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The Return Of The Crisis

The World After September 11th, 2001

The Old Mole

By the time you read this, a crisis different from September 11th may well be foremost in people's minds. Read on. For us today, all the crises merge to one and we can see the form of Enron's Collapse or the Iraq War within September 11th and vice-versa. Now, beyond the death and destruction, the horror of an event like September 11th is the horror of losing control of your world. This feeling is an extension of the ordinary experience of being a resident of modern capitalist society. Here, work, commuting, shopping, and television are transmitted to you in ways that are beyond any individual or collective control.

But not knowing what things happened or how they happened is a part of this misery. Aside from reflexes of anger, the explosion of Internet texts and public discussions have shown how many average people have felt a need to get a handle on the events. This text is one more contribution to creating such an understanding. Naturally we think we can show some connections that have not yet been revealed. Among other things, we will show the link between the organization of our daily life and the various disasters which today seem to come from nowhere. We're not aiming to be surprising in our basic outline. But still we aim to go beyond any particular conspiracy theories and show these events as natural results of the world as it stands. We think you'll find that getting to the bottom of things is worth the effort of understanding a few abstractions. To keep things short, a lot of details will be in hyperlinks or footnotes.

Just about anyone who has thought about it has considered many ways the present world system could collapse. From military insanity to bureaucracy to environmental degradation to economic crisis to information overload, many doomsday scenarios can seem plausible. Even the experts will chorus how they don't understand the size and complexity of the derivatives market, global warming, the chance of nuclear war or other dangers. But the very complexity of the world has made previous prophecies of doom less credible when they failed to appear. Just look at "The Year Two Thousand Problem". The world has hovered in mid air long after some folks expected an end.

So where does this leave us? Well we now have some evidence something is moving. For us, September 11th did not signal that a crisis had begun. It signaled that this world could no longer hide the effect of an ongoing crisis. It showed there is much chaos below the surface of this world.

We could summarize our point as; "Lies, corruption and credit will increase till the house of cards collapses". But that's just extrapolating from the present trend. If we don't provide a tight timetable, you can't really take this prediction to the bank. So rather than making predictions, the point is illuminating the scale and rhythm of the present events and showing the larger forces behind them.

The obscurity of the larger problem, whether the intelligence world, corporate finance or geopolitical maneuvering, makes it tricky to deal with. So, the beginning of dealing effectively with this uncertainty is to reconcile to it for a moment. Information about the total state of the world will be limited for a time. We aren't going see all the debt or the all the secret files nor know all the deals for a little bit now.

Many among the elite behave as if they are sleepwalking. If the companies whose managers were murdered on September 11th cared much, they have not shown it by searching for any deeper causes of the events. If investors who lost money on Enron care, they still haven't dug very far.

The pace of life in America has sped up. Conscious, calculated systems have been a part of this but uncontrolled, irrational processes like the recent speculative bubbles have played a big part as well. But even while benefitting from this chaos, the elite doesn't seem to be able to get a handle on it.

This edifice has been held together by more connections than any single person can know about. Before, these connections made things seem extremely stable, so stable that many could simply go to sleep. But once the whole contraption begins to fail, things will go the opposite way. Collapse happens without anyone being able to coherently describe why.

The events in Argentina show an elite that is not willing to stop its own crimes even if they eventually destroy the country which they profit from. Argentina is the nation that applied the neoliberal policies of the IMF and World Bank most completely. It rapidly went from having a standard of living close to the developed world to a nation with fifty percent of the population in poverty and twenty five percent unemployed, homeless and often starving.1

A bit of digging will immediately show facts outside the mainstream story. Indeed the mainstream version of events makes sense only if you believe in cartoon devils, "hatred" as being capable of producing action at a distance and other factors. No plausible reconstruction of the World Trade Center hijackers' operation has been made; no creditable prosecution case has been made in the largest murder case in American history. If one grainy video with Osama bin Laden taking credit has been found, certainly an equivalent one with Charles Manson or Tupac Shapur taking credit could be found (and the Japanese Red Army did take credit). We've seen how embarrassing facts can be washed away by ridiculous justifications. The mainstream press says an undetermined CIA scientist perpetrated the anthrax attack on the USA — but the press claims that somehow this government employee wasn't acting as a part of any plan2.

All theories of practical psychology agree that a period of shock gives a persuader the opportunity to "install" ideas of the persuader's choice. It is not surprising then that essentially the first word out of President Bush's mouth was the laughable falsehood "no one could have predicted this" (for comforting the ignorant this has a counterpart in Alan Greenspan's "you never know for sure it's a bubble until after it's popped"3).

Cemented with the shock of the moment, it took Bush's absurdity about six months to fall apart. We know now that the list of those predicting the events in outline is long and several folks predicted it in striking detail. The public might have vaguely heard that similar actions were either planned or carried out earlier — bombing the USS Cole, the bombing of the US Embassies in Kenya and Tanzania, the plot to destroy the Seattle Space Needle, the plot to hijack eleven airliners from the Philippines to crash into US buildings, etc4.

For a short time, the "mainstream" press and the public woke up to the idea that perhaps someone had the job of preventing things like the World Trade Center attack. Indeed, they discovered, after some research, that the job belonged to those secret agencies which they pumped billions of dollars into. Yet such are the layers of the current crisis that such insights yield nothing of substance. No American official has lost his or her job over the rather obvious mistakes that were made.

Once we get over the shock of the initial events, other questions appear. The stream of current events was already utterly disconnected from our lives and the immediate understanding most people have of their lives. Current events are real, but real like a popular song that everyone hums without noticing.

Altogether, living a "normal life" today in America involves keeping many areas of thought unexplored. We don't know how to organize our world. Underneath any talk of democracy, experts and processes that the average person knows quite little about run almost everything. How what you eat gets to the supermarket and how what you wear is created, what creates wealth or poverty or how traffic gets to be so bad are all simply mysteries in the routine of daily life.

For some people, this may seem quite fine since it frees them from the terrible complexity of the system. But any surrendering to the system begins with the assumption that these incomprehensible experts at least don't mean to simply butcher us. The events of September 11th bring this into question.

Without having any special information, we can see conclusions and ideas coming out of September 11th that are too ugly for many people to accept. This is normal and nothing new. For each new crisis in the modern world, people have accepted new illusions. At this point, we have to cut through several layers of illusions to see the true situation. The crust of confusion is so thick that if a tape of George Bush and Osama bin Laden shaking hands on a deal were played on national TV, this would still not give the hapless public the insight or ability to act on the crisis.

The Accumulation Of Crisis

"The late 20th Century will go down in World history as a period of global impoverishment marked by the collapse of productive systems in the developing World, the demise of national institutions and the disintegration of health and educational programs." Global Poverty In The Late 20th Century, Michel Chossudovsky5

In the end, the mystery is not how much greed or corruption there is today. The CIA trained Osama bin Laden originally but this is not the first time blowback has burned America. Neoliberalism is a program for draining the globe of resources but this is what the wealthy do. The exact differences between various drug dealing, weapons dealing and financial conspiracies is murky, to say the least. Aside from these big, ugly details, this question keeps appearing; why do the rulers seem to need extreme measures to solve ordinary problems? We can see the problems that the system faces and we can see the solutions which it chooses. But there's a gap here. You would think that the world's biggest economy would get more profit from moving towards peace rather than war. You would think that Enron would have used the billions it stole in California to dig itself out of the Ponzi scheme which it had built. You would think that cutting through "accounting scandals" would allow the American economy to grow again. But none of this can happen. There is never a point where such schemes can land on solid ground.

What is the answer to this riddle? It hides its answer in its very size. From neoliberalism to the dot-com collapse, from September 11th to Enron, from the collapse of the Argentine economy to the US invasion of Iraq, huge unsustainable projects have expanded and then collapsed.

The forces we're talking about, what we will call leviathan industries, are roughly those factors which have shown their ability to trump just about any ordinary "slow, gradually building" change. By a rapid expansion that draws all else into them, they have shown an ability to drive the entire system on one level or another. Any list of these factors would have to include the military-industrial complex, the medical-industrial industry, the media complex, the oil-automobile complex, the financial complex, and the police/drug/prison industrial complex. Still, we won't establish an exact ordering of such factors.

The present ruling class has experienced periodic crises throughout its history. The solution of each of the crises has involved burying its crimes, its contradictions, within the system itself. Our leviathan industries are the spots closest to where these are buried.

You could roughly compare the overall situation to an ordinary racket. If a racket happens to grow increasingly large, its racketeers must take increasingly extreme measures because their position becomes fragile through an accumulation of earlier acts. The smallest admission can cause some big pieces to unravel.

In a ordinary racket, the criminal succeeds if his victims stay buried and forgotten. Thus any racket will eventually fail as a river of lies, ghosts and riddles catches up with it. For the racket that is capital, the specter which cannot be exorcised is the proletariat, the economic South Pole on the economy's magnetic field.

You could say the current huge and productive system reflects a guilty awareness of everything that has happened before. As we unravel the present crisis, we will wind up peeling an onion of crisis and manipulation. We can trace our different crises to many dates and events in the past. And we can see it on many on many levels as well — the economic, the political, the ideological and the geopolitical.

When we talk about our leviathan industries, we're sketching a huge area. We could dive in and describe the complex aspects of one or another of these beasts. In many areas, this has already been done. Important writers include Doug Noland, Richard Labévière, Emmanuel Wallerstein, Barnet Coleman, Mike Ruppert and many others6. But even digesting all this leaves immense complexity and uncertainty7. What we will be describing is not simply the mechanics of various conspiracies but the underlying processes of this society.

Any one of our leviathan industries is large enough that an argument could be made that it is "the cause", "the answer". This is especially seductive given the difficulty of deciding how long oil reserves will last, what the exact source of al-Qaeda's money is, how dependent is the US on drug-money-laundering, or how many nations the US Army can occupy at once. For example, there is a fair amount of evidence that for months before the Afghan war, high-placed friends of Enron Corporation were pushing for a war in Afghanistan to facilitate the building of a natural gas pipeline to their failing power plant in Dabhol, India8. But the collapse of Enron itself before any pipeline could be constructed shows that more than one set of forces is acting here. And we know the heroin trade and the trade in smuggled oil and counterfeit goods are both plums to be taken in Afghanistan as well9.

At the same time, these leviathan industries have appeared gradually, fading in from what might be considered one or another "normal" aspects of life. The automobile has been a normal part of daily life for fifty years, the Federal Reserve has existed for seventy years. Each of these systems also mesh with the others. Al-Qaeda is one important subject and it can be seen on many levels (equivalent treatment might be made of Enron or George Bush). Al-Qaeda operates at the level of a gang, with the CIA as co-racketeer maintaining relations with al-Qaeda long after its bombing sprees became embarrassing for the American state10. It also operates at the level of an industry, as Labévière documents its banking, money laundering and drug dealing and as others document their connections to Taleban natural gas deals. And we can see al-Qaeda at the level of ideology, providing a spectacular counter-image to American imperialism while working with Saudi capital and drug capital around the world.

Each of our leviathan industries has a natural narrative. They each have a distinct historical scale and a distinct dynamics. Monetary policy has both Breton Woods and the floating of the US dollar as its most unique touchstones. The last century's wars, especially Vietnam and the Gulf War, set the stage for the present strategic situation.

Now our narrative will aim to describe a dynamic that is common to all of these schemes. In each part of our general approach, we'll give examples from several of these rackets, hopefully casting light on our crisis of everything (though there are sure to be connections we won't make).

Trying to understand the World Trade Center events is like waking up to act fifteen of a long Greek Tragedy. It needs a complex fabric of description to give a full picture. In explaining this crisis, we will be showing how the situation rests on layers of historical developments, layers of crises and solutions.

Still, the present crisis is historical and systematic. The system removes some historical cause and memory and imposes its own self-reinforcing flows instead. The point of origin for some factors is unavailable and other factors come out of the system rather than the past. Never before has a society been based so much on a sensation of pure now. But even amnesia has a historical dynamic. In any case, we have to unravel these various forces starting from the present.

We will take a spiral path in sorting out this entire situation. While talking about the crisis of the present system, we must still fully define what constitutes this system. Tracing this fabric, we will return to certain points repeatedly to arrive at our source. We will lay out a few useful details of intelligence agency activities, as we are showing intelligence as an instance of indirect capital (and the availability of the world wide web to the readers for verification is another implicit factor).

To put things in simple terms, we will have to use the fuzzy understanding that everyone has of this world. While each of our leviathan industries swarms with complex, secret details, the outline of the whole must have a certain simplicity to it as a system. This is because each part and each of the players of the system must relate with each other part and player and there's a limit to what any single player, even Dick Cheney or George Soros, can know.

Oil, Technological Change And Resource Exhaustion

In its more than two hundred years of development, this society has expanded exponentially as representation, as money, as population, as information, as energy and as physical goods. Technological progress in energy sources can be described as coming from an increased concentration of energy in the substance as well as other efficiencies11. This progress peaked with petroleum and nuclear power. With nuclear energy having numerous difficulties, petroleum is at the apex of conventional energy production technology. Whereas cleaner and more sustainable sources of energy will ultimately involve a decrease in energy use, the US has increased its energy consumption and become more dependent on oil and hydrocarbons12.

In the last thirty years, much innovation has shifted from energy production technology to energy consumption technology. More efficient technology has allowed greater production with less energy. Auto companies presently have the technology to produce a car getting seventy or more miles per gallon13. A network of cell towers can replace the entire conventional network of switching networks, wire and phone poles. A single microchip can replace a computer which once required a building the size of a city block, etc.

