Thursday, December 15, 2011

The Theory of the Political Elite (2)

We now come to the underlying basis for why an Elite had to emerge by the early 20th century, and why it had to viciously clamp down on the power of the masses, whether to ensure they garnered no major store of resources, or capital. By ensuring both, they also made certain there'd be no major challenges to their power marked by violent overthrow such as occurred in the French or Bolshevik Revolutions.

Two initial instigators of conceptual thought come to the fore: David Ricardo (18 April 1772 – 11 September 1823) and Rev. Thomas Malthus (14 February 1766 – 29 December 1834). Let's take Malthus first, since his treatise, 'An Essay on the Principle of Population' (1798), remains one of the most potent in terms of grasping why poverty in the world is endemic unless massive resource liberation is available. Malthus wrote:

"Must it not then be acknowledged by an attentive examiner of the histories of mankind, that in every age and in every State in which man has existed, or does now exist:

- That the increase of population is necessarily limited by the means of subsistence,

- That population does invariably increase when the means of subsistence increase, and,

- That the superior power of population is repressed, and the actual population kept equal to the means of subsistence, by misery and vice"

Hence, Malthus grasped that an increasing population was insupportable unless it had access to resources: food, minerals, materials for building, etc., beyond subsistence. He also observed this must be the case given that population grows geometrically (2, 4, 8, 16 etc.) and food production only arithmetically (2, 4, 6, 8). In effect, at some point the population growth becomes so great that the available foodstuffs can no longer support it and one has a crash or dieout.

Stark poverty and destitution then, invariably occurred when there was too great an imbalance between available food and population. (He might also have added, if aware of our situation today, that the same imbalance can occur between JOBS and population growth. If then there are too many people there can never be sufficient jobs created to support them all in adequate remuneration. In this sense, jobs become a proxy indicator for both food and shelter. This is one unmentioned reason why there are so many unemployed - nearly 15 million - in the U.S. today. Because the rate of job creation has not kept up with the rate of working population added, on average some 150,000/month since 2001. That translates into 1.8 million a year, or 18 million over ten years. Given only 5 million jobs have been created in that time - above population replacement levels - and 2 million have been sent overseas, it accounts for why 15 million remain unemployed)

Of course, the political Elite know this too! This brings us to David Ricardo's doctrine of "comparative advantage". It basically says that when comparatively inefficient enterprises shrink in any country, others will grow absorbing the capital or labor released from the declining activities. Capital will then migrate in each trading nation to those activities in which it is most productive.

However, in contrast to today's Neoliberal purveyors of lies and propaganda, Ricardo's doctrine was never intended to be used to justify GLOBAL trade! As noted by economist John Gray (False Dawn, The New Press, 1998):

"Ricardian comparative advantage applies internally in trading nations, not externally between them. It implies that in a regime of unrestricted free trade the allocation of resources will be maximally productive within each trading nation and thereby, by inference, throughout the world. Insofar as the world then becomes a single market, efficiency and productivity in every country will be maximized."

In other words, Ricardo would never have remotely conceived of or countenanced having American furniture, toys, and other (e.g. software) products manufactured in China or India or Mexico. That to him would have been an abomination and he'd have warned severely about the country's markets and labor power being universally weakened by doing such a stupid thing. And yet, under GATT, NAFTA, and the WTO (World Trade Organization) that's exactly what we've done! Indeed, in one treatise ('On The Principles of Political Economy and Taxation') Ricardo observed:

"the fancied or real insecurity of capital, when not under the immediate control of its owner, together with the natural disinclination every man has to quit the country of his birth and connections, and intrust himself with all his habits fixed, to a strange government and new laws, checks the emigration of capital".

In other words, Ricardo perceived that the innate preference of nations for their own laws, customs and culture, would inhibit the flow of capital outward to others ....for jobs, production or whatever other reason (speculation in foreign currency markets). However, the coming of the globalized trade era and its "race to the bottom" shows how wrong he was, or how very optimistic.

