7 facts that show the American dream is dead

A living wage, retirement security and a life free of debt are now only accessible to the country’s wealthiest

, AlterNet

7 facts that show the American dream is dead
This article originally appeared on AlterNet.

AlterNetrecent poll showed that more than half of all people in this country don’t believe that the American dream is real. Fifty-nine percent of those polled in June agreed that “the American dream has become impossible for most people to achieve.” More and more Americans believe there is “not much opportunity” to get ahead.

The public has reached this conclusion for a very simple reason: It’s true. The key elements of the American dream—a living wage, retirement security, the opportunity for one’s children to get ahead in life—are now unreachable for all but the wealthiest among us. And it’s getting worse. As inequality increases, the fundamental elements of the American dream are becoming increasingly unaffordable for the majority.

Here are seven ways the American dream is dying.

1. Most people can’t get ahead financially.

If the American dream means a reasonable rate of income growth for working people, most people can’t expect to achieve it.

As Ben Casselman observes at fivethirtyeight.com, the middle class hasn’t seen its wage rise in 15 years. In fact, the percentage of middle-class households in this nation is actually falling. Median household income has fallen since the financial crisis of 2008, while income for the wealthiest of Americans has actually risen.

Thomas Edsall wrote in the New York Timesthat “Not only has the wealth of the very rich doubled since 2000, but corporate revenues are at record levels.” Edsall also observed that, “In 2013, according to Goldman Sachs, corporate profits rose five times faster than wages.”

2. The stay-at-home parent is a thing of the past.

There was a time when middle-class families could lead a comfortable lifestyle on one person’s earnings. One parent could work while the other stayed home with the kids.



Those days are gone. As Elizabeth Warren and co-author Amelia Warren Tyagi documented in their 2003 book, The Two-Income Trap, the increasing number of two-earner families was matched by rising costs in a number of areas such as education, home costs and transportation.

These cost increases, combined with wage stagnation, mean that families are struggling to make ends meet—and that neither parent has the luxury of staying home any longer. In fact, parenthood has become a financial risk. Warren and Tyagi write that “Having a child is now the single best predictor that a woman will end up in financial collapse.” This book was written over a decade ago; things are even worse today.

3. The rich are more debt-free. Others have no choice.

Most Americans are falling behind anyway, as their salary fails to keep up with their expenses. No wonder debt is on the rise. As Joshua Freedman and Sherle R. Schwenninger observe in a paper for the New America Foundation, “American households… have become dependent on debt to maintain their standard of living in the face of stagnant wages.”

This “debt-dependent economy,” as Freedman and Schwenninger call it, has negative implications for the nation as a whole. But individual families are suffering too.

Rani Molla of the Wall Street Journal notes that “Over the past 20 years the average increase in spending on some items has exceeded the growth of incomes. The gap is especially poignant for those under 25 years old.”

There are increasingly two classes of Americans: Those who are taking on additional debt, and the rich.

4. Student debt is crushing a generation of non-wealthy Americans.

Education for every American who wants to get ahead? Forget about it. Nowadays you have to be rich to get a college education; that is, unless you want to begin your career with a mountain of debt. Once you get out of college, you’ll quickly discover that the gap between spending and income is greatest for people under 25 years of age.

Education, as Forbescolumnist Steve Odland put it in 2012, is “the great equalizer… the facilitator of the American dream.” But at that point college costs had risen 500 percent since 1985, while the overall consumer price index rose by 115 percent. As of 2013, tuition at a private university was projected to cost nearly $130,000 on average over four years, and that’s not counting food, lodging, books, or other expenses.

Public colleges and universities have long been viewed as the get-ahead option for all Americans, including the poorest among us. Not anymore. The University of California was once considered a national model for free, high-quality public education, but today tuition at UC Berkeley is $12,972 per year. (It was tuition-free until Ronald Reagan became governor.) Room and board is $14,414. The total cost of on-campus attendance at Berkeley, including books and other items, is estimated to be $32,168.

The California story has been repeated across the country, as state cutbacks in the wake of the financial crisis caused the cost of public higher education to soar by 15 percent in a two-year period. With a median national household income of $51,000, even public colleges are quickly becoming unaffordable

Sure, there are still some scholarships and grants available. But even as college costs rise, the availability of those programs is falling, leaving middle-class and lower-income students further in debt as out-of-pocket costs rise.

5. Vacations aren’t for the likes of you anymore.

Think you’d like to have a nice vacation? Think again. According to a 2012 American Express survey, Americans who were planning vacations expected to spend an average of $1,180 per person. That’s $4,720 for a family of four. But then, why worry about paying for that vacation? If you’re unemployed, you can’t afford it. And even if you have a job, there’s a good chance you won’t get the time off anyway.

