For my two-cents worth, the Dems should drop this one (the Wall Street bailout bill) — or better, load it up with progressive, main street provisions (like taxpayers taking capital stock and warrants in these companies) that may never pass but make sense. Then take the bill to the floor.

It’s very unpopular among the average guy on the street, whether Dem, GOP or independent.

It’s a Bush/Gramm/Reagan deregulation problem. Let the so-called “free marketers” solve it. That $700 Billion could provide health insurance for the uninsured for four years according to one source.

I believe the Paulson “push” on this is a ruse. The Dems should show Bush some backbone. He won’t even comply with constitutional requests for testimony from Rove and others. Why in the world would we go over backward to help bail out him and his cronies?

The market will ebb and flow but these guys are exaggerating the pain the average guy will feel. We have all seen our meager 401K’s go up and down before.

Sincerely,
Edward S. Savela
Vestavia Hills, Alabama

Palin Bump Shrinks, Obama Back Out Front

Essay for Locust Fork News-Journal, by Robert G. Dyck, Ph.D.
bobdyck@vt.edu

September 26, 2008

1. Systems Science

First comes the good news about systems science, adding to what I said about the crucial importance of the socio-political-cultural context of capitalism and socialism in these pages, on 09-23-08. Luckily for us, there is quite a lot of “new science” that helps us understand what goes on in evolving complex systems like ecosystems, including social systems with economic components. This new science goes way beyond the limitations of Newtonian, mechanistic science (the “clockwork universe”), because it is not based on simple cause-and-effect relationships, but on whole system effects that emerge, sometimes in unexpected “chaotic” ways, as a consequence of flows of energy (including information and money) through a system. We also know that systems evolve in order to accommodate and maximize their energy flows (including information and money): they have to become ever-more complex to facilitate those flows. Human systems adapt and become more complex through a process of evolutionary adaptive learning, which is, ultimately, the key to our survival on the planet. We also know, from evolutionary systems findings, that the collaborative sub-systems are a lot more important than competitive sub-systems to the overall evolutionary process.

We now also know that one of the best ways to facilitate the flow of energy (including information and money) through a system is to utilize fractal geometries. Nature uses fractals all the time to facilitate the flow of energy between different parts of a system, especially when those parts have different scale (size) relationships. In the human body, for example, we have both arterials and capillaries. Both are necessary to distribute energy to both the big muscles and organs, and also to the smaller ones. The system as a whole cannot work properly unless big and small are coordinated, systemically, in accordance with applicable power laws. We won’t go into the mathematics of power laws here; suffice it to say that the fractal principle of self-similarity, in both small and large structures, is essential for the energy transfer process.

Fractally organized structures necessarily do have both large, medium, and small components, in numbers proportionate to the power laws that generate them. In urban terms, we have to have traffic arterials, but if there are too many of them, the possibility of intimate pedestrian-scale social interaction will be destroyed. In economic terms, very large arterial money flows controlled by just a few people on Wall Street will destroy the adequacy of money flow through the hands of people on thousands of Main Streets. For this reason, we should (but generally don’t) organize money flows in accordance with fractal principles to assure the viability and long-term sustainability of all parts of the system. If the smaller parts of the system do not get their share, the whole system will collapse.

Notice that we have just been talking about hierarchies and oligarchies. Some hierarchical organization is necessary for the survival of a social system. But if hierarchy becomes oligarchy, the system as a whole is imperiled by the inadequacy of money (and power) that flows through the parts of the system controlled by, but not really supported by the oligarchy, rather than by the people who should be controlling their own destinies, but are not able to do so, because of subversion of their support system by the oligarchy.

A final paragraph is needed to explain the so-called “S” curve, which describes the rise and fall of all types of systems, over time. Usually there is an initial slow “take-off” period, followed by a period in which energy flow through the system is maximal and the system grows much faster. In turn, this is typically followed by a “leveling-off” period in which the system achieves very little growth, followed finally by its decline or even collapse. But sometimes there is a revival of system innovation at the point of decline, and a new “S” curve can begin. Note that the periods of systemic growth are always accompanied by increasing levels of systemic complexity. In the case of human socioeconomic systems, this corresponds to an increase in the level of innovative productivity, based on adaptive learning, demonstrating that more and more citizens are contributing to support of the system’s continuing viability (sustainability).

Note: The source reference for this summary discussion is Goerner, Dyck, and Lagerroos, The New Science of Sustainability: Building a Foundation for Great Change (2008). The book is distributed by New Society Publishers (based in British Columbia, Canada), and is available for purchase at Little Professor Books & Café, 2717 South Main, Homewood, AL 35209, phone 205-870-7461. Dr. Dyck will be present at the Little Professor for conversation and to autograph book copies purchased, on Friday, Oct. 24, 2008, from noon until 1 pm.

