Wednesday, November 12, 2008


We live at the end of the second Robber Baron age. The first Robber Baron age ended October 29, 1929. That economic system was referred to as "Liberalism".

The current Robber Baron age started September 11, 1973 when the CIA murdered Salvador Allende in Chile and Milton Friedman's Chicago School of Economics began the rape of the Chilean economy. Since that time, no economy has been spared and now it is our turn. In our era the economic system is referred to as "Neo-Liberalism" most everywhere in the world. In the US it is called Reaganomics, Thatcherism, Supply-side economics or Trickle-down economics.

The man who codified Liberalism, which is really nothing more than unregulated capitalism, was Adam Smith in Wealth of Nations.

One of the hallmarks of "(Neo)-Liberalism" is unregulated markets. According to theory, unregulated markets allow Adam Smith's "invisible hand" to operate and thus maximize wealth and economic well-being for all.

What unregulated markets do, in fact, is create wild, uncontrolled speculative bubbles. This is the perfect environment for sharks to operate. They borrow virtually unlimited and unregulated money and use that money to blow the bubble up. The mania of the bubble eventually gets everyone invested. When the last sucker is in, the bubble begins to burst. The sharks not only get their cash out - which is really your cash - but they sell short which drives the decline further, faster and deeper. Markets crash, wealth disappears.

If I am not mistaken, the first bubble of our era was the bubble engineered by the Bill Clinton administration. Many of those bubble engineers are currently on Obama's short list.

Adam Smith and his Wealth of Nations is a fraud for many reasons but lets start at the top - competition. Smith posits that in every market there are millions of competitors, non who are able to control the market. This is not true. There are not, for example, million of farmers, there is an oligarchy. Archer Daniels Midland, Cargill, ConAgra, Monsanto. Every market has its own oligarchy. The first thing they do is get rid of competition. The second thing they do is buy a Senator from Illinois who sells out our major food crop to them for ethanol production and then gives them huge handouts (subsidies from the public purse) for their trouble.

Even if you have a brand new idea and a brand new market and you find a Venture Capitalist, the VC guys always ask this: "What are the barriers to entry for potential competitors?" The Grail they were seeking, you see, is quite simply monopoly. Competition is for losers.

Thomas Edison made this fact perfectly clear in a statement to the New York Times in 1892, explaining why he sold out to GE. "New stuff selling for ordinary hardware prices, due to competition. Not getting as big a return as I'd like". Bill Gates is the example for our era.

The Adam Smith Wealth of Nations Reaganesque myth/hustle is ever thus: risk-taking; self-made; beholden to no one; bold; unafraid of possible failure; eager to compete on the level playing field, may the best man win, et cetera, et cetera -- one has heard all this dribble a million times. This is a lie.

The Reality: they hate competition worse than the plague, and when they fail, they run to the government for a handout.

And the government, with both halves having been bought out long ago, feels their pain with the public purse which you, the working class, will replenish with your taxes.

And now we find yet another industry mis-managed by greedy, self serving individuals seeking profit by building environment-destroying, gas-guzzling SUV's which is now seeking taxpayer money to rescue themselves from the folly of their ways, not so they can produce a social product with true utility, but so they can first of all, pay themselves outrageous bonuses and then continue doing what they have always done.

Since we are going to buy it, then we own it, and the only rational thing to do is nationalize that bullshit, re-tool the assembly lines and manufacture buses, trains and the construction vehicles needed to re-build our nation's infrastructure. Throw out management and let democratically-run worker's councils to manage the industry.
Class consciousness is knowing which side of the fence you are on, class analysis is knowing who is there with you.


MarcLord said...

again, you are on fire here. Although there's no way in hell democratically run worker's councils will happen here without making Hank Paulson shish kebabs.

Jesus del Norte said...

Why thank you sir. I agree. This country will go "Mussolini" before it goes workers council. I have been thinking about the 60's though. That was an incredible period and an incredible movement or actually an amalgamation of movements, but it was premature and without good leadership. Those movement people didnt go anywhere, they are still here only now they have matured and lost 40% of their IRA's with greater losses coming. Who knows what is possible. I suspect we will all be surprised