1. Drawing on the materials in this section, a) compare and contrast the first and fourth "energy shocks", i.e., the 1973-74 quadrupling of oil prices and the jump in oil prices in 1990-91. What are the similarities and differences between these two events? In your discussion take into account the conditions leading up to the events, the motivations and actions of the major actors as well as the immediate consequences. b) In much contemporary economic analysis, such "shocks" are dealt with as "exogenous" or coming from outside the "normal" set of economic relations (which may be formulated neatly in a mathematical model). How reasonable does such an approach seem to you? Is there any sense in which these changes might be seen as endogenous (internal) to the economic system?
a)Compare: both played the role of providing price increases that cut real wages in the petroleum importing countries; both were interrelated with wars; both reflected the monetary needs of oil producing states for revenues to cope with internal problems; both involved the acquiescence/help of the U.S.; both were accompanied by recession. Contrast: the first occurred within an emerging crisis at the end of a long period of growth and rising money wages, the fourth came within an ongoing chronic crisis that saw real wages stagnant and falling; the first involved considerable unity within OPEC over the need for and desireability of increased prices, the fourth exploded within disunity and conflict as Iraq attacked Kuwait in part for pumping too much oil and lower prices; the first triggered the onset of the "energy crisis" while the fourth came after 20 years of it and Bush et al sought to use it to counterattack constraints on nuclear power and off-shore drilling, etc;
b) A variety of responses is possible, e.g., nothing is exogenous so the models are unreasonable, yes, there is a sense, namely that changes in the oil industry and pricing are shaped by a constellation of forces in both production and labor markets within the larger global factory or economic system. Oil prices adjusted upward in response to local pressures and were allowed by other power because they were under other pressures. etc.
2. The challenges to energy policies in the United States, as in many other areas of the world over the last 30 years, have involved both the rejection of many official policies and the attempt to push alternative approaches to defining and meeting society's energy needs. a) Drawing on the material in the packet and class discussions give some examples of this two-sided developments. b) What have been the outcomes of these conflicts? To what degree have the challenges actually changed the trajectory of energy policy in the U.S. and what impact have those changes (or lack of changes) had on U.S. international energy policies in recent years? c) Finally to what degree and in ways have you found the socio-political analysis of entrophy in "The Work/Energy Crisis & the Apocolypse" useful in understanding this history?
a) Some examples: opposition developed to nuclear power (dangers of radioactivity, meltdowns, unresolved problems of waste disposal, dangers of uranium mining, etc.), to coal burning (high-sulfur coal burning produces acid rain, mining destroys the land and the companies don't restore it --in both Eastern deep and Western strip mining), to energy inefficient architecture (high energy requirements for heating in winter and for cooling in summer), to inefficient energy systems (losses at each stage of energy production and transmittal --Commoner). Alternatives: various kinds of renewable energy systems (decentralized solar, wind, biomass, all the so-called "soft" energy paths), efficient solar architecture (thick walls to reduce energy requirements, use of trees, overhanging roofs to shade windows, etc) and simplification of energy sytems (warm your water on the roof with the sun, gather rain water instead of using pumps, burn fuel directly to heat instead of using electricity, industrial co-generation and recycling of energy, etc).
b) Outcomes: on the one hand, despite the vagaries of federal government policy (e.g. support for alternative energy development under Carter, lack of support under Reagan/Bush) a variety of new energy sources (e.g., wind power) have become economically competitive at the commercial level, also changes in industrial practices in reaction to high energy prices, building codes and local government policies have encouraged increased efficiency of both buildings (e.g., home insulation standards) and appliances (e.g., hot water heaters) such that energy demand has not grown as quickly as it might otherwise have grown. This has been especially true in Japan, not quite as much in Europe, least in the US but still real gains have been made. On the other hand, other than the death of the nuclear power industry these changes have not fundamentally changed the pattern of energy generation and use in the US and in other countries. Therefore, the same kinds of dramatic conflicts around energy that we saw in the 1970s (OPEC, 2 oil shocks) continued in the 1980s (3rd oil shock, Bush to Gulf, bombing of Libya) and the 1990s (Gulf War) and continuing conflicts over various related ecological issues such as waste disposal, ocean pollution, global warming etc. Furthermore, if we take the Midnight Notes argument seriously, that the most fundamental "energy" problem, is the ability of capital to convert human energy into work, the recent I.G.Metall strike in Germany --for the reduction of the working week-- plus such phenonmena as the continuing problems with productivity growth and crises in all kinds of social institutions, suggest that THAT problem has not yet been resolved. The current policies of the Contract with America can be seen as aimed, in part, at those programs and social policies which have made the resistance to work easier, and so on.
