Banking on Bankers

There are days when tracking the Obama Administration’s bank-rescue plans seems to require a graduate degree in Kremlinology…


There are days when tracking the Obama Administration’s bank-rescue plans seems to require a graduate degree in Kremlinology. As was true of those Cold War analyses of who stood where on the May Day reviewing stand, there is a sense at Treasury these days that runes and signs lie embedded in the most ordinary scenes. In public, Bernanke and Geithner continue to say that nationalization—or temporary receivership, the gentler euphemism—is not required and is not in their plans. Yet there are persistent indications of a hidden, whispered narrative of personal rivalry, debate, and unfinished decision-making within the Adminsitration about how to rescue the banks, and in what sequence.
Some of this puffs-of-smoke confusion seems easy to explain. Many of the country’s biggest banks are in deep trouble—many are technically insolvent, or “upside down,” as they say in the household-mortgage sector—but have not yet been forced to reckon fully with their insolvency. I heard a senior Administration official remark that seventy-five per cent of the country’s banks are probably upside down. Since, as with home mortgages, this is a condition of unrealized loss whose implications (i.e. bankruptcy) can be artfully postponed in many instances, there is an understandable desire to see if the economic downturn can be somehow finessed—or if the banks can simply be talked back into health. The viability of particular banks will be determined not only by the mathematical facts of the value of their holdings and debts, but also by the less easily measured ebb and flow of national confidence. Geithner et al must simultaneously produce a reliable accounting of bank balance sheets while simultaneously doing all within their honest powers to preserve and promote confidence in the banking system and the economy. This is a prescription for self-contradiction and we’ve been getting plenty of it.
Similarly, the Obama Administration is engaged in a delicate call-and-response with Congress over the need for additional bank-rescue funds. The Adminstration will almost certainly need more money this year. To get it while preserving the President’s approval ratings will be a risky endeavor. So Geithner and his colleagues speak about the bank rescue in a Washington vernacular designed to preserve political options and elasticity.
To compound all this, Geithner, Bernanke, and the President seem to have organized themselves as a determined minority in resistance to the gathering view among mainstream economists, even Alan Greenspan, that the best solution to the bank problem, at this point, is, in fact, temporary receivership—on the model of the Resolution Trust Corporation that cleaned up the savings-and-loans industry in the early nineteen-nineties, or the more routine receivership processes of the Federal Deposit Insurance Corporation. Is this resistance by Geithner, Bernanke, and the President genuine and fully determined, or is it part of the political and confidence equation above, and therefore susceptible to changeàIn the President’s case, it’s hard to be sure. In Geithner’s case, he seems to be saying what he means. Where is Larry Summers, the top White House economic adviser, on this critical questionàAlso hard to tell. Perhaps, like Alan Greenspan, he is privately leaning toward receivership; if so, his position would be complicated by the fact that his younger, former protégé, Geithner, who now holds a more visible position than his own, thinks otherwise. Anyway, the facts about the health of the banks are not yet officially in hand—that is the purpose of the “stress tests” that are now being administered, to analyze which of the country’s largest nineteen banks are in the strongest positions, and which are in the weakest. Policy options are still being developed. The likelihood of various economic forecasts is still being debated. And so we endure more Kremlin-like opacity.
The clearest indicator in this environment is what Geithner says in public and what Treasury officials post on the department’s Web site. Perhaps the most reliable analysis would just be to take Geithner at his word and assume that what he is saying in public accurately signals where Administration policy toward the banks will end up. Geithner says that receivership is a less desirable option than his still-forming hybrid plan, which he will disclose over the next several weeks. Rather than a big bang of bankruptcy and reorganization, his plan, so far as we can tell at this stage, would increase government ownership of troubled banks in spurts, on a case-by-case model, and it would work off the banks’ bad assets in a sort of running, improvised partnership with private investors. This might or might not lead to a creeping nationalization in a few instances (Citigroup and Bank of America being two contenders), but even in those cases, every effort would be made to avoid full receivership. The government might even end up, for example, with rights to a majority of a bank’s common stock, and yet it might exercise its ownership through private-sector managers, and perhaps the current ones—not exactly as passive investors, but not seizing full control, either.
This is the approach that Geithner participated in, following the rescue of the insurance giant A.I.G. last September. The Financial Times’ Lex column had a terrific item on Thursday, describing how the U.S. government’s creeping investments in A.I.G. may preview Geithner’s approach to the big banks. In general, the results to date are not very encouraging. If applied to the banks, the A.I.G. narrative portends debilitating drip-drip politics, rather than a clean break with the past.
What are the real differences between Geithner’s evolutionary approach and the shock-and-awe of temporary nationalization or receivershipàIt’s hard to be entirely sure, since the Treasury’s plan remains embryonic. But it does seem clear that the basic clean-up and turnaround tasks required will not be very different—in either case, the troubled banks must be recapitalized, conditions must be created to encourage increased and sustainable lending, and the bad assets that caused all this insolvency in the first place must be removed from balance sheets and auctioned off to bargain-hunting private investors, with taxpayers positioned for a fair cut of the return. Yet the two paths will likely have very different consequences for at least three groups of people: current shareholders in the big banks, executives at the big banks, and politicians who must eventually seek reëlection before the voters.
In receivership, the shareholders would almost certainly be wiped out, the current bank executives fired, and the politicians who went along with such a takeover would be accused of socialistic tendencies. In Geithner’s method, none of these things would necessarily happen. A certain school of Washington conventional wisdom concludes, therefore, that Geithner’s approach is more appealing, if it can be made to actually work.
But this wisdom is doubtful—particularly the political analysis that it implies.Geithner apparently worries, a la the recent anti-stimulus arguments of David Brooks, that government lacks the talent and capacity to manage the turnarounds of big bankrupted banks. This skepticism is reasonable. Yes, the government did a much better job than it generally gets credit for in some analogous cases in the past, such as at the Resolution Trust Corporation. But the banks it would likely take into its fold this time are much larger and more complex than any the government has ever tried to manage. The receivership of Continental Illinois a quarter century ago, the Washington Post pointed out the other day, took seven years and involved a bank less than half as large as the banks in trouble now. The Obama Administration is still arriving and in transition; appallingly, for example, the Administration has not even named a No. 2 at Treasury yet. Many other positions at the department remain unfilled.
Yet why would the Administration assume that its alternative management approach—partnership with the executive teams at the troubled banks—will prove any better than the civil serviceàAnd what makes them think that these executives will protect or prove responsible to the Administration during such a defining crisis and politically important crisisà
Of course, not all bank executives have performed in the same way. There are some management teams, such as at Wells Fargo, J. P. Morgan, and Goldman Sachs, that seem to have done a decent job overall, considering the systemic stresses they endured. Perhaps they or other management groups among the top nineteen now being stress-tested will be revealed to oversee institutions that will not require receivership at all. Goldman is said to be looking for ways to pay back the TARP funds it has received and free itself entirely from the rescue regime. A good thing, if it can be done, obviously.
Or, even if they require receivership, perhaps some of these legacy bank executives will be judged to be innocent victims of a global tsunami. There is no intrinsic reason why receivership should require Treasury to get rid of competent bank executives if they can be persuaded to stay on, for the sake of public service and eventual upside rewards after a turnaround.
As a class, however, the executives at the country’s largest banks have just completed an exercise in failure without precedent in modern business history. Their poor judgment encompasses every category of management failure relevant to running—and rescuing—banks: Financial engineering, economic forecasting, risk assessment and control, and, not incidentally, political and ethical judgment.
Why, for example, would the Obama Administration wish to forge a bet-the-Presidency partnership with Kenneth Lewis, the C.E.O. of Bank of America, who bought the sub-prime lender Countrywide at the top of the housing market, and who then, as this enormous mistake became evident, extravagantly overpaid for Merrill LynchàWhat absolves Lewis of responsibility for these colossal errors in business judgmentàThis week, Andrew Cuomo, the attorney general of New York, has been deposing Lewis about his tone-deaf decision, instigated by Merrill’s John Thain, to award more than $3 billion in bonuses to Merrill employees in December. In December—a month of cascading layoffs, rising public anger, falling stock prices, and the dawn of a new national politics. And what of the management of Citigroup, with which Summers, among others in the Administration, enjoys close connectionsàVikram Pandit, the current C.E.O., took office recently and is not responsible for all of the bank’s problems, but he is part of a board and management group that has an almost comically awful record dating back years. How much more bad judgment must a board and an executive team display before it departs to exileà
Just as important, the Cuomo investigation reminds us that we don’t yet know the full scope of terrible judgment, ethical lapses, and outright fraud that occurred within the banking and financial industries last autumn. It was a time of great turmoil and very high stakes. More shoes will drop; Obama and company might want to slide out of the way before they do.
As an outsider to Wall Street and corporate life, Obama presumably does not suffer from what I recently heard Paul Krugman refer to as “cognitive regulatory dysfunction,” which is the tendency of Washington regulators with Wall Street backgrounds and connections to overestimate the value of Wall Street expertise. Obama did, however, take a great deal of Wall Street money while running for President. He has surrounded himself with both Wall Street mandarins and others (Gene Sperling, Peter Orszag, and Jason Furman) whose careers and thinking are free of such cant. I hope this is the deepest cause of the Kremlin-like signals: A hidden struggle within his councils between competing perspectives about the proper relationship between Washington and Wall Street in the midst of this crisis.
There is an understandable anger brewing in the country against Wall Street and the big commercial banks. During his speech Tuesday night, Obama tried to position himself ahead of this anger—his political advisers certainly recognize that if he doesn’t occupy this cultural ground, the Republican Party will try to do so. Perhaps, in time, the President will trust his instincts and take his chances with his civil service, supplemented by the out-of-work bankers it can retain. In a situation with no great choices, this seems the better one—and much truer to the President’s campaign.

