Monthly Archives: November 2012

Note to neo-liberals: Earth orbits the sun

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By John Ross
November 24, 2012

In the next 15 years one of the greatest turning points in world history can occur. In five to seven years China will become the world’s largest economy. In about 15 years China will achieve the annual $12,000 GDP per capita qualifying it as a developed economy by World Bank criteria. China is so large that these events will change the world. For example, China’s 1.3 billion population is larger than the combined 1.1 billion of all existing developed economies.

But these successes are not inevitable. China has enjoyed tremendous economic achievements since 1978, experiencing in the last decade the fastest per capita GDP growth in any major economy in history, and the fastest growth of consumption in a large country. It achieved this because it followed economic policies laid out by Deng Xiaoping from 1978. But now an attempt is being made by some to divert China onto an economic path, neo-liberalism, which has failed wherever it has been carried out. Examining the factual record of neo-liberal policy shows the scale of what is at stake both for China and internationally.

Neo-Liberal policies were applied in Latin America in the 1980s. The result was that Latin America’s per capita GDP fell by an average 0.5 percent a year for 10 years.

In the former Soviet Union neo-liberal shock therapy, based on full privatization, was carried out after 1991. Russia’s GDP fell 36 percent, the greatest decline of a major economy in peacetime in modern world history. Russia’s male life expectancy fell by four years, to only 58, by 1998 and Russia’s population today is 7 million less than it was in 1991.

Neo-liberal policies in the US instigated under Ronald Reagan led to the colossal accumulation of debt that culminated in the international financial crisis of 2008. During the earlier Keynesian period of US economic policy, lasting from the end of the Korean War (1950-53) until 1980, US state debt fell from 70 percent to 37 percent of GDP. During the succeeding neo-liberal period US state debt rose to 88 percent of GDP by last year. Over the same period the 10-year moving average of annual US GDP growth fell from 3.3 percent to 1.6 percent. Under neo-liberal policies US state debt more than doubled, and US economic growth halved.

Given neo-liberalism’s disastrous record, which is even starker when compared with China’s growth, how can anyone advocate that China adopt such a failed policy? The answer is that intellectually this can be done only by making no reference to economic facts or by falsifying them. An example of the latter is the assertion that China’s investment is less efficient than that of economies such as the US when the facts show the opposite. Even before the international financial crisis China had to invest only 4.1 percent of GDP to produce each percentage point of economic growth, compared with the 8.8 percent in the US. Since the financial crisis the US position has worsened.

Neo-liberalism fails as economic policy because it refuses to follow science’s first rule of starting with the facts, or, in the famous Chinese phrase, it refuses to “seek truth from facts”. Rather in the style of pre-Copernican astronomers who insisted that the sun orbited the Earth, because they failed to make measurements showing the Earth circles the sun, neo-liberals construct models of an economy that does not exist. They imagine an economy made up of millions of competitive firms (technically “perfect competition”), in which prices are flexible downward as well as upward, and in which investment is a low percentage of the economy. The real economy is nothing like this.

The scale of investment has been rising for 300 years to levels of 20 percent, or even more than 40 percent, of GDP. Huge financial structures were necessarily created to centralize the resources for this. Banks now agreed to be “too big to fail”, and which therefore cannot be allowed to operate in a free market without incentivizing uncontrollable risk taking. Due to this high investment the world’s most important industries – automobiles, aviation, computers, finance, pharmaceuticals – do not operate according to “perfect competition” but are monopolies or oligopolies. As neo-liberalism does not correspond to economic reality its policies are necessarily damaging.

For this reason, even when not fully adopted, neo-liberalism’s influence damages China’s economy. For example, early this year severe negative pressure on China’s economy occurred due to a downturn in the global economy driven by a fall in private investment. However, due to the influence of neo-liberal views, that the State should “get out” of the economy, the necessary stimulus to counter this was not launched early enough. Fortunately, in the second half of the year, China’s government launched a required medium-scale State-led investment stimulus that stabilized the economy during the third quarter and should now lead to accelerated growth.

The consequences for the popularity of those implementing neo-liberal policies, and for social stability, are also clear. For example in Britain David Cameron launched the Big Society, the concept that the state should be small and be replaced in social protection by the market and voluntary organizations. But factual evidence shows that pure operation of the market increases, not decreases, social inequality and fails to provide social protection. The result under Cameron was sharply rising social inequality, ridiculing of his policies even by those not associated with the political opposition, and a collapse in the government’s popularity.