US energy use is not set in stone. Beyond technological innovation, in a multidimensional economy as complex as the US, the question of what energy consumption trend predominates isn't simply determined by blind technological progress. Rather, it involves a complicated social process of choosing of ends and means. The direction of development is the question.

Today, world obesity levels recently exceeded world hunger levels — at approximately 1.1 billion each14. This shows how this society's total production level has gone a good deal past that required for simple survival. If we could speak of this entire society as a collective agent, we would say that the management of wealth and consumption has become the crucial problem for its development15.

Consumption has shifted more and more from production for survival to production for the economy; production for more jobs, production for more taxes, production "to get us out of the recession", etc. But this does not mean that this production has satisfied social needs efficiently. Housing developers have little or no incentive to produce energy efficient houses or to locate homes near workplaces. Instead, to compensate for low profits, US housing developers have sold more and more energy guzzling "McMansions" and "Super Homes" to those who are too rich to care about the cost of energy, and developments located in the "exurbs" create gas sucking double commutes. Laptop computers consuming only thirty watts of power work perfectly well, yet a standard desktop computer consumes four hundred watts. Despite existing highly efficient automobile technology, the number of SUVs getting less than twenty mpg are increasing and average US gas mileage has declined for the last ten years while the average commute length has increased.

A large part of energy consumption simply creates social symbols. A large house with a lawn in the suburbs symbolizes the owner's position in society rather than satisfying any fixed, biological need. Yet the land, water and herbicide used consume substantial resources and energy. In this way, the accumulation of capital can be seen as creating greater symbolic representation and ideological control rather than satisfying generic needs.

"America's thirst for oil" is neither a pure popular sentiment nor a pure calculation of the ruling class. Rather, it is created from various building blocks in such a way that both rulers and consumers can imagine it is outside their intentions. One building block is what Americans will buy without prompting. It is a standard auto industry maxim that "the amount of sacrifice Americans are willing to make to drive a nonpolluting car is exactly zero."16 A herd mentality drives things yet those with more power can manage and accelerate it. Another building block is naturally the interests of the wealthy and powerful who profit from the whole complex. So this adds up to things being driven by an ideology even more irrational than the thinking of the particulars players of the game. One could make similar observations concerning medicine, politicians, judges or journalism.

It is thus not surprising that the US is still the least energy efficient developed nation on earth (with semi-developed China even less efficient). Americans consume the second largest amount of gasoline per person, with Venezuelans first.

It is a truism in biology and other sciences that an exponential growth process cannot continue forever and often ends in exponential decay. This includes all the growth processes mentioned above. We could argue back and forth about what are the practical limits of the various growth process. Such arguments miss the following point. A large part of these exponential expansions is the result of humanity's present, out-of-control social relations. This means that a change in these social relations could result in a change in these processes. We might reach the point where technical and biological process drive these cycles of expansion and collapse all by themselves and where human collective action would be irrelevant. Rather than worrying about exactly when we could reach this point of destruction, the most important thing, and essentially the only hope, is creating a change in a social relations which would head off this disaster17.

The World That Value Built


King Fahd of Saudi Arabia might not seem like an equivalent to one of America's 19th century robber barons, yet looking at Persian Gulf States, notably including Saudi Arabia, you notice these countries have huge "rented" populations (twenty seven percent). The oil kingdom is a company town. Approximately half of the work force, half those who maintain the machinery and cater to the needs of the oil-rich citizens, are temporary workers from other parts of the world. The apparent ability to muster up a worker-army for any purpose lies at the heart of this present world. If the Saudi regime clearly depends on oil, it depends just as much on another substance, "labor power".

Today, one can look at the great sameness in the way a public hospital, a private corporation, a multinational charity, an army, or a large church operates. Each of these is a money circulation system and a rule-based bureaucracy. When we say capitalism, one can see we're talking about these real systems rather than a hypothetical pure marketplace. For us, the common historic thread that leads up to the modern multinational is the development of Marx's labor power as a force separate from the laborer herself and as a force for the separation of laborer and product. The French Revolution was as much about the rise of bureaucracy as it was about the rise of the commercial bourgeois and this is the reality of the system. The dictatorship of Napoleon Bonaparte showed how bureaucracy's rule-based control could liberate a world-transforming energy just as much as the rise of merchant capitalism showed the power of the market.

The advantage of using oil as a source of energy is that this allows a high density of energy to be transported relatively cheaply around the globe. Oil is an indirect ingredient of most things sold today. If a person's labor could truly be bottled in the same way as oil, it would be an even more amazing substance. If we viewed it as a substance, human labor would be an essential ingredient of everything sold, any commodity. Now we know that human beings are not so easily packaged. At the same time, if you look at the worldwide markets for the results of labor, everything is organized to allow an entrepreneur to act as if labor was a fluid substance which can be piped easily from place to place. Cash can serve as an idealized representation of labor and it moves around the globe with a speed far faster than oil. Electronic credit and investment move in anticipation of the movement of labor and insurance smooths out any disruptions. This allows bond owners to ignore any uncertainty about whether programmers will go to work in Silicon Valley or whether Chinese factory laborers will burn down their hellish workplaces.

Wage labor might seem like the simple ability to hire a person to do something for a few bucks. But once this hiring process becomes the main way people exist, this "liberates" an abstract force, labor power, from the whole social fabric. It takes all things that people can do, take all the ways that people deceive themselves with, all the ways that people can manipulate themselves and all the wisdom that "outside experts" can muster, and put these resources in the hands of the highest bidder.

While you can describe this society as an accumulation of technological means, of resources, of petrochemicals, of the means of domination and manipulation, we see it as an accumulation of labor power. Among other things, this shows it as the accumulation of every product of human creativity taken outside the person. Seeing it this way, we'll describe the vast sea of commodities around us as "dead labor".

We measure abstract labor power by looking at the average labor which society needs to put into a commodity. The electronic world market already organizes much of production by calculating similar values. Thus this mechanism also negates all those qualities which cannot be measured as labor power.

We can make an analogy between the flow of labor power and a corrosive fluid covering the earth. One can imagine this substance spreading both to every corner of the globe and becoming so thick in some of the areas where it started that it dissolves the very hills. Our society is continually more filled with more commodities, more products of wage labor, and more empty of anything else. These products of labor give the impression of being completely unrelated to the laborer himself. Thus, we have the sensation of a world where things are in the saddle riding people. This all may sound strange and abstract, yet simply looking at all the products assembled at the mall can make it crystal clear: a vast store seems to sell all that the mind could desire, yet a closer look reveals this vastness as just many calculated, empty surfaces with little real variety or depth.

Still, autonomous labor power does not simply expand uniformly. It needs concentration and breeds greater concentration. Asymmetry is everywhere. The third world suffers terrible impoverishment while the first world drowns in goods. Even in the first world, a select few have an excess of goods while many must struggle to gain the (still wasteful) consumption level needed for social survival.

Neoliberalism in the third world has not just crushed the living standards but the medical systems, the social support networks, the educational systems and the scientific infrastructures of various nations. The ability of third world science to have an autonomous existence decreased to the point of vanishing. Scientific discoveries in the first world have been concentrated in huge research institutes devoted to big science (thus slowly eliminating any independent views within science).

The Worker

The opposite pole of our liberated labor power is the existence of those who must work, all those who need a stream of wages for their survival. The liberation of labor involves creating a group of people whose activity, wage labor, is separated from their immediate existence.

After the Russian revolution, the Bolshevik bureaucratic economy vastly expanded the Soviet working class just as the brutal "enclosures" essentially created the English working class. Indeed, the initial stage of capitalism is often total dispossession, creating a mass of individuals who have lost both their possessions and their culture. War has always been one of the natural origins of crime. Lawless areas present fertile ground for exploitation, ex-soldiers are familiar with violence, and many people are reduced to a destitute, exploitable condition. (Thus the circumstances which gave rise to the Taleban are part of the flow of capital as well).

The dispossessed only become a positive force for creation once they wind up in position to create their own world. The mass of poor whites expending across the US frontier were the shock troops for dispossessing the American natives of their land. In this way, they were similar to the orphanage-raised fanatics of the Taleban who uprooted the traditional practices of Afghan peasants in favor of their narrow view of Islam.

The carrier of labor power, the international working class, is spread more widely than ever before. This world and its chaos creates an increasing flow of would-be laborers, not simply Mexicans traveling to the US but Turks traveling to Germany, Chinese hiding on container ships to escape the "industrial miracle", Africans seeking Europe, Pakistanis laboring in the Gulf States and many others.

The creation of labor time, of the flexibility of jobs where either you or your boss can stop at any point, is the creation of a fluid, atomized social existence beneath our "work world". This fluidity is a generator of the social productivity on which this society's fabric increasingly depends. In our economy, the flexible social role — social position by appointment instead of birth — is another important face of the liberation of labor.

This experience seems totally ordinary to us. But it only became common a few hundred years ago — and once the employers of wage labor came to dominate society, the present transformation of the globe began. This transformation clearly has not stabilized even now.

Labor power, the accumulation of people's activity, removed from their intentions, has built (and destroyed and built again) the modern world. The relationship of wage labor can be contrasted to the relationship of owning slaves. The slave is not only an unwilling worker. He or she must also be provided with housing and upkeep if the owner is to realize his investment from the slave. Certainly, earlier societies have had some wage-laborers. But the guildsman and the day laborers never together constituted enough social power to be a predominant force. We can contrast this with the modern world, where the vast wealth of, say, the Saudi royal family can translate into an entire hired country. From this view, the formal financial, ideological, technological, bureaucratic and cybernetic processes that have shaped the last two centuries all have been dependent on capitalist society's ability to liberate fluid labor power. Each has, in turn, extended the ability of this fluid to act.

There are contradictory-seeming pieces to this which we should look at carefully. A larger and larger percentage of people operate as cynical workers, as those with only an eye to be paid for their labor. They are the angry and the opportunistic. The question is what opportunity will they take? They have left the old "community of labor" behind but they have not yet created anything in its place. So for us, this disillusionment is only the start of a process.

We use the word proletarian to describe those who negate the whole of capitalist relations. The proletarian, one who has nothing but his labor to dispose of, is the opposite pole of labor power. This group, the working class moving for itself, has only appeared in history in fits and starts up to now. It is not those who glorify work but those united to create a way of relating different than work. So we will often see the proletariat indirectly through breakdown rather than directly in the pictures of heroic Soviet factory workers or actors in Budweiser commercials. Despite this, we can describe quite a gathering storm given the present conditions.


The economy has always existed as one tendency in human society. But for us, this system isn't determined by whether an entrepreneur faces competition in a fair market. Instead, we say that once the relationship of wage labor dominates society, we can call the society capitalist. We are past that point now on a world scale. Certainly most of the guards of tradition and personal desire which once held market relations in check have been swept away. They will be further knocked down as things continue.

The domination of capital needs a fabric of behaviors and values spread from higher workers to managers up all the way to the highest rulers; a social relationship. Each of these relationships involves an actor who must continuously and delicately adjust production processes to maintain the value of the capital. Balancing these production relationships involves a balance of investment, cooperation and consumption relationships — including non-relationship, being willing not to care for whom you work. The economy involves a fabric of social relations. Looking at the top, this can be seen as an intertwined relationship where various folks identify their interests with the rulers while in the middle this can be seen as individuals falsely identifying buying commodities with meeting their needs.

Capitalism implies a capitalist class. Each member of this capitalist class is not simply a member of some club. Rather, he must have separate power-base. The capitalist must control a "node" in the flow of labor power. Whether that node is a factory or an abstract investment deal, the node is still concrete control of the abstract flows happening. And they must extract a benefit, a surplus, from that node.

Capital goods are an important part of the economy. On one hand, these are means of production, the way that society is maintained. On the other hand, this is a special kind of commodity, one that you buy in order to sell again for a profit, for more money than was put into it. We'll call a capitalist someone who owns capital goods and capital goods are what society uses to create things — the means of production. The capitalist mobilizes both immediate labor power and dead, already expended, labor power.

Industries produce jobs, commuting and television but capital is the organizing principle which makes them into a single seamless web. Capital expands the illusions of labor value as quickly as it expands the extraction of labor value or petroleum. Capital builds a world which treats every quality as a quantity to be bought and sold — a certain amount of hydrochloric acid is equivalent to a certain amount of philosophical understanding.

The Item

"Today, it almost heresy to suggest that scientific knowledge is not the sum of all knowledge But a little reflection will show that there is beyond question a body of very important but unorganized knowledge which cannot possibly be called scientific in the sense of knowledge of general rules: the knowledge of the particular circumstances of time and place." The Price System as a Mechanism for Using Knowledge, Friedrich A. Hayek,18

The present world is a very uncertain place. It is difficult to determine the practicality and resource-cost of any given production process. Often, only those intimately familiar with the process can decide this — yet even here these folks may fool themselves. Even more, if the interests of those intimately involved with a process conflict with those who are trying to learn, the former will often deceive the latter to protect their interests.

Only with today's huge accumulation of trade and production has some portion of humanity gotten used to frequently making allowance for those parts of life which they know nothing about. Uncertainty is thus a product of the accumulation of alienated labor. It is not that each piece of the world has become more uncertain. Rather, from Enron-generated power outages to wars across the globe, each person has become more beholden to the many uncertain pieces of the modern machine. So to deal with this uncertain world, a modern person must often use snap judgments and arbitrary prejudice to classify those things outside their immediate experience. This is not simply laziness but happens because the person has no other resources for creating an idea. The point is that there is a fabric of judgments, reactions and behaviors which is below the rational mind. This means that people will often deal with those things which are far from their experience using rules of thumb which cannot be verified.