The Beatles, in Hey Jude

Barthes ou le désir des textes

L'hiver 2009 voit fleurir une belle actualité barthésienne. De nombreuses rééditions, commentaires ou inédits paraissent ces temps-ci. Trois textes sont réédités chez Christian Bourgois : le Colloque de Cerisy, Prétexte : Roland Barthes, de 1977 dirigé par Antoine Compagnon, L'Écriture même : à propos de Roland Barthes de Susan Sontag et Roland Barthes, Vers le Neutre, de Bernard Comment ; Questions, un ouvrage étonnant, paraît aux éditions Manucius : il recense les 1.920 questions posées par Barthes dans ses écrits entre 1942 et 1980 ; sortent enfin les ouvrages Empreintes de Roland Barthes, dirigé par Daniel Bougnoux (éditions INA), et Pourquoi j’aime Barthes, d’Alain Robbe-Grillet (Christian Bourgois), sur lequel nous nous attardons. Ce recueil apparaît comme une bonne introduction à l'œuvre du sémiologue grâce au regard subtil que Robbe-Grillet porte sur le travail de son ami.
Mais ce sont les deux publications posthumes de Barthes (1915-1980) qui ont le plus attiré l'attention : le Journal de deuil (Seuil/IMEC) et les Carnets du voyage en Chine (Christian Bourgois/IMEC), qui s'avèrent, après trois semaine de vente, être de francs succès de librairie. Ces deux inédits mettent au jour l'intimité d'une figure intellectuelle majeure. Cela pose, comme pour toute publication posthume, des questions éthiques, historiques et littéraires parfois indécidables, mais toujours passionnantes.
Nonfiction revient sur cette effervescence éditoriale et invite par un entretien à prendre un peu de recul vis-à-vis de cette agitation. Thomas Clerc a édité les cours de Barthes sur le Neutre (Seuil, 2002), ouvrage précieux pour comprendre non seulement les deux inédits, mais l'ensemble de ses écrits. Il revient avec un regard littéraire - professeur de littérature, il est écrivain lui-même - sur l'œuvre de Barthes, et sur l'écho qu'elle trouve avec notre temps. Si dans ce dossier, les perspectives sur les textes personels de Barthes divergent parfois, c'est parce qu'une œuvre vivace suscite des réactions contrastées, et que le "désir du texte" que fait passer Barthes résonne avec l'émotion de chacun

Au sommaire de ce dossier :
- Roland Barthes, Journal de deuil (Seuil/IMEC), par Pierre Eugène.
Les notes inédites de Roland Barthes après la mort de sa mère laissent dans un espace hésitant entre détachement et psychologisme.
- Roland Barthes, Carnets du voyage en Chine (Christian Bourgois/IMEC), par Camille Renard.
L’édition posthume des notes d'un Barthes plongé au cœur de la Chine maoïste livre les prémisses de la notion de Neutre, aux confins du littéraire et du politique.
- Alain Robbe-Grillet, Pourquoi j'aime Barthes (Christian Bourgois), par Camille Renard.
Cet hommage sous forme de quatre courts textes éclaire aussi bien l’œuvre de Roland Barthes que celle d'Alain Robbe-Grillet.
- "Entre deuil et voyage : l'(in)actualité de Barthes", interview de Thomas Clerc par Camille Renard.

À lire également sur nonfiction.fr :
- Centre Roland Barthes, Vivre le sens (Seuil), par Pierre Eugène.

“A Whole New Kind of Struggle is Emerging”

Interview with John Bellamy Foster, Author of "The Great Financial Crisis"

by Mike Whitney / February 27th, 2009

John Bellamy Foster is editor of Monthly Review and professor of sociology at the University of Oregon. He is the coauthor with Fred Magdoff of The Great Financial Crisis: Causes and Consequences, recently published by Monthly Review Press.

Mike Whitney: The financial crisis is quickly turning into a political crisis. Already governments in Iceland and Latvia have collapsed and the global slump is just beginning to accelerate. Riots and street violence have broken out in Greece, Latvia and Lithuania and worker-led protests have become commonplace throughout the EU. As unemployment skyrockets and economic activity stalls, countries are likely to experience greater social instability. How does one take deep-seated discontent and rage and shape it into a political movement for structural change?

John Bellamy Foster: The first thing to recognize is that we are suddenly in a different historical period. One of my favorite quotes comes from Gillo Pontecorvo's 1969 film Burn! where the main character, William Walker (played by Marlon Brando), states: "Very often between one historical period and another, ten years suddenly might be enough to reveal the contradictions of an entire century." We are living in such a period, not only because of the Great Financial Crisis and what the IMF is now calling a depression in the advanced capitalist economies, but also because of the global ecological crisis that during the last decade has accelerated out of control under business as usual, and due to the reappearance of "naked imperialism." What made sense ten years ago is nonsense now. New dangers and new possibilities are opening up. A whole different kind of struggle is emerging.

The sudden fall of the governments in Iceland and Latvia as a result of protests against financial theft is remarkable, as are the widespread revolts in Greece and throughout the EU, with millions in the streets. The general strikes in Guadeloupe and Martinique, the French Antilles, and the support given to these movements by the French New Anti-Capitalist Party is a breakthrough. In fact much of the world is in ferment. Latin Americans are engaged in a full-scale revolt against neoliberalism, led by Venezuela's Bolivarian Revolution, and the aspiration of a new socialism for the 21st century (as envisioned also in Bolivia, Ecuador and Cuba). The Nepalese revolution has offered new hope in Asia. Social struggles on a major scale are occurring in emerging economies such as Brazil, Mexico, and India. China itself is experiencing unrest.

The one place in the world where this world historical ferment appears to not be having telling effect at present is the United States. This can be traced to two reasons. First, the United States as the center of a world empire is a fortress of conservatism. Second, the election of the Obama administration has confused progressive forces, leading to absurd notions that the Democrats under Obama are going to create a New New Deal without renewed pressure arising from a revolt from below. Meanwhile, under Obama's watch, and with the help of his chosen advisers, vast amounts of state funds are being infused into the financial system to benefit private capital.

What is needed in the United States today, we argue in The Great Financial Crisis, is a renewal of the classic concept of political economy (with its class perspective), whereby it comes to be understood that the economy is subject to public control, and should be wrested from the domination of the ruling class. The bailing out of the system right now is going on with taxpayer funds but without the say of the public. A revolt to gain popular control of the political economy is therefore necessary.

It is possible to start with the demand for a New New Deal rooted in the best legacy of the Roosevelt administration in the 1930s, most notably the Works Progress Administration. But as Robert McChesney and I argued in "A New New Deal Under Obama?" in the February 2009 issue of Monthly Review, the struggle has to move quickly beyond that to an expansion of workers' rights along socialist principles, breaking with the logic of capital. For this to occur there has to be a great revolt from below on at least the scale of the industrial unionization movement of the 1930s that created a new political force in the country (later destroyed in the McCarthy Era). The story of this struggle is told in David Milton's classic account, The Politics of U.S. Labor, which also points out that the rising labor movement was led by socialists and radical syndicalists.

