On Friday, April 22, thousands of workers demonstrated in major cities across Belgium protesting the worsening cost of living crisis and calling for a rise in wages. The call for the mobilization was given by major trade unions like the General Labor Federation of Belgium (ABVV/FGTB), Confederation of Christian Trade Unions (ACV/CSC), General Confederation of Liberal Trade Unions of Belgium (ACLVB/CGSLB), and political parties including the Workers’ Party of Belgium (PTB/PVDA). Various student/youth groups expressed support and solidarity with the workers’ mobilization. The protesting workers have called for a revision of the 1996 Wage Margin Act. The act establishes a strict procedure for the Belgian social partners to negotiate a maximum average wage increase and thus effectively prevents any real increase in wages in the country.
To anyone paying attention, the American economy sure feels a lot like a casino. The stock market has become increasingly gamified, and the consequences are felt by all of us, every day—even those of us who aren’t even invited to play. There’s actually a term for our financial system that uses these words: casino capitalism. What many don’t know, however, is that behind this new form of capitalism is a flesh-and-bones man with a certain sort of gambling addiction. His name is Bill Gross, and his is the story that Mary Childs, co-host of NPR’s “Planet Money” podcast, tells so compellingly in her book, “The Bond King.” Titled after the investment banker’s moniker, Childs’ book explains how Gross remade the bond market into a gambler’s paradise, and went on not only to found the investment firm Pimco, but to rig the entire U.S. economy in his favor.
Because only fools believe they can predict the short-term fluctuations of the economy, let’s follow in the style of Descartes and just retreat to the most basic possible prediction that we are certain will come true. Which is: The current boom in asset prices — high prices not just in one asset, but in stocks, financial assets, real estate, luxury goods, crypto, NFTs and any other hastily invented place where money can flow — will come to an end. Whether that end comes tomorrow or in six months or in a year or in five years is impossible to know for sure, but we do know that the economy moves in cycles, and the current cycle is (very far) on the upside. And what goes up will, inevitably, come down.
For the end of the year, Clearing the FOG speaks with economist Richard Wolff about the current state of United States capitalism. Wolff explains that the United States is experiencing the greatest crisis in its history - a severe economic crisis at the same time as a pandemic, as well as the climate crisis. This is unprecedented. Unlike the great depression in the last century, when the wealth divide shrank, inequality is worsening. On top of that, US empire is in decline. Wolff discusses the current state of inflation and supply chain disruption and the forces behind them. Instead of facing up to these realities and learning from the experiences of other countries, such as China, and even our own past, the ruling class is in denial and continues on the same path that created the current situation. Wolff talks about what we need to focus on going forward.
In March 2020, as the first wave of coronavirus infections all but shut down the U.S. economy, Congress responded with rare speed, passing a $2.2 trillion relief package called the CARES Act. The centerpiece of the law was an emergency payment to over 150 million American households that needed help. Congress used a simple filter to determine who was eligible for assistance: The full $1,200 was limited to single taxpayers who’d reported $75,000 a year or less in income on their previous tax return. Married couples got $2,400 if they had reported less than $150,000 in income. Money was sent automatically to those who qualified. Ira Rennert, worth $3.7 billion according to Forbes, did not appear to need the cash infusion offered by the CARES Act.
While wages for many Americans have rebounded to pre-pandemic levels, earnings for Black workers declined in the first quarter of 2021, growing the wage gap to its highest level since before the pandemic, according to a new analysis. In a report of earnings data by the Ludwig Institute for Shared Economic Prosperity (LISEP) real median earnings have increased by 1 percent for the first quarter of 2021, driven in large part by a 1.6 percent increase in real earnings by Hispanic workers, while real earnings for white workers remained virtually unchanged. Wages for white earners have fully recovered to pre-pandemic levels and are currently 0.3 percent higher in real terms than in December 2019.
This past week the US Commerce Department released its early estimates for US GDP for the 1st Quarter 2021, January through March. If we are to believe the numbers, the US economy grew a respectable 6.4% during the period. But did it really? And does it represent a strong recovery underway? Or just a rebound, as the economy reopens in the services sector; and once the reopening concludes, will the economy flatten out again—as it did with last summer’s 2020 partial reopening that collapsed in late 2020? The first thing for readers to understand is the 6.4% is not really 6.4% for the first three months of 2021. The US is one of the few countries that reports its GDP figures in an ‘Annual Rate’ (AR) percentage. Most other advanced economies do not.
Like all previous economic systems in recorded history, capitalism is on track to repeat the same three-step trip: birth, evolution, and death. The timing and other specifics of each system’s trip differ. Births and evolutions are commonly experienced as positive, celebrated for their progress and promise. The declines and deaths, however, are often denied and usually feel difficult and depressing. Notwithstanding endlessly glib political speeches about bright futures, U.S. capitalism has reached and passed its peak. Like the British Empire after World War I, the trip now is painful. Signs of decline accumulate. The last 40 years of slow economic growth have seen the top 10 percent take nearly all of it. The other 90 percent suffered constricted real wage growth that drove them to borrow massively (for homes, cars, credit cards, and college expenses).
Scores of ordinary Lebanese citizens participated in a massive protest demonstration in the Lebanese capital, Beirut on Sunday, March 28, 2021 to express their disapproval and anger over the worsening socio-economic situation in the country. The situation has resulted in severe uncertainty about the future and extreme hardships in the lives of the common Lebanese people, a report by the Middle East Monitor stated yesterday. The demonstrations organized by the Lebanese Communist party also railed against the administrative vacuum existing in the country because of the dominant political parties not being able to reach an agreement on government formation. The interim government has been more or less powerless to make any significant governmental decisions towards improving the citizens’ lives and to rescue the failing economy.
I'm delighted to have Michael Hudson join us today. He'll be discussing how under a neoliberal shift from industrial to finance capitalism, today's most pressing economic conflict is not simply between labor and employers. It's a conflict in which rentier interests have the upper hand over labor, industry and government together. This is the political economy in which the COVID-19 economic shock is playing out with dire consequences. Michael Hudson is a research professor of economics at the University of Missouri - Kansas City and a research associate at the Levy Economics Institute of Bard College. Michael Hudson's latest book is "And Forgive Them Their Debts."
On this week's show, Prof. Wolff explores what major social changes will flow from today's combination of major economic crash and the viral pandemic (capitalism's worst nightmare). To answer, we consider how European feudalism changed after its 14th century combination of economic decline and the bubonic plague. The two big changes then were (1) switching from a decentralized to a strong state, monarchical feudalism and (2) transition from feudalism to capitalism. The two big parallel changes now are...