisis? Why do CEOs and other top executives who have demonstrably destroyed their firms, nevertheless, collect astronomical bonuses and compensations packages.

*** My theory is, taking something from the article by Jennifer Senior : The Myth of the Gifted Child: the junior meritocracy, I have speculated that he (my classmate from Canada) must have taken one of those I.Q. tests of four years of age or so, and throughout his academic career, the book on him must have been that he was gifted, so if he failed his classes, there wasn't something wrong with his understanding or study habits, it must be the teacher's fault of something. It seems that students in college feel much more free, these days, to second guess the professors about their grades. If a CEO caused his investment bank to take way too much risk with predictable, results, an utter implosion, why, it can't be his fault, he's "gifted." If a member of the Obama administration, responsible for helping to shape the response to this current recession, advocated for exactly the wrong policies that brought us to this sorry state today, it can't be his fault, for he's "gifted." The fault must lie elsewhere.

wingedcentaur

Friends,

Oh yeah! There was one more quote I wanted to offer from the Jennifer Senior article.

"The irony is that doing well on these exams [to determine the eligiblity of students for Gifted and Talented programs] can be just as damaging as doing poorly on them. "Gifted" is an awfully uncomfortable label for some children to wear. It can cripple their thinking, make them terrified of risk (p.82)."

And according to one administrator, '"It's not entirely inaccurate to observe that more and more high-achieving students go off to university and don't care about anything. They don't ask questions, they don't have original ideas. And its not because there's anything wrong with them, but because they were conditioned to believe that learning is about giving back the right answer.... These tests, at 4, start that long process of conditioning. Right then, children start to believe that learning means pleasing the powerful adult in whose presence you are (p.82)."'

It is these youngsters, crippled in their thinking and "terrified of risk," who are supposed to be the ones who grow up and take the helms of the commanding heights of the economy, becoming America's "free market" crusaders. We'll talk more about this when we briefly discuss Noam Chomsky's theory of "really existing markets."

wingedcentaur

Good Morning Friends,

Today I would like to briefly talk about an article that appeared in the Feburary 8, 2010 issue of New York magazine. The article is either called The Myth of the Gifted Child, as it appears on the cover; or it is called The Junior Meritocracy, as it appears on the inside. I hate when they do that! In any event, the article was written by Jennifer Senior.

The blurb on the front cover reads: "If a four-year-old aces an intelligence test, she is often set for life. Trouble is that test is worthless." That is the point of the article, and let me say, that this article possesses personal meaning for me, but not in the way you might think.

It seems that almost every prestigious private school and selective public school in New York City requires standardized exams of some kind for admission into kindergarten. Yes, friends, kindergarten! Indeed, some schools giving such tests "... so much weight that they won't even consider applicants who score below the top 3 percent." and "... if a child manages to vault over it," [this threshold] "and in turn gets into one of these selective schools, it can set him or her on a successful glide path for life (p.28)."

Applicants might have to take the WPPSI-III. I don't remember what that acronym stands for but it is administered by the Educational Records Bureau, and for that reason it is known by many parents as the ERB test. Some schools may require the OLSAT test: Otis Lennon School Ability Test. Some may require the Stanford-Binet Intelligence Scales, which cost $275 to take. And it seems that there is an overlapping testing regime to see which student qualify for Gifted and Talented programs in schools.

I went to a solid public elementary school where there was a G&T program. I was not in it but I remember there where kids who were. An announcement would come over the public address and some kids would get up and go off somewhere, if memory serves - right in the middle of some class with the rest of us ordinary students. I remember wondering, at times like this, where they were going and what they were doing and what was happening to them.

Anyway, parents might drill their four-year-olds to an hour or more at a time, getting them ready for the big test with practice exams, with the help of a $350 "evaluator," perhaps a psychology graduate student. Some of the tests are given by licensed teachers and focus on "school readiness." Some of the tests are given and evaluated by psychologists and focus on abstract thinking and conceptualization.

But, then again, all the tests are pretty much the same. No matter which test a child takes, odds are they will all be asked to "do something with triangles," as one professional put it.

Of course, failure to meet these thresholds "hardly spells doom," as the article put, because the very fact that certain youngsters find themselves in such contention shows that their families occupy an elevated class position to begin with. But to those lucky four-year-olds who make the cut, the added advantages "reverberate into the world beyond," since "acing" such exams often lead them into gaining admission into elite high schools such as Hunter College High, Trinity, Dalton, and others.

And from there, about a third or more of them go on to the Ivy League colleges, with all the promise that having those institutions on their resumes. These tests make allegedly quantitative, static, unchangeable determinations about a child's intelligence quotient. The article says that 110-120 is considered smart; 120 to 130 very smart; and a score of 140 or more, and people start using the term 'genius' and so forth.