It is important, as István Mészáros explained in his Beyond Capital, that the radical politics opened up in this historical moment not be diverted into attempting to save the existing system, but be directed at transcending it. As Mészáros wrote: "To succeed in its original aim, radical politics must transfer at the height of the crisis its aspirations — in the form of effective powers of decision making at all levels and all areas, including the economy — to the social body itself from which subsequent material and political demands would emanate."

In the United States a primary goal of any radical politics should be to cut military spending, which is the imperial iron heel holding down the entire world, while corrupting the US body politic and diverting surplus from pressing social needs.

The obvious weak link of the whole political, ideological and economic structure in command in the United States today, is that the system has clearly failed to meet peoples' real needs. Rather than addressing these pressing needs in the crisis, the emphasis of the economic overlords is to bailout private capital at virtually any cost. Between October 2008 and January 2009 the federal government provided about $160 billion in capital and infusions and debt guarantees to the Bank of America, which had a total net worth in late January of only a small fraction of that amount. The rest had gone down the rat hole.

The robbing of public funds to bailout private capital is now on a scale probably never before seen. A politicized, organized working class capable of understanding and reacting to that theft, and choosing thereby to restructure society, to meet real social, egalitarian needs is what is now to be hoped for. The title of a recent cover story Newsweek declared: "We Are All Socialists Now." As it turned out, Newsweek's editors were simply referring to the increase in public spending now taking place — hardly an indication of socialism. But the fact that this is said at all in the mainstream media points to the fact that we are in a different historical moment in which radical forces have the possibility of moving forward.

MW: As the economy has become more dependent on financialization for growth, the gap between rich and poor has grown wider and wider. As you point out in your book, "In the United States the top 1 percent of wealth holders in 2001 owned more than twice as much as the bottom 80 percent of the population. If this was simply measured in terms of financial wealth, the top 1 percent owned more than four times the bottom 80 percent." (p 130). How have working class people managed to keep their heads above water with all this wealth being shifted to the rich?

JBF: The answer is fairly obvious. If people cannot maintain their standard of living on the basis of their income, they will borrow against income and against whatever wealth they have. The result— if their incomes don't rise, or if the value of whatever assets they have do not increase — is that they will simply get deeper and deeper in debt in an attempt simply to stand still. I became concerned about the growth of working-class household debt in 2000 and carried out a study of The Survey of Consumer Finances, which is published every three years by the federal government with a three year lag in the data. This is the only major federal government data source that we have on household debt broken down into income groups so that we can determine the debt burden of different classes. I published an article based on this research in the May 2000 issue of Monthly Review entitled "Working-Class Households and the Burden of Debt." I then followed this up six years later with an article in the May 2006 Monthly Review on "The Household Debt Bubble," which was to be incorporated into The Great Financial Crisis. There I wrote that "The housing bubble and the strength of consumption in the economy are connected to what might be termed the 'household debt bubble,' which could easily burst as a result of rising interest rates and the stagnation or decline of housing prices." This is of course what happened, and the reason why this crisis has turned out to be so severe was the destruction over decades of the finances of working-class households, on the back of which financialization took place.

MW: Will you define "debt-deflation" and explain its potential danger to the economy? As credit continues to tighten and housing prices sink; aren't we slipping into a reinforcing deflationary spiral? Do you think that fiscal policy will reverse this trend or is the stimulus package too small to stop real estate and equities from continuing to slide?

JBF: The term "debt-deflation" is associated particularly with the work of Irving Fisher during the Great Depression. Fisher wrote an article for the journal Econometrica in 1933 entitled "The Debt-Deflation Theory of Great Depressions." Deflation as applied to the general economy is a drop in the general price level, something not seen in the United States since the Great Depression, and catastrophic in the economy of monopoly capital (and even more so under monopoly-finance capital). In the first place, deflation (or disinflation, i.e. the reduction of inflation to what the Federal Reserve calls "below optimal" levels) means that the profit margins of corporations are squeezed, even if the cost structure of production, and productivity remain the same. Under these circumstances price competition is reactivated with giant firms actually in a life and death struggle. This also generates pressure for heavy layoffs and wage reductions, creating all sorts of vicious cycles.

But the real fear of deflation has to do with the enormously bloated financial structure and the huge debt load of the economy. Under inflation, which is usually assumed to be built into the advanced capitalist economy, debts are paid back with smaller dollars (that is, worth less over time). In a deflationary economy, however, debt has to be paid back with bigger dollars (worth more over time). This then creates a debt-deflation spiral, enormously accelerating financial meltdown. As Fisher put it, "deflation caused by the debt reacts on the debt. Each dollar of debt still unpaid becomes a bigger dollar, and if the over-indebtedness with which we started was great enough, the liquidation of debt cannot keep up with the fall of prices which it causes." Stated differently, quoting from The Great Financial Crisis (p. 116), "prices fall as debtors sell assets to pay their debts, and as prices fall the remaining debts must be repaid in dollars more valuable than the ones borrowed, causing more defaults, leading to yet lower prices, and thus a deflationary spiral." In order to check this deflationary tendency, the Federal Reserve and the Treasury have been trying to reflate the economy by printing money (euphemistically called "quantitative easing"). But they have not succeeded and deflationary forces are still very strong, causing President Obama to warn shortly after his election that "we now risk falling into a deflationary spiral that could increase our massive debt even further."

It is also worth mentioning the effect that deflation has on investment. With capital faced with the fact that a few years down the line the price level could be lower than it is now, expected profits on investment in new productive capacity (given that this takes years to be built and has to paid for in current prices) are depressed, creating a deeper stagnation of accumulation.

The stimulus package introduced by the Obama administration is far too small to pump up demand and reflate the economy under these circumstances. It is less than $400 billion a year, forty percent of which is tax cuts, so that the increased governmental spending is minuscule compared to the size of the hole created by the drastic drop in consumption, investment, and state and local government spending. It is also dwarfed by the total federal government support programs, primarily to financial institutions, which now amount to more than $9.7 trillion in the form of cash infusions, debt guarantees, swaps of Treasuries for financial toxic waste, etc.

MW: Karl Marx seems to have anticipated the financial meltdown we are now facing. In Capital,he said, "The superficiality of political economy shows itself in the fact that it views the expansion and contraction of credit as the cause of the periodic alterations of the industrial cycle, while it is a mere symptom of them." Marx appears to agree with your theory that the real problem is deeper — economic stagnation which forces surplus capital to look for more profitable investments. While the monetarist theories of Milton Friedman are now under withering attack, Keynes and Marx seem to have held up rather well. What does Marx mean when he talks about "political economy"?

JBF: Marx was an acute analyst of financial crises in his time and described their main features. However, he saw financial expansions as occurring at the peak of a boom, not as a secular phenomenon. Financialization in the sense of a long-term shift in the center of gravity of the economy toward finance, with financial speculation building over decades, is a completely unprecedented situation.

Marx and Engels did place great emphasis on the growth of joint-stock companies/corporations and the appearance of a market for industrial securities that began to appear near the end of the nineteenth century. It was this creation of the modern market for industrial securities that was the real beginning of the emergence of finance as a relatively independent aspect of the monopoly capitalist economy. There are essentially two pricing structures to the economy: one in the real economy related to the production of goods and services, the other in the financial realm associated with the pricing of assets (paper claims to wealth). The two are interrelated but can be disassociated from each other for periods of time. Keynes in the 1930s singled-out the dangers of an economy that was increasingly governed by the speculative pricing of financial assets. Marx was such an acute observer of capitalism, that even in his time he began to see the contradictions emerging between money (or fictitious) capital and real capital.

One thing that Marx did argue in this context is that surges in financial speculation were responses to stagnation and decline in the real economy, as capital desperately sought a way to maintain and expand its surplus. Thus he wrote that the "plethora of money capital" in such periods was due to "difficulties in employment, through a lack of spheres of investment, i.e., due to a surplus in the branches of production" and showed nothing so much as the immanent barriers to capitalist expansion (quoted in The Great Financial Crisis, p. 39).

Marx remains the strongest foundation for the critique of the capitalist economy, down to our day. But the real Keynes (not to be confused with the bastardized Keynesianism of today) is also important, since he emphasized what he called the "outstanding faults" of the capitalist economy: the tendency to high inequality and high unemployment. He also pointed to the dangers of a system geared to speculative finance.

MW: Is wage stagnation and income inequality a direct result of financialization?