As the Center for Economic and Policy Research found in 2013, the United States is the only advanced economy in the world that does not require employers to offer paid vacations to their workers. The number of paid holidays and vacation days received by the average worker in this country (16) would not meet the statutory minimum requirements in 19 other developed countries, according to the CEPR. Thirty-one percent of workers in smaller businesses had no paid vacation days at all.

The CEPR also found that 14 percent of employees at larger corporations also received no paid vacation days. Overall, roughly one in four working Americans gets no vacation time at all.

Rep. Alan Grayson, who has introduced the Paid Vacation Act, correctly notes that the average working American now spends 176 hours more per year on the job than was the case in 1976.

Between the pressure to work more hours and the cost of vacation, even people who do get vacation time—at least on paper—are hard-pressed to take any time off. That’s why 175 million vacation days go unclaimed each year.

6. Even with health insurance, medical care is increasingly unaffordable for most people.

Medical care when you need it? That’s for the wealthy.

The Affordable Care Act was designed to increase the number of Americans who are covered by health insurance. But health coverage in this country is the worst of any highly developed nation—and that’s for people who have health insurance.

Every year the Milliman actuarial firm analyzes the average costs of medical care, including the household’s share of insurance premiums and out-of-pocket costs, for a family of four with the kind of insurance that is considered higher quality coverage in this country: a PPO plan which allows them to use a wider range of healthcare providers.

Even as overall wealth in this country has shifted upward, away from middle-class families, the cost of medical care is increasingly being borne by the families themselves. As the Milliman study shows, the employer-funded portion of healthcare costs has risen 52 percent since 2007, the first year of the recession. But household costs have risen by a staggering 73 percent, or 8 percent per year, and now average $9,144. In the same time period, Census Bureau figures show that median household income has fallen 8 percent.

That means that household healthcare costs are skyrocketing even as income falls dramatically.

The recent claims of “lowered healthcare costs” are misleading. While the rate of increase is slowing down, healthcare costs are continuing to increase. And the actual cost to working Americans is increasing even faster, as corporations continue to maximize their record profits by shifting healthcare costs onto consumers. This shift is expected to accelerate as the result of a misguided provision in the Affordable Care Act which will tax higher-cost plans.

According to an OECD survey, the number of Americans who report going without needed healthcare in the past year because of cost was higher than in 10 comparable countries. This was true for both lower-income and higher-income Americans, suggesting that insured Americans are also feeling the pinch when it comes to getting medical treatment.

As inequality worsens, wages continue to stagnate, and more healthcare costs are placed on the backs of working families, more and more Americans will find medical care unaffordable.

7. Americans can no longer look forward to a secure retirement.

Want to retire when you get older, as earlier generations did, and enjoy a secure life after a lifetime of hard work? You’ll get to… if you’re rich.

There was a time when most middle-class Americans could work until they were 65 and then look forward to a financially secure retirement. Corporate pensions guaranteed a minimum income for the remainder of their life. Those pensions, coupled with Social Security income and a lifetime’s savings, assured that these ordinary Americans could spend their senior years in modest comfort.

No longer. As we have already seen, rising expenses means most Americans are buried in debt rather than able to accumulate modest savings. That’s the main reason why 20 percent of Americans who are nearing retirement age haven’t saved for their post-working years.

Meanwhile, corporations are gutting these pension plans in favor of far less general programs. The financial crisis of 2008, driven by the greed of Wall Street one percenters, robbed most American household of their primary assets. And right-wing “centrists” of both parties, not satisfied with the rising retirement age which has already cut the program’s benefits, continue to press for even deeper cuts to the program.

One group, Natixis Global Asset Management, ranks the United States 19th among developed countries when it comes to retirement security. The principal reasons the US ranks so poorly are 1) the weakness of our pension programs; and 2) the stinginess of our healthcare system, which even with Medicare for the elderly, is far weaker than that of nations such as Austria.

Economists used to speak of retirement security as a three-legged stool. Pensions were one leg of the stool, savings were another and Social Security was the third. Today two legs of the stool have been shattered, and anti-Social Security advocates are sawing away at the third.

Conclusion

Vacations; an education; staying home to raise your kids; a life without crushing debt; seeing the doctor when you don’t feel well; a chance to retire: one by one, these mainstays of middle-class life are disappearing for most Americans. Until we demand political leadership that will do something about it, they’re not coming back.

Can the American dream be restored? Yes, but it will take concerted effort to address two underlying problems. First, we must end the domination of our electoral process by wealthy and powerful elites. At the same time, we must begin to address the problem of growing economic inequality. Without a national movement to call for change, change simply isn’t going to happen.

Richard (RJ) Eskow is a writer and policy analyst. He is a Senior Fellow with the Campaign for America’s Future and is host and managing editor of The Zero Hour on We Act Radio.