But there's a deeper layer. The Elites, again, had grown terrified of the onset of assorted appeals to egalitarianism and equality, so decided to make provisions for impeding these efforts. The major push incepted with the globalized trade negotiations of the 1990s, which saw nations surrender their sovereignty of trade wholesale to third party hierarchies like the WTO. But these were created by the very elites who also used Vilfredo Pareto's Pareto distribution and efficiency. (Recall from the end of a previous blog :

where I noted that under Pareto effiiciency it made more sense to dispatch toxic wastes to poor African or other nations, than to try to dispose of them in the U.S.)

In like manner, under the global trade imperative and Pareto efficiency, it made more sense to send out American manufacturing jobs to places like China and India, where the labor costs were least, than have them done in the U.S. The argument was that U.S. workers would then "move on" to higher skilled brain work, like software production. But this was all lies and deception from the Elites, who merely later dispatched the software jobs to India too. In effect, they merely wanted some reason to justify sending American capital and jobs out of the country.

The hidden reason, coupled with the mammoth increases in military-defense spending and enormous tax cuts for the wealthiest - was to ensure the majority of the population is unable to obtain adequate remuneration from paid work, and hence becomes more impoverished over time. As they do, they will lose control of their lives, and either die or have to work (in lowest level or paid jobs) around the clock just to survive. Meanwhile, young people will eventually cease going to college and amassing debts equal to a mortgage and join the volunteer military instead - paving the way for the need to incite more conflicts.

In effect, the globalization of U.S. production, jobs and capital (allowing it to be utterly mobile) laid the seeds for the acceleration of the rate of exploitation ( S/V )..see, e.g.

The Political Elite thereby had a built-in mechanism to spawn entrenched destitution among all the world's middle and working class populations over time, especially as the population continued to increase in Malthusian proportions and progressions. Food? Well, that would briefly keep pace, but only barely and even then the effects would be that in return for higher yields, there'd be much less nutrient value, e.g.

Beyond that, the increased use of nitrogen fertilizers would have deleterious environmental effects, e.g.

Of course, the Political Elite at the heart of what I call "Elite theory" are also about protecting their capital to the fullest, and fighting to prevent any "dilution" by the masses. This means several things:

- They need to preserve as many tax cuts as possible to deprive government of revenue streams for social support

- They need to ensure new wars and conflicts arise, again, to suck up tax revenues and minimize government capital for social support. This means keeping defense spending at a peak. (Meanwhile, on a quest to eliminate or privatize all other government jobs).

- They need to eviscerate or remove all social safety nets and insurance programs in which the masses are "awarded" capital ("entitlements" in Elite parlance) without having invested it or earned it.

As Jay Bookman aptly noted('The New World Disorder Evident Here, Abroad', in The Baltimore Sun, December 15, 1997):

"The global economy has been constructed on the premise that government guarantees of security and protection must be avoided at all costs, because they discourage personal initiative. In times of crisis, however, that premise cannot be sustained politically. In times of trouble it is human nature to seek security and protection and to be drawn toward those who promise to provide it. That is how men such as Adolf Hitler, and Vladimir Ilyich Lenin came to power, with disastrous consequences."

Recall that it was Vladimir Ilyich Lenin ( 'Imperialism, the Highest Form of Capitalism', 1916) who first sounded the warning that mobile finance capital was designed to continually leverage labor to the lowest common denominator. Lenin clearly showed in his treatise how the Politicial and Economic Elite, simply by the expedient of export capital, could indirectly exploit raw materials from poor nations, or use the latter as captive labor markets. Meanwhile, that same exported capital would ensure working conditions degraded at home. Under such a scheme, financiers would continually divert capital to foreign locales where it would generate the highest return and refrain from aiding industry in their own countries.

That decision by the Elite seems to have been made in the last twelve to fifteen years. Where once the Elite was prepared to at least cough up something in higher taxes to support the commonweal, they are no longer. Their only offered alternative now is debt: for the millions of citizens - from grandma and her medical ills, to college students. Oh, and debt for the nation as a whole to make it fair meat for the subjugation by bond pirates.

The worst is still to come, and the Elites in this case, are preparing themselves for the massive planetary "die off" (see e.g. when both Peak Oil and the runaway greenhouse effect meet at the red hour, with a half second to go before midnight.

Can the Elites survive if the mass of humanity doesn't? We explore that next!

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