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May 2006, Volume58 — Number 1 c o n t
e n t s When MRzine was launched on Bastille Day, July 14, 2005, Eduardo Galeano greeted it with the words: “Monthly Review in conquest of the air? Wasn't it a private kingdom of weapons, toxics, and lies? Great news for all of us, humble terrestrians.” | more |. REVIEW
OF THE MONTH It is an inescapable truth of the capitalist economy that the uneven, class-based distribution of income is a determining factor of consumption and investment. How much is spent on consumption goods depends on the income of the working class. Workers necessarily spend all or almost all of their income on consumption. Thus for households in the bottom 60 percent of the income distribution in the United States, average personal consumption expenditures equaled or exceeded average pre-tax income in 2003; while the fifth of the population just above them used up five-sixths of their pre-tax income (most of the rest no doubt taken up by taxes) on consumption.1 In contrast, those high up on the income pyramid-the capitalist class and their relatively well-to-do hangers-on-spend a much smaller percentage of their income on personal consumption. The overwhelming proportion of the income of capitalists (which at this level has to be extended to include unrealized capital gains) is devoted to investment. The End of
Retirement An esteemed colleague read three paragraphs of news clip on employer pensions before he realized it was from the satirical newspaper The Onion. The tip off was the interview with an eighty-seven-year-old machine shop worker struggling with widowhood, high stress, and early stage Alzheimer's at General Electric. Early stage Alzheimer's was the first clue, not the eighty-seven-years of age. Satire writers must have a holy grail of seconds before the earnest reader starts chuckling; my colleague's delay might be a record. It takes three seconds to know "Cindy Sheehan loses second son in Katrina" is a lampoon. The reason it took so long to laugh at a news story that GE was adopting a new policy of "lifetime" jobs and a new forty-five-year vesting period for their pensions is that it is credible; the signs of the end of retirement are all around. Trouble, Trouble,
Debt, and Bubble The questions regarding U.S. macroeconomic policy these days come down to whether the country can keep borrowing. Can consumers keep spending by increasing their debt level? Can the federal government keep running a large budget deficit without serious problems developing? Can the U.S. current account deficit keep growing? Will foreigners keep buying government bonds to cover this growing debt? If the answer is no to such questions, we can expect serious trouble and not just for the United States but for the rest of the world, which has grown used to the United States as the consumer of last resort. The United States buys 50 percent more than it sells overseas, enough to sink any other economy. In another economy, such a deficit would lead to a severe devaluation of the currency, sharply inflating the price of imports and forcing the monetary authorities to push interest rates up considerably. The Neoliberal
‘Rebirth’ of Development Economics Development economics, as a branch of economics that attempts to show how the world's poor economies can develop, had its origins in the 1940s and 1950s. One of its earliest ideas was that the economies of the less developed countries were mired in a cycle of poverty and needed a "big push" to develop. This push was seen as a large boost in investment, helped by the state's infrastructural and social spending, as well as by private foreign capital spending and aid from the governments of the developed nations. NEW THIS WEEK! A review of Immigrants, Unions, and the New U. S. Labor Market by Immanuel Ness and Shortchanged: Life and Debt in the Fringe Economy by Howard Karger. April 2006, Volume 57, Number
11 c o n t
e n t s As we write this in late February, threats of a U.S. military intervention in Iran are intensifying in response to Washington’s claims that Iran is attempting to develop nuclear weapons capabilities. The International Atomic Energy Agency has voted to take the issue of what it views as Iran’s noncompliance with the Nuclear Nonproliferation Treaty Safeguards Agreement to the United Nations Security Council in early March. Meanwhile, the Bush administration has repeatedly stated that a military strike against Iran by the United States is now “on the table.” Washington’s waving of its big stick coupled with its feeding of misinformation to a U.S. media system that has not hesitated to pass these distortions on to the general public have already had their effect. A Los Angeles Times/Bloomberg poll taken in January indicated that “57% of Americans favor military intervention if Iran’s Islamic government pursues a program that could enable it to build nuclear arms” (Los Angeles Times, January 27, 2006). A few days later President Bush declared in his State of the Union address that “the Iranian government is defying the world with its nuclear ambitions, and the nations of the world must not permit the Iranian regime to gain nuclear weapons. America will continue to rally the world to confront these threats.”| more|. REVIEW
OF THE MONTH Agreements like the North American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO) have enhanced transnational capitalist power and profits at the cost of growing economic instability and deteriorating working and living conditions. Despite this reality, neoliberal claims that liberalization, deregulation, and privatization produce unrivaled benefits have been repeated so often that many working people accept them as unchallengeable truths. Thus, business and political leaders in the United States and other developed capitalist countries routinely defend their efforts to expand the WTO and secure new agreements like the Free Trade Area of the Americas (FTAA) as necessary to ensure a brighter future for the world’s people, especially those living in poverty. The Lawyer’s Typist: Variations on a
Theme by Paul Samuelson Nora, who was Improving her Mind with a night school course in introductory economics, settled down to do her homework. That week’s assignment was the chapter on international trade in the textbook for the course (which the instructor had assured the class was The Very Best, being the seventh edition of Paul Samuelson’s Economics: An Introductory Analysis. Poetry: Buyer Beware If you subscribe to a magazine about
dogs, Rebel in the
House: Vito Marcantonio was the most consequential radical politician in the United States in the twentieth century. Elected to Congress from New York’s ethnically Italian and Puerto Rican East Harlem slums, Marcantonio, in his time, held office longer than any other third-party radical, serving seven terms from 1934 to 1950. Colorful and controversial, Marcantonio captured national prominence as a powerful orator and brilliant parliamentarian. Often allied with the U.S. Communist Party (CP), he was an advocate of civil rights, civil liberties, labor unions, and Puerto Rican independence. He supported social security and unemployment legislation for what later was called a “living wage” standard. And he annually introduced anti-lynching and anti–poll tax bills a decade before it became respectable. He also opposed the House Un-American Activities Committee, redbaiting, and antisemitism, and fought for the rights of the foreign born. He was a bold outspoken opponent of U.S. imperialism. BOOK
REVIEWS A review of 1491: New Revelations of the Americas before Columbus by Charles C. Mann. Rebellion
of a New Generation A review of Letters from Young Activists: Today's Rebels Speak Out by Dan Berger, Chesa Boudin, and Kenyon Farrow, eds., with preface by Bernardine Dohrn. Darwin’s Materialism A review of Darwin: Discovering the Tree of Life by Niles Eldredge. Index to Volume 57 |
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Paul M. Sweezy(1910-2004) Contact: Monthly Review If you have any questions or comments |
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