Now, the production, distribution and consumption systems of today are oriented to dealing with this process by eliminating uncertainty as much as possible. Often, it is easier to eliminate uncertainty through impelling action than through achieving understanding. The worker deals directly with the uncertainty of production. But for the boss, the biggest uncertainty is the worker herself or himself. A boss will require that all of his workers report to duty on time rather than accepting reasonable excuses for lateness. This is because this is the simplest and most effective way of persuading people to be on time. So altogether, our modern world is filled with many crude efforts, many simplistic approximations which mostly work to cushion bureaucrats from the uncertainty this world creates.

We describe wage labor, money and capital as social relations. The power of money as an apparently autonomous force has naturally increased as this society has imposed the interchangeability of labor and a willingness to work for anything. Capitalist social relationships involve a sum of people's expectations, learned reactions and actual behavior. Each of these creates the other and altogether they form a self-reinforcing feedback loop, with each person's judgment being a piece of the loop. This includes each person internalizing the viewpoint that all things and all people have a price. So judging something's worth by its price becomes one of the necessary simplifications ruling this world. We can see this in a luxury shop which improves sales by raising prices or in the software shop where a manager insists that old software code be reused even if it is cheaper to rewrite the code from scratch.

A traditional religious fetish is an craved idol that is an image of a spirit and is also considered to truly be the spirit. Sexual fetishes have the same power. They both represent sex and are sex. Sexy shoes, say, represent sex but also are a turn-on. The fetish of the commodity comes when a commodity both represents value and is a social end in itself. The way kids wear jackets with the price tags left on illustrates this in the extreme. A fetish might appear to be merely an error of representation. Actually, when certain kinds of representations are embedded in social existence, certain fetishes become unavoidable.

The value illusion we are discussing leads into the fetish of the commodity step by step. Assume a worker pays for transportation either by car or by public transit. A worker pays the cost of a car in a few big chunks — as the purchase price and as insurance. She pays for public transit only when she actually uses it. Transportation by car might work out to be more expensive than public transit. But if our worker wants the option to use the car at all, she must pay for the whole car's cost up front. Here, it often works out that once the worker has invested in the car, using the car at any one time is cheaper than the cost of public transit. Now, in this way, investment in a resource acts as a lens to distort the investor's behavior. If an automobile could be distributed between people, if we were not looking at an atomized mass of consumers, a community might calculate the relative cost of each trip including all the hidden costs and behave differently. Yet the market economy works against this kind of behavior.

This is a picture of our world of dead labor. This is more than just this society's accumulation of the products of human labor. It is also all the institutions which seek to get back the original labor value plus profits from items. The fetish of the commodity is as embedded in the organization of society as it is in people's prejudices. Both prejudice and atomization cause people not to see value as the alien construct that it is.

This way all products — material items which are the product of a finite natural world as well as ideas and inventions which serve all of humanity — are given value only according to their price, their dead labor content. This management naturally marches hand in hand with a bias for seeing any product as if its price was proportional to its usefulness. Those who buy houses tend to filter their world to see sleeping in a house as more appealing even on a hot summer's night where sleeping outside might be more pleasant.

Exchange And Representation

Representation As Commodity

Creating our modern capitalist world has been something of a spiral process. Potentially, everything that satisfies a need can become a commodity. Once the capitalist world achieved the ability to satisfy the material desires of those areas directly under its control, the next step has been to begin satisfying subjective wants. While this could be seen as the accumulation of the vast range of unneeded luxuries, we can better view this as creating emotional commodities, information commodities, bureaucratic commodities, ideological commodities, secrecy commodities and manipulation commodities, etc. Even more, when capital has understood the way to satisfy a need monetarily, it can then "cut back" and satisfy that need only barely.

While the monetary accumulation of capital has increased during the development of capitalism, other outflows of labor power have reproduced capital in nonmonetary forms. The commodification of representation takes the form of bureaucracy, of propaganda, of words and symbols of power, as intellectual property, of academic prestige and of generic marketed information. Again, this is not just a bunch of representations but an ordinate faith in their value.

The various aspect of life have only become commodities over time; the entry of American women into the workforce in the 1970's made prepared meals more into commodities of necessity rather than luxury. Stackbuck's coffee shops sell a certain brand of social space as a commodity. The 1980's and 1990's saw "information" taken as more and more of an ideal commodity. Bureaucracy and ideology also have only gradually established their hold; the founding of the CIA in the 1950's was a watershed for integrating secrecy into the order of daily life. The rise of Richard Nixon's White House was another watershed as the methods of the "party line" and the "big lie" were adapted to American media relations. Here, H.R. Haldeman created the method whereby every spokesperson was given a fixed, short position to endlessly repeat, making certain that the top had wide latitude to broadcast myths, unchained by any bother of facts.

Some of this commodification has happened as a calculated plan of various entrepreneurs. Still, commodification has also happened by accident. The individual capitalist, the one who buys labor power, still is just a carrier of this free flow of labor power. Beyond the firms, factories and offices which make up official capitalism, the continual churning of this entire capitalist society produces an undifferentiated flood of raw labor power. Besides individual workers rushing to sell themselves, there are all manner of ways human labor escapes immediate intentions, with religious cults combining with all manner of commodity crazes. From the transformation of the workers' movement into capitalist rackets like the AFL-CIO to the transformation of 1960's rebellion into hip capitalism, we can see a tendency of atomized humans to reproduce capitalist relations in a different form. There is a tendency, when a person is expending creativity outside any community, for this creativity to become our abstract labor power and ultimately return as a commodity against its creator.

We describe this whole process as recuperation; human creativity is generated by the system's chaos and then ultimately reeled in once the exchange process has determined its value. Recuperation produces intellectual property. One important kind of intellectual property it produces is ideology. Ideology is the ideas in power and at the same time the symbols of power (the movement back and forth between the symbols of power and the thinking of power is a theme which we'll be discussing as we continue).

Ideology comes as "isms"; Leninism, fascism, Islamism, liberalism, neoconservatism , and many others. Even an ideology without an official ism can be understood when these isms have become the ruling ideas of modern society and, at the same time, they are the symbols which elites use to gain and to show their position in society.

Our modern world has been built out of the worldwide ideological struggles of the Eastern Bloc, Nazi Germany and American free market capitalism. And everywhere zealots, those who have the skill of spouting a convincing version of the dominant rhetoric, helped drive these conflicts. The struggle of Robespierre and the Committee for Public Safety and Lenin's struggle for control of the Bolshevik Party foreshadow Paul Wolfowitz, Richard Perle and Donald Rumsfeld's struggles for the bureaucratic triumph of neoconservatism, the most extreme representatives of ideology naturally winding up winning the prize of state power in all these cases.

Within these struggles, purified ideology ultimately evolves to a single big lie. The enemy — the Jews, the communists, the fascist-Trotsky-wreckers or al-Qaeda — is "behind everything". At the same time, since these battles are purely around the symbols of power, in the ideological battle of twenty-first century Washington DC, the substantive differences between the competing factions are less than ever before. If anything, the Bush-Cheney and Gore-Lieberman axes compete substantively only in their degree of loyalty to Ariel Sharon's settler state, the intensity of their loyalty to the military-industrial complex and the market economy, and so on. Nonetheless, the vicious Republican stunts against Clinton showed several ideological cliques in a fierce fight to exercise essentially the same policies. It is not the faction in power but the crisis of capitalism that guarantees ideological insanity.

Ideology is rigid thinking. This isn't just rigidity in the sense that all ideas fail to capture the world's full complexity. When someone accepts an idea for the money and prestige the idea gives them, they are less concerned whether it is true. The battles of Democrats and Republicans become more vicious as these two groups differ less in their policies and care less about their ideas. Ideologists have an incentive to be more concerned about being able to spout their rhetoric than they are about the exactness of those ideas. The results have different flavors — sometimes, ideology might only influence the unconscious judgment call which people must constantly make — it makes people "fudge" their calls. Other times, a person may be confronted with the need to consciously lie to protect their position. But each time a person fudges their call, they end with a commitment that make a conscious lie more acceptable.

The most advanced ideology thus has the rigidity of the liar who lies to himself. When Richard Nixon made false claims about communist subversion or Adolf Hitler made false claims of Jewish subversion, they showed that ideological extremism was the best weapon for climbing to the top of the ladder. This is method has now been perfected by the neoconservative Bush White House which has wrapped attacks on Iraq and Christian fundamentalism into a single ideological package. Even before the presidency of George W. Bush, the claim of the Iraqi threat was the coin of the realm — despite its clear falsehood. "[Karl] Rove and [George] Bush came to an important strategic conclusion,' writes Lou Dubose, Rove's biographer. `To govern on behalf of the corporate Right, they would have to appease the Christian Right.'"18.5

In capitalism, there is indeed a division between owner and manager, between owner and ideologist or between owner and unionist. But while these are each counter-poles to pure financial Capital, since all alienated human relationships flow back into an accumulation of dead labor, the owners, those who manage quantities of dead labor, have a special position.

We are writing after capital has fully transformed the globe. In this period, this society's tremendous output of surplus labor power has gone to create both an infrastructure worth billions and to many projects where labor and resources seem to have been squandered. But still many of these wasted expenditures of labor power are with us as ideological underpinnings. The Soviet Union, the Cold War or the War On Drugs each created a vast accumulation of ideological capital. These ideologies still help organize the present world and serve as models for further projects like the War On Terror.

We can see this written in the history of last ninety years. Bureaucracy and propaganda have been a part of the harnessing of labor from the French Revolution and before. That the ideological Islamist capital of the Moslem Brothers is strongly tied to both the power of Saudi Arabia and the reactionary elites of the Middle East is as logical a product of capital's development as is televangelism.

Intelligence agencies as well as private contractors sell the product actionable intelligence; "Accurate forecasts are what sets Stratfor apart from its competitors. Unlike news organizations and research firms that offer only reactive information, Stratfor delivers actionable intelligence, providing not only in-depth analysis of what is happening, but also uncannily accurate forecasts of what is going to happen"19. Just as much, the ideological fervor of a Moonie or an al-Qaeda member accumulates as bureaucratic power within the organization, distilling its irrationality.

Appearance As Capital

"If we speak frankly, we have to admit that our basis of knowledge for estimating the yield ten years hence of a railway, a copper mine, a textile factory, the goodwill of a patent medicine, an Atlantic liner, a building in the City of London amounts to little and sometimes to nothing." The General Theory, Keynes20

"Headquartered in Dublin, OH, National Century Financial Enterprises, Inc. estimated revenues of approximately $200 million for 1999 and is the country's largest provider of healthcare accounts receivable financing via its securitized portfolios. In addition to its Dublin headquarters, NCFE has offices in Scottsdale AZ.

"Boston Regional Medical Center, Stoneham, Mass., which closed and filed for bankruptcy last February, blamed the financing company, Dublin, Ohio-based National Century Financial Enterprises and its chief executive officer, Lance Poulson, for its demise. The hospital also blamed Paul Tuft, chairman and CEO of Doctors Community Healthcare Corp., for its trouble. The lawsuit, filed in U.S. Bankruptcy Court in Boston, seeks unspecified damages for 16 counts including alleged fraud, misrepresentation, breach of fiduciary duty and civil conspiracy..." 21

Like Enron, National Century Financial Enterprises was an essentially fraudulent enterprise. It shunted money from place to place to falsely create the impression that it possessed more than it really did. At the time of its failure in late 2002, its fraudulent practices had been exposed for several years. During this period, the large bond rating services failed to downgrade its bonds. Only on the very month of its collapse did this happen. And these ratings services themselves did not lose the faith of their investors — at least not immediately.

The fundamental uncertainty, which economists as diverse as Keynes and Hayek describe, extends to investors as well as managers. The majority of investors have remarkably little insight into future events. With the world big and chaotic, the simplest thing they can look for is whether or not a businessman is solidly part of the capitalist class. This means that in a faith in the system is the support column on which all other bets rest.

Money as symbol comes out of the process of circulating images. An investor will put money into a project where it appears it will make money. So any effective appearance is just one step away from money. A false appearance of wealth can get you a loan — a false appearance of wisdom got Scholes and Merton of Long Term Capital Management billions of dollars to play with.

This is one beginning point for understanding the economy of appearance exchange. Falsity loses its meaning here since all that is needed is something significant, something that gives you some notice. "All publicity is good publicity". Just as the social relation of exchange creates the illusion that exchange value creates use value, the relation of capital creates the illusion that social appearance is a value in itself. And this is an illusion which our ahistorical economic man cannot reason his way out of.

A modern citizen must deal with a stream of social appearances just as much as they must deal with the concrete details of life. Any image that has social importance and which a person can accumulate can be a means of capitalization — it can inspire others to invest their appearance in you. Today we live in a world of "fiat money", money that comes out of a printing press. This comes from the truism that for something to be "money", that something just has be part of a special kind of organized hierarchy of symbols. Any image which has social value and which a person can attach to is a bit like money and can be traded for money itself under the right circumstances (in the case of rock musicians, those with a cool image will "sell out" to become capitalist). But just as much, since money is a quantity of pure abstract appearance, the item ultimately sought by our symbolic exchangers can be fame, respect, prominence, "literary immortality" and so-forth.

Still, the bits of valuable appearance which each person has do not come out of a random lottery but from the whole web of class relations underlying this society. These same class relations organize production. Few people realize how much of the news is written directly from the press releases of major corporations. While getting a loan can come down to nothing more than membership in a club, membership in a club involves an entire network of common interests.