JBF: I would put it the other way around. Wage stagnation and growing income and wealth inequality are components of the underlying stagnation tendency. Both have shown a tendency to worsen over time, resulting in deepening stagnation tendencies within the overall economy. Real wages in the United States peaked in 1971, when Richard Nixon was president, and by 2008 had fallen back to 1967 levels, when Lyndon Johnson was president. This is in despite of the enormous growth of productivity and expansion of wealth over the intervening decades. Hence, this is a marker of "the tendency of surplus to rise," as Baran and Sweezy put it, or a rising rate of surplus value, in Marx's own terms. This was accompanied by a massive growth of income and wealth at the top. As we stated in The Great Financial Crisis (p. 130), "From 1990 to 2002, for each added dollar made by those in the bottom 90 percent [of income] those in the uppermost 0.01 percent (today about 14,000 households) made an additional $18,000." By 2007 income/wealth inequality in the United States had reached 1929 proportions, i.e., the level reached just prior to the 1929 Stock Market Crash that led to the Great Depression.

I do think you are right, though, that financialization made income and wealth inequality worse, and contributed to the stagnation of wages. We can see neoliberalism as basically the ideology of monopoly-finance capital, introduced originally as the ruling class response to stagnation, and then increasingly geared to promoting the financialization of capital, itself a structural response to stagnation.

Neoliberalism promoted incessant breaking of unions, forcing down wages, cutting state social welfare spending, deregulation, free mobility of capital, development of new financial architecture, etc. One way to understand this is the enormous need for new cash infusions to feed a financial superstructure that was voracious in its demand for new money capital, which it needed to leverage still more piling up of debt and financial speculation. Insurance companies, real estate, and mutual funds all provided infusions into this financial superstructure, as did the state. All limits were removed. Under these circumstances workers were encouraged to use their houses like piggy banks to finance consumption, credit cards were handed out to teenagers, subprime loans were pushed on those with little ability to pay. Individual retirement packages were shifted toward IRAs that were tied into the speculative financial system. This had all the signs of an addictive system. In these circumstances, too, the real economy, particularly production of goods and manufacturing, was decimated. In the introduction to The Great Financial Crisis we include a chart covering the period since 1960 showing production of goods as a percentage of GDP in a slow, long-term decline, while debt as a percentage of GDP is skyrocketing over the same period. All of this meant a massive redistribution away from working people to capital, and to those at the pinnacle of the financial pyramid.

MW: In your book The Great Financial Crisis, you are critical of Paulson's capital injections into the banks saying that "at most they buy the necessary time in which the vast mass of questionable loans can be liquidated in an orderly fashion, restoring solvency but at a far lower rate of economic activity — that of a serious recession or depression." On Friday, Timothy Geithner told CNBC that "We will preserve the system that is owned and managed by the private sector." This suggests that the Treasury Secretary might not liquidate the toxic assets at all, but try maintain the appearance that these underwater banks are solvent. What do you think will happen if Geithner refuses to nationalize the banks?

JBF: I would not interpret Geithner's statement that way. Rather we are experiencing one of the greatest robberies in history. I have written on the question of nationalization for the "Notes from the Editors" forthcoming in the March 2009 Monthly Review. All the attempts to rescue the financial system at this time go in the direction of nationalization. The federal government is providing more and more of the capital and assuming financial responsibility for the banks. However, they are doing everything they can to keep the banks in private hands, resulting in a kind of de facto nationalization with de jure private control. Whether the federal government is forced eventually toward full nationalization (that is, assuming direct control of the banks) is a big question. But even that is unlikely to change the nature of what is going on, which is a classic case of the socialization of losses of financial institutions while leaving untouched the massive gains still in the hands of those who most profited from the whole extreme period of financial speculation.

To get an idea of what is happening one has to understand that the federal government, as I have already indicated, has committed itself thus far in this crisis $9.7 trillion in support programs primarily for financial institutions. The Federal Reserve (together with the Treasury) now has converted itself into what is called a "bad bank." It has been swapping Treasury certificates for toxic financial waste, such as collateralized debt obligations. As a result the Federal Reserve has become the banker of last resort for toxic waste with the share of Treasuries in the Fed's balance sheet dropping from about 90 percent to about 20 percent over the course of the crisis, with much of the rest now made up of financial toxic waste.

Obviously, full, straightforward nationalization would be more rational than this. But one has also to remember the system of power — both economic and political — that we are dealing with at present. The classic case of full bank nationalization was Italian corporatist capitalism of the 1920s and '30s, and was carried out by the fascist regime. Without suggesting that we are headed this way now it should be clear from this that nationalization of banks itself is no panacea.

The fact that Geithner, Obama's pick for Treasury Secretary, is overseeing the enormous robbery taking place, probably exceeding any theft in history, with the ordinary taxpayers picking up the tab, should certainly cause one to ask questions about the "progressive" nature of the new administration.

MW: Former Fed chief Alan Greenspan has dismissed criticism of his monetary policies saying that no one could have seen the humongous credit bubble developing in housing. In your book, however, you make this observation: "It was the reality of economic stagnation beginning in the 1970s . . . that led to the emergence of the 'new financialized capitalist regime's kind of 'paradoxical financial Keynesianism' whereby demand in the economy was stimulated primarily 'thanks to asset bubbles.'" (p 129) The statement suggests that the Fed knew exactly what it was doing when it slashed rates and created a speculative frenzy. Debt-fueled asset bubbles are a way of shifting wealth from one class to another while avoiding the stagnation of the underlying economy. Can this problem be fixed through regulation and better oversight or is it something that is intrinsic to capitalism itself?

JBF: Greenspan is of course trying desperately to salvage his reputation and to remove any sense that he is culpable. I would agree that the Fed knew what it was doing up to a point, and deliberately promoted an asset bubble in housing — what Stephanie Pomboy called "The Great Bubble Transfer" following the bursting of the New Economy tech bubble in 2000. The view that no one saw the dangers of course is false. It reminds me of Paul Krugman's face-saving claim in his The Return of Depression Economics and the Crisis of 2008 that while some people thought that financial and economic problems of the 1930s might repeat themselves, these were not "sensible people." According to Krugman, "sensible people" like himself (that is, those who expressed the consensus of those in power) knew that these things could never happen — but turned out to be wrong. It is true, as Greenspan says, no one could have foreseen precisely what really happened. And certainly there were a lot of blinders at the top. But there were lots of warnings and concerns. For example, I drafted an article ("The Great Fear") for the April 2005 issue of Monthly Review that referred to "rising interest rates (threatening a bursting of the housing bubble supporting U.S. consumption)" as one of the key "perils of a stagnating economy." Other close observers of the economy were saying the same thing.

The Federal Reserve Board, indeed, was internally debating in these years whether to adopt a policy of pricking the asset bubbles before they got further out of control. But Greenspan and Bernanke were both against such a dangerous operation, claiming that this could bring the whole rickety financial structure down. Since they didn't know what to do about asset bubbles they simply sat on their hands and tried to talk the market up. The dominant view was that the Federal Reserve could stop a financial avalanche by putting a rock in the right place the moment there was a sign of trouble. So Bernanke went ahead, closed his eyes and prayed, raising interest rates to restrict inflation (an action demanded by the financial elite) and the rest is history.

At all times it was those at the commanding heights of the financial institutions that called the shots, and the Fed followed their wishes. Greenspan himself is no dummy. He wrote in Challenge Magazine in March-April 1988 of the dangers associated with housing bubbles. But as a Federal Reserve Board chairman he pursued financialization to the hilt, since there was no other option for the system. Needless to say, such financialization was associated with the growing disparities in wealth and income in the country. Debt itself is an instrument of power and those at the bottom were chained by it, while those at the top were using it to leverage rising fortunes. The total net worth of the Forbes 400 richest Americans (an increasing percentage of whom were based in finance) rose from $91.8 billion in 1982 to $1.2 trillion in 2006, while most people in the society were finding it harder and harder to make ends meet. None of this was an accident. It was all intrinsic to monopoly-finance capital.

Venezuela: A Different Kind of Power?

Dual Power in the Venezuelan Revolution

by George Ciccariello-Maher

Too often, the Bolivarian Revolution currently underway in Venezuela is dismissed by its critics—on the right and left—as a fundamentally statist enterprise. We are told it is, at best, a continuation of the corrupt, bureaucratic status quo or, at worst, a personalistic consolidation of state power in the hands of a single individual at the expense of those "checks and balances" traditionally associated with western liberal democracies. These perspectives are erroneous, since they cannot account for what have emerged as the central planks of the revolutionary process. I will focus on the most significant of these planks: the explosion of communal power.

