Thursday, 18 December 2008

David McNally on the present crisis

We are very pleased to publish a new article by David McNally on the roots of the present crisis:

David McNally, 'From financial crisis to world slump: accumulation, financialization, and the global slowdown', Marx and the Financial Crisis of 2008, December 2008

Please post comments here.


  1. I've review David's article here



  2. Well, another analysis. And another call for "revolution from below". This approach represents the continuing failure of socialism to reinvent itself meaningfully.

    Prof. McNally should leave analysis to others; he has done enough of it to last several lifetimes. Instead, he should take the last paragraph of this paper and turn it into an essay that attempts to imagine a renewed socialism, post-revolution as it were. What would it look like?

    In short, the idea that socialism will emerge from revolution is both unpersuasive and unmotivating. The mere assertion of the intrinsec value of revolution provokes distrust and rejection, as it should. Detailed plans and programs founded on clear principles are necessary, if not sufficient. Without them there is no reason not to get on with the business of rescuing capitalism once again.

  3. Yes, the "New Socialist" view--revolution from below (RFB)--means that nothing really changes. It is always safe to wait for workers to think because they are not in a position to think. No thought = no action. RFB isn't permanent revolution, it is change on permanent hold.

    The left calls for new ideas but proposes none. The left fails to lead intellectually. Workers' Committees/Councils (RFB) are either make-shift, transitional responses to disorder that are quickly replaced by those who use the Committees as stepping stones to power or they are mere pretexts for power-seekers to grab the steering wheel. They are excuses and window-dressing for empty-headed change-seekers who don't really want change. The spontaneous emergence of Committees/Councils (Paris Commune, early Soviets, RFB etc.) is a mere symptom of the collapse of existing authority pending its replacement by a new authority. RFB isn't and can't be a new form of authority.

    How would a socialist economy really work? How does information technology and vastly increased computational capacity increase the effectiveness of fitting supply to demand? Who manages the managers? How does the population dump existing leaders and replace them when they wish to? How would a socialist economy avoid the problems that helped to undermine it the first time (USSR etc.)? Aren't socialist economies dependent on vast repression? (Stalin wasn't an accident, he was the end result of RFB). How would you safeguard against this? The various left groups in Canada (New Socialist, International Socialist, CPC etc.) should propose a genuine program of economic, social and political change. The RFBers are probably incapable, but you never know.... Even VIL and LT changed their tunes in response to events and since the RFBers venerate the early Bolsheviks, perhaps they will emulate their intellectual "creativity".

  4. The "Anonymous" comments denouncing "revolution from below" don't make much sense. First, McNally has taken up issues about how a post-capitalist economic democracy might be organized, notably in his book, AGAINST THE MARKET. Second, how can it make any sense to denounce the idea of a revolution and to simultaneously demand "detailed plans and programs" for organizing a post-revolutionary economy. If he shouldn't be a revolutionary (which Anonymous claims), then presumably he also shouldn't give us a bunch of plans for a post-revolutionary society.

    What Anonymous means, really, is: "Everybody stop talking about stuff so I can go on and on about how disappointed I am in everyone on the Left."

  5. Restructuring Financial Systems

    With respect to the "nature of wealth", I think that the "quality of life" paradigm in lieu of the "standard of living" paradigm needs to be stressed.

    "Quality of life" includes personal happiness for self, family, friends, neighbors, and all others. It includes ownership opportunities for all and everybuddy having the things they need, including health, healthy and loving relations with family, friends, neighbors, and all the people of the world. It includes peace on earth, and it includes a future for all the children of the world.

    "Standard of living" implies maximizing the consumption of things.

    The current Capitalist dominated system is dysfunctional both from an equity/fairness and economic and natural resource sustainability perspective.

    The dominant paradigm in Capitalist financial business operations uses something called the discount rate which assumes that money will be worth less (eventually worthless) in the future, thus creating a necessity to extract profits exceeding a "hurdle" rate leading to unfair and unwise exploitation of both workers and natural resources, and to rampant inflation.

    The use of credit is not a good business or personal practice. In business, it should be discouraged because creditors have first claims on net revenues and hold liens on real property and capital assets. For "consumers", the use of credit is unwise because the system is set up to extract profits from interest thus assuring that when consumers use credit that they are losing money relative to inflation. Certainly the current foreclosure crisis in the USA is ample evidence of the inflation and the unfairness and unhealthiness of the mortgage lien process.

    Credit Unions and Mutual Insurance companies are in theory attempts to institute non-profit economic democracies for their respective industries. However, because of the need to compete for customers, both of these relatively progressive financial service organization types are forced to play the same game that is basically destructive to individuals, families, communities, and the natural environment. Ideally, credit should only be used as a last resort, much more preferably not at all. We should replace all aspects of the extant financial system with an Equity Union. In some ways, a mutual insurance company is similar to an equity union. However, because such companies are required to realize profits in order to compete for "policy holders" (really investors), the companies that comprise the portfolios of the mutual insurance firms cannot be not-for-profit, can not be mutual organizations themselves.