 

http://www.salon.com/2014/10/25/7_facts_that_show_the_american_dream_is_dead_partner/?source=newsletter

The American oligarchy

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18 October 2014

There is an unspoken rule in American politics, expressed ever more clearly in each election cycle, that the more important an issue is, the less it can be discussed—much less decided—by the election. The US military has embarked on a new war in the Middle East, democratic rights have been eviscerated, millions are without jobs, household incomes are falling, and a record number of people are being deported from the country. Yet, with the 2014 midterm election just 17 days away, none of these issues are being discussed.

What accounts for this hollowing-out of American politics and the transformation of elections into empty biennial rituals? As with all significant political transformations, these changes are rooted in deeper social processes. One does not have to look all too far to identify them.

Over the past several weeks, report after report has been released documenting the extraordinary growth of social inequality in the United States and throughout the world.

Late last month, Forbes magazine reported that the 400 richest people in the United States saw their wealth grow 14 percent over the past year. The following week, the Organization for Economic Cooperation and Development reported that global social inequality has eclipsed the pre-Great Depression highs of the 1920s.

This week, Credit Suisse reported that the top one percent of the world’s population control nearly half of all wealth, with the ultra-rich concentrated in the United States.

This was followed by the release of a paper by economists Emmanuel Saez and Gabriel Zucman showing that wealth in the US is increasingly monopolized not merely by the wealthiest 10 percent or even the top 1 percent, but by the top 0.1 percent. They concluded, “Virtually all the increase in the top 10 percent and top 1 percent shares over the last three decades is due to the rise in the top 0.1 percent share, from 7 percent in the late 1970s to 22 percent in 2012.”

Even US Federal Reserve Chair Janet Yellen, who is overseeing the continued handout of oceans of cash to the financial markets, felt compelled to warn of the “extent of and continuing increase in inequality in the United States.” She noted in remarks Friday, “By some estimates, income and wealth inequality are near their highest levels in the past hundred years, much higher than the average during that time span and probably higher than for much of American history before then.”

How can these vast changes in economic relationships not have had a profound and transformative impact on political life?

The historian Edward Gibbon once summed up the political form of the Roman Empire as “an absolute monarchy disguised by the forms of a commonwealth.” Taking our cue from his definition, we can say that the United States has become an oligarchy disguised by the outward, increasingly threadbare trappings of a democracy.

Whatever the pretense of “one person, one vote,” the fact is that the top 0.1 percent dictates policy and essentially selects the personnel tasked with carrying it out. A somewhat broader, still highly privileged and small, section of the population has some influence—the top 5 or 10 percent. The interests and concerns of the bottom 90 percent have absolutely no impact on government actions.

Money buys elections. The 2012 election, the most expensive election cycle in history, was decided by some $6.3 billion in campaign cash. An analysis of elections to the House of Representatives found that 93 percent were decided by which candidate raised the most money. In the 2004 elections, a stunning 98 percent of victorious candidates out-spent their opponents.

2014 is set to be the most expensive non-presidential election in US history, despite widespread popular indifference.

Not only do the politicians do the bidding of the wealthy, they are themselves increasingly numbered among the rich and super-rich. Earlier this year, the Center for Responsive Politics reported that, for the first time in history, most members of the US Congress are millionaires.

Not content with the power it already has, the US ruling class is moving to remove all remaining restraints on money in politics. In April, the United States Supreme Court issued a ruling removing the cap on the total amount of money individuals can contribute to political campaigns.

The financial oligarchy has used its unlimited political power and influence to divert an ever-greater share of the US economy to financial speculation and fraud. The Obama administration and the Federal Reserve, after bailing out the banks, have kept interest rates at zero for nearly six years, fueling a raging financial bubble.

The dictatorship of the wealthy is inextricably tied to the basic structure of the capitalist system. Economic life is totally subordinated to the insatiable profit demands of the giant banks and corporations, whose top executives account for a growing portion of America’s ultra-rich. As the Socialist Equality Party program states, “All the basic needs of the working class come into immediate and direct conflict with the dictatorship of the giant banks and financial institutions over every aspect of political and economic life.”

No progressive change—ending social inequality, guaranteeing the social and economic rights of working people, halting the drive to dictatorship, preventing a new world war—can be achieved without expropriating the vast fortunes of the financial aristocracy and nationalizing the banks and corporations under the democratic control of the working class, i.e., initiating the socialist restructuring of the US and world economy.

Andre Damon

 

http://www.wsws.org/en/articles/2014/10/18/pers-o18.html

Storm clouds gather over world economy

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By Nick Beams
14 October 2014

The annual International Monetary Fund (IMF) and World Bank meetings concluded in Washington over the weekend in the midst of a deepening economic and financial crisis, with no prospect of a recovery in the world economy.

The euro zone seems set to enter its third recession since the global financial crisis erupted in 2008, and there are fears that the policies being pursued by the world’s major central banks are creating the conditions for another crash.

The IMF and World Bank meetings were held following the release of data showing that Germany could be moving into a recession. Industrial production dropped 4 percent from July, the biggest decline since January 2009. New orders for September fell at their fastest pace since 2009, according to a survey of purchasing managers.