By viewing the process through the Leninist concept of "dual power"—that is, the construction of an autonomous, alternative power capable of challenging the existing state structure—we can see that the establishment of communal councils in Venezuela is clearly a positive step toward the development of fuller and deeper democracy, which is encouraging in and of itself. But the councils' significance goes beyond that. The consolidation of communal power says much about the role of the state in the Venezuelan Revolution. Specifically, what is unique about the Venezuelan situation is the fact that sectors of the state are working actively to dismantle and dissolve the old state apparatus by devolving power to local organs capable of constituting a dual power. Transcending the simplistic debate between taking or opposing state power, a focus on dual power allows us to concentrate on what really matters in Venezuela and elsewhere: the revolutionary transformation of existing repressive structures.

'An Entirely Different Kind of Power'

Lenin—standing at what he felt to be an unprecedented and unforeseeable political crossroads—spoke of the emergence of "an entirely different kind of power," one fundamentally distinct from that of prevailing bourgeois democracies.1 Alongside the Provisional Government of Kerensky, an alternative government of Workers' Soviets had emerged, a dual power—or dvoevlastie—standing outside and against the existing state structure. This still "weak and incipient" alternative structure Lenin describes as "a revolutionary dictatorship, i.e., a power directly based on revolutionary seizure, on the direct initiative of the people from below, and not on a law enacted by a centralized state power."

What was it that made this power "entirely different"? According to Lenin, this dual power was defined above all by its unique political content, for which the clearest historical reference point was the 1871 Paris Commune.

The fundamental characteristics of this type are: (1) the source of power is not a law previously discussed and enacted by parliament, but the direct initiative of the people from below, in their local areas—direct "seizure," to use a current expression; (2) the replacement of the police and the army, which are institutions divorced from the people and set against the people, by the direct arming of the whole people; order in the state under such a power is maintained by the armed workers and peasants themselves, by the armed people themselves; (3) officialdom, the bureaucracy, are either similarly replaced by the direct rule of the people themselves or at least placed under special control; they not only become elected officials, but are also subject to recall at the people's first demand; they are reduced to the position of simple agents; from a privileged group holding "jobs" remunerated on a high, bourgeois scale, they become workers of a special "arm of the service," whose remuneration does not exceed the ordinary pay of a competent worker.

As we will see, this concept can clearly be applied to Venezuela, but to do so entails a double movement: it reveals some of the limitations of the concept itself as originally formulated, and also alerts us to some of the dangers confronting the revolutionary process in Venezuela. By speaking in terms of dual power, the hope is that we might enrich our understanding both of the concept itself and of the Bolivarian Revolution.

The Explosion of Communal Power

In the aftermath of Chávez's landslide electoral victory in December 2006, the Bolivarian Revolution has taken a radical turn. The enemies of the process soundly defeated, the way has been cleared for the deepening and radicalization of the process. Moreover, with six years of leadership ahead of him, Chávez now enjoys a brief respite from the demands of his "allies," one which has allowed him to take serious steps against those corrupt bureaucrats within the Chavista ranks who would halt the revolutionary process. The program for this radicalization has been described in terms of the "five motors" driving the revolution, the fifth and most substantial of which is "the explosion of communal power." This refers to the expansion of local communal councils and their authority throughout Venezuela, a process which began with the 2006 Law on Communal Councils and which has taken off in recent weeks and months.  At present, there are an estimated 18,320 organized communal councils, and some 50,000 are expected by the end of the year.

The committee that authored the Law on Communal Councils was chaired by Communist Party member David Velásquez—recently named Minister of Participation and Social Development—who sees the councils as the basis for the revolutionary transformation of the state, arguing that: "what is sought is to transfer power and democracy to organized communities to such a degree that the State apparatus would eventually be reduced to levels that it becomes unnecessary."  But as we will see below, this view also differs from Lenin's understanding of dual power in that it has operated in part through the legal system and the state apparatus. This difference can be explained by the fact that Velásquez's vision draws directly upon Antonio Negri's distinction between "constituent" and "constituted" powers, a distinction which Chávez himself has cited on several occasions and which emphasizes the constant need for the intervention by the "constituent" masses in opposition to the sterility of legality and the adherence to already-constituted structures.  This distinction—which does not dismiss constituted, institutional, or legal power from the outset, but instead subjects that power to revocation by the people—is much more useful for a discussion of dual power than a homogeneous view of the state structure, and has arguably contributed significantly (partly through Velásquez's own intervention) to the construction of a serious dual power in Venezuela whose ethical-legal foundation is the constituent intervention of the masses.

Considering the popularity of constituent power in Venezuela, it shouldn't surprise us to find that the role of law in contemporary Venezuela is peculiar to say the least. The situation is what one might call a "revolutionary reverence" for the law: not an a priori respect for the law but rather an admiration derived from the experience of revolutionary legislation imposed from below, and specifically the organized defense of the 1999 Bolivarian Constitution (a defense which gave rise to the revolutionary base organizations known as Bolivarian Circles). As the spokesperson for a communal council in the Naguanagua sector of Valencia recently told me—Communal Council Law in hand—"we can't read the law like a reactionary lawyer, but instead, without violating it, we need to make it fit our social reality in order to restore the true protagonism to the people." This radical view of the law is, in fact, a manifestation of the Venezuelan emphasis on constituent power: while it is necessary to make use of existing constituted power (in this case, the law), one must never forget that this constituted power relies fundamentally upon the constituent power that enacted it.

According to Article 2 of the 2006 law, communal councils are "instances of participation, articulation, and integration between various community organizations, social groups, and citizens," the goal of which is to "permit the organized people directly to manage public policy and projects oriented toward responding to the needs and aspirations of communities in the construction of a society of equity and social justice." These councils, moreover, are required to operate according to criteria which include "mutual responsibility, cooperation, solidarity, transparency, accountability, honesty, efficacy, efficiency, social responsibility, social control, equity, and social and gender equality" (Article 3), and are broadly empowered to "adopt those decisions essential to life in the community" (Article 6).

According to the law, councils are to be governed by way of committees whose spokespersons are elected for a tenure of two years (Article 12), and as with elections at other levels, mandates are revocable (Article 6). The fiscal autonomy of the communal councils is significant, despite the fact that most funding comes—somewhat unavoidably in an oil-rich nation—via the central government. Chávez has announced on several occasions that in the future, a full 50 percent of the profits derived from the state-owned petroleum company PDVSA—profits totaling more than $6 billion during the first half of 2006—will be transferred directly to communal councils. These funds had been previously directed toward state governors and mayors, but will now be managed directly on the communal level. Toward this end, 590 billion bolívares ($274 million) had already been earmarked for 2,500 communal projects by February 15, 2007, and that figure has only been increasing since.  So, too, has the breadth of their specified competencies: in response to the recent controversy over meat shortages caused by hoarding, a law was passed giving power to the government to take over businesses engaged in hoarding, and this law gives the same authority to communal councils. While these remain but hints as to the future importance of the councils, they are nevertheless encouraging ones. But what is the relation between the nascent communal councils and the concept of dual power outlined above?

Against Bureaucracy

To take Lenin's criteria in reverse order, it should be pointed out that the explicit purpose of the councils is to subject the official bureaucracy to the will of the people expressed through direct participation on the local level. While some tentative and insufficient steps have been taken to attack corruption and bureaucracy within the central government, the councils can be seen as taking this fight to another level, both in the "social oversight" authority they are granted over the central government and in the transparent and egalitarian norms which govern their internal operations. In terms of Lenin's two criteria—revocable leadership and the elimination of wage differentials—it is worth noting that revocable mandates have been a central plank of the Bolivarian Revolution from the beginning, and are enshrined in the 1999 Constitution.  In terms of wages, the Venezuelan government has begun to take steps to impose ceilings on public sector wages: in January, the National Assembly—citing the fact that some high court judges earn more than twenty-eight million bolívares ($13,000) a month—began work on a law that would limit salaries for government officials to six million bolívares ($2,800) monthly.

The capacity of the councils to attack bureaucracy and corruption begins with their capacity to supervise other levels of government: every council elects a five-person committee for "social oversight [contraloría]" which in the words of Lenin, places bureaucrats "under special control." These committees are empowered to oversee "programs and projects for public investment budgeted and executed by the national, regional, or municipal government" (Article 11). This authority represents a powerful weapon against the corrupt bureaucracies that exist on the state and local level, and against those governors and mayors whom many hope the councils will eventually replace entirely. But this is far from certain, as Fernando—an organizer with the Simón Bolívar Cultural Foundation in the historically revolutionary 23 de Enero neighborhood and official promoter of Chávez's nascent United Socialist Party (PSUV)—expresses a common concern at this stage of the formation of communal councils: "most mayors are playing too big a role in the creation of communal councils, trying to control them. The role of state officials should only be to provide information and facilitate the councils."