Capital As Appearance

"The U.S. government has a technology, called a printing press or today's electronic equivalent — that allows it to produce as many U.S. dollars as it wishes AT ESSENTIALLY NO COST" _ Federal Reserve Governor Ben S. Bernanke

Marx defined a capitalist as an owner who begins with money, buys goods and hires labor and then sells the results to regain his money with profit. However, today, a capitalist generally begins this cycle by getting money from other investors and giving them a promise of a return. Loans are investments with fixed returns, stock is an investment with a variable return.

Notice how the act of investment creates a kind of doubling. Before a manager of a corporation has begun using his investment dollars, the money involved in the investment seems to exist in two places. The original investor thinks of his money as safely contained in his stocks or his bonds while the manager sees he has access to fully functional cash. The original investor can go so far as selling his investment for more cash while the manager is out using the investor's original cash.

This process doesn't really give the manager any greater net assets than before. But it gives him cash to maneuver with. The capitalist rightly assumes that the more money he has on hand, the more desirable and profitable his situation is. Having a million in cash and owing a million gives you more room for maneuvering than being penniless on the street. Space within the world of symbols has value.

Even more, if the manager spends his borrowed money, this loan will likely find its way back to a bank which will loan the money out again. Thus our money doubling process applied to banks becomes the "money multiplier" described by J.M. Keynes.

Our multiplication process forms an infinite series. If a single dollar was deposited in one capitalist's account and loaned out quickly enough to another, it could theoretically finance every investment on the planet. In reality, our magical duplicating process is limited by friction and regulation, by the speed of money moving between being loaned and being spent and the reserves that are held back in these transactions. Even with these limits, this results in a geometric series involving the speed of money and the money which banks or individual capitalist keep on reserve. The total deposits end up having the value of initial assets times the money multiplier. The multiplier's value is determined by our money duplication process — in modern America it is about ten. In this sense, there is ten times as much "financial capital" as there is total "real money".

The money multiplier also results in a multiplication of the price of those capital goods that can be bought on credit. For example, in a credit system, houses are chased by ten times as much money as otherwise. This means that without bank loans, the price of a house would be about the price of what is presently a "down-payment". But this also means that far more resources to go into capital goods than would otherwise go since these capital goods, such as houses or trans-Atlantic fiber optic cables, are perceived as easier to sell. Still, the billions of dollars Enron and Worldcom wasted on such cables, shows this greater capitalization doesn't necessary create greater rationality.

In a conventional banking system, central bank authorities have the ability to change the money multiplier by regulating the factors which go into our money duplication process. The Federal Reserve indirectly controls the amount of money loaned out as well as reserve limits and various other factors. Thus with control of the monetary system, authorities have a total currency creation dynamic. This is a symbolic balance between present and future. This is one reason more and more consumption happens on credit. Here too, the credit system will to allow a person immediate access to their entire lifetime's earning potential if they can prove their "earning power" is a solid, reliable capital good.

What happens when we combine our analysis of appearance as investment and of investment as the duplicating of money?

Stocks, bonds and other investments can also multiply money. This follows the same logic as the bank money multiplier if capitalists as a whole, take ownership of the stock to be identical to holding money. If not, the multiplication of stock creates an investment bubble or Ponzi scheme — see our later discussion. Even more, while the Federal Reserve can limit the bank money multiplier, more tenuous multipliers like the stock multiplier depend on the whole system of image circulation, which is out of any one hand.

There is also an information commodity multiplier. In the 1960's or 1970's, the "age of management", a company would modify a product to make it more sellable. In the 1990's, in the age of derivatives, a company would take the image used to sell a product and spin it off as a different company. This newly formed company would plan on using its images to influence the entire population and not just consumers of its parent company's products. This spin-off would paint a future where its advertising would be a separate information product and thus the parent company could capture more investment capital. Al-Qaeda also follows this model. It has often been described as a "foundation for terrorism", with independent operatives approaching the central members for funding and expertise. Like the semiautonomous capital groups, the parts of this organization could attract and create more money than a single, centralized whole would.

Also, we can compare the tenuous qualities of interpersonal or ideological attachments to stock. Each mover and shaker has an informal investment in pieces of rhetoric, bureaucratic initiatives and other bureaucrats. We can know the tendency of appearance to both multiply endlessly and to become more and more self-referential. Taken to the limit, this is the spectacle, a seamless stream of images only reflecting each other. Seeing this tendency of capital to multiply representation, we can explain the frenetic yet uniform quality of today's world.

The Role Of Protocols

"The society whose modernization has reached the stage of the integrated spectacle is characterized by the combined effect of five principal features: incessant technological renewal; integration of state and economy; generalized secrecy; unanswerable lies; an eternal present." Comments On The Society Of The Spectacle, Guy Debord22

"These three protagonists — the GIA [Armed Islamic Group], the army and the private militia — gradually have become complementary enemies who, each in his own way, contributes to a profound transformation of Algerian society" Luis Martinez quoted in Dollars For Terror23

One important kind of ideological exchange is the system of complementary enemies. The twentieth century battle of capitalism versus communism showed this classic system. This conflict reinforced each of these ideology's power versus their internal opposition. This phenomenon of complementary enemies appears in the Chavezismo versus the opposition in Venezuela, in the NLF government versus Islamism in Algeria, Zionism versus Islamism, in the themes of "Jihad Versus McWorld"26 and in a host of other variants.

Another important kind of ideological exchange is the bribe. In Dossier; The Secret History Of Armand Hammer, Edward Jay Epstein24 sketches the principles of bribery; (1) an laundered or untraceable source of funds, (2) an anonymous go-between to prevent the transaction from rebounding, (3) a cover story to allow an act of favoritism to be explained. This protocol is needed to turn a onetime deflection of judgment into a continuing, dependable system. And many capitalized representation systems use special protocols in a similar way to secure their operations.

One important aspect of the protocols of ideological exchange is the way society erects barriers between those who are "out" and those who are "in". In capitalist society, these are both visible and invisible. There is a border between the appearance of wealth and the "reality" of money or between "shooting film" and "being a film maker", between knowing a famous producer and being a Screen Actors Guild member hired for a movie or between knowing a programming language and "having paid experience on the required [computer] platform" and so-forth. This isn't saying that those on the inside don't need real skills or substance to maintain their position and their appearance. It simply saying that those on the outside windup facing a barrier; they cannot gain the skills or don't have the connections to join the cliques, and so-forth.

These tendencies are based on the two directions that labor power flows. On the one hand, the system tends to reduce labor to a minimally paid, generic substance. On the other hand, capital tends to become representation, a substance which is reflects a much larger chunk of capital as that it keeps or increases its value. Thus, a fog of uncertainty guards the border between the skilled laborer and the intellectual entrepreneur. The tendency of capital to take labor as a generic is proven in the exception as well as the rule; persuaders, competent technical experts or competent soldiers are all held at arm's length through a system of indirection. Special forces soldiers operate with autonomy outside the ordinary army, artists are given space within advertising agencies, computer nerds are given an autonomy separate from ordinary workers.

These barriers are strong but not absolute. They are the necessary dampers on the process of representation becoming money, described in the previous section. They serve a similar function to the Federal Reserve in limiting the circulation of representation. The way past each barrier continually changes and knowing the points where a person can break through is the most valuable yet hardest to quantify or obtain knowledge about (see Robert and Kim Kiyosaki's efforts to sell the instinctive knowledge of the rich in Rich Dad, Poor Dad25). What matters is using the right protocol. The idea of a protocol goes back to the rituals courtiers have used in courts of royalty. It means an agreed-on order for exchanging information and goods. A protocol is intended to allow certain things to be done only at certain time, certain information to be given only at certain time. Opening a door at the right time is a protocol, language itself is a protocol while computers talk to the Internet using the TCP/IP protocol.

Any society which has an exchange system needs protocols which guarantee its exchanges. Now, since value relations themselves are part of the protocols of capitalist society, capitalist society winds up only understanding itself by using the market — however flawed that market is. In this sense we can roughly call ideology which distorted the market a "lie" even though the market itself is hardly true since capital's own processes will tend to undo such ideology.

Perhaps the simplest kind of capitalization of representation is ideological barter; the producer, the politician, the conspicuous consumer, the postmodern dilettante and the Mullah all trade their ability to wield Max Weber's "routinized charisma". The path all these processes follows could be call remonetization, the creation of a new accounting system that incorporates formal and informal labor. An important aspect of this is that any remonetization needs a new protocol to secure its new accounting. The most complete example of remonetization is the film industry, where the use of volunteer labor and the manipulation of the hopes and dreams of aspiring actors and directors are now well-calibrated parts of the industry's machinery.

There are three important parts of any protocol of remonetization. The origin of the new value system must be cloaked in uncertainty. A shining image must replace it. And any knowledge of the history of any alternatives or other systems must be erased. Thus our necessary illusion must be married to a chaotic fluidity and the enterprise this illusion hides will be priced at a high ratio to the labor put into it.

All of these protocols form systems of symbolic interchange. Naturally, these vary in how fully they mesh with the "hard" world monetary system but they are essentially ways of extracting labor power. There is an information economy, an intelligence economy, a marketplace of ideas, an economy of the spectacle and so forth. The more any of these methods, from blackmail to the big lie, are used by the powers-that-be, the more they become incorporated into the social fabric itself. Terms like "time-frame" move advertising to everyday usage. "Persuasion technologies" are used more and more in daily life as well as in advertising, so that all communication gradually becomes something of a calculated bid for influence. Any commodity could be seen as an information commodity even though the concept of information came after the commodity form. And information itself can reduce to probability, to signals and to secrets.

§ A cell of a secret organization operates with a protocol for operations and information exchange; only the head of the cell knows members of other cells, and information is handled on a need-to-know basis. Intelligence agencies "handle" agents with a similar sequence of indirect contacts.

§ "Public key" cryptography systems exchange keys and allow entities secure communication as well as certain methods of "digitally signing" documents with processes which limit the knowledge exchanged by each side of a relationship as well as the knowledge going to third parties. Each of these relies on knowing how much calculation is needed to solve a particular problem.

§ Doug Noland has described how the "synthetic bond" market uses a sequence of steps to launder corporate credit. Collateralized Debt Obligations (CDO) of various companies are mixed, "blinded" and insured to allow a company with poor credit to still sell AAA rated bonds27. Secrecy and uncertainty places a cap around flows of interest. Chaotic behavior can hide a trend and thus prevent people from acting on it. This "security" can seem like safety for a while.

§ The Skull And Bones faction of the US ruling class is known to act with intentional obscurity and this matches Richard Labévière's assessment "America; Big Brother Or A Ship Without A Rudder"28; the US rules through haphazard measures. These are ideally intended both to balance multiple interests and to protect the invisible center. A policy built on "Around and around and around she goes and where she stops, nobody knows..." can, at various times, give various factions the impression that they will benefit.

§ Sherman Skolnick describes the "business" of the press, which involves selling even true stories to the highest bidder through the willingness of the press to suppress stories for those willing to advertise29. This same "information" business extends to politicians introducing crusading bills so as to obtain bribes to suppress those same bills or businesses supporting those politicians who have "skeletons in their closets" since those blackmailable individuals can be most easily controlled. Intelligence agencies employ conmen as catspaws who can accomplish goals but are not credible if they attempt to describe their activities. Larger manipulators move beyond the range of vision just as large corporations contribute to both political parties.

Ideological Exchange In Practice

"When it was first brought to the United States by migrant Sicilian workers, the Mafia was nothing but an uprooted archaism; just like the gang wars between Chinese secret societies which appeared at the same time on the West Coast. Born out of obscurantism and poverty, the Mafia at that time was not even able to put down roots in Northern Italy. It seemed condemned to vanish with the progress of the modern state. For it was a form of organized crime which could only prosper through the `protection' of backward minorities, outside the urban world, where the laws of the bourgeoisie and a rational police force could not penetrate. In its defense, the Mafia could only eliminate witnesses, to neutralize the police and judiciary, and to maintain necessary secrecy in its sphere of activity. But subsequently it found fresh scope in the new obscurantism first of diffuse spectacular society, then of its integrated form: with the total victory of secrecy, the general resignation of the populace, the complete loss of logic, the universal progress of venality and cowardice, all the conditions were in place for it to become a modern, and offensive, power." Debord30

"When I say that academia is corrupt in America, I don't mean that professors are accepting bribes and giving kickbacks for government contracts. There may be a financial motive in some cases, such as the use of overhead funds for a "course buyout" to reduce a professor's workload, but I am not talking about the kind of corruption associated with Wall Street and Washington exactly. I am talking about the replacement of science with politics as the main item on the academic agenda.

"It must not have always been so. At one time, I believe academics were appointed and promoted primarily on the basis of merit and accomplishment. Within the last 20 years or so in the United States this has gradually changed into a system in which political correctness, slickness, and good salesmanship are more highly valued than good science. I don't pretend to understand the reasons for this, but I can point to many examples within our own community." Slashdot Interview, Richard Wallace31

"Hinduism too has many conflicting histories. Only since the last century has there been Hinduism as such. `Hindu' was a word used by outsiders to describe a place and people — not an institutionalized religion. The people who actually lived in this part of the world were followers of various saints, such as Shivites in Tamil Nadu and Vaishnavites in Gujarat and Bengal. The representations of Ram, hero of the Ramayana, used to vary greatly from region to region. But the many Ramayanas have now become one. In early 1987 an 18-month-long version of the Ramayana ran on prime time TV. The most popular programs ever shown in India, they represented an important step towards standardizing Hinduism for national consumption.