Output of investment goods slumped 8.8 percent in August, intermediate goods were down 1.9 percent, consumer goods fell 0.4 percent, and construction dropped by 2 percent. Only energy output increased, by 0.3 percent.

The IMF cut its forecast for German growth for 2014 from 1.9 to 1.4 percent and downgraded its 2015 prediction from 1.7 to 1.5 percent. Even these predictions are likely to be too optimistic, since Germany’s economy shrank in the second quarter of this year. Germany, which depends highly on exports, is being hit by stagnation across Europe, its largest single market, as well as recession in Brazil, another key market, and the marked slowdown in Chinese growth.

The world slump, growing uncertainties over the direction of central bank policies and increasing geo-political tensions in Ukraine and the Middle East are all combining to create volatile conditions in financial markets.

Trading on Wall Street opened this week with the S&P 500 Index experiencing its worst three-day loss since 2011, led by falls in airline shares as a result of the Ebola crisis and declines in energy stocks as the price of oil hit its lowest point in four years. Monday’s losses came after a week in which $1.5 trillion was wiped off the value of global equities.

Fears of another financial crisis prompted US and British financial officials to organise a war game yesterday in which they sought to ascertain whether lessons had been learned from the 2008 crisis. Reporting on the war game on Sunday, Larry Elliott, the Guardian economics correspondent, summed up the atmosphere at the IMF meeting.

“The Fund’s annual meeting was like a gathering of international diplomats at the League of Nations in the 1930s. Those attending were desperate to avoid another war but were unsure how to do so. They see dark forces gathering but lack the weapons or the will to tackle them effectively.”

Elliott pointed out that the IMF and central bankers are well aware that pumping money into the financial system has not boosted the real economy through expanded investment and increased production, but led only to increased financial risk-taking. At the same time, they fear that lifting interest rates to halt speculation will push their economies into recession, and so they “cross their fingers and hope for the best.” The IMF, he continued, knows something is going “badly wrong in Europe, but was powerless to do anything about it.”

Clear evidence of the gathering slump is provided by the sharp declines in commodity prices. Oil prices are reported to be in “free fall,” with benchmark Brent Crude down 24 percent since the middle of the year. The International Energy Agency says oil prices have been “weighed down by abundant supplies” and weakening demand.

The price of iron ore, a key indicator of investment because of steel’s role in construction, has dropped by 41 percent this year to its lowest level for five years. The Bloomberg industrial metals index is down 37 percent from its highest point after the financial crisis and 50 percent below the levels reached in 2007.

The price of gold is 38 percent off the high it reached in 2011. Agricultural product prices, another key indicator, are also sharply down. Corn prices are 22 percent lower than they were in June, wheat is down by 16 percent over the same period, and soybean prices have fallen 28 percent to their lowest level in four years.

The growing slump is compounded by uncertainty and confusion in financial markets. Last week, the US Federal Reserve Board released the minutes from the September meeting of its policy-making committee, revealing that “some participants expressed concern that the persistent shortfall of economic growth and inflation in the euro area could lead to a further appreciation of the dollar and have adverse effects on the US external sector.” The Fed’s vice-president, Stanley Fisher, has said that the central bank will monitor the impact of the dollar’s strength on the level of global demand for US goods and services.

The minutes raised questions over how far and how fast the Fed will seek to raise interest rates to more normal levels. The risk of turbulence results from the fact that while the Fed is ostensibly on an ill-defined path back to higher rates, the European Central Bank (ECB) and the Bank of Japan are pushing rates down. This creates the conditions for so-called carry trades, where investors borrow at lower rates in international markets and then invest in US assets, pushing up the value of the dollar and impacting US exports.

The uncertainty over the direction of Fed policy has contributed to a sharp rise in the VIX volatility index, which tracks movements on US share markets. It has increased by 21 percent over the past week, following months of what was described as an “eerie calm.”

The problems in financial markets are exacerbated by differences in the policies of the major economic powers, which emerged into the open at a seminar organised during the IMF meeting.

Centering his fire on Germany, former US Treasury Secretary Lawrence Summers, who last year warned of the prospect of “secular stagnation” for the world economy, criticised Europe’s “dismal” economic performance, comparing it to the two-decades-long stagnation in Japan and the Great Depression of the 1930s.

German Finance Minister Wolfgang Schäuble struck back, dismissing the suggestion that the crisis was the outcome of European policy failings. “America was the cause of the crisis, to be frank,” he said.

The US, as well as the IMF, wants the ECB to extend its asset-buying program to the purchase of government bonds in order to increase financial stimulus. But ECB President Mario Draghi has said the ECB is close to the limit of what it can do. In 2012, Draghi managed to avert a financial crisis originating in Spain, Greece, Portugal and other highly indebted euro zone countries by declaring that the ECB would do “whatever it takes.”