There is also the hope that, in bypassing these various levels of government bureaucracy, the councils will be able to avoid or at least minimize the corruption that comes with the transfer of funds from the national to the local level. "If a local organization wants to request funding from the government," Fernando explains, "that money needs to pass through so many hands [e.g. ministries, governors, and mayors] that corruption is inevitable. We hope that the councils will eliminate or at least minimize the possibility of corruption by establishing a direct link between funding and the communities." While he doubts that fiscal reliance on the state as a whole will be eliminated in the near future—"How else," he asks, "can petroleum money reach the communities?"—his hope is that the councils will reduce the possibility that the institutions involved remain alienated from the people.

On the local level, moreover, we find the second key element to the councils' attack on bureaucracy and corruption: direct democracy on the local level. Turning again to Lenin's emphasis on revocable mandates and limited wages, committee members in communal councils are elected through the direct participation of the community, for short terms (two years), and can be revoked much easier than elected officials at higher levels. When we get to the communal councils, moreover, remuneration has disappeared entirely, and all elected posts are explicitly "ad honorem" (Article 12). Whereas in the capacity of overseeing the central government, the councils serve as a counterweight to the higher levels of power. The directly democratic nature of participation in the councils coupled with the non-remuneration of their elected leadership militate against the corruption and bureaucratization of the councils themselves, thereby making them a more stable and self-sufficient reservoir of dual power. These are structures which simultaneously prefigure a future participatory society while tentatively building forces to attack those elements of the existing state which oppose that transformation.

But the ability of the councils to live up to this hope is far from guaranteed, and up the street at the council election, Carlos Rodríguez—younger brother of one of 23 de Enero's most famous martyrs—while optimistic, insists that "only time will tell whether the councils will be able to fulfill their function."

An Armed Populace

Lenin's second criterion for dual power—that of a directly armed populace—is a more complicated question, since the communal councils are not armed in any official sense. Rather, they must be considered in a broader context, and the history of armed organizations outside and against the state runs deep in Venezuela. Decades of rural and urban guerrilla struggle in the pre-Chávez years have given way not to a pacification and disarmament after his election, but rather to the proliferation of networks of armed, local self-defense units concentrated in the poorest parts of Venezuela. As merely one example, we could mention the various groups concentrated in the 23 de Enero sector of western Caracas, where decades of urban insurgency gave birth to the Coordinadora Simón Bolívar (CSB), the Revolutionary Tupamaro Movement, the Revolutionary Carapaica Movement–Néstor Zerpa Cartollini Combat Unit, and the Colectivo Alexis Vive, just to name a few. Similar organizations exist in the other large barrios of Caracas—Petare, La Vega, El Valle, etc.—and throughout the country as a whole, to which we could add the mysterious activities of the decentralized Bolivarian Liberation Front which operates in rural areas.

These groups have even on several occasions received logistical support from national and local government (especially current Metropolitan Mayor Juan Barreto), though this support has not included arms as the opposition has often claimed. This, moreover, has been a reciprocal relationship: when Chávez was briefly overthrown in April 2002, several of his ministers were offered safe haven in barrios like 23 de Enero and La Vega. So while the space for armed self-defense on the local level has certainly expanded and been encouraged as elected Chavistas have taken over the various levels of the state apparatus, we should bear in mind that this has been a slow and uneven process, both because Chavista hegemony is only now becoming consolidated, but more importantly because, as a revolutionary organizer who is currently working to facilitate local preparations for asymmetrical warfare in the event of aggression against Venezuela by the United States tells me: "Despite Chávez's pronouncements on the need for a citizens' militia, many of those within the structure still believe in the state's need to maintain the monopoly of violence."

As was the case with the attack on bureaucracy and corruption, this tension emerges on two levels: both within formal military structures (between the Armed Forces and the reserves) and more importantly between those military (and police) structures and local armed organizations. As to the first, I spoke recently with a member of the National Reserve, who weighed in on the current controversy over what relation the reserves should have to the official Armed Forces. While the current inclusion of the reserves within the Armed Forces might be interpreted as a recognition of the democratic counter-power of militia organization, it is better interpreted as an effort at co-optation and subordination. "The reserves shouldn't be part of the Armed Forces," Victor tells me, "we should be invisible, anonymous, waiting and ready to attack any aggressor without being identified."

This view is echoed by former commander of the reserves and recently named Defense Minister Gustavo Rangel Briceño, who argues that "the reserves should not be a component of the Armed Forces" since they lack the rigid structure of the latter and "should adopt the characteristics of a popular organization."11 This force he currently estimates at 880,000, with the long-term objective of 15 million reservists (i.e. more than half the population). Rangel Briceño hopes that Chávez will reform the 2005 reserve law to provide the force with full autonomy, in which case the Venezuelan reserve might more closely approximate Lenin's notion of "the direct arming of the whole people" than any force in recent history. This, at least, is Chávez's own self-professed objective: "The military reserve must be linked to popular organization…the goal isn't to have only reserve troops in the battalions, no, it's the people as a whole."

But no matter how popular and autonomous, a centralized reserve structure would nevertheless maintain a degree of alienation from local organs of dual power, and in this sense the communal councils reside in a space between the reserves and local self-defense organizations which rupture the state's monopoly on legitimate violence.  Even prior to the establishment of the councils and in the absence of armed self-defense organizations, a widely held distrust of the police led many communities to take measures to ensure local safety and security. While the communal councils are not in any sense armed revolutionary cadres (as was arguably the case with some of the Bolivarian Circles), the call to decentralize power to the bases has extended to questions of local self-defense and the establishment of local security and defense committees. These "integral security committees" are enshrined in the 2006 Communal Council Law (Article 9), but their existence was largely theoretical until after the December 2006 election. In late February of this year, reserve commander Rangel Briceño—also a member of the presidential council for communal power—announced that the government would be emphasizing the need to establish security and defense committees in the communal councils, adding notably that, "these will be oriented not only toward defense from external military aggression, but as a point of internal security, in the carrying out of our daily tasks."

This internal security situation in the barrios was explained to me by Rigoberto, who I met at around noon on the day of the communal council elections for block five of 23 de Enero, at which point he was already drinking cold Polar Negra and shots of rum. Given that he was running for the security committee, perhaps it was lucky that he was not elected (he came in fourth place, but insisted that he had actually come in second). Despite his intoxicated state, Rigoberto explained to me how security worked in the zone even prior to the existence of the community council or security committee. "If we catch someone dealing drugs in our neighborhood," he tells me, "first they get a warning. If they show up again, they get a beating. And if they show up a third time…." He trails off, indicating with a hand gesture that the outcome will not be pleasant. He also recounts a recent situation in which members of the community caught a local malandro, or criminal, robbing the Cuban doctor in the local Barrio Adentro health module: an unarmed crowd of neighbors seized the man, beat him, stripped him naked, and sent him on his way. While this sort of autonomous, local self-management of security matters may seem insignificant, it is a fundamental precondition for the deepening of dual power in Venezuela, and while it didn't begin with the councils their empowerment in the area of security and defense promises to contribute to it.

However important reserves may be as a "direct arming of the whole people" in Lenin's terms, we should recall that the reason that Lenin advocated the "replacement of the police and the army" is that these are "institutions divorced from the people and set against the people." While an autonomous militia might reduce this alienation of security forces—and in this sense is certainly a positive step—the true replacement of the army and the police requires a more substantial break with the "monopoly of violence," a decentralization of coercive force that is more firmly rooted in local structures. Such decentralized control over security matters has a long history in Venezuela—from guerrilla armies to urban Tupamaros (a Maoist-type self-defense organization)—and the communal councils have the potential to continue and build upon this history.

'We Created Him'

Given the central role of Chávez in the Venezuelan process, any discussion of the Bolivarian Revolution in terms of dual power clearly requires an adjustment of prevailing categories to account for Chávez's peculiar role as, in his own words, "a subversive in power."  This need to adjust our concepts to accommodate Venezuelan reality is perhaps best put by Oswaldo, a veteran of the Venezuelan guerrilla struggle (himself no friend of constituted power). While agreeing that the concept of dual power has much to contribute to an understanding of the Venezuelan process, he nevertheless cautions that "we wouldn't want to compare Chávez to Kerensky." This is more than mere piety toward a leader: it demarcates the particular twist that the Venezuelan experience introduces into the dual power framework.

