The Great Regression

The Great Regression
By John Ripton

http://www.stateofnature.org/theGreatRegression.html
"As happens often throughout history, those who benefit from the status quo cling to its ideologies and institutions even as fundamental ideas and established systems become increasingly anachronistic, almost impervious to reform. No vision is developed, no program of broad policy changes considered, no progress made."

Historical Overview

As the Great Recession persists, the American body politic slides into a Great Regression. Fearful of economic and political breakdown and skating on thin ideological ice, the governing parties offer no broad vision to the nation or the world. While conservatives often embrace naked reactionary policies, liberals just as often compromise fading idealism, easily chastised as "job killers" and profligate spenders. The body politic retreats into a narrow and anachronistic ideology. Classic liberal economics - "open markets," "free trade," "self-interest" - can no longer mask its tendency toward wealth concentration and ecological disaster.

Radical reform, however, too often falls on deaf ears of those deeply committed to the status quo. Support for status quo, moreover, is broadly based in the United States, much larger than critics of America's direction might think. While the vast majority of Americans are experiencing economic losses and profound anxiety, those same Americans are embedded in the ideology and material accomplishments of liberal economics, or capitalism. That era is now closing. Nevertheless, the challenges of daily life - food on the table, health care, rent, mortgage payment, education expenses, retirement - preoccupy most Americans. Tens of millions in poverty struggle to obtain health care and other basic needs. Many millions more, even those of the vast "middle class," face declining incomes, escalating health care expenses, weakening pension benefits, and loss of net worth. In the absence of effective political leadership and convincing alternatives, such immediate concerns remain paramount for most Americans, understandably pushing to the background any consideration of fundamental political and economic change. Too much uncertainty already exists.

Meanwhile, familiar prescriptions of the last three decades such as balancing budgets, cutting social spending, reducing taxes and controlling debt receive support from many who are forced to cut their own spending as equity, jobs and wages weaken. Presently, pragmatic technical responses by government have limited impact. Decades of distorted, often deceptive, rhetoric in Washington and daily barrages of corporate propaganda pushing consumption erode Americans' political acumen and will. Without popular support, however, an alternative national agenda cannot be set and the overdue reforms facilitating greater economic equity, lowering overall consumption and adopting greener technologies await a time of even worsening conditions.

Conventional economic measures, circumscribed by the very economic principles and practices driving the global economy into crisis in the first place, are predictably inadequate. Many liberal economic "solutions" encourage an escalating concentration of wealth, contributing to the synergy of dramatic income inequality and the broad political influence that comes with wealth. Consequently public policy favorable to the corporate class reinforces this dynamic. When liberal economic policies, perhaps even inadvertently, enabled corporations to undermine the entire economic system, enormous taxpayer wealth was transferred from the public treasury to the financial industry. Once recapitalized, however, the financial industry sat on its capital, using it for acquisitions but making little of it available to ordinary citizens.

The weaknesses of the national and global economies are systemic and can only be productively analyzed and effectively addressed from a position outside of the present global system. Measures based on traditional assumptions fall short of identifying and addressing systemic fault lines threatening to shatter the global economy. Liberal economic proposals, tepid and dramatic ones alike, often become so anemic under the pressure of corporate lobbies that the resulting measures typically falter when implemented. Thus the threshold of economic reconfiguring and retooling needed to effectively mitigate and ultimately manage the transition to a sustainable economy is not attained. Economic stagnation continues as class divisions widen, sowing distrust and prolonging economic recovery. Climate change and other ecological concerns, though critical to salutary economic planning for the future, are lost in the confusion.