As six years of central bank interventions have demonstrated, however, injections of money cannot bring about increased investment and production in the real economy, which is where the crisis is now centered. The only beneficiaries are the banks, finance houses and ultra-wealthy speculators.

Moreover, there are deep divisions in the ECB itself. German representatives have already voted against the present round of asset purchases and are certain to stridently oppose any central bank move to buy up government bonds and extend quantitative easing.

The IMF discussions presented a picture of a ruling class in disarray. Divided over what to do and unable to advance a program to promote anything remotely resembling an economic recovery, the ruling elites are acutely aware they are sitting on a powder keg. They are united only by their fear that the worsening social conditions and deepening inequality produced by the breakdown of the economic order over which they preside will provoke an explosion of social struggles from below.

 

 

http://www.wsws.org/en/articles/2014/10/14/econ-o14.html

Hong Kong protests dwindle ahead of talks

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By Peter Symonds
9 October 2014

Representatives of the Hong Kong government and protest groups are due to meet tomorrow afternoon to discuss the demands of last week’s mass protests, which have now dwindled in numbers to several hundred people.

The demonstrations erupted after China’s National People’s Congress (NPC) announced its plans in late August for the 2017 election for the territory’s chief executive. While conceding universal suffrage for the first time, the NPC placed restrictions on nominations that all but ensured that only a handful of pro-Beijing candidates would be allowed to stand.

The limited demand of the three organisations that have dominated the protests—Occupy Central, the Hong Kong Federation of Students (HKFS) and Scholarism—has been for an end to vetting by a nomination committee stacked with pro-Beijing appointees.

Hong Kong’s current Chief Executive Leung Chun-ying has ruled out any significant concessions in advance. In offering talks last Thursday, he rejected calls for his resignation and insisted that discussions be based on the territory’s Basic Law—the legal framework established when Britain handed its former colony to China in 1997—and the NPC’s decisions.

The parameters of tomorrow’s discussions were finalised on Tuesday, but student leaders accused the government of being “insincere.” HKFS deputy secretary-general Lester Shum told the media that “we are very disappointed and angry” because the government was resorting to legal arguments rather than addressing the issue of full and open elections in 2017.

In reality, in accepting the offer of talks, the HKFS and other protest organisations effectively agreed to Leung’s conditions. While tomorrow’s discussions with Chief Secretary Carrie Lam are unlikely to reach any agreement, they have already served the government’s purpose in defusing the protests.

Last week, the protests swelled into the tens of thousands after the police attempted to clear the streets of student protesters the previous weekend using tear gas, pepper spray and batons. The latest media reports indicate that only a few hundred people are still manning the protest sites. Barricades often have no protesters present.

The Hong Kong administration is clearly hoping the protests will wither away as talks drag on. A government source told the New York Times that senior officials “don’t want to give them [the protesters] any excuse that the government is taking things by force.” As a result, the police have not attempted to remove any, even unmanned barricades.

As the numbers have dwindled, the right-wing Hong Kong nationalist organisation Civic Passion has become more prominent at the protest sites, voicing criticisms of the direction taken by Occupy Central and the student organisations. The Wall Street Journal reported that the organisation had about 120 members spread across the three protest sites. At each it had a tent distributing food and bottled water, along with a sound system for its members to address protesters and onlookers. Its free monthly newspaper and web site call for “cultural resistance against mainland China,” one member told the Wall Street Journal .

Civic Passion, formed in 2012, blames tourists and immigrants from the Chinese mainland, as well as the Beijing and Hong Kong governments, for the lack of housing and jobs. According to one report, its more extreme members have told immigrants, especially mainland Chinese, to leave Hong Kong. It feeds off parochial sentiment, encouraged by opposition parties and media outlets that brand mainlanders as “locusts” undermining Hong Kong’s culture and language.

The whipping up of anti-mainlander hostility is aimed at diverting the sharpening social tensions produced by Hong Kong’s deepening social polarisation in a reactionary political direction. Over the past two decades, as China has been transformed into the world’s premier cheap labour platform, manufacturing in Hong Kong has plummetted and the territory has become China’s chief financial centre.

The gulf between rich and poor has widened. According to Forbes, Hong Kong’s 10 wealthiest men control a combined fortune of about $130 billion. All of them have stakes in the territory’s lucrative real estate market, where prices have more than trebled over the past decade. As manufacturing jobs have been destroyed, young people have been increasingly forced to compete for work in lower-paid service industries. The service sector, which includes retail and tourism catering to large numbers of mainland tourists as well as the finance industry, today accounts for more than 90 percent of the territory’s economy. Wages have risen by only 3 percent over the past 10 years.

While broad social concerns, as well as democratic aspirations, animated the mainly young people who joined last week’s protests, these sentiments find no expression in the limited demands of Occupy Central and the student organisations, except perhaps to the extent that they promote the naïve belief that an open election in 2017 will result in a government more responsive to social needs.