In China, where there is a widespread consensus that in the recent period social inequality has gone too far, and which due to size is more difficult to govern than any European state, to embark on neo-liberal policies, which would inevitably increase inequality, would not only be economically damaging but socially and politically destabilizing.

However, neo-liberalism is not just an intellectual theory. Many people profit from it. In the US most of those in the finance sector who led its economy to disaster in 2008 retain the private wealth gained from neo-liberal policies.

Two groups of people would gain from neo-liberalism in China, and therefore support it. The first are some financial layers in the country. The second are US neo-con circles that aim to maintain the US as the world’s largest economy despite remorseless arithmetic showing this is impossible.

The population of the US is only 23 percent of China’s. The only way the US could remain the world’s largest economy is if China’s per capita GDP, and by implication its living standards, never reaches 23 percent of US levels. Quite rightly China’s population will never accept they can only have less than one quarter of the US living standard; nor in the future will India. As China’s GDP per capita moves toward that of the US China’s economy will become first the largest and later the strongest in the world. The only way to stop this is to sharply slow China’s economic growth, neo-liberalism’s disastrous consequences being the way to achieve that.

China’s economic rise immensely benefits not only itself but humanity. When, in about 15 years, China achieves advanced economy status, 35 percent of the world’s population, for the first time in modern history, will enjoy the benefits of this. When China has come so close not only to full national revival but to decent living standards for its people it would be one of the greatest tragedies in world history for neo-liberalism to block this.

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FULL INTERVIEW: This is why they killed Syrian-Palestinian actor Mohamad Rafea

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Mohamad Rafea was the first Palestinian artist to be martyred in Syria. This interview with journalists Lizzie Phelan and Mostafa Afzalzadeh is an example of how despite the numerous threats Mohamad had received because of his vocal opposition to the illegal covert foreign intervention and insurgency in Syria, he refused to be silenced primarily about the importance of the country remaining united in the face of the western and Gulf state conspiracy to divide and destroy it. This interview was originally shot for a documentary by the journalists that can be watched in English, French and soon Spanish here http://www.manufacturing-dissent.com/ but has been released in full in the wake of his murder.

On Friday November 2nd 2012, Mohamad was kidnapped by extremists. On Sunday November 4th 2012, his father received a phone call from his murderers, informing him that they had dumped his body in an orchard. His body bore clear signs of torture and mutilation.

Despite attempts by western and pro-opposition media to portray Mohamad as a Syrian government thug, Mohamad was a much loved and widely known figure for his humility and dedication to humanity. His murder sent shockwaves throughout Syria. His father has called him a “martyr for Syria’s unity”.

A tribute to Mohamad by Lizzie Phelan can be read here in English http://tinyurl.com/asn8eag and here in Arabic http://tinyurl.com/akwcr8x

Will Damascus Survive Washington’s Latest Attempt to Impose a Puppet Government on Syria?

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US secretary of state Hillary Clinton says Washington needs “an opposition that will be on record strongly resisting the efforts by extremists to hijack the Syrian revolution,” (1) but fails to add that it must also be open to the United States doing the same.

By Stephen Gowans

After several months of showing solidarity to the de-facto govt. Syrian National Council (SNC), Hillary Clinton announces the U.S. no longer recognizes the SNC.

Uprisings aimed at overthrowing governments are often divided between militants who do the heavy lifting on the ground and politicians who lead the fight in the political sphere. Outside powers scheme to anoint an acceptable politician as a leader-in-waiting to step into the void if and when the current government is toppled. The leader must be both acceptable to his or her foreign backers and to the militants on the ground.

Washington has decided that the Syrian National Council, which it “initially charged” to “galvanize opposition” (2) to Syria’s Ba’thist government is unacceptable to Syrian rebels and therefore has no hope of leading a successor government. As an alternative to the failed council, it has handpicked the leaders of a new government-in-waiting, to be unveiled in Doha on November 7, and soon after receive the pre-arranged blessing of the Arab League and Friends of Syria. Make no mistake. What emerges from Doha will be a US creation, intended to represent US interests in Syria and the Middle East.