Part II: The International Debt Crisis (30%)
3. In The New York Times (April 26, 1992) a critic of the IMF described it in the following manner: "The I.M.F. in many ways is like a medieval doctor where no matter what the ailment, you apply leeches and bleed the patient. My experience is they are very successful in steering countries' resources toward paying debts to commercial banks, but they are disastrous in terms of the long-term economic health of these countries." This same metaphor of the IMF-as-doctor was used in one of the Mexican cartoons in your packet -the one that shows a skeletal dying man in a hospital bed. Beside the bed are several bottles labeled IMF with a skull and crossbones and the commentary is: Doctor: "It's going well, increase the dosage!", Nurse: Yes Doctor". a) Explain the logic behind the metaphor in both commentaries on the IMF's role in the debt crisis and some reasons why the IMF-as-doctor is being characterized as incompetent and life-destroying rather than life-saving. b) Imagine that you are Michel Camdessus, head of the IMF, and asked to respond to such criticism. Justify the IMF's diagnosis and treatment. c) Finally, take the "patient's" point of view and comment on Camdessus' response.
a) logic of the metaphor: the countries are "sick" because their economies are not functioning properly, the symptoms are the budget deficits, balance of trade and payments deficit, high inflation and so on. The IMF is the doctor (called in by the patient who needs help) who diagnoses the illiness (over consumption and not enough investment) and perscribes cures (austerity--reduced consumption and more investment) . The countries have to accept the cure and be healed so the symptoms go away. The IMF-as-doctor is being portrayed negatively because it is widely judged to have misdiagnosed the illness and misperscribed the cure. The real illness, some say, is an extreme inequality in income and wealth in which the rich rule in their own interests at the expense of the poor and at the expense of investment which would create jobs and internal markets. The failure of the IMF to learn from the hardship it has imposed is another sign of incompetence to many. It imposes austerity, starves people, accentuates physical illness (cholera) and fails to stimulate growth, but just calls for more of the same each time.br>
b) Camdessus' response (fictional but lifelike): we are only calling on the countries which come to us for help to cure themselves. To do that they must establish the foundations necessary for investment and growth. They must stop trying to consume so much (which really doesn't work anywhay because inflation outstrips the increase in nominal wages), stop channeling resources through the state and privatize instead --where the rules of the game will be imposed more rigorously by the market-- thus austerity is painful but necessary. Besides where our adjustment programs have been implemented we see an improvement in balance of payments accounts (fewer imports and more exports), in government budgetary deficits (they go down) and in inflation (which is reduced); thus the symptoms are being relieved by the application of our policies. Perhaps we need a little "safety net" as well to catch those hit hardest by this necessary adjustment? We are now beginning to suggest such things to our patients.
c) Patient's point of view: depends on who the patient is, if it's the government/business-elite then the response is often "too much, too fast" you want corrections to be imposed faster than it is possible to do politically, if we move at the rate you want we'll only produce explosions and riots and lose the whole bag of wax! We agree as to the general direction but we got into this current mess because of real political pressures not out of whim. If it's the poor, then the IMF is likely to be denounced for killing people in order to save them, of imposing austerity that hurts those least responsible for the problems, instead of squeezing the generals and businesses that did all the borrowing to start with, the poor and the waged are being squeezed to pay back illegitamate debt! This is the patient whichis being 'cured' to death by the IMF!!
4. Peter Peterson has argued that the debt crisis has come to the United States -in the sense that the U.S. is now the worlds largest debtor, that the debt will, at some point or over time, have to be repaid and that the repayment will be costly. At the heart of his analysis is his perception of a "consumption bacchanalia", or a "torrid consumption boom" in the U.S. -an expression of a "national preference for consumption over investment". a) Explain his analysis of how this "bacchanalia" has translated into economic crisis and a rapid build-up of debt and his proposed solution. Responding to Peterson's policy recommendation, and to others in a similar vein, Jeff Faux, writing in World Policy Journal, (in an article you were not asked to read but whose arguments Steve went over in class) has offered a critique of both the analysis and the prescriptions. b) Explain how Faux differs with Peterson over the sources of the American debt and the proper policy to be followed in dealing with it. c) Finally, use the analysis that I have set out in class and in the article on "Closing the IMF" to critique both of these authors from a third, more radical perspective.