The only beneficiaries of an easing of the restrictions on the 2017 election would be the official opposition—a broad grouping known as the pan-Democrats. They represent sections of the Hong Kong elite who fear that their business interests and the viability of the territory as a financial centre are threatened by Beijing’s domination of the territory’s economic and political life.

The pan-Democrats, who did not initiate the protests, have been concerned from the outset that the political unrest could spin out of control. Jim Lai, a prominent Hong Kong media tycoon and pan-Democrat supporter, is the latest to appeal to protest leaders to “call a retreat” and end the street demonstrations this weekend, saying they must not “exhaust the goodwill of the Hong Kong people.”

Student leaders threaten to escalate Hong Kong protests

By Peter Symonds
2 October 2014

Tens of thousands took part in protests yesterday in Hong Kong to demand the resignation of Chief Executive Leung Chun-ying and a full and open election for his post in 2017. Crowds of people, overwhelmingly young, took advantage of the October 1 national holiday to join demonstrations in at least five locations on Hong Kong island and neighbouring Kowloon.

Student leaders threatened to escalate protests today unless Leung resigns. Lester Shum, vice secretary of the Hong Kong Federation of Students, declared yesterday that there was “no room for dialogue” with Leung and warned: “If he does not resign by tomorrow, we will step up our actions, such as occupying several important government buildings.”

The protests have also sparked small demonstrations in Macau and Taiwan. Chinese authorities, fearful that the protests could spread to the mainland, have clamped down on the media and Internet.

Leung has refused to step down or hold talks with any protest organisers. He used his National Day speech to appeal to protesters to accept Beijing’s decision to allow a 2017 election with universal suffrage but limited to candidates vetted by a nominating committee stacked with pro-Beijing appointees.

Beijing’s announcement in late August provoked widespread hostility, which the official opposition “pan-Democratic” grouping sought to exploit to force a compromise on the nomination process. The pan-Democrats threatened to use their numbers in Legislative Council to veto the proposal and, in effect, maintain the anti-democratic status quo. Currently the chief executive is simply chosen by a 1,200-member committee, dominated by pro-Beijing loyalists.

The current protests erupted after clashes last Friday between police and students, who boycotted classes to oppose Beijing’s plan. The protests were joined by the Occupy Central organisation, which had proposed, but not begun, a civil disobedience campaign. Riot police were withdrawn from the streets after their attempts to suppress the protests over the weekend only caused the crowds to swell.

Those joining the protests are animated by fears that Beijing will impose further anti-democratic restrictions, and by discontent over the deepening social divide between rich and poor. This social polarisation has been intensified by Hong Kong’s economic integration with China, which has accelerated since Beijing’s takeover of the former British colony in 1997.

Industry has shifted to take advantage of cheap labour in southern China, causing a collapse in the manufacturing workforce from about one million in the early 1980s to 20,000 in 2013. At the same time, the banking and financial sector has burgeoned. Hong Kong is the preferred location for Chinese companies to launch initial public offerings—$43 billion since 2012—and a transit point for investment into and out of China. Last year, two thirds of foreign direct investment into China flowed through Hong Kong.

While a narrow layer of super-wealthy tycoons has prospered, the living standards of the majority of working people have fallen. Jobs in manufacturing have been replaced by low-wage positions in service industries that benefitted from a growing numbers of tourists from the Chinese mainland. Despite declining real wages, the cost of living, especially housing costs, have risen sharply. The waiting time for public housing has blown out to ten years, forcing the low paid into makeshift accommodation and what are known as “cage homes.”

Layers of the middle classes, especially the young, have also been impacted. A university graduate earns roughly the same as a decade ago and faces increasing competition from applicants from the mainland for jobs.

These pressing social issues, however, find no expression in the perspective advanced by those parties and organisations dominating the current protests—the pan-Democrats, Occupy Central and various student groups—which are all, despite tactical differences, narrowly focussed on ensuring opposition candidates can stand in the 2017 election. This is a significant factor in the predominantly middle class composition of the protest movement and its failure to attract substantial support from the working class.

The demand for full and open elections reflects the interests of layers of the Hong Kong elite who resent being marginalised by pro-Beijing tycoons and fear that the Beijing’s control over Hong Kong’s political affairs will undermine its competitiveness as an Asian financial centre. This wealthy stratum is determined to defend what it regards as Hong Kong’s competitive advantage, particularly over Chinese financial centres such as Shanghai: the long-established defence of capitalist property that unpins all commercial and financial transactions and is entrenched in the legal system established under British colonial rule.

In April, a group of about 70 current and former financiers and managers, describing themselves as the financial arm of Occupy Central, wrote to Chinese President Xi Jinping to protest over threats to press freedoms, and the political cronyism in the finance industry, and to call for open elections for the chief executive. “In the long run, if you want to maintain an international banking and finance centre in Hong Kong, you need to have a good system, a good framework, in order to protect it,” Lai Chong Au, a marketing manager told the New York Times .