"A couple of months after the Ramayana mega-series the Vishnu Hindu Parishad (World Hindu Council) called on Hindus throughout India and the world to make holy bricks for the construction of a temple at Ayodhya. Bricks came from as far away as Vancouver, Canada and Durban, South Africa. Construction was deferred until after the national elections of 1989, in which the BJP [Bharatiya Janata Party, largely responsible for the current wave of sectarian murders in India] captured 86 seats, compared with the two they had won in 1984." Temple Wars, New Internationalist32

From the beginning of American Christianity and before, the methods of psychological manipulation have been studied and codified, first as cottage industry and later as systematic and scientific methodology33. The characteristic quality of "manipulation capital" is that the most streamlined approach is used. The scientific study of motivation only confirmed the classical theory of rhetoric — that an appeal to base emotions is the best way to get action without thought.

The American Christian Right, Islamism and "Hindu Fundamentalism" are each irrational, ideological constructs serving various purposes of the ruling class. The most shadowy world of ideological exchange can be seen in the connections of the Unification Church, neoconservatives, cocaine drug-dealers and South American dictators. All this is broadly comparable to Nazism — they create a single pole of power using a single dominant ideology. Similarly, these groups recruit both the most dispossessed and failed businessmen, architects and intellectuals.

While religion has not always been the most efficient at recuperation, it serves a fine purpose in the world of neo-archaisms. As a "technology" divorced from any particular religion, "sell it by zealot" is a proven technique. Wahhabism, Fundamentalist Christianity, Maoism and the Bharatiya Janata Party have far different points of origin. Yet they now serve the same purpose; using rigid moral categories, they give meaning and purpose to those who have lost a living culture.

Here we can see the appeal that Islamism has had for the CIA's professional manipulators. All the players are ideological entrepreneurs. The house of Saud gives more and more money to Islamist social welfare and protection rackets, aiding a process which has destabilized several other states — Algeria, Egypt, Pakistan, etc.

The overall direction of such ideologies is irrational. They don't follow the path which would bring the absolute maximum calculated benefit to ruling class. Once they get out of hand, they threaten the death and destruction of the ruling class itself. The "blowback" the CIA has experienced from bin Laden is an ideological collapse akin to the financial overreach and collapse of Enron.

After World War II, a modernization of society seemed to imply that liberal bureaucracies which could manipulate less self-destructively would gradually replace such "archaic" ideologies.

Now, everywhere things seem to be moving backwards towards an irrational past. Everywhere, a despair in modernization has led to the selling of streamlined myths of the past. This symbolizes the dominance of ideology, a dominance which no longer needs a wash of rationality to justify itself.

It is hard to tell whether this society is more corrupt than a hundred years ago. What we can see is that the form corruption takes is now different. One hundred years ago in America, the existence of organized crime had the clear implication that authorities were corrupt or at the least incompetent. Today, with villain images taken from James Bond movies, the publicity of extraordinary organized criminals, terrorists or drug dealers is used to bring on calls for more extraordinary enforcement powers. This dual hype of villain and agent brings us back to reactions to the World Trade Center attack. This especially includes the average person's amazing inability to see this as a terrible failing of the FBI, CIA and Federal authorities in general. The lawman and the high criminal engage in an ideological exchange which benefits both.

With ideological entrepreneurialism, the "hot button" is startup capital. We've already seen this with religious capitalism but everywhere today it has become systematic. "Hired guns" were the standard fare in the recent US presidential election. The most notable aspect of this event is that the "cost-benefit" calculations and maneuvers of Bush and Gore exactly split the Electoral College. Nothing could better illustrate the calculated use of ideology as an instrument. This calculated use implies a pure cynicism. Moreover, the virtual electoral tie which America reached in the last election showed the ability of this manipulation to discredit formal American democracy.

In Iran or Saudi Arabia, the expansion of modern Islamism is accompanied by a huge, parasitic expansion of clerics and their corrupt influences. Ad-hoc economic policies and the dominance of religion over science in education and policy hobble society's development. Yet this backwardness, characteristic of Iran or Saudi Arabia, also describes many of the conditions of the USA. An expansion of irrational ideologies combines to degrade American education. From biodeterminism to standardized test-based education, neoliberal and other ideology extracts more profits while corroding the rationality of the system.

Our society of ideological exchange is a society of indirect corruption. Corruption takes the form of a package deal, adherence to image and ideology. The term "log rolling" provides an image of officials who knock an item back and forth without sincerity but with the understanding that this kind of exchange allows them a particular hold on power. What has changed the most is that now the logs are bigger. Altogether, they are rolled into just a few ideologies — "Security, family values and the al-Qaeda threat". An adherence to these then becomes the badge granting the functionary membership in the present power clique.

This indirect corruption doesn't appear in the form of building inspectors, cops, professors or stockbrokers asking for bribes. Rather, one sees the corruption of an entire complex — essentially submission to the spectacle itself. Senators may no longer be directly bought but nonetheless are entirely controlled by a mesh of monetary and ideological interests. The control of images, of "cyberspace", of "street cred", the power of the mafia, the surveillance of spy agencies, and a host of other powers are not only advanced commodities but also means by which capitalists profit. This process facilitates the formation of nonmonetary exchange systems. This capitalization of representation is both the ability of corruption to distort the ordinary market and the ability of ideologists to turn their doctrines into cash.

Capital's Zero Point

The Falling Rate Of Profit

This article takes the system's multidimensional matrix and flattens it to a linear narrative. Crisis, production and representation really are happening all at once but we wind up describing first one and then the other.

Here, we still want to ask why the system experiences crisis. Some of the changes caused by the commodification of society clearly destabilize things. With other change, it isn't that clear why the development of the system produces this stream of irrationalities and occasional collapse. Crime and corruption are as old as the state but they have sometimes gone down, such during the American 1950's and 1960's, say. So why do things seem to be coming to a head now?

To answer our question, we go back to the basic processes of capitalist production — Marx's "money bags" buying labor and materials cheap and selling them together for a bit more.

Remember that the subjective aspects of the crisis have sometimes allowed the system to escape the objective aspects of the crisis — and vice-versa; advertising and media extend the system by stimulating consumption and pushing away an understanding of capital's eventual results. A declining standard of living has made people so desperate they ignore the qualitative misery of life under capitalism. As all these processes become automated, they become quantifiable. Information must be given a price, statistics is used to wrap uncertainty, etc. Thus, it is useful to see the quantitative contradictions wrapping the expansion of capital.

We see the quantitative crisis of capital coming out of this society's domination by the relations of labor power. Especially, we see our quantitative contradictions coming out contradictory ratios within this "law of value" Here, we give something like a streamlined summary of Marx's Capital. To solidify the ideas, the reader is referred to the original. To make these ideas more understandable, we will describe the qualitative kernel of capitalist production first and then give a summary of the arithmetic.

The contradiction of capital can be seen as coming from two different, natural measurements of capitalist production:

* On the one hand, you have the labor value needed to reproduce a given item. This is directly proportional to the number of items involved. But since more and more things are produced, this is continually growing as an overhead, especially as the world is seen and treated as a "production apparatus".

* On the other hand, you have the labor needed to produce those items needed to socially reproduce a laborer himself or herself, the labor needed to reproduce free labor itself. Capital productivity reduces this overall cost but not as quickly as capitalist production increases the total value of the items it is producing.

The point is that our second cost is different from the productivity of capital. The difference is that the usual capitalist measures of "productivity" look at the ability of enterprises to produce goods embodying labor without regard to the complex mix of goods which is actually necessary for a person to socially survive. The cost of survival may indeed decline but it will not decline at the same rate as the productivity of capital advances. The cost of food does not decline at the same rate as the cost of computer equipment. The cost of cotton does not decline at the rate the cost of plastic declines, etc.

The whole enterprise of capital is devoted to building a world where all measures of usefulness are seen as equal to labor value. This is the labor of others expressed as money. A car is an ideal means of transport for Capital since the driver supplements his or her natural ability to move using the labor power in the form of a metal box and an engine. The basic activity of movement is not necessarily improved but an overhead of indirect labor is added to it and thus a total cost can be assigned.

The difference between our ratios leads to a tendency for capital's average profit rate to fall — see side-bar.

Zero Point Results

"The progressive tendency of the general rate of profit to fail is, therefore, just an expression peculiar to the capitalist mode of production of the progressive development of the social productivity of labor." Capital, Marx34

Financial leverage denotes the size of a enterprise's borrowing relative to the size of its owners' investments . A modern enterprise of any significant size can't operate without a lot of leverage, without a lot of money invested from outside. One reason is that over the whole world economy, the most influential markets are those which are quickly expanding and thus generating higher profit margins. These higher profit margins are still not enough to allow companies in these areas to generate the capital they need to fully exploit these opportunities. So the quickest growing markets all have grown with huge outside investment; railroads in the 1890's, computer chips in the 1990's and manufacturing in China today all fit this. Equivalently, the bank money multiplier we mentioned earlier also implies a highly leveraged capitalism — when there is ten times as much money in the form of bank loans as in the form of individual capital, most businesses will operate on the loans. The money multiplier here isn't really a different force affecting the economy, it is just the same web of exchange, investment and representation described differently.

Understanding how leveraged a modern corporation is, we can see that the most important flow to a company is credit. "Debt structure", not raw income, determines whether a company is profitable or bankrupt. An example is a capitalist who borrows one million dollars to build a factory. The million dollars is loaned at five percent interest and the capitalist makes seven percent profit, paying for the loan and making money for himself. But if competition increases (through overcapacity) and the capitalist's rate of profit goes to three percent, then suddenly he is not making enough to pay his loans and the stock of the company becomes worthless. This is the zero point of profits.

Increasing leverage is altogether how capital expresses the increasing socialization of production. Even if a given company has only a limited number of inputs and outputs, the flow of credit and investment to the enterprise strongly connects it with all of capitalism, making it respond to the tides of the world market. Our zero point of profit is the point where capital's leverage causes its finances to start to seize up. So it is natural that we can see a lot of mischief lying in wait for capital here. This mischief begins with the contradiction of an individual controlling some large set of resources and the same individual not being expected to gain equivalently for himself. Because a bankrupt firm still has a lot of resources (credits), the owners and managers have an incentive to make off with the credits before the debts come due.

Bankruptcy makes an uncertain result more valuable than a certain loss. A corporate head's decision to sell drugs or to gamble the payroll at Monte Carlo when his company is on the verge of bankruptcy is only the most extreme example. Less extreme decisions that make short term money but doom the company would risk less jail time.

When a firm reaches a point of apparently unavoidable bankruptcy, there are four general strategies an owner or manager can use: (1 — Overcapacity) The capitalist can lower prices and increase capacity to increase market share and expand to other parts of the world, thus also gaining a flow of money which may conceal an even greater accumulation of debt for a while. (2 — Exploitation) Somehow compel their workers to work longer hours and/or for less pay. (3 — Ideological Or Extra-Market Intervention) Gain a bailout or regulatory deal which locks in some greater flow of profits. (4 — Ponzi Scheme) Use trickery to get more investment money flowing into the company and thus make the company appear solvent.

These strategies roughly sketch the problems which the present capitalist world is experiencing. We discuss expanding exploitation throughout this article. We will focus on the other three approaches in following sections.


"The productive overcapacity is neither temporary nor diminishing. Autos are the leading example of the dilemma—too many cars chasing too few buyers—but the same trend is visible in steel, aircraft, chemicals, computers, consumer electronics, drugs, tires and some others. The particulars vary from one sector to another, but the overriding fact is gross surplus of capacity, despite the many years of plant closings, and the overhang grows steadily larger in most cases. Of all the imperatives driving the behavior of global enterprises, this constitutes a central source of their anxiety." One World, Ready or Not, William Greider 35 see also 36 for an even more detailed account of overcapacity in a particular industry.

The zero-point of profits generates overcapacity. There is a subtle difference between overcapacity and under consumption. A situation could be called under consumption if you could put enough money into the market to impel consumers to buy more.

Unambiguous overcapacity appears when industries with a fairly fixed demand have more than could be satisfied. A wealthier worker might buy an extra pickup but they would have little incentive to buy identical extra economy cars.

Luxury coffee production has allowed some producers to escape the present cheap coffee glut but such production needs years of planning and investment, a luxury that the cheap producers don't have. On the other hand, each cheap producer can get more immediate money by producing more. This is an "easy" solution but when all producers do this, they are ruined.

This shows how a crisis of profitability can lead to a crisis of overproduction. A given industry which ceases to be productive, based on the level of domestic production, has every incentive to sell on a foreign market to make back some cash. Such extra demand will become the lifeline for those enterprises who have already had their capital crushed by a declining rate of profit. This effect causes the bankruptcy to move from individual firms to entire industries.

Overcapacity appears as various nations or corporations develop in parallel. As the rate of profit declines, capital sees highly capitalized items as its source of revival. The highly capitalized item offers a greater rate of profit. But this situation reverses itself when you reach the zero point of profits. In these situations, many companies may go broke. But it also becomes profitable to operate otherwise unprofitable factories once the cost of replacing the factory doesn't have to be considered. Suddenly, an industry where the cost of entry created high profits becomes one where overcapacity creates low profits.

It might be imagined that a state system could stop this, but the bureaucrats of the Soviet Union actually faced a similar problem. Overcapacity appeared in the Soviet Union. This happened as the bureaucrats gradually lost any incentive to actually advance the nation. Rather than reallocating resources from one type of production to another, they simply chose to maximize the production of existing, unneeded goods. This was because each bureaucrat's position depended on the level of production rather than from providing any use.

But now that the Soviet Union has collapsed, we can see overcapacity coming full circle again with former Soviet steel plants which today export steel to the rest of the world as they are profitably run into the ground by Indian multinationals37.