This tension between concept and reality becomes most acute when we turn to Lenin's third criterion: that dual power is not legislated, but rather directly seized from below. While opposing dual power—the "direct initiative of the people from below"—to "a law previously discussed and enacted by parliament" might at first glance seem to objectively exclude the experience of Venezuela's communal councils (these were, after all, a legislative creation), the reality is not so simple. This is because from the beginning, the Bolivarian Revolution has been fundamentally driven from below, and not in the pedestrian, electoral sense.  For example, Chávez's 1992 attempted coup—although unsuccessful—was in many ways a direct result of the 1989 Caracazo riot, a massive and spontaneous week-long popular rebellion which spread across the entire country in response to neoliberal structural adjustment. As Juan Contreras, head of the revolutionary Coordinadora Simón Bolívar, puts it: "Chávez didn't create the movements, we created him."

The importance of base-level organization, moreover, did not dissipate after Chávez was elected in 1998. In the run-up to the 1999 referendum approving the new Constitution, spontaneous reading groups formed with the goal of studying, understanding, and later defending their new Magna Carta. These reading groups would become the Bolivarian Circles, revolutionary neighborhood organizations (and arguable predecessors to the communal councils) which while fervently supporting Chávez and the revolution have consistently resisted all efforts at formal institutionalization. During the 2002 coup against Chávez, these same Bolivarian Circles as well as other base organizations proved their revolutionary dual power credentials as clearly as they had during the Caracazo: first on April 11 on Llaguno Bridge, where armed Chavistas and members of Bolivarian Circles battled the opposition-controlled Metropolitan Police, holding them at bay for hours to protect unarmed crowds, and later on April 13 when millions of Chavistas swarmed around Miraflores Palace, Fort Tiuna in Caracas, and the Parachute Regiment in Maracay, playing a key part in the military effort to oust the illegitimate interim government and return Chávez to power.

Such events are crucial moments in the history of Venezuelan dual power, demonstrating the capacity of the populace to, in Lenin's terms, directly seize power from below. But this is not all they show: the relationship between the 1989 Caracazo and the failed 1992 Chávez coup, and between the April 11, 2002, opposition coup against Chávez and the April 13 popular insurgency that returned him to power also indicate a complex top-bottom dialectic between Chávez and the bases which has been a defining feature of the Venezuelan experience. As a result, we find ourselves in the peculiar situation in which even the most radically anti-state and anti-institutional segments of popular base organizations recognize Chávez's importance for the process of building dual power.

This is perhaps clearest in the Tupamaros, one of the most important dual power forces active in Venezuela. In a 2003 manifesto, the Tupamaros attack those corrupt party politicians who would "re-institutionalize the country," thereby maintaining the traditional structures of the bourgeois state.17 For the Tupamaros, the revolutionary path is an explicitly anti-institutional one: "The state and its networks, woven through years of domination, do not allow reformist solutions." Their goal is instead "to encourage dual power by strengthening popular participation, to link, organize, and multiply autonomous social forces." To this end, they propose communal councils composed of workers and peasants which would represent a "local power that through popular assemblies, without the institutional influence of any sort, would be able to plan, orient, and execute the social force capable of demystifying constituted power." Here we see the Tupamaros linking the building of dual power directly to communal councils, and doing so precisely through a distinction between constituent and constituted power.

This anti-institutionalist vision—emphasizing as it does the harnessing of constituent power to build a viable dual power alternative—does not exclude participation by those within the state apparatus: for the Tupamaros, the line dividing revolutionaries from reformists cuts across the state structure itself. Specifically, the National Assembly (circa 2003) was seen as a reformist talking-shop, the spearhead of the bourgeois offensive against the revolution. Chávez, in contrast, falls on the side of the revolutionary forces as a result of his "historical role," that of "a statesman dedicated to the voice of the people." Despite being surrounded by opportunists, the Tupamaros credit Chávez with "having awakened the abandoned from their lethargy to put the people on the offensive," that is, Chávez is seen as having activated constituent power toward the construction of dual power. In order to counteract efforts by some sectors of Chavismo to demobilize the population and thereby halt the revolution, the Tupamaros even advocated that the president invoke constitutional powers to dissolve the Assembly.

This seemingly paradoxical effort to construct dual power in alliance with certain segments of the state has also entered into Tupamaro strategy. In 2004 the electoral wing of the Tupamaro movement supported Chavista mayoral candidate Alexis Toledo in the state of Vargas, and upon being elected, Toledo named Tupamaro leader José Pinto police chief of Vargas. To put this development in perspective, we might compare it to Huey P. Newton being put in charge of the Oakland Police Department, and while some Tupamaros have expressed concern about entering into electoral politics, few could argue that to have an anti-state revolutionary in charge of the police represents a step backward in terms of the construction of dual power in Venezuela.

Roland Denis has expressed a similar vision of dual power animated by the intervention of the constituent masses. Contemporary revolutionary movements, Denis tells us, "now focus their attention on cultivating and extending popular power through the permanent reanimation of the constituent power of the people. The old slogan of 'dual power' (bourgeois and working-class) valid for the summit of the revolutionary movement today becomes a permanent strategy in accord with the need for the organization of a socialized and non-state power."

He proposes "governments of resistance" to carry out local administration tasks, and in fact Denis claims that the councils themselves resulted from a series of meetings held with popular organizations during his short-lived stint as vice-minister of planning and development following the 2002 coup.19 For Denis as for the Tupamaros, the communal councils are central to a dual power strategy informed by constituent power, and perhaps the best evidence of applying the concept of dual power to the Venezuelan context lies in the fact that this proponent of "non-state power" heads up an organization deemed the "April 13th Movement," named for the day that the Venezuelan masses showed their true dual power credentials, invoking their authority as a constituent power to return Chávez to his position within the structure of constituted power.

In an attempt to clarify Chávez's peculiar role in the construction of dual power in Venezuela, former Vice President José Vicente Rangel puts it bluntly: "Chávez is anti-power; Chávez is the one that moves things, within power and outside power. Why? Because Chávez is a man who has decontextualized power, demystified it, brought it closer to the people, managed to connect it with the common and everyday citizen."

Rangel also refers to this role as that of a "counterpower…exercised outside of constituted power" and against that established structure.  This, of course, is insufficient: Chávez is neither anti-power nor counter-power. It is only the revolutionary base movements and the nascent communal councils that merit such a title. But against many of Chávez's critics, we must recognize that the Venezuelan leader has indeed contributed to this anti-power or counter-power—in short, to the construction of dual power—in a significant and decisive manner.

Dual Power and the State

In most contemporary debates regarding the Venezuelan Revolution, both sides have remained mesmerized and thereby blinkered by an overly simplistic view of the state as a homogeneous unit. The resulting debate has been less than useful: must we change the world without taking power, or is it only by taking power that we can indeed change the world?  By concentrating on the construction of dual power in Venezuela, we can avoid this naïve debate by focusing on the more constructive question: that of distinguishing between those forces working within-and-for the perpetuation of the traditional state structure and those working within-and-against that same structure, toward its dissolution.

Dual power situations are by definition unstable and ridden with threats. Given the role that some sectors of the state apparatus have played in fostering the construction of dual power in Venezuela, these threats are all the more complex and difficult to discern. What is clear is that the most fundamental of these threats is that the communal councils will never manage to assert their autonomy from the state. This will be all the more difficult given their current reliance on oil income, and so the long-term process of endogenous local economic development and the transition away from an oil-based economy is of the utmost importance to the strengthening of communal power. But since any significant transformation in the structure of the Venezuelan economy is unlikely in the short term, what is more likely is that Venezuelan revolutionary movements will continue to operate as they have for decades: strategically, advancing where the enemy retreats, gradually consolidating the communal councils as a viable dual power force capable of competing with and radically transforming the existing state structure.

No one left to fight

Lisbon

First day of Portuguese Socialist Party Congress

Leadership is an inevitable part of struggle but in this repeated history we can find no one left to fight.

Portuguese socialists seem to believe that history is merely created by charismatic individuals imposing their ideas on their movement to power.

Socialist left is not prepared for leadership fight.

No resistance to stand against the leader.

For many people the concept of "leadership" is a dirty word.

This is not the case for PS even if leadership means the party mainstream dominance.

Manuel Alegre did not enter the leader race.

However he remains an excellent resource for use.

An ingredient of surprise given his electoral influence.