Great Regressions are not new phenomena. They occur when one regime of political economy is evolving into its successor regime. New technologies and new explanations of the physical and social universe often usher in the transition. This is the second Great Regression in the last three centuries. The first occurred at the time of the Industrial Revolution in the late 18th century. At that time France was the epicenter of historical change. France was also deeply in debt then and reeling from financial schemes as well, yet as incapable of dramatic reform as the United States has been to this point. Among the French, the struggle to overcome monarchical absolutism and ecclesiastical influence and to establish greater individual freedom and prosperity was the most pronounced in the emerging western world. In 1789, when the French Revolution began, the United States was already part way to establishing a modern republic and a liberal economy but was incapable of establishing a truly democratic republic; American slavery persisted for nearly another century and women didn't gain the franchise until the 20th century. In France, as well, women and religious minorities did not receive full civil or human rights, though officially sanctioned slavery was abolished and the poorest classes were directly represented in the Estates General.

In the tumultuous period of the French Revolution, new political and economic thinking evolved and radically new policies were established. Highly productive, capitalist societies emerged, dominating the growing global manufacturing and trade. New republican states supported, and often promoted, private commercial and industrial initiatives. These states helped establish political and juridical climates as well as economic infrastructures that promised vigorous economic growth. In turn, capitalists exploited, usually very aggressively, human labor and the natural environment. For two hundred years, technological and organizational innovations and capital concentration facilitated the rise of corporations as well as states. Eventually, transnational corporations became so powerful that they exercised dominant influence in state policy making. At the same time, the heavily militarized industrial states guaranteed prosperity in the West. These states had constructed colonial empires, exploiting vast expanses of territory and peoples. However, most former colonial states, vestiges of European empires, remained relatively undeveloped long after the disintegration of colonial empires. Some states in the present international economy are even less fortunate, still desperately poor. The United States, for its part, had relentlessly forged a continental nation integrating enormous natural wealth and immigrant labor into its corporate development. By the turn of the twentieth century, American corporations became the most dynamic and aggressive political agents in the shaping the nation's public policy and, after WWII, vigorously engineering an expanding global economy.

Industrial revolutions also enabled the West to outpace much of the growing domestic economic inequalities in its state systems. Workers struggled for a share of the growing profits, for better lives and opportunities. Middle class reformers, labor strikes, popular demonstrations and economic depressions compelled states to address inequality, inequities and worker exploitation, thereby blunting the tendencies toward wealth concentration. Substantial consuming societies emerged in these states and vast middle classes enjoyed rising prosperity. In the West, rich states achieved relative domestic stability through several decades of the latter twentieth century, expanding civil liberties, educational opportunities, and other social guarantees.

In retrospect, the conclusion of the Southeast Asian War and rising oil prices in the 1970s signaled that "welfare state" policies and rising wages in the United States could not be sustained in the more volatile, less predictable economic climate. Internationally, the oil crisis contributed to a massive debt crisis in the less developed world. An enormous impoverished class that could not negotiate in the global market was now being structured out of that market. International banks and the International Monetary Fund imposed strict austerity plans on indebted nations. Whatever meager social assistance existed in poorer countries was cut. Social investment in water, electricity and communications, for example, was privatized, often sold to foreign as well as wealthy domestic concerns. Tax and wage advantages were offered to investors in order to entice private corporate relocation to states less developed and heavily indebted. Of course, in the absence of government intervention and assistance, even the wages and benefits won in the developed states were gradually undermined by runaway shops and outsourcing. Domestic poverty, its reduction once a legislative priority in richer states, began to increase again, especially in the United States. Social programs, including educational assistance and social welfare, were cut back. At the same time, transnational corporations forced reductions in wages and benefits as they threatened to abandon workers and communities to invest abroad.