Ponzi Schemes

"A Ponzi scheme, named after Charles Ponzi who defrauded people in the 1920s using the method, involves getting people to invest in something for a guaranteed rate of return and using the money of later investors to pay off the earlier ones."40 A Ponzi scheme is also known as a pyramid scheme or an investment bubble.

Post-Keynesian Hyman Minsky describes how the ordinary business cycle can transform a given enterprise from productive finance to "Ponzi finance" (and ideally back again)41. Minsky describes a common situation for modern capital investment. A construction firm wishes to borrow for a building that will need several years to complete. Assume once the building is complete, it will yield a fixed income — this is quite an assumption but we're looking at how things can get dicey even if this assumption is correct.

To pay for the wages and materials needed for the building process, the capitalist borrows short-term each month. To pay the interest on the money they have already borrowed, they borrow extra. An increase in interest rates or decrease in revenues results in a company which pays its bills primarily with borrowed money. This is our zero-point and it is possible that a company which reached the point where debts hopelessly outpace revenues would simply declare bankruptcy and end the process. But the temptation to just get more capital and keep the process going is great. This puts many average enterprises on the knife's edge between being brilliant entrepreneurial ventures and rackets. The days of the Mom and Pop store are long gone and even the smallest capital feels the whiphand of the market.

This connects with our earlier discussion on capital as representation. Both the Ponzi scheme and the bank multiplier rely on building interlocked representations of money. One could see the bank multiplier is simply fragile whereas the Ponzi scheme is doomed to collapse. Still, Minsky's reasoning shows they are ultimately variations of each other. There is ultimately no way to distinguish between productive and Ponzi finance. Since a capitalist takes his monetary position from his social position in the circle of representation, there is no way to fix the tendency to create Ponzi cycles. Any algorithm which attempts to sort "real enterprise" from "fraud" will fail just as Long Term Capital Management failed. When a person's job is guarding another person's money, their reward for theft is always higher than their salary. As J.P. Morgan said, capital relies on character, on the commonality of interests which binds each capitalist to other42.

Now, a smattering of Ponzi schemes is normal for the capitalist economy. Some long-term investments will be misjudgments. When the managers of these enterprises reach our zero point, they may suck up more money to maintain the appearance of solvency. A machinery involving accounting institutions, masses of lawyers, the Securities and Exchange Commission and so forth works constantly to keep this problem at bay. Even here, greed fighting greed can't guarantee the results.

Remember how capital is based on various protocols. The very complexity of the investment process means many small investors must simply take the handshake and the expensive suit of the manager as enough to guarantee a flow of cash. The dot-com boom is the most obvious recent example. The larger capitalists will still treat the value of various analyses as being proportionate to their price. We can see how the highest paid Wall Street analysts simply looked at the income trends and the reputation of Enron without making the slightest inquiry into the actual workings of the company. And we can see all the rest following these characters.

The statistical viewpoint starts with a purely random series of data values. This randomness implies that various "coincidental" events are not likely to occur. To that end, statistics assumes that all the data points on a graph are created equal. So, among other things, the statistical perspective takes the position that the observer finds himself or herself in at the present moment is no more unique than any other moment on the line of the graph. A statistician wouldn't assume that the future will resemble the past but he would assume the probability distribution of the past is going to determine the events of the future. So, a statistician looking the graph of a Ponzi scheme will see a continuous history of growth. He may credit that there is a chance of collapse but he will assume that this chance either stays constant or increases slowly. Therefore, he must assume that the gamble looks fairly good. He will be mistaken since all Ponzi schemes collapse.

So, it still does an investor no good to know the "track record" of both this Ponzi scheme and others. If the scheme has been going for a little while but still hasn't reached its limit, then an investment may turn out to be a good gamble. The effective Ponzi schemer has to have good reason to believe that he is above the cut within those who would indulge in the game at all (which is different from simply being near the top within the entire population).

Thus the ideologies which support Ponzi schemes mesh with the denial of history. The belief that the latest fad is more insightful than all history before it smooths the way for investments in these glittering promises.

A rise in Ponzi schemes is a natural result of the declining rate of profit. A Ponzi scheme is, in ways, a form of ideological intervention to prevent the impact of a fallen rate of profit. Just as much, since any lie must continually be reinforced, the rhetoric required to support different unprofitable enterprises must be constantly increased, resulting in an ideological Ponzi scheme. And thus each part of our system flows into the other.

Ideological Intervention

Writing in early 2003, the Japanese economy has been in recession for more than ten years, ever since the collapse of the "Nikkei Bubble" in 199138. This situation gives the impression of continuing indefinitely. It is said that a resolution of the current Japanese financial crisis could only come after recognizing the fact that many of the largest banks and corporation are broke. Yet the interlocked Japanese capitalist class has refused to let this happen. Banks and corporations control the government and have prevented any shutdowns or bankruptcy declarations .

It could be argued that these folks reveal they aren't capitalists, or reveal that the nation isn't capitalist enough. But capital needs more than just the simple existence of the labor process — though it absolutely needs the labor process. Capitalism also needs some fudging of the market. And now, the rise of ideology gives companies a palette of ways to twist the immediate tendencies of the market and postpone the effects of the declining rate of profit.

While the changing ratio of our two quantities creates a falling rate of profit in terms of labor value, this only becomes a crisis in money terms once the price of commodities stabilizes at a level around the labor value contained in the commodity. Only once the lower prices from other producers start to cut into profits has the declining rate of profit really arrived.

This is the tendency of prices but ideological factors can temporarily halt. Advertising funnels demand to those companies which control information rather than companies which produce the best products. "Buy America" campaigns aim to make consumers work against their individual interests to benefit American companies (companies who naturally feel no obligation to help American workers). State intervention prevents failed companies from collapsing.

The system of the Soviet Union could be called capitalism without the capitalists. There, bureaucrats created a simulation of a modern industrial society but had no flexibility in its organization. This creation is only different in degrees from the Zombie Companies of Japan — or the bankrupt but still flying United Airlines. And all of these are ways that ideology first intervenes to prevent capital's crisis and then ultimately strangles all ability of capitalists to act.

Capitalists do act in their collective interests but this means acting together to protect each of their individual profit streams. Within private capitalism, each of these profit streams is a matter of leverage rather than the total exploitation of labor power. So the preservation of total leverage is the goal rather than the simple preservation of the stream of labor power. As in Japan, an ideological intervention is collectively preferable to a disruption of property relations.

Ideological intervention also creates an increasing division between the production apparatus and the organizing/profit apparatus within capital. Ideological intervention becomes the guarantor of production and reaps profits instead of producer capital. This is equivalent to increasing the capitalization of representation; since every new protocol essentially focuses money within its own big lie, actual profits are more and more divorced from directly productive activities. Thus profits and organizing principles now come from a few very big, very remote schemes and with everything else trailing behind these. General Motors gains in credit profit what it loses in production costs. Citibank gains in money laundering profits what it loses in ordinary credits. The film industry makes money on those few mega-films which can be monolithically sold around the world while most film production activity never officially makes a dime.

"It is often argued that industrial deception is a uniquely self-rectifying problem, in that an engineering firm with rotten patents will get a reputation of shoddiness and unreliability and will eventually suffer in the marketplace. But this rottenness can take an extremely long time to reveal itself, while secrecy, accumulated mistakes, and economically motivated disinformation slowly clog the pipeline of innovation. In this sense, ownership—more accurately the secrecy it necessitates—is not the engine of progress, but its enemy. One cannot both expose knowledge to scrutiny and keep it for oneself to sell. It has to be one or the other." Physics Today, Robert B. Laughlin39

We have a system in which a trade in ideology has become the coin of the realm. All of the expanding legal devices of intellectual property are on the one hand an effort to commodify life and on the other an effort to freeze a part of capitalist relations so that power and profits are guaranteed. Thus the declining rate of profit increases all the effects of this indirect corruption.

Behind Neoliberalism


However much denied, the declining rate of profit and capital's efforts to deal with it have been around for hundreds of years now. This struggle hasn't just been a seesaw of changing profit rates. Instead, capital has transformed the world with all the methods we have described — increased exploitation, ideological intervention, ideological monetization, the structural freezing of different realms, and the inflation of ideological Ponzi schemes. It has left layers of previous results everywhere.

While the turning point is difficult to see exactly, we can say that by the time of the 1929 depression, society had reached the point that overproduction was more of a threat to the rulers than underproduction. The present neoliberal phase arose out of the previous era. This era, what could be called the progressive, the Keynesian, or the social democratic era of Western capital was fully in place by the end of World War II. This broad trend itself appeared after traditional capitalist society had been bloodied in a number of ways. The limits which were placed on banks, corporations or investment firms after 1930 were a "damping" intended to prevent the quick elastic motion of markets, this same elastic motion which hurled the economy into the depression. The ideology with which the state protected itself was also used to stabilize the money system. Altogether, a tremendous expansion in ideology during and after the thirties seemed to be the solution to what could be contrasted as "runaway capitalism" during the teens and twenties.

The Western Powers emerged victorious in World War II. This victory was far from undisputed. The great depression revealed market inefficiency in brutal detail and "Communism" still constituted what seemed to be a serious threat. At the same time, both Eastern "Communism" and Western "Democracy" were based on a powerfully-developed central state. They were two poles of social democratic society and this general principle of bureaucratic capitalism appeared completely victorious.

The ideological division of the world and the Breton Woods agreement seemed to solve the crises of state and private capitalism, both left over from the great depression. So it made sense for much Western capital to adopt an agenda which offered concessions to the working class and for it to plan to avoid the still-remembered excess of a market gone mad. Like any broad, historical movement, this agenda had many contradictory aspects. But it also animated much of the approach of capital. All factions of capital were united as specialists and bureaucrats.

The triggering factor for the breakdown in social democratic capitalism was the return of economic and financial crisis after 1970 and reawakening of proletarian resistance. Capital needed to solve the problems of slowing growth as well as the rejection of the "affluent society" which swept the globe in the later 1960s. Thus from 1973 to 1980, capital sought new approaches to solving its problems.

The production system was in a much better condition than in 1945 and far better than in 1930. But the progressive agenda had not demonstrated an ability to end class struggle. Moreover, the struggles that were happening seemed somewhat dependent on progressive institutions like state universities or welfare giving people enough social space to protest. The affluent society seemed to be coming apart at the seams.

Rightwing free-market anticommunism had never gone away in any Western country since it represented a natural ideology of various sectors of capital — the vast, backward parts of the US constitute a "residual supply" of rightwing ideology ready to jump to the fore. Thus it was natural for this agenda become dominant again. Relatively rightwing politicians in the US had accepted various parts of the progressive agenda, with Eisenhower presiding during the CIO's organizing drive and so-forth. But this also meant that the US didn't have any constituencies ready to defend social democratic concessions wholeheartedly.

Now over the thirty years after 1945, the progressive consensus has broken down and the speculative financial sector has grown to a larger and more powerful part of the economy (after having been reigned-in somewhat during the depression). This set the stage for the rise of neoliberal ideology, which became the ruling class consensus during and after Reagan and affected society on many levels.

Our description of this is spread through the rest of this text.

Dollar As Control And Representation

The American financial markets are in a bubble still in March, 2003. Despite the current recession, the overall American investment bubble has not "popped". The US is still absorbing up a huge amount of world investment dollars. Attracting investment dollars is one half of the cycle of dollar recycling. The US spends money on various imported items, especially oil but also manufactured goods from East Asia and drugs from numerous areas. Then these various countries reinvest their dollars in either the stock market or different bonds. The money from this then goes to sustain consumer credit and government spending and from there, the cycle repeats itself.

America has pursued a "strong dollar" policy for the last ten years. This policy has resulted in the world's capital leaving other first and third world nations and lodging in (sometimes speculative) American investments. The dollar's strength is supported by the perverse logic of global chaos. As neoliberalism sinks the world into greater general chaos, more investment flows into the US as a "safe haven". So events like September 11th, the Afghan war and the Iraq war play into the dollar recycling process42.5. America thus dominates through finance, through military power and through ideology. Oil is denominated in dollars and an expanding demand for oil means an expanding demand for dollars.

Dollar recycling and neoliberal investment increase global chaos in turn. A important part of the neoliberalism has been forcing a collapse in commodity prices in the 1980's and 1990's. These low prices boosted American economic activity at the same time that America absorbed vast speculative inflows.

We should be clear that this is the US dominating as capital. While the US economy still has the world's highest rate of consumption, this consumption rate is more and more imposed on workers. Increasingly, you need a car to get a job, you need health insurance to survive, you need the right appearance to be socially accepted. The average American does not receive a stipend equivalent to Saudi or other imperial citizens.

The present "collapse to the center" is as necessary for the periphery as for the center. Just as the American Democratic Party is willing to lose elections rather than playing to popular discontent, a whole array of third world state apparatuses are willingly organizing the draining of their economy towards the speculative center. And indeed America's rulers work hard to make sure this game remains "the only game in town".

Drug money is just one of several kinds of money waiting for laundering and that laundering adds to the pot of recycled dollars taken into American banks. Beyond drugs, all of our social dislocations have in turn increased this river of speculative capital. The failure of governments allows corrupt officials to secrete funds and allows refugees to be fleeced and savagely exploited. And all of the entrepreneurs involved here seek investments in America where they can be legitimate.

Global overcapacity further creates a situation which makes the US the only country which can "lead demand". If the world market were to be "thrown to its own devices", global overcapacity would cause prices to plummet to a point of complete unprofitability. This means that declines in American consumption have caused even greater declines in European and Asian economic activity. And this reinforces the dollar recycling effect.