CGTP-IN PREOCUPADA COM FORTE QUEBRA DAS RECEITAS FISCAIS

O Boletim Informativo da Direcção Geral do Orçamento, de Janeiro de 2009, dá conta do enorme agravamento do défice do subsector Estado, que atinge mais de 260 milhões de euros quando comparado com o período homólogo do ano anterior.
Face ao mesmo mês de 2008, a receita do Estado regista uma quebra da ordem dos 14% (menos 444 milhões) e a despesa diminui 5% (menos 182 milhões de euros).
O conjunto das receitas fiscais diminui cerca de 11% (menos 290 milhões de euros) face ao mês de Janeiro de 2008. Grande parte deste decréscimo deve-se à baixa do IRC (menos 113 milhões de euros) e do IVA (77 milhões de euros). As quotizações para a segurança social aumentam apenas 2%, face ao mês homólogo, quando a norma era a ocorrência de aumentos da ordem dos 5 a 6%.

Tal como se passa no caso do emprego também no caso dos impostos e das contribuições para a segurança social o que parece estar a passar-se é uma actuação de incumprimento da lei e completa ausência de responsabilidade social por parte de alguma empresas.
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¿Qué hacer con los italianos?

¿Qué hacer con los italianos?
José Saramago (27-02-2009)

Reconozco que la pregunta le podrá sonar algo ofensiva a un oído delicado. ¿Qué es esto? ¿Un simple particular interpelando a un pueblo entero, pidiéndole cuentas por el uso de un voto que, para regocijo de una mayoría de derecha cada vez más insolente, acabó haciendo de Berlusconi amo y señor absoluto de Italia y de la conciencia de millones de italianos? Aunque, de verdad, quiero decirlo ya, el más ofendido sea yo. Sí, precisamente yo. Ofendido en mi amor por Italia, por la cultura italiana, por la historia italiana, ofendido, incluso, en mi pertinaz esperanza de que la pesadilla llegue al final y de que Italia puede retomar el exaltador espirito verdiano que fue, durante un tiempo, su mejor definición. Y que no me acusen de estar mezclando gratuitamente música y política, cualquier italiano culto y honrado sabe que tengo razón y porqué.

Acaba de llegar la noticia de la demisión de Walter Veltroni. Bienvenida sea, su Partido Democrático comenzó como una caricatura de partido y acabó, sin palabra ni proyecto, como un convidado de piedra en la escena política. Las esperanzas que en él depositamos fueron defraudadas por su indefinición ideológica y por la fragilidad de su carácter personal. Veltroni es responsable, ciertamente no el único, pero en la coyuntura actual, el mayor, por el debilitamiento de una izquierda de que llegó a presentarse como salvador. Paz a su alma.

Sin embargo no todo está perdido. Es lo que nos dicen el escritor Andrea Camilleri y el filósofo Paolo Flores d'Arcais en un artículo publicado recientemente en "El País". Hay un trabajo por hacer junto a los millones de italianos que ya han perdido la paciencia viendo a su país siendo arrastrado cada día que pasa al ridículo público. El pequeño partido de Antonio di Pietro, el ex magistrado de Manos Limpias, puede convertirse en el revulsivo que Italia necesita para llegar a una catarsis colectiva que despierte para la acción cívica a lo mejor de la sociedad italiana. Es la hora. Esperemos que lo sea.

Olof Palme, un crimen sin resolver

El asesinato de Olof Palme, acaecido el 28 de febrero de 1986, aproximadamente a las 11 de la noche, salta a la memoria apenas se ponen los pies en Sveavägen. Lo extraño es que en la esquina, donde el cuerpo cayó fulminado por el disparo, no quedan más rastros que una placa empotrada contra el suelo, en cuya inscripción se lee: "På denna plats mördades sveriges statsminister Olof Palme" (En este lugar fue asesinado el primer ministro sueco Olof Palme).

A dos cuadras más allá, en el cementerio de la iglesia Adolf Fredrik y cerca del cine Grand, donde asistió por última vez en compañía de su esposa, se encuentra su modesta tumba, en la cual destaca una lápida en forma de roca en lugar de un busto o un monumento de bronce. En la tumba no faltan las flores ni las visitas de quienes, en actitud de respeto y admiración, hacen acto de presencia con un silencio sepulcral, ya que los suecos, poco acostumbrados a los discursos solemnes y a la grandiosidad de los mártires, prefieren conservar a su carismático líder en el corazón que inmortalizado en una efigie de metal bruñido.

Olof Palme, a pesar de provenir de una familia acomodada, se inclinó hacia la causa de los desposeídos y abandonó los privilegios que le brindaba su entorno social. Los viajes por varios países, entre ellos Estados Unidos, donde obtuvo el bachillerato en Kenyon College de Ohio, le enseñaron a contemplar el mundo desde la perspectiva de la injusticia social, la desigualdad económica y la discriminación racial.

Todos coinciden en señalar que desarrolló una brillante carrera en las filas de la socialdemocracia desde 1953, año en que fue captado por el entonces primer ministro Tage Erlander, para que trabajara en su gabinete, en el cual ocupó varios puestos de importancia, hasta que fue elegido líder del Partido Socialdemócrata y primer ministro de Suecia en 1969.

En su ajetreada carrera política, como todo defensor del pacifismo y el internacionalismo, realizó una labor significativa en la ONU durante el conflicto bélico entre Irán e Iraq. Adoptó posiciones radicales en defensa de las luchas de liberación en África, Asia y América Latina. Rompió relaciones con las dictaduras militares, condenó enérgicamente el holocausto nazi, la política del apartheid sudafricano, la arrogancia del imperialismo norteamericano y la guerra del Vietnam. Se declaró simpatizante de la Organización para la Liberación de Palestina, del régimen socialista de Salvador Allende y de la revolución cubana de Fidel Castro, a quien lo consideraba un buen amigo.

Sus ideas reforzaron las bases programáticas de la socialdemocracia europea y sus discursos controvertidos lo convirtieron en una de las personalidades más influyentes y polémicas de su época. La izquierda lo admiraban por sus ideales de justicia y libertad, mientras la derecha, atrincherada en las concepciones más reaccionarios y fascistas, lo consideraba su enemigo principal.

Su muerte conmocionó al mundo entero. Nunca antes se había matado a tiros a un mandatario de Estado en las calles de Estocolmo. Cuando la noticia trascendió a la prensa, nadie se lo podía creer aquella mañana gélida y nevada del 29 de febrero, sino hasta que la televisión mostró el lugar donde se perpetró el crimen. Toda la nación quedó en estado de shock, como levitando en el vacío. Todos se preguntaban el porqué de este asesinato que, desde el primer instante, se trocó en una mancha de sangre y en una herida abierta en el subconsciente colectivo.

La investigación del caso, que sigue siendo uno de los más misteriosos en los anales de la historia criminal, ha costado mucho dinero y esfuerzo, pero nunca se llegó a saber, a ciencia cierta, quién fue el autor del crimen, por mucho que se invirtió millones en su captura y se formaron varias comisiones tanto a nivel de gobierno como a nivel de las fuerzas de seguridad de la policía sueca (SÄPO).

Su esposa, Lisbeth Palme, fue la única que alcanzó a ver al asesino, quien, tras descargar el arma de fuego, se alejó corriendo por las gradas de un callejón en penumbras; más tarde, durante el proceso de la investigación, declaró que el hombre que vio esa noche era Christer Pettersson, un alcohólico y toxicómano que fue detenido en 1988 y luego absuelto por falta de mayores evidencias.

El crimen, que generó una serie de "teorías de conspiración", unas más incoherentes que otras, se prescribirá el 28 de febrero de 2011, veinticinco años después del asesinato, y el aparato policial será declarado incompetente ante la opinión pública, ya que nunca hubo un Sherlock Holmes capaz de desvelar los móviles del crimen ni detectives capaces de dar con el paradero del asesino, quien apareció y desapareció esa misma noche como alma que lleva el diablo.

Lo cierto es que la muerte Olof Palme, que tenía enemigos en el interior de los gobiernos racistas y dictatoriales de la época, pudo haber sido tramada y perpetrada por cualquier organización nacional o internacional. Los sospechosos se cuentan a montones, y, entre ellos, no se descartan a los agentes de la CIA ni al gobierno de Augusto Pinochet, cuyo yerno, Roberto Thieme, fue sindicado como el presunto asesino por el periodista sueco Anders Leopold en el diario chileno "La Cuarta", el 7 de marzo de 2008.

El pueblo sueco, sin perder la paciencia ni las esperanzas, espera que algún día, más temprano que tarde, las instituciones pertinentes revelen el nombre y el rostro de los responsables de este alevoso crimen, para que sobre ellos caiga sin contemplaciones la justicia popular y todo el peso de la ley.

Víctor Montoya Rebelión