a) Overconsumption is flip side of underinvestment which has produced a critical slowdown in productivity growth in the private sector. Making federal benefits programs (e.g., health) into entitlements (which then grew and grew) and abandoning fixed exchange rates such that it became too easy to borrow to finance increased spending set the stage for rapid build up of US debt. Thus increased consumption has been financed by growing "river of foreign debt." Therefore, the only way to deal with this situation is to slash consumption (e.g., by $1650 each year for the average worker, mainly via consumption taxes) and pay off the debt, i.e., austerity at home, increased exports to earn the foreign exchange necessary to repay the debt. Part of what we squeeze out of consumption must go to pay the debt, the other part must go to investment (encouraged by cuts in corporate taxes), both infrastructural investment and commodity producing investment. Only this can improve the growth of productivity necessary to raise standards of living.
b)Faux emphasizes the wasted resources that have flowed through the hands of business and the rich rather than the diversion of income into consumption by everyone. Reaganomics encouraged wasteful use of money, e.g., speculation and merges and takeovers and military waste rather than real investment. Thus he blames underproduction due to underinvestment rather than overconsumption. Faux's alternative is to "grow out of debt" rather than seek a path through austerity. This for both the U.S. and the world --the world must grow to buy the exports the US must sell inorder to earn what is necessary to pay off the debt, U.S. incomes must rise to absorb the output of growing productivity to be had from greater investment. Both Peterson and Faux want increased investment its just that Faux takes a Keynesian approach that emphasizes the necessity of a growth in final demand in order to induce investment and output. They also differ in that Faux argues for increased government intervention to stimulate industrial investment. He wants an "industrial policy" which has been common in Germany and Japan but anathama to Reaganonomists. Thus he would force capitalists to be capitalists and tax the very rich while plowing the money into investment. In short he wants a "new social contract", a new deal between labor and business which would spur both to greater output and growth within the constraints of a wage/profit/productivity contraint which would force the diversion of income into capital investment.
c) From Cleaver's perspective both Peterson and Faux are trying to restore capitalist growth and development. Peterson may be a conservative --putting forth what is essentially a supply-side argument-- and Faux may be a liberal --arguing for a kind of Keynesian deal-- but both are interested in re-establishing the conditions of growth. They merely disagree over methods: Peterson wants to smash standards of living to improve profits; Faux wants a new social contract with rising wages and growth. Thus Peterson echos the arguments of the IMF while Faux sounds like the Latin American grow-out-of-debt proponents. Against both such positions Cleaver has argued for using the crisis to move in other directions, not capitalist or socialist accumulation and development, but self-determined reorganization of society along other lines. In his article he calls not only for rejecting the reestablishment of the conditions of growth but also for listening to grassroots movements which have been rejecting development in favor of other kinds of social projects, e.g., community renewal, the defense of cultural integrity, etc. He does not, however, go into this very deeply so it is hard to know much about these alternatives on the basis of that one article.
Part III: Immigration Crises (30%)
5. Discuss the phenomena of immigration as well as that of a "crisis" in immigration from the points of view of: a) the immigrants (or migrants, or refugees), b) the policy makers (governmental and business) in the countries to which they are going and who sometimes encourage, sometimes discourage their movement, c) the other workers in the countries to which they go, and d) the other workers/people in the countries from which they come. In each case, explain some of the motives of these various sets of people, the gains or loses they experience from immigration and how they might define "crisis" differently from others.
a) immigration: the immigrants are either fleeing intolerable conditions, or moving toward better ones, or simply moving across a differential to improve their lives; frequently they are "birds of passage" who move to earn money to improve their lives at home, immigration is something they do as active social subjects engaged in the struggle for better lives.Where successful they gain income, experience and improved control over their own lives. The loses they experience may come from failure, form encarceration if caught in illegal crossings, even their lives may be forfeit in some cases -abandonment by coyotes in rail cars and trucks. The crisis of immigration appears to them in the form of state repression against their autonomous movement, in extreme cases as the crisis which precipitates the movement itself, immigration as crisis. But in the sense we are talking about here, it is the sudden harshening of conditions of immigration imposed by the state.
b) for policy makers the immigrant flow must be managed as part of labor force management, the flow of workers helps business manage the local labor force, undercutting supply bottlenecks and wage increases; at the same time the export of such immigrants provides a way of exporting unemployment as well as a scapegoat to blame for falling wages. Gains for business: higher profits, lower wages, lower costs more generally. For the state: less expenditure per worker when illegals avoid asking for social services. Losses to both business and government when the immigrants get out of control, i.e., uncontrolable movment delegitimizes borders and the state management. The crisis of immigration appears when the flow begins to be unmanageable, when workers move when their movement is unwanted or refuse to move when their movement is desired. In the late 1960s the crisis appears to have derived from the immigrant workers developing ties to local workers in such a way that the division between foreign and domestic labor was beginning to be overcome, thus undercutting the usefulness of the immigrant labor force in the division and control of the labor force as a whole.