The article never answers its implicit question: why is such a system in place. A question worth asking, especially since "Even administrators who use the exams - indeed, especially the administrators who use these exams - say they're practically worthless as predictors of future intelligence (p.30)." I.Q. is naturally fluid, in other words, and it can deteriorate if one does not keep his or her mind engaged.

In fact, David Lohman, a psychologist at the University of Iowa, who, in 2006 co-authored a paper called 'Gifted Today But Not Tomorrow?,' was asked: how many four year olds who scored a 130 or above would do so again as seventeen year olds? His answer was about 25 percent (p.31).

The article almost answers its own question when Jennifer Senior wrote: "Rather than promoting a meritocracy, in other words, these tests instead retard one. They reflect the world as it's already stratified - and then perpetuate the same stratification." You see, Senior goes right up to the edge but then turns away.

You know, I went to Rutgers University in Newark for a time. One year I stayed in a dorm with a young man from Canada. He had started college at sixteen. He was eighteen when I met him, and on track to graduate at twenty years of age. He was asked how he came to enter college at such a relatively young age.

He explained that there had come a point in his education when his performance deteriorated. In fact the words he used was that he was "failing" his classes. The assumption that he might have needed extra help or that he should have been switched to a remedial program was, apparently, never entertained. It was never assumed that he needed to "buckle down," and so forth, to master the material. Instead the assumption was made that he wasn't being challenged enough by his classes, that he was bored, unstimulated. The solution, to his teachers and parents, was obvious: he needed to be promoted.

You should keep this in mind in relation to how this government is handling the financial crisis, with respect to the figures who keep resurfacing in positions of authority in the Obama administration (figures whom a lot of people have said have demonstrably failed in previous positions of policy planning and who actually promoted policies that helped cause the crisis and so forth). How do they keep managing to turn failure into success? How do they manage such a trick?

I think what the experience of my friend shows, in connection with the insight into how the bourgeoisie educate their children provided by this article, is that the ruling one percent live in a marvelously sealed magical reality, in which failure equals success. Not only does failure equal success. Failure is not really failure in their world. Failure is not an indication that one is beyond his or her depth, but rather an indication that you are not being sufficiently challenged. You need a much greater challenge and more responsibility and authority, and you will surely rise to the occasion and realize your potential.

So, my friend had obviously had an established reputation for being "gifted" from an early age. It seems likely that he had taken some intelligence test at four years old or so, and that "objective" data was never questioned or revised in any way. High schools and colleges collude to maintain the illusion. I would refer you to an article in USAToday.com about Ivy League grade inflation.

www.usatoday.com/news/opinion/2002/02/08/edtwof2.htw

It's dated 02/07/2002. You may recall there was a grade inflation "scandal" at Harvard several years back. An analysis had found that eight out of ten Harvard students graduated with honors, and nearly half received A's in their courses.

A few more statistics from this article.

1966: 22 percent of Harvard undergrads earned As in their courses
1996: the number rose to 46 percent
1996: 82 percent of seniors graduated with honors

1973: 31 percent of Princeton undergrads earned As
1997: the number rose to 43 percent
1997: only 12 percent of all grades were below the B range

The article says that there are well documented cases of high schools doing this too.

The article raises and dismisses all kinds of reasons offered by professors - some with greater validity than others, while pointing out the most obvious one: "Families paying more than $30,000 a year for college education expect something more for their money than a report card full of gentleman's C's." By the way, "gentleman's C's" are inflated grades as well, are they not?

Okay. But read the article. It's very short and to the point. Now, with this crisis we're living through and with state governments slashing budgets, left and right, we can expect tuition and other fees to go up at colleges and universities, I would expect that we will see increasing pressure on grade inflation, as well as increasing pressure on content deflation, in terms of difficulty of the material offered in college courses.

Here's how I interpret the data given in that article. It is the unconsciously directed, institutional expression of the following anxiety: These kids can't be ordinary! They just can't be mere mortals! They are the future "leaders of the free world" in politics, "masters of the universe" in business and finance, and conquering warlords (no doubt as commissioned officers occupying strategic and tactical planning positions, far removed from the drudgery of actual combat) in the military. They can't be like the unwashed masses!

And I think this dynamic goes a long way to explain why it is that corporate CEOs and other top executives get astronomical bonuses and pay packages, that appear to be entirely unconnected with performance. The institutional dynamic is in place by the time they start kindergarten. Failure does not mean failure in the world of the ruling block.

Now, given what we know about grade inflation in high school (the aforementioned article refers to "well documented cases of grade inflation in high school; and while it did not say so, no doubt these cases mostly occur in the elite high schools, that serve as feeders for the Ivies) and college, we must consider what this means in light of the latest alarm bell to ring out of Washington that our education system is broken.

As you know, the Obama administration is putting pressure on state governments to, among other things, lift their caps on the number of charter schools they will allow, in order to get federal money. Let me just put the matter this way: Will the transfer of money from the public sector to the private sector lead to the dumbing down of America?