Even if the opposition parties and organisations achieved their objective in full—an open election in 2017 for chief executive—the result would be a contest, dominated by big money, between candidates representing rival factions of the Hong Kong tycoons.

The pro-Western orientation of much of the official Hong Kong opposition leaves the present protests open to manipulation by the major imperialist powers. At this stage, the US and Britain have expressed concerns, but not called for the resignation of Hong Kong’s chief executive or explicitly backed the opposition’s demands over the 2017 election.

Before meeting with China’s Foreign Minister Wang Yi yesterday, US Secretary of State John Kerry urged Hong Kong authorities to “exercise restraint and respect protesters’ rights to express their views.” In response, Wang declared that “Hong Kong affairs are China’s internal affairs,” adding that “all countries should respect China’s sovereignty.”

Britain’s cautious approach was underlined by the comments yesterday by former Hong Kong governor Chris Patten who appealed for China’s leaders to consult with opposition figures. “I think we’ve got to see dialogue replacing tear gas and pepper sprays,” he told the BBC. “The right thing to do is to embark on a new period of consultation … because there are a lot of very moderate people on the pro-democracy side.”

Embroiled in an escalating war in Iraq and Syria, and an ongoing confrontation with Russia over Ukraine, the US and its allies appear wary about immediately stoking up another international political crisis. Given the acute state of geo-political tensions, however, that could rapidly change.

John Holloway: cracking capitalism vs. the state option

by Amador Fernández-Savater on September 29, 2014

Post image for John Holloway: cracking capitalism vs. the state optionWith left parties on the rise in Spain and Greece, John Holloway reflects on his influential 2002 thesis: can we change the world without taking power?

Interview by Amador Fernández-Savater. Translated by Richard Mac Duinnsleibhe and edited by Arianne Sved of Guerrilla Translation.

In 2002, John Holloway published a landmark book: Change the World without Taking Power. Inspired by the ‘¡Ya basta!’ of the Zapatistas, by the movement that emerged in Argentina in 2001/’02, and by the anti-globalization movement, Holloway sets out a hypothesis: it is not the idea of revolution or transformation of the world that has been refuted as a result of the disaster of authoritarian communism, but rather the idea of revolution as the taking of power, and of the party as the political tool par excellence.

Holloway discerns another concept of social change at work in these movements, and generally in every practice—however visible or invisible it may be—where a logic different from that of profit is followed: the logic of cracking capitalism. That is, to create, within the very society that is being rejected, spaces, moments, or areas of activity in which a different world is prefigured. Rebellions in motion. From this perspective, the idea of organization is no longer equivalent to that of the party, but rather entails the question of how the different cracks that unravel the fabric of capitalism can recognize each other and connect.

But after Argentina’s “que se vayan todos” came the Kirchner government, and after Spain’s “no nos representan” appeared Podemos. We met with John Holloway in the city of Puebla, Mexico, to ask him if, after everything that has happened in the past decade, from the progressive governments of Latin America to Podemos and Syriza in Europe, along with the problems for self-organized practices to exist and multiply, he still thinks that it is possible to “change the world without taking power.”

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Firstly, John, we would like to ask you where the hegemonic idea of revolution in the 20th century comes from, what it is based on. That is, the idea of social change through the taking of power.

I think the central element is labor, understood as wage labor. In other words, alienated or abstract labor. Wage labor has been, and still is, the bedrock of the trade union movement, of the social democratic parties that were its political wing, and also of the communist movements. This concept defined the revolutionary theory of the labor movement: the struggle of wage labor against capital. But its struggle was limited because wage labor is the complement of capital, not its negation.

I don’t understand the relation between this idea of labor and that of revolution through the taking of state power.

One way of understanding the connection would be as follows: if you start off from the definition of labor as wage or alienated labor, you start off from the idea of the workers as victims and objects of the system of domination. And a movement that struggles to improve the living standards of workers (considered as victims and objects) immediately refers to the state. Why? Because the state, due to its very separation from society, is the ideal institution if one seeks to achieve benefits for people. This is the traditional thinking of the labor movement and that of the left governments that currently exist in Latin America.

But this tradition isn’t the only approach to a politics of emancipation…

Of course not. In the last twenty or thirty years we find a great many movements that claim something else: it is possible to emancipate human activity from alienated labor by opening up cracks where one is able to do things differently, to do something that seems useful, necessary, and worthwhile to us; an activity that is not subordinated to the logic of profit.

These cracks can be spatial (places where other social relations are generated), temporal (“Here, in this event, for the time that we are together, we are going to do things differently. We are going to open windows onto another world.”), or related to particular activities or resources (for example, cooperatives or activities that pursue a non-market logic with regard to water, software, education, etc.). The world, and each one of us, is full of these cracks.

The rejection of alienated and alienating labor entails, at the same time, a critique of the institutional and organizational structures, and the mindset that springs from it. This is how we can explain the rejection of trade unions, parties, and the state that we observe in so many contemporary movements, from the Zapatistas to the Greek or Spanish indignados.