2. The Current Economic Crisis

The current national financial services and economic crisis was entirely predictable, based on the theory of complex systems presented above, because of the interlocking oligarchical control of the financial market by Wall Street, the U.S. Treasury, and the Federal Reserve Bank. As pointed out by Kevin Phillips in his recent book, Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism (New York: The Penguin Group, 2008), the financial services sector now controls 20 percent of US GDP, principally because of de-regulation and favor-seeking support (for campaign financing) by the executive and legislative branches of the US government, while the manufacturing sector has dropped by half in the last 30 years to only to 12 or 13 percent of GDP. These proportions are just the reverse of what they should be in a healthy, productive, sustainable economy.

Further, as argued in William Greider’s Secrets of the Temple: How the Federal Reserve Runs the Country (New York: Simon & Schuster, 1987), the Fed has always been a force counter to truly democratic financial policy, equitable distribution of capital earnings, and equitable access to capital, since its establishment in 1913. As a quasi-public institution, owned and operated in reality by the private banking sector, it has never supported the interests of the citizenry at large. Its overriding focus, control of growth and inflation by curtailing the money supply and maintaining high interest rates, has worked against any significant rise in real wages during the last 30 years, with the result that US income and wealth distribution has become radically skewed to the wealthiest population percentiles, while the middle class population has gone into steep decline, and the poverty percentile has steadily increased.

The prevailing pattern of “trickle-down economics, ”controlled by oligarchies, obviously is not working for the majority of Americans. In the run-up to the current depression, millions of working people have been stripped of their jobs and the ownership of their homes and other economic resources, while the financial services sector has reaped enormous profits and huge increases in salaries and wealth for its CEOs and its financial management class. Small wonder that there is enormous, widespread bi-partisan unhappiness with Treasury Secretary Henry Paulson’s plan for a $700 billion to $1 trillion bailout of the big financial corporations, at the expense of the same American taxpayers who have already borne the burden of past financial policies that did not work for them.

3. The Need for Fractal Socio-Political-Economic Organization

The key challenge before us is to try to engage our society in the process of building a new “S” curve of sustainable socio-political-economic development, in which the culture and the politics are more democratic and the economic outcomes more equitable. This process would reduce socio-economic injustices to an absolute minimum, while supporting possibilities for personal realization, contributions to community and the society at large, universal economic security, universal educational opportunity, and universal health maintenance, to the maximum sustainable extent. The notion, developed below, that we have to change the prevailing cultural “stories” that inform our societal processes, comes from David Korten’s The Great Turning: From Empire to Earth Community (Bloomfield, CT: Kumarian Press, and San Francisco: Berrett-Koehler Publishers, 2006), but I have altered the content of his stories to support my fractal-based scenarios for change.

Our society has to be rebuilt from the bottom-up, rather than from the top down, in order to facilitate a more mutually beneficial, fractally organized societal culture, with substantially increased levels of collaborative participation by citizens of all levels of society. This will not be an easy or quick process. The old story that oligarchical culture is not only the best, but the only way to organize society, has to be exposed for the myth that it is. However , it is the only story that most citizens have ever heard. Thus, the new story has to be understood and internalized, through a process of community-based discussion, consciousness raising, and experimentation. The long, difficult, sometimes tedious, sometimes exciting and rewarding process of community organization has to be its fundamental basis. The goal is the development of a society with minimal need for hierarchical direction, but with maximal opportunities for individual self-realization, community-based ownership and support, and self-management.

This community development process will, in turn, lead to consideration of, and experimentation with, the political options available. Again, the old story that politics is mostly about personal ambition and self-aggrandizement has to be exposed for the myth that it is. Most of us have become so jaded and cynical about the “political process” that we do not recognize that there is another version of the story that we need to hear and internalize: that social organization through politics is necessary to achieve a more collaborative, mutually supportive, environmentally conservative, personally productive, and secure economy, based in the local community but interlinked with other communities and other levels of organization, for mutual benefit and support.

Finally, although this reverses the usual order of things, the notions that economics comes before culture and politics, and that our economic future depends on centralized oligarchical control of wealth and national security, have to be exposed as the twin myths that they are. Social and political organization are the only ways to lay the groundwork for the necessary paradigm shift away from the military-industrial empire that currently threatens all of our social, economic, and political institutions, including the US constitution and all three branches of the US government. Putting this another way, the economy needs to spring from its cultural and political context which, based on the insights of the ancient Greeks, is really the only basis for the good and productive life, rather than vice-versa. Only with this sea change of perspective can any economy become fully productive, socially and morally just, mutually supportive, and sustainable in the long term. Note that this means that all constituent components of the system will have to be sustainable, including its communities and cities, lest the whole system fail. Note also that sustainability puts a premium on collaboration, and that the pseudo-science of social Darwinism (“survival of the fittest”) is not supported either by the theory or the practice of new science.