This integrated process can also let us see the motives behind the Bush Administration's push for the Iraq War. Argument can be made that any of the following motivated the neoconservatives.

* Controlling Oil, for US oil company profits, to secure enough for the American economy, to deny oil to enemies, to support the US dollar and the unbalanced US economy by assuring that the dollar remains the currency with which oil is bought.

* Supporting the military-industrial complex and George Bush's personal political future, providing a distraction from the worsening US economic situation and securing a permanent hold on the Republican Party for the neoconservatives themselves.

* Conquering or controlling the Middle East, to squash the perceived threat of "Islamic Fascism," to assure the position of Israel in the Middle East and not incidently to further attack the working class of Iraq and the entire area.

With each of these scenarios plausible, the situation seems opaque. But the single deeper reason is the crisis of capital. Each of these reasons relates directly to capital's zero point and the dollar as control and representation. All of these wind up as one logic, the crisis of capitalism. The Iraq war logic says "this war is needed to maintain the American lifestyle" — thousands must die to keep us under in the same rut, under the thumb of the same boss.

Capital's Foam

Having seen capital's tendency to expand, freeze, and switch directions, we can see leviathan industries more clearly. Each of these rackets can be seen as a bubble growing at a somewhat different rate. Over time, each will pop or freeze in place. An ideological Ponzi scheme appears as a exchange of prestige, information or image reaching a point of increasing concentration. It is a bubble expanding through history. We can see this in the explosions of ideological excess in Stalinist nations, in the implosion of cults and in the tendency of dominant images to become more and more uniform — in the way the faces of the most famous TV actors and actresses blend into one ever-present face.

Forces equivalent to single Ponzi schemes affect whole industries, the currency system, our system of information production, ideological exchange and all our capitalized ideologies. Big lies expand and collapse, fashions appear and disappear. The system's concept of itself becomes more and more incoherent. Institutions operate on a large scale, proposing and testing their various schemes with experiments and statistics. Having none of the limits of previous times, wealth and the appearance of wealth are mixed freely and the term "national interest" can be leveraged for anything.

Taking this tendency from two hundred years ago up till now, you can imagine a foam — bits of solid areas around the empty space left by large and small bubbles. Areas expand, fall into crisis and are carried over by other areas. Indeed we see fragile illusion piled on fragile illusion, with rapidly growing schemes leading everything by the nose. This quality is spread through everything. The conditions of daily life shows the same psychology. Denial, fear, and obsession are the pressures which structure routine existence today.

The social relations of today organize daily life not just in terms of the reduction of activity to wage labor but with rings of synthetic loyalty based on competitive pseudo-interests; any worker above bare survival is encouraged to fight for a place in the "in" crowd, the right job, the right hobbies and so-forth. And those at bare survival hope that they have cast their lot with the right racket.

We've talked about the principle of concentration whereby various leviathan industries dominate production and policy. We've given some details about media, religious fundamentalism, neoliberalism, the petroleum economy, and dollar power. With all the present entanglements, it's a judgment-call which other rackets deserve mention.

The medical industrial system and the prison industrial complex are two other rackets which we'll look at. Like other leviathan industries, these are woven through many aspect of life today. The American prison industrial complex intersects with the spectacular crime myth as well as the drug system. America right now has a system of three-strike and mandatory sentencing laws which are guaranteed to keep the number of people in jail increasing for at least twenty years. We can see a situation where the State of California will be increasing its spending to $4.8 billion on jails in 2003 as the recession gives it a $35 billion dollar deficit — with a mandatory sentencing laws locking the state into further increasing prison costs43.

The medical industrial complex has followed a similar path to the prison industrial complex. As institutions whose consumers cannot exercise much choice, hospitals and prisons seem like excellent investments given a profit crunch. This connects these schemes to the river of speculative capital. Medical science has certainly made considerable advances over time. Still, healthcare becomes a horror when care doled out according to same logic as gizmos on an assembly line.

The medical industrial system again follows the dynamic of the entire system. The healthcare industry is an especially powerful example of the corrosive effects of the law of value; the entire healthcare crisis can be seen as an effort to satisfy a social function — health — with money, with generic labor and generic commodities. So its contradictions come out of the social relation of wage labor. The medical industrial system has experienced particular crises similar to each crisis we've mentioned. So we can show some good examples of capital's foam:

§ As American society reaches its "demographic crisis", as the proportion of old people becomes larger, this society has moved to weaken the interpersonal links, the values and resources that could lessen the costs of this transition. Just as much, the more that hospitals cut costs for patients by speeding up routine and cutting workers salaries, the more hospitals cease to provide the health which they originally claimed to provide. The "cost of dying" has skyrocketed as life extension technologies turn the terminally ill into a huge source of profits.

§ In hospitals across the country, the Emergency Room has become the healthcare provider of first resort for the growing number of uninsured. This generates higher healthcare costs and reduces the quality of care dramatically.

§ Health insurance costs have risen at a rate of something like $100 per person in the last year, pushing more people into the ranks of the uninsured. Today, total healthcare costs are approaching close to fourteen percent of GDP, up from ten only a few years ago43.5. These increases are clearly unsustainable. With present insurance bureaucracy, up to fifty percent of healthcare costs now go into administration.

§ The healthcare system has been used as the preferred treatment for a wide range of self-destructive social behaviors (drugs, obesity, sedentary lifestyles, the inherent deadliness of the private automobile, work-related stress, etc.). But this is both hugely expensive and is also an excuse for not preventing these problems to begin with. Moreover, it dovetails with various disease-centered ideologies, ideologies which treat social problems or personal anxiety as disease. This happens as "illness" has become the only acceptable form of social deviation. The FDA requires all herbal supplements to carry the label "not intended to treat any disease".

§ The expansion of psychotropic drugs masks a world whose pressures and contradictions are driving people crazy. The increasing prescription of drugs to children is especially worrying (though Prozac might relieve this worry...).44

§ Pharmaceutical company profits and prices have reached such heights that drug costs need to be insured separately from other healthcare costs. At the same time, the quality and effectiveness of many drugs can be doubted.

§ Drug companies and hospitals are increasingly developing ways to avoid liability for the horrors they create. The answer for unpayable malpractice insurance is limited court settlements. The Homeland Security Act contained provisions shielding pharmaceutical companies from liabilities for vaccines.45 Ideological intervention once again protects the free market industries.

§ Those connected to Hollywood, the restaurant industry, journalism or even telemarketing schemes must tell their bosses and themselves the same lie of benefitting from their situation. Those afflicted with the imagined or real diseases treated by the medical industrial complexes perforce face heavy pressure to express loyalty to the ideology of disease.

The Blue Screen Of Death

Balancing Collapse

"Have you heard of the wonderful one-hoss shay, that was built in such a logical way. It ran a hundred years to a day, and then, of a sudden ... it went to pieces all at once, all at once, and nothing first, just as bubbles do when they burst. End of the wonderful one-hoss shay. Logic is logic. That's all I say." Oliver Wendell Holmes (describing a carriage built with "each part as strong as the next".)

"That's one of the problems of a globalized economy, and it's why people are puzzled and don't know what to do. Where can the risk capital really go?" asked a trader at a European Bank in New York about where to invest when every nation's economy seemed to be tanking simultaneously. Reuters, (8/2/2002)46 

Margaret Thatcher's TINA (There Is No Alternative) has become a continual reframe of the present world. An ideologist may, at various times, acknowledge the essential madness of either a particular project like industrial healthcare or the whole of this industrial civilization. But naturally, they follow this admission with a statement that things really continue because this is the only game in town. This is where we see a society where "risk" winds up spread so evenly that, like radioactive pollution, no one in the world can escape it.

For a modern manager, a critical job is knowing how much rot there in the process they're managing. By rot, we mean all those weaknesses which could cause failure at some later point. In a factory, these weaknesses could be dangerous working conditions, worn-out machinery, or broken regulations. For world leaders, these weaknesses could be popular anger, environmental devastation or global corruption.

But for an efficient manager, understanding the rot doesn't necessarily mean rooting out all the rot or letting it all go. Since capitalism values everything by the dollar, this is just a matter of balancing costs. If you have a shipping business, it wastes money to buy a new truck each year but a ten year old truck might waste fuel, tarnish the image of the company and be unreliable. So, most companies choose a point in the middle. This involves balancing only the costs which the company will have to pay. An anonymous supertanker owner calculates whether a leaky bucket of rust is likely enough to get across the Atlantic to recoup the initial investment. He does not calculate the social cost of the supertanker disintegrating in the Atlantic and showering Spain with oil.47

But larger implications come when we look at an entire world run this way. Global managers do the same thing as local managers, balancing the multiple forces which nip at capital's heels. For such rulers the system appears as a single machine on the one hand and as a forest of individual managers and enterprises on the other.

So now, all of our "zero-point" problems are appearing within this forest of enterprises. The Ponzi scheme is one characteristic direction for capitalism. While some enterprises are working normally, some fraction of enterprises are frozen outside monetary profits, some are failing and some are in Ponzi explosion.

Ideally, the system efficiently balances each force which extracts surplus value while minimizing necessary collapses or Ponzi explosions. But going from our formulation of the crisis to our understanding of money as expectation, regulation ultimately only increases the entire field on which capitalization and crisis unfold.

This becomes the same process on a wider playing field. First capital experiences crisis, then an ideological solution, an external force, is evoked to prevent that crisis, and then finally this force breaks down and further crisis management is needed. All is fine here until circumstances conspire to cause these separate breaks to occur at the same time.

The New Deal saw the rise of the federal bureaucracy and a less pure capitalist market. Still, as generalized bureaucracy interacted with market forces, ultimately both the market and the bureaucracy stood perfected. Both Federal and corporate bureaucracies deal with management's latest ideological initiative while they sell surplus materials on eBay and otherwise continually marketize operations. But this perfection is a kind of fragility also. Now neither market nor bureaucracy can be mobilized as an extra force for a crisis since each one is continually mobilized to maintain the ordinary economy.

Today, banks "stress test" their investments to assure themselves that under "normal circumstances" they are unbeatable48. But the increasing level of crisis naturally implies that these bets will be extended to a wider and wider area to assure that the basic investments will not fail. The failure of Long Term Capital Management has shown how this spreading of risk could threaten the entire financial system49.

The information economy and bureaucratic ideology were the triumphs of the postwar "mixed economy". Yet once ideology itself becomes just a series of tokens bought and sold on the market then information itself can have a crisis. The falsification which comes from commodified information guarantees this. With the present Internet, Secretary of State Colin Powell's Security Council presentation could be revealed as false within seconds on Google. The expansion of the Internet has so far stalemated the expansion of Orwellian intellectual property schemes such as Microsoft's Palladium.

The logic of crisis capital is the logic of short-term thinking. Daily survival in this society involves building complex protocols of future expectations — complicated arrangements of hope and doubt, certainty, possibility and uncertainty. Each crisis the system faces trades present peace for future disaster. Life in America is based on a chain of future promises. The compensation for school is the promise of a good job. The compensation for annoying work is the opportunity to be taken care of in old age or the chance for your children to go to college. As all these schemes become more and more part of the financial system, bureaucrats have accumulated more resources to invest with the ostensible intention to use them for education, retirement or healthcare. Naturally, much of this money has already been stolen to support the "miraculous" profits rates of the "new economy" while the continually escalating costs of healthcare and education make the remainder utterly inadequate.

George W. Bush's rejection of the Kyoto accords couldn't be seen as giving the US a long-term economic advantage. Throughout the 1990's, oil prices were lower, in real terms, than in the 1950's. These same low prices have prevented the development of alternative energy sources despite declining oil supplies. Naturally, the environmental costs of the hydrocarbon economy are steadily accumulating. Since capital in crisis cannot afford the small rationality needed to convert to clean energy, these horrors will increase. And the world economy seems to expect to be able to exponentially increase the burning of oil as China and India develop automobile economies akin to the US.

But if we realize the goal is just to move a few horse-lengths ahead in the race, it's likely it could give a push to the US economy. Of course, this push will be absorbed by the "pull" of the present structural crises, a crisis which Bush and his cabal have neither the ability to solve nor to understand. This insane act shows the tendency of capital's managers to borrow from another store of resources whenever they need "wiggle room" in their immediate situation. This is happening openly and secretly in many institutions as the economy stretches things "to the boards".

Crisis In Practice

Our strategy isn't based on predicting exactly how far capital will fall when. It's enough to explain the crisis at present. Given our opaque world, it is worthwhile having an explanation of why this structure is rocking and creaking, why holes like September 11th seem to appear without warning.

We will be discovering the exact dimensions of the crisis in practice. Our entire discussion naturally has followed a spiral path. The dimension of value and the spectacle mesh on more and more complex ways as one looks at more and more dimensions. But there will also come a time for simplification. That is when the wheels stop turning.

America today fights battles of unknown scale with persons unknown in Afghanistan50. Brazil lurches towards a possible default in summer of 2003. The American public has not yet experienced a full recession while it is still numbed by the continuous escalation of exploitation that has happened over the last twenty years. The size of the drug economy and the money laundering system are unknown. The true size of gold reserves is also an uncertain variable. The corruption of the military industrial complex competes with the rise of military technology. The rising neoconservative ideology must naturally project an absurd image of America's enemies. The myth of the new economy's productivity could only survive for so long. The immense sympathy which the US had after September 11th has been completely used up already. How many other rackets are twisting in the wind, ready to collapse? How many Enrons and space shuttles are waiting ahead?