But it isn’t a question of the opposition between an old and a new politics, I think. Because what we see in the movements born of the economic crisis is that those two things come to the fore at the same time: cracks such as protests in city squares, and new parties such as Syriza or Podemos.

I think it’s a reflection of the fact that our experience under capitalism is contradictory. We are victims and yet we are not. We seek to improve our living standards as workers, and also to go beyond that, to live differently. In one respect we are, in effect, people who have to sell their labor power in order to survive. But in another, each one of us has dreams, behaviors and projects that don’t fit into the capitalist definition of labor.

The difficulty, then as now, lies in envisioning the relation between those two types of movements. How can that relation avoid reproducing the old sectarianism? How can it be a fruitful relation without denying the fundamental differences between the two perspectives?

Argentina in 2001 and 2002, the indignados in Greece and Spain more recently. At a certain point, bottom-up movements stall, they enter a crisis or an impasse, or they vanish. Would you say that the politics of cracks has intrinsic limits in terms of enduring and expanding?

I wouldn’t call them limits, but rather problems. Ten years ago, when I published Change the World without Taking Power, the achievements and the power of movements from below were more apparent, whereas now we are more conscious of the problems. The movements you mention are enormously important beacons of hope, but capital continues to exist and it’s getting worse and worse; it progressively entails more misery and destruction. We cannot confine ourselves to singing the praises of movements. That’s not enough.

Could one response then be the option that focuses on the state?

It’s understandable why people want to go in that direction, very understandable. These have been years of ferocious struggles, but capital’s aggression remains unchanged. I sincerely hope that Podemos and Syriza do win the elections, because that would change the current kaleidoscope of social struggles. But I maintain all of my objections with regard to the state option.

Any government of this kind entails channeling aspirations and struggles into institutional conduits that, by necessity, force one to seek a conciliation between the anger that these movements express and the reproduction of capital. Because the existence of any government involves promoting the reproduction of capital (by attracting foreign investment, or through some other means), there is no way around it. This inevitably means taking part in the aggression that is capital. It’s what has already happened in Bolivia and Venezuela, and it will also be the problem in Greece or Spain.

Could it be a matter of complementing the movements from below with a movement oriented towards government institutions?

That’s the obvious answer that keeps coming up. But the problem with obvious answers is that they suppress contradictions. Things can’t be reconciled so easily. From above, it may be possible to improve people’s living conditions, but I don’t think one can break with capitalism and generate a different reality. And I sincerely believe that we’re in a situation where there are no long-term solutions for the whole of humanity within capitalism.

I’m not discrediting the state option because I myself don’t have an answer to offer, but I don’t think it’s the solution.

Where are you looking for the answer?

Whilst not considering parties of the left as enemies, since for me this is certainly not the case, I would say that the answer has to be thought of in terms of deepening the cracks.

If we’re not going to accept the annihilation of humanity, which, to me, seems to be on capitalism’s agenda as a real possibility, then the only alternative is to think that our movements are the birth of another world. We have to keep building cracks and finding ways of recognizing them, strengthening them, expanding them, connecting them; seeking the confluence or, preferably, the commoning of the cracks.

If we think in terms of state and elections, we are straying away from that, because Podemos or Syriza can improve things, but they cannot create another world outside the logic of capital. And that’s what this is all about, I think.

Finally, John, how do you see the relation between the two perspectives we’ve been talking about?

We need to keep a constant and respectful debate going without suppressing the differences and the contradictions. I think the basis for a dialogue could be this: no one has the solution.

For the moment, we have to recognize that we’re not strong enough to abolish capitalism. By strong, I am referring here to building ways of living that don’t depend on wage labor. To be able to say “I don’t really care whether I have a job or not, because if I don’t have one, I can dedicate my life to other things that interest me and that give me enough sustenance to live decently.” That’s not the case right now. Perhaps we have to build that before we can say “go to hell, capital.”

In that sense, let’s bear in mind that a precondition for the French Revolution was that, at a certain point, the social network of bourgeois relations no longer needed the aristocracy in order to exist. Likewise, we must work to reach a point where we can say “we don’t care if global capital isn’t investing in Spain, because we’ve built a mutual support network that’s strong enough to enable us to live with dignity.”

Right now the rage against banks is spreading throughout the world. However, I don’t think banks are the problem, but rather the existence of money as a social relation. How should we think about rage against money? I believe this necessarily entails building non-monetized, non-commodified social relations.

And there are a great many people dedicated to this effort, whether out of desire, conviction or necessity, even though they may not appear in the newspapers. They’re building other forms of community, of sociality, of thinking about technology and human capabilities in order to create a new life.

John Holloway is Professor of Sociology at the Institute of Humanities and Social Sciences of the Autonomous University of Puebla in Mexico. His latest book is Crack Capitalism (Pluto Press, 2010).

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