    In a not-for profit Equity Union financial services system based on principles of mutuality working in concert with ethical, wise, knowledgeable, and intelligent community, inter-community, inter-regional, and worldwide planning there would certainly be an important role for financial service workers.

  6. Peoples' Equity Union

    A major impediment to such an Equity Union would be the competitive advantage of the current financial sector and the fear of the friction of change to those individuals and organizations. Dealing with this sector of "the" economy, it would be more feasible with regards to Capitalist resistance and more humane, to orderly and peacefully transition to an Equity Union, coordinated with ecologically sound economic planning.

    I am writing and talking about transitioning slowly, methodically, and with the minimum amount of friction and hardship from a dysfunctional financial system, based on self-interest, to one designed to meet the needs of people.

    The Peoples' Equity Union concept is designed to be a grass roots, popular choice "movement". I am organizing with individuals, workers, and shopkeepers in my neighborhood, adjoining neighborhoods, and through the inter-net to whomever I can attract an interest in the concept.

    The focus is primarily local, yet global at the same time. It is my dream, not a hope yet, to encourage a critical mass of people to organize locally around a unifying mission, unifying principles, unifying strategies, and unifying tactics in order to minimize the amount of executive administration at the regional and global levels.

    The theory is that neighborhood locales, the neighborhood community/worker hybrid association will have maximum autonomy and will be guided only, in their inter-community and inter-economic sector relationships by regional Planning Boards and a Global Policy Committee.

    We must replace the current equity trading systems, corporate conglomerate corporations, insurance companies, and usurious banking systems of the Capitalist status quo with a worldwide Peoples' Equity Union with branches in every community/neighborhood.

    The goal is to be a true economic democracy: of, for, and by the people.

  7. More on Equity Union(s)

    In a not-for profit Equity Union financial services system based on principles of mutuality working in concert with ethical, wise, knowledgeable, and intelligent community, inter-community, inter-regional, and worldwide planning would serve the needs of the people.

    In local and inter-community equity unions, equity sharing would be the modus operandi. People with funds being held in credit unions would have the option of investing in primarily worker owned community betterment projects based on the principles of quality of life, equity (which means ownership, and also means equality), humanity, and sustainability (which means there will be an economy and natural resources for the youth and the children, and for generations to come).

    If the inflation spiral can be removed (and the cost of real and capital assets brought back to earth), then indigent and poor workers could hope to increase their equity holdings and quality of life assets and equity investors could hope to get their money back. Some endeavors, beyond poor workers enrichment, would be not-for-profit. That is, profits made beyond a pre-determined return to the poor workers, would be re-invested in more such worker/community betterment hybrid businesses (preferably cooperatives).

    Equity investments in community businesses could not be sold to others, but could be bought back at par value (the price of the share of the stock when it was invested). Such would be discouraged, and disallowed if it was a qualified low-income/low wealth equity investor who may or may not (what do you all think?) if they were allowed to collect (limited) personal dividends.

    Equity Union branches in low income/low wealth neighborhoods would be allowed to set up a (501)(c)(3) to receive donations to an equity fund for their neighborhoods, to be kept in a local Community Development Credit Union and the funds allocated (equity grants) by a Board committed to community betterment and the likely success of the endeavor(s).

    A Local Discussion Regarding Peoples' Equity

    Hi Mike,

    (rest of letter deleted)

    [By the way, I presently have more income than is best for my
    lifestyle, and now have recently gotten my hands on some extra money.
    I'm not used to this situation. Do you have any suggestions about
    where to 'invest' for the greater good, keeping in mind that my main
    concerns remain first 'global heating', and then generally shorter
    paths to possible eutopias vs. possible extreme distopias?]


    Hi Dan,

    (rest of letter deleted)

    I, too, have some discretionary funds that I would like to put into trust
    for public service and altruistic endeavors. Perhaps, you and I (and others
    if we can find them) should investigate creating a local Peoples' Equity
    fund. My idea on that is to see if we can open a group trust account in a
    Credit Union, where each trustee would have an individual account, yet
    allocations to community betterment projects could be done collectively,
    with each individual signing off on the amount that they want to dedicate to
    the project.

    The idea would be that we would "invest" in community betterment projects
    with the care that we would expect to only get the par value of our
    "investment" back or we could choose to make individual and/or collective
    tax-deductible or maybe tax credit eligible contributions to "qualified"
    501(c)(3) community betterment organizations (CBOs)

    CBOs could be not-for-profit, non-profit or both.

    That's enough for now.

    What think?