At a press conference following an October 30 meeting with the president of Croatia, US secretary of state Hillary Clinton revealed that the Syrian National Council, Washington’s initial pick to lead the opposition to the Asad government, no longer had Washington’s support. The SNC, in Washington’s view, had become irrelevant. The armed opposition to the Asad government is happening outside the leadership of the SNC, an organization of exiles with no legitimacy within Syria and internally divided by incessant squabbling between its Islamist and secularist factions. The SNC, commented one armed rebel, “has been over with for a long time now; fighters only talk about it sarcastically.” (3)

Equally problematic for Washington was the SNC’s narrow base of political support. “From the beginning, the council was seen as a prime vehicle for the long-exiled Muslim Brotherhood” (4) and therefore “failed to attract significant representation from minority groups,” (5) including Alawites, Christians and Kurds. Its failure to win support from fighters on the ground, and to expand beyond a narrow sectarian base, hardly recommended it as a viable government-in-waiting. Sounding the council’s death knell, Clinton decreed “that the SNC can no longer be viewed as the visible leader of the opposition.” (6)

For weeks now, Robert Ford, the former US ambassador to Syria, has been putting together a plan to anoint a new US-approved government-in-the-wings. The initiative is known as the “Riad Seif plan” (7) named after a wealthy Damascus businessman and former Syrian parliamentarian who has long played an active role in the opposition to the Asad government. Acceptable to Washington owing to his businessman politics (as against the Ba’athist’s ideological commitment to state domination of the economy, marginalization of the private sector, and controls on foreign investment (8)), Seif has been endorsed by Washington to lead a post-Ba’athist government. It is hoped that his opposition credentials—he was jailed by the Syrian government for his activities—will put him in good stead with the rebels on the ground.

The plan calls for the creation of a “proto-parliament” comprising 50 members, 20 from the internal opposition, 15 from the SNC (i.e., the exile opposition), and 15 from various other Syrian opposition organizations. An executive body made up of 8 to 10 members—who have been endorsed by the US State department (9) — will work directly with the United States and its allies. (10) Washington and its subordinates, the Arab League and misnamed Friends of Syria, both democracy-hating clubs of plutocracies and oil monarchies, will attempt to make the body acceptable to Syrians by recognizing it as the legitimate representative of the Syrian people.

There’s no guarantee the plan will work. One of its goals is to marginalize the influence of the Jihadists, many though not all of whom have spilled into Syria from other countries, bent on overturning a secular regime led by a president whose Alawi faith they revile as heretical. If the Jihadists can be sidelined, Washington may be able to funnel arms to “acceptable” militant groups, without fear of their being used later against US targets. But there’s a question mark hanging over Seif’s appeal to religiously-inspired militants, especially when the hands of the marionette-master, the US State Department, are so visible. The same goes for the new council’s appeal to the anti-imperialist secular opposition, who “are against any new political entity that becomes subject to the agendas of foreign countries.” (11) And there’s no mistaking that the new ‘Made-in-the-USA’ council will be subject to the political agenda of the United States.

We needn’t tarry long on debunking the naive belief that Washington’s intervention in Syrian affairs has the slightest connection to promoting democracy. If democracy promotion motivated US foreign policy, absolutist monarchies with execrable records of human rights abridgements and violent repression of popular uprisings against their dictatorial rule would not make up the bulk of the United States’ Arab allies. The last thing the wealthy investors, bankers and corporate heavyweights who make up the US ruling class want is democracy, either at home or aboard. They want its polar opposite—plutocracy, rule by people of wealth in the interests of piling up more wealth through the exploitation of the labor of other people and the land, resources and markets of other countries.

When Saudi Arabia sent tanks and troops into Bahrain on March 14, 2011 to crush a local eruption of the Arab Spring, the United States did nothing to disturb their democracy-abominating ally’s assault on the popular uprising, except issue a meaningless call for “political dialogue.” As the New York Times explained,

The reasons for Mr. Obama’s reticence were clear: Bahrain sits off the Saudi coast, and the Saudis were never going to allow a sudden flowering of democracy next door…In addition, the United States maintains a naval base in Bahrain…crucial for maintaining the flow of oil from the region. “We realized that the possibility of anything happening in Saudi Arabia was one that couldn’t become a reality,” said William M. Daley, President Obama’s chief of staff at the time. “For the global economy, this couldn’t happen.” (12)

Considering that William Daley is an investment banker from a politically well-connected family; that “maintaining the flow of oil” means “maintaining the flow of oil revenues to US oil giants”; and that “the global economy” means “investors’ returns,” it’s clear why the plutocracy condoned their ally’s repression of the Bahrain uprising. Under plutocratic rule, steps toward democracy—even baby ones—are not allowed to get in the way of profits.