This is a conflict where different sides have strengths in different broad dimensions — military, economic, political or ideological. How will Chinese industrial capacity measure up to US financial and military power? In the invasions of Kosovo, Afghanistan, Iraq or other further places, the variables seem to be the ultimate cost of occupation rather than an uncertain military outcome. But this still leaves much uncertainty. Iraqi heavy armor couldn't put up significant resistance to the vast airpower of the US but we don't know if the willingness of an Iraqi proletariat to resist American occupiers will be greater than their will to fight Saddam's repression. The US won't easily replace Saddam's expertise in crushing the proletariat.

With the world in its present state, the influence of our various factors will remain partly a riddle. The role of secrecy appears in just trying to determine if Bush is the imbecile he appears to be and whether it matters much for the US if he is. On a more basic level, how much of the crisis is coming out of working class resistance, how much of the crisis is inter-capitalist rivalry, and how much of the crisis is the exhaustion of the environment and natural resources. We can see the diplomatic disaster over Iraq, the failed Venezuelan coup and the Afghan swamp as evidence that the US is vulnerable — if our information is at all reliable. Still, it is immensely powerful.

As these entities contend on these multiple levels, the decisive factors will be determined in practice. Every sign points to a series of conflicts that will bring this crisis into a more open form. Even here, the question is only partly the disintegrating intelligence of this complex. A more crucial question is the degree of understanding given to capital versus that given to its enemies.

At the time, some media experts expressed surprise at the US victory in Afghanistan. The conditions of the Afghan war are obscure, with many US claims appearing dubious. When the Special Forces serve as the bodyguards of the Afghan president, things can't be doing peachy.

One factor in gauging our strength is the level of effective deception affecting the various parts of the working class. Iraq may involve a similar war of a thousand cuts — but it is uncertain how soon after the invasion we will learn the true condition in Iraq. The willingness of the American working class to fight for their SUVs may be different from their willingness to fight without their SUVs. How will the battle end, between the irresistible force and the immovable object?

Doug Noland describes a roving mass of derivative capital which floats between the different investments, whether "bear" or "bull"51. As strategies become untenable, this situation yields a violent unwinding where upturns and downturns equally snag various players but the general momentum is still downward.

We have already described how every act of postponing a crisis generates an accumulation of potential future crises; financial manipulation, overcapacity, misallocation of resources and so forth — and how the means to cover up each particular symptom of these problems has naturally also grown. Given this, the violent appearance of the unexpected, as in the disintegration of the wonderful one-hoss shay, seems logical.

The Proletariat Again

If we have said relatively little about this, it is because in the present world, the proletariat bats last. In some ways, all the conditions of this system apply to the rebels, in other ways the counter-force has yet to be heard. Even in an era where revolt is coming closer to the surface, we often see the proletariat through the negation of capital rather than through its visible action. The proletariat appears by transforming the methods of capital. We are on the one hand those who are dispossessed and know it and on the other we are those who have adapted to the social production which capital has created. Turning capital's development against capital, using global mobility, the Internet and other technologies against capital is one part of this.

The reappearance of popular resistance does not automatically follow a balanced strategy. We are not plotting which countries have enough production to create a static counter-power to the capitalist bloc. Rebellions have naturally begun in those areas crushed by neoliberalism. We know that the dispossessed in Argentina and Algeria have engaged in huge autonomous upsurges which rejected all capitalist parties and representation — most importantly rejecting leftism in Argentina and Islamism in Algeria. The totalitarian rule of capital and ideology makes an absolute, nonnegotiable autonomy a central principle for actions. In Argentina, the slogan "Que Vayan Todos" is universally shouted — meaning "Get rid of them all". In Algeria, elections are the primary target of autonomous rioting masses. Workers in China have also engaged in large revolts against the conditions of that country's development. Sparked by disintegrating living conditions, China currently experiences over seven hundred demonstrations per day52.

Proletarian upsurges are often economically senseless since they are the negation of the economy. Indeed, resistance goes between the pole of absolute despair and the pole of being incorporated back into this society's machinery. The religious nationalist group Hamas recruits suicide bombers with the slogan "better a meaningful death than a meaningless life". Still, the resistance of Palestinians in general is visible to the entire world as resistance to the present order and subtle factors such as this are important along with any count of numbers of resisters. Hence the attempts of the US government to silence support for the intifada.

Still, the task is moving from despair to resistance to the present world order, to revolution. A crucial step will be for the defensive structures which many insurrections create to become offensive revolutionary structures. In Argentina, a limited, parallel form of self-management could become an end in itself rather than being a means to communize the entire economy. In Algeria, committees of defense have not yet articulated themselves as a means of the poor seizing power. Neither struggle has yet internationalized itself. Still, these struggles show how quickly organic community can arise when capitalist relations are refused.

Given the slow collapse of capital, there may be time for these tendencies to go further. But the final word must be the same as the graffito from Paris 1968 — "vite" — "quick". At the proper point, we must act quickly to extend all the tendencies of the international proletariat. This includes rejecting wage labor, capital and ideology and carrying out autonomous direct action across the bounds of race, gender and nation. Red Hughes

End Notes For "The Return Of The Crisis" — See also topical reference

1. Ten days that shook the World Bank, Le Monde Diplomatique, February 2002; See also further financial crisis notes.

2. A vast CIA Anthrax connection literature can be found on the web, much of it based on mainstream sources; Reference . See also corruption of science and elites notes.

3. "As events evolved, we recognized that, despite our suspicions, it was very difficult to definitively identify a bubble until after the fact--that is, when its bursting confirmed its existence" Alan Greenspan, Speech at Jackson Hole, Wyoming, August 30, 2002; See also further financial crisis notes.

4. Unholy Wars, Afghanistan, America and International Terrorism, Third edition, John K. Cooley, Pluto Press. See also imperial plans and problems notes.

5. Michel Chossudovsky, Global Poverty In The Late 20th Century, 1998, See also Neoliberalism references.

6. Doug Noland: Barnet Coleman The Political Economy of War And Peace In Afghanistan, Mike Ruppert: www.fromthewilderness.com

7. Immanuel Wallerstein, The Eagle Has Crash Landed Foreign Policy; See also imperial plans and problems notes.

8. Vast amounts have been written about Enron, the pipeline and Afghanistan. One link is: Reference. See also imperial plans and problems notes.

9. Barnet Coleman, The political economy of War And Peace In Afghanistan See also imperial plans and problems notes.

10. Richard Labévière, Dollars for Terror: The United States and Islam, Algora

11. "The marginal product of a fuel is determined in part by a complex set of attributes unique to each fuel such as physical scarcity, capacity to do useful work, energy density, cleanliness, amenability to storage, safety, flexibility of use, cost of conversion, and so on" Net Energy Resources See also further energy politics notes

12. US dependence on hydrocarbons can be seen at: Reference See also further energy politics notes

13. The Honda Insight See also further energy politics notes

14. "'Often, nations have simply traded hunger for obesity, and diseases of poverty for diseases of excess,' said co-author Brian Halweil. In Brazil and Colombia, for example, 36 and 41 percent, respectively, of the population is overweight, levels that match those of many European countries" worldwatch

15. This isn't saying that humanity had previously lived on the basis of pure need and survival. The start of civilization itself resulted in a giant step backwards for humanity, when humans went from abundance to bare survival.

16. See; Reference

17. This is indirectly addressing all the folks argue from the perspective of resource exhaustion, including Mike Ruppert, dieoff.org, Daniel Quin, deep ecologists, Malthusians and many others. See also further energy politics notes

18. The Price system As a Mechanism for Using Knowledge Comparative Economic Systems, ed. Morris Bornstein, (Illinois: Irwin Publication In Economics, 1985), p. 27-40

18.5. Two Men Driving Bush Into War, The Observer, Sunday February 23, 2003

19. Stratfor.com's home web page describes its product

20. J.M. Keynes, The General Theory, chapter 12, section 3. 21. Business Wire, January 24, 2000

21. Business Wire, January 24, 2000

22. Guy Debord, Comments on the Society of the Spectacle, Verso, Chapter V

23. Quoted in Dollars For Terror, Richard Labeviere, Algora Publishing, p. 56

24. Dossier; The Secret History Of Armand Hammer, Edward Jay Epstein, Carrol & Graf, 1996, p. 251-2.

25. Rich Dad, Poor Dad markets the social learning knowledge of the wealthy.

26. Jihad vs. McWorld: how globalism and tribalism are reshaping the world, Benjamin R. Barber, Andrea Schulz New York: Ballantine Books.by

27. "A 'blind pool' means the CDO's creator doesn't reveal the names of the companies that have bonds in the collateral pool" Reference See also further financial crisis notes.

28. Labeviere, see earlier reference

29. Sherman H. Skolnick, The Blackmail Business

30. Guy Debord, Comments On Society Of The Spectacle, Black And Red

31. Computer Expert Richard Wallace, (Slashdot.org interview, Friday July 26, 2002). See also corruption of science and elites notes.

32. Temple wars , New Internationalist Issue 247, September 1993;

33. Dick Sutphen, The Battle for Your Mind

34. Capital, Karl Marx, Progress Publishers, Volume III, Chapter XXIII

35. One World, Ready or Not William Greider, Simon and Schuster

36. EPA, Metal Products and Machinery report, chapter 3, page 7-8,

37. Ispat, owner of Inland Steel as well as former Soviet steel works in Kazakhstan.

38. See the Nikkei Bubble and aftermath; Reference 1, Reference 2

39. Robert B. Laughlin, Physics Today, volume 55, issue 12, page 10 — Reference

40. See; Reference

41. Minsky, Hyman (1986), Stabilizing an Unstable Economy, New Haven: Yale University Press, See also further financial crisis notes.

42. Untermyer: "Is not commercial credit based primarily upon money or property?"

Morgan: "No sir. The first thing is character"

Untermyer: "Before money or property?"

Morgan: "Before money or property or anything else. Money cannot buy it...because a man I do not trust could not get money from me on all the bonds in Christendom"

This a stock quotation, found many places, including; Reference

42.5 The Real Reasons for the Upcoming War With Iraq: A Macroeconomic and Geostrategic Analysis of the Unspoken Truth, W. Clark, Independent Media Center, January 2003 (revised 20 February) See also further financial crisis notes, imperial plans and problems notes and Neoliberalism references. .

43. See; Reference

43.5 See http://www.ncsl.org/programs/health/finance.htm

44. See; Reference

45. Reference

46. NYT website

47. Note the disintegration of the Prestige indeed off the coast of Spain — this was the largest oil in history (writing in Feb 2003): "News reports later cited the Prestige's captain as saying he believes the tanker was struck by a shipping container that had fallen off a container ship, but Spanish authorities have blamed the hole on metal fatigue and the general poor state of the tanker"

48. Reference

49. Bailout Blues: Wall Street Journal; New York; Sep 25, 1998

50. The deteriorating position of the US in Afghanistan hardly bares mention as America plans the next war; Reference 1, (free registration required) Reference 2 See also imperial plans and problems notes.

51. Credit Bubble Bulletin:

52. See: http://www.wsws.org/articles/2003/feb2003/chin-f12.shtml


The Declining Rate Of Profit

Marx defined constant capital as the materials, equipment and all other commodities which represent labor power reused in the production process. He defined "variable capital" as the labor power which comes in the form of actual wage labor employed in the production process. If we define D as the constant capital expended at a given period and V as the variable capital used in that period, then, in a stable production process, we can get the equation, D+V = W+S, where W represents the goods needed for the survival of the working class and S is total profits, including the consumption of the elites, profits hoarded, and profits reinvested in production, to become future constant capital. We define the rate of profit as S/(C+V), where Cis total constant capital in the production process at a given moment (which will be a sum of P's. Total remaining capital is the constant capital generated each periods added over several previous periods). Seeing this equation, we can see a decline in the rate of profit take in three forms; 1) An increase in W coming from the working class seizing a greater share of production. This can also happen when Capital pushes W below the absolute bare survival rate and must then increase it to produce. 2) A decline in total returns coming from Capital's devastation of the ecosystem or exhaustion of resources. 3) A rise in relative size of total constant capital, C. A rise in profits comes from the opposite movements of the different variable.

Since V remains mostly constant, what we're concerned with is mostly S/C. In a naive conception of the production system, many economists imagine that S and C will increase at approximately the same rate, seesawing to allow the rate of profits to stay constant. But we know that C is always increasing. C is the means of production. It is all of the objects in our synthetic world and our world is increasingly synthetic in many ways. Capital's domination of society guarantees this will continue. Again, this reflects modern, very integrated production where a good portion of total labor involves maintaining the whole production process rather than producing commodities for immediate use. A larger number of people fix the machines at shoe factories than individually produce shoes. We are measuring all of our quantities in labor time, so W+S = P, where P is the total labor available to the population. C can be greater than P since C is built up over several periods. So if C is increasing as a proportion of P, then S will also have to take an increasing portion of production for S/C to stay constant. This seems possible if we restrict our attention to amazingly productive industries such as computer chip manufacture. But here is the rub. Some industries and methods will continue to require basic, non-automated labor. So our C will still require some amount of labor. Machine tenders are some proportion of the social machine. This means that W will equal C times a, for some small number a. Our a is constant or will decline only rather slowly compared to C's increase. But since C is increasing beyond D or P, that means that W will tend to increase or at least that will stay relatively constant. S will not keep up with C and our ratio will decline. This result indeed comes from our ratios. We are saying that the amount of capital goods increases faster than the labor required to fully reproduce labor decreases. This assumption, that the production process will have heterogenous increases in productivity, is the factor which later Marxist scholars have missed when they failed to demonstrate the declining rate of profit. Thus Capital's rate of profit tends to decline.