By the 1980s, reinvigorated conservative politics and liberal economics coincided with the decline and eventual disintegration of the Soviet Union and its trading bloc. Liberals, even those to the political left, retreated. Peace agreements concluded nationalist struggles in the poor states, struggles that had engaged the East-West superpowers directly and indirectly. In the United States conservative governments pushed back the earlier gains of labor unions. Deregulation of business ensued. Free trade agreements facilitated relocation of industry from richer to poorer countries. At the same time, huge consuming classes in the developed countries benefitted from the availability of cheaper goods in the global market. Meanwhile, transnational corporations' economic power and political influence grew within the relatively small corporate class in each country, rich and poor. Fearing that inflation might dampen economic growth and consumption in the U.S., interest rates remained low. Combined with the "ownership society" pushed by George W. Bush in his first term as American president, low interest rates drove the real estate market boom. Corporate speculators - banks and investment houses - drained themselves of adequate capital to cover their investments and widely encouraged investment in American real estate through phony investment schemes.

Consequently, in recent decades at least, the global economic system has concentrated enormous wealth in the hands of relatively few in national and international corporate classes. Liberal economics (its adherents now called neoliberals) is an anachronism. Yet its unsustainable consumption of the planet's resources and its deleterious impact on the quality of life everywhere, continues to be the prevailing ideology. The United States, often with the cooperation of European states, has brooked no challenge to the "free market." Alternatives to the liberal market economy, no matter how promising, are systematically deprived of sorely needed capital, incapable of sustaining reforms; their resources drained in defense of their gains, they often wither away. Nevertheless, the economic system and its ideology, not the United States, are generating the current economic and political deterioration. The financial system's breakdown ignited the economic stagnation and political turmoil, but, ultimately, neither the financial industry nor the state can rescue the system without changes presently unacceptable to both.

After the people assumed power in France in 1789, the nation was soon thrust into a period of horrific violence, a short-lived however bloody reign of populist tyranny, the infamous 'reign of terror.' As in the English Civil War that preceded it by a century and a half, the French monarchy prolonged and worsened the transition to greater popular representation in government by resisting it at virtually every turn. It also failed to make the necessary reforms to liberalize the economy, maintaining strong centralized control over it and placing the burden of debt directly onto the shoulders of its poorer classes. The ideology of the ancien regime, the old system, held back the fundamental reforms needed to free the French people to form new social and economic relations to fit the changing historical conditions. As a result, fear and anguish mounted. Eventually growing poverty, food shortages and deep resentment turned Paris into a crucible of violence.
The United States and the global economy are on a similar course. Once again, a Great Regression holds back needed reforms. Governing classes in the West generally deny the deepening class divisions and growing resentment of ineffective public policies at home and abroad. Furthermore, the political class in these states has not adequately responded to the urgency of addressing climate change and regularly intrudes on democratic participation in governance. How the present course unfolds is naturally subject to prevailing historical conditions. Of critical significance, also, is the ability of nations to comprehend the nature of the crisis and to embark on a course of radical reforms, thus meliorating the most paralyzing social and ecological consequences of resource overconsumption, widespread environmental degradation, and social deprivation accompanied by nihilistic violence.

New national and global paradigms will eventually emerge, discovering more sustainable ways to live. In the meantime, though, the politics of the Great Regression stand in the way, prolonging the necessary reckoning and reform measures. The monarchy, some of the aristocracy, and the Catholic Church also stood in the way of reform in the last quarter of the 18th century. Today the power of wealth in the U.S. corporate class blocks significant progress. Without redressing the root causes of the global economy's systemic crises, as happened in France more than two centuries ago, the present Great Regression in the United States certainly only worsens conditions.

The Great Regression and the Political Economy of Wealth in the U.S.

The United States economy is by far the largest economy in the world. It is double the size of the second largest, China. It is also the largest consumer market in the world and the financial center of global commerce. It is an enormous economic engine that literally drives much of the global economy. Yet, for all its immeasurable resources and its vaunted resiliency, the nation's economic recovery continues to lag. While the average American's net worth falls, corporate profits reach their highest level in forty years. [1] The corporate class continues to prosper. Thus, as the concentration of wealth in the United States grows ever starker, this condition suggests that wealth concentration is a significant obstacle to recovery. The conservative politics of the Great Regression, however, distract Americans from such divisive issues.