Wresting democratic control of corporate culture from entrenched oligarchies will be difficult, but not impossible, with the right cultural and political support, according to William Greider. His book, The Soul of Capitalism: Opening Paths to a Moral Economy (New York: Simon and Schuster, 2003), frankly acknowledges that capitalism has no “soul,” consistent with the notion that “economic justice” is an oxymoron, according to the prevailing practice of neo-liberal economics. But Greider believes that it is both necessary and feasible to accomplish radical, systematic reform of capitalism, based on positive initiatives being taken by conservative business managers, small-town civic leaders, social agitators, ecologists, labor leaders, farmers, pension fund managers, and socially concerned stock holders. Many workers are becoming owners. Pension funds are withdrawing their capital from polluters. Small companies are learning to be profitable while caring for their employees and the environment. Governments are reforming their public works programs. Greider believes that the remedy for capitalistic/corporate malfeasance will come not from government, or the politics of the past, but from a new realignment of power that is already underway on many fronts.

Joel Kovel’s impassioned polemic, The Enemy of Nature: The End of Capitalism or the End of the World? (London, New York: Zed Books, 2002, 2007), is designed to save the planet from ecological catastrophe by subverting the “sinister” intentions and impacts of capital. This approach broadens the scope of traditional socialism, but its implementation leaves many unanswered questions. Capital, in and of itself, must be considered a “neutral” tool for production and development, and a force for good or evil depending upon the intentions and impacts promulgated by those who control its use. Not incidentally, it is important to point out that there are billions of people in small land-holding and tenant farming households around the world, many of them women, who desperately need small amounts of capital at reasonable rates. In the past, the capitalistic banking system has generally preferred not to make small loans to low income borrowers, but the experience of the Grameen Bank (pioneered by Muhammad Yunus in Bangladesh), is that such loans are perfectly feasible, with as good or better rates of payback compared to other loans. Most importantly, they have been extremely productive for the circles of borrowers who are jointly responsible for the loan repayments.

4. Afterword

The key to building a new society lies in generating a much more inclusive and widespread culture of democracy. For new inspiration, we may turn to the idealism embodied in powerful pamphlets written by Thomas Paine more than two hundred years ago. Paine, more than anyone else, turned Americans in revolutionary times into democratic radicals, articulating a unique American identity charged with exceptional purpose and promise. His salient contribution is delineated by Harvey Kaye in Thomas Paine and the Promise of America (New York: Hill & Wang, a Division of Farrar, Straus and Giroux, 2005).

The most recent manifestation of Paine’s ideals occurred during the Civil Rights movement of the 50s and 60s, constituting a second American revolution. Martin Luther King pushed Lyndon B. Johnson into securing passage of the 1964 Civil Rights Act and the 1965 Voting Rights Act. Many other reforms and new programs also came during this period: LBJ’s programs included the War on Poverty, the Great Society, Medicare, Medicaid, Headstart, federal aid to education, job training, consumer and environmental protection, cabinet level departments for housing and transportation, national endowment for arts and humanities, freedom of information laws, and the Immigration Act of 1965. But the years 1964-65 were the high point. LBJ then committed the nation to imperial war in Vietnam (money that could otherwise have been invested in his War on Poverty), racial injustice and riots proliferated, and movements arose for other minority rights and hedonistic counter-culture objectives. The Left splintered along lines of class, race, and gender, and Paine’s motivating ideals were lost in the process.

On April 4, 1967, Martin Luther King, Jr., said, “We as a nation must undergo a radical revolution of values. We must rapidly begin the shift from a thing-oriented society to a person-oriented society. When machines and computers, profit motives and property rights, are considered more important than people, the giant triplets of racism, extreme materialism, and militarism are incapable of being conquered.” When MLK was assassinated in Memphis, in 1968, he was fighting for the right of Memphis sanitation workers to organize unions, for economic equality. He recognized that unions had paved the way for the Civil Rights movement and said that unions were the best anti-poverty program available to low-income people. He wanted his Poor People’s Campaign to go to Washington to demand that money allocated for the Vietnam War be allocated instead to abolish poverty. He saw labor rights, civil rights, and human rights as indivisible. Today, King’s call “to planetize our movement for social justice” remains a crucial priority.