c) for local workers immigration can be family reunification or it can be unionbusting importation of scabs, depending upon circumstances, as the case of Mexican workers and the Mexican American community shows. There may be opposition, as in the early UFW reaction in the 1960s, or there may be cooperation as in the Brown Beret attitudes or Maricopa County strike in 1977 where activists embraced "Aztlan" as a borderless whole and fought divisions between immigrant workers and local workers. Influx of immigrants may undercut wages or it may provide allies in the struggle against business and the state, depending upon circumstances. Crisis appears mostly where immigrants are used as scabs.
d) for those living in the source communities, immigration may be a safety value whereby "excess" population may move away, or it may be a vehicle for local struggle and the improvement of standards of living, as in cases where the immigrants repatriate their wages raising income and resources for local needs; moreover the return of such "birds of passage" brings experience and resources back into the community which can strengthen it as well as tie it to others elsewhere. Crisis here may involve the dissappearance of immigration opportunities or reductions of income back-flows to the community when foreign governments crack down on immmigration.
6. In Rodolfo Acuna's account of Mexicano immigration to the United States and of US immigration policy toward such immigrants those policies are interpreted largely in terms of the fluctuating requirements of the US labor market (and thus of the US economy more generally). Similar analyses have been developed for Western Europe and elsewhere. Using the other materials we have examined, critique this interpretation from the point of view of those who see the immigrants themselves as more determining historical forces.
The basic critique of Acuna's account is the one leveled by Moulier et al at those Europeans who claimed that the crackdown on immigrants in Europe in 1974 came in response to the slump of 1974-75 and rising unemployment. The critique argues that the crackdown came before the rise in unemployment and had another source: the self-activity of the immigrants who were becoming unmanageable. In the case of Mexicano's in the US the pamphlet by Flores "A Call to Action" made this argument and Cleaver made it in class. While exporting unemployment via exporting/deporting immigrants is undoubtedly a real phenomenon, there seems to be evidence that in many of the cases of stepped up repression the real motivation is the regaining of control over both Mexicano immigrants and the Mexicano/Chicano communities within which they live and work. Carter's crackdown came after the strikes by undocumented workers in Maricopa County, Arizona as the French crackdown came after the French workers at Renault supported the immigrant workers in a strike in 1968. Thus the notion of "fluctuating requirements of US labor markets" would need to be interpretted broadly in a qualitative as well as quantitative sense, namely the issue of the texture of control, or the lack of it, is important in evaluating policy changes. Immigrants must be seen as active agents who are "managed" rather than controlled absolutely. We must be prepared to observe them slipping or subverting that control in their own interests. Thus the evolution of policies occurrs as some fail and others must be developed in their place.
Part III: BusinessWeek Articles & Movies (10%)
7. Open question: Assuming you read something among all the BusinessWeek articles assigned, discuss it in relationship to the materials and analyses we have covered in class. Then tell me whether a) you read the assigned articles regularly and b) doing so was a useful complement to the older materials covered in the packets.
Although it doesn't say so explicitly (shame on me) the article or articles cited and discussed should be tied into to the three areas treated in this section, e.g., energy, debt and immigration.
8. Blacks Britannica: a) In what ways does the film Blacks Britannica illustrate and illuminate the arguments in the essay "The Impossible Class"? b) What did you learn from the film that you did not learn from reading the essay? c) What did you learn from the essay that was not brought out in the film?
a) the film "Blacks Brittanica" -which was refered to in the article- illustrates the role of the police in the repression of black communities, especially young blacks as well as the systematic destruction of black communities (as in the urban renewal projects and the regouping of people in high-rise, easy to control appartment complexes. It also illustrated the sense of community construction as in a bookstore/community center organized around radical literature and cultural opposition and street festivals opposed by the police. It also gave footage of another phenomenon mentioned by the article, the connection between official police/state repression and unofficial fascist anti-immigrant racism. There are dramatic scenes of young skin heads chanting "out with the blacks" "we want our country back". etc.
b) lots of answers possible,
c) same here, although the main thing would probably be the analysis of the resistance to the police as something that didn't fit into the usual Marxist understanding of working class struggle. The film showed the struggle with the police but mostly showed horror stories of repression without much insight into the new orientation of young workers toward self-activity instead of work, etc.