Nor need we tarry on the naive belief that a government that has been handpicked by Washington—the US State Department has “recommended names and organizations that ….should be included in any leadership structure,” disclosed Clinton (13)—will represent Syrian interests against those of its sponsor. US interests in Syria have no intrinsic relationship to protecting Israel, which—with its formidable military, yearly $3 billion dollop of US military aid, and an arsenal of 200 nuclear weapons—hardly needs further assistance defending itself against Iran, Hezbollah or Hamas, none of which are significant threats to Israel anyway but are threatened by it. Weakening Iran, Syria’s ally, may be one of Washington’s objectives in trying to orchestrate Asad’s ouster, but not because Iran may acquire nuclear power status and therefore threaten Israel (which it could hardly do anyway considering that it’s severely outclassed militarily (14)), but because, like Syria, it zealously safeguards its economic territory from the US plutocracy’s designs, allowing the state to dominate its economy and protect its domestic enterprises, land and resources from outside domination. The real reason the US plutocracy wants to topple the Syrian and Iranian governments is because they’re bad for the plutocracy’s business interests. Democracy, existential threats to Israel, and nuclear non-proliferation, have nothing to do with it.

The Syrian government is no stranger to formidable challenges. It has waged a longstanding war with Islamists who have rejected the Ba’athist’s secular orientation from the start. Its war with the ethnic-cleansing settler regime in Tel Aviv oscillates between hot and cold. The United States has waged economic warfare against Syria for years, and has connived at overthrowing its government before. Still, Damascus is in a particularly bad spot now. The world’s strongest plutocracies have escalated their hostility. Jihadist terrorists from abroad—to say nothing of home-grown ones—are doing their best to upset Ba’athist rule. But the support of the Syrian military and a substantial part of the Syrian population, plus assistance from Russia and Iran, have allowed it to hang on.

In the face of imperialist and Islamist opposition, its future looks grim, but governments have faced bleaker prospects before and survived, some even going on to thrive. To be sure, there are profound differences between the Asad government and the early Bolshevik regime, but the Syrian government and its supporters may take heart knowing that at one point it seemed all but certain that Lenin’s fledgling government would fail. Famine had gripped the cities. An imperialist war had thrown Russia’s industry into chaos and all but ruined its transportation system. Civil war had broken out and predatory hostile states had launched military invasions to smother the infant government in its cradle. Yet, in the face of these tremendous challenges, the Bolsheviks survived and over the next seven decades went on to build a great industrial power that eliminated unemployment, overwork, economic insecurity, extremes of inequality, and economic crises, while almost singlehandedly eradicating the scourge of Nazism. And it did so without exploiting other countries but helping to build them economically and escape colonialism and imperialist domination, often at great expense to itself. Similarly the Syrian government may overcome its challenges, both internal and external, and carry on a course of independent, self-directed development, free from the backwardness of Islamic fundamentalism, sectarianism and domination by the world’s great plutocracies. Let’s hope so.

1. Neil MacFarquhar and Michael R. Gordon, “As fighting rages, Clinton seeks new Syrian opposition”, The New York Times, October 31, 2012

2. Jay Solomon and Nour Malas, “U.S. pulls support for key anti-Assad bloc”, The Wall Street Journal, October 31, 2012

3. MacFarquhar and Gordon

4. MacFarquhar and Gordon

5. MacFarquhar and Gordon

6. Hillary Clinton’s Remarks With Croatian President Ivo Josipovic After Their Meeting, October 31, 2012. http://www.state.gov/secretary/rm/2012/10/199931.htm

7. Josh Rogin, “Obama administration works to launch new Syrian opposition council”, Foreign Policy, October 30, 2012. http://thecable.foreignpolicy.com/posts/2012/10/30/obama_administration_works_to_launch_new_syrian_opposition_council

8. See the Syrian page of The Heritage Foundations’ Index of Economic Freedom, http://www.heritage.org/index/country/syria

9. Andrew Quin, “Hillary Clinton calls for overhaul of Syria opposition”, The Globe and Mail, October 31, 2012

10. Rogin

11. MacFarquhar and Gordon

12. Helene Cooper and Robert F. Worth, “In Arab Sprint, Obama finds a sharp test”, The New York Times, September 24, 2012

13. Quin

14. Stephen Gowans, “Wars for Profits: A No-Nonsense Guide to Why the United States Seeks to Make Iran an International Pariah”, what’s left, November 9, 2011. http://gowans.wordpress.com/2011/11/09/wars-for-profits-a-no-nonsense-guide-to-why-the-united-states-seeks-to-make-iran-an-international-pariah/

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