During a Great Regression political leaders fixate on the symptoms of a foundering economic regime. National debt, unemployment, the housing market seem to be the main preoccupations today. Indicators reflecting the economic decline, though, are either ignored or spun to political advantage. A recent report on national unemployment data by the Bureau of Labor Statistics is an example of this behavior. The government reported that unemployment fell from 9 percent to 8.6 percent. Yet, according to Edward Luce in the Financial Times, this statistic does not include the 315,000 unemployed Americans who are no longer "actively seeking" work, a figure that overwhelms the reported 120,000 new jobs created. Considering the overall percentage of the population in the workforce was 62.7 percent in 2007 and is now 58.5 percent, Luce estimates that the actual unemployment rate is 11 percent. [2]

According to the Bureau of Labor Statistics' broadest measure of unemployment, however, real unemployment is much higher. This more exacting measure - the so-called U-6 statistic - includes those who are underemployed in one form or another, pushing the effective unemployment rate to 20 percent. [3] It is doubtful, though, that either major political party in the U.S. wishes to draw attention to such a stark reality. Acknowledging the full extent and impact of unemployment, underemployment and declining wages on untold millions of Americans would likely expose the limitations of proposals from both major political parties. Nevertheless the livelihoods, health and education of scores of millions in the United States are already deeply affected by a faltering economy.

In the beginning of 2011 a reported 8.5 million jobs had been lost since the economic recession began in 2007. [4] Annual wage growth also diminished 2 percent from May 2007 to May 2011. [5] Moreover, the jobs created today do not offer a promising future for those already in financially precarious positions. The fastest growing sectors of the economy are those in non-productive industries that do not require degrees, pay less and are more subject to part-time employment: registered nurses, home health workers, customer service representatives, food preparation and service employees, and personal and home care aids. Indeed, of the 27.3 million U.S. jobs created between 1990 and 2008 virtually all (98 percent) were in the service industry. [6] Their conditions aggravated by a paucity of good-paying jobs, the number of poor Americans jumped to 46.9 million in 2010 from 37.3 million in 2007. [7]

The emphasis on new housing construction is also shortsighted. In a period of declining wages and excess supply of houses this industry no longer has the same power as an indicator of economic recovery. Fewer people have the financial wherewithal to sustain new house purchases even if prices are lower. This appears to be reflected in the pace of new single-family home sales, dropping to a predicted 301,000 in 2011 from 323,000 in 2010. According to John Gittlesohn reporting in Bloomburg, the 2011 new housing sale figure is "the lowest in Commerce Department data going back to 1963." Gittlesohn also notes that 14 million homeowners are in serious financial trouble, either in foreclosure, delinquent on mortgage payments, or holding mortgages greater than the value of their homes. [8]
Most foreclosed homes, moreover, are "repossessed or sold as short sales" [9], i.e. at lower prices than regular home sales. Not surprisingly, house prices also fell in 2011 by 3.9 percent, declining in value to 2003 levels. [10] These figures indicate that the initial home equity loss of 35 percent sustained by Americans in the period 2009-2011 [11] continues to deepen. With too many houses for sale and too few buyers the housing crisis is not likely to subside for years. [12] Americans with less equity, moreover, have less purchasing power, and progressively less wherewithal to attend adequately to primary needs such as diet and health or education.

Already the effect of a slackening economy on public health is being noted. A study recently in American Journal of Public Health warned that the home mortgage crisis could have long-term health consequences. The study discovered high rates of depression and a higher likelihood of reducing purchases of food and medicines to meet mortgage payments among people over 50 years of age facing delinquent mortgage payments. The study's lead researcher also pointed to the worsening disparities in health across income groups, [13] suggesting that the economic decline is affecting the poorer classes more directly and profoundly than the wealthier classes. The ultimate costs of deteriorating health for millions of poorer Americans are likely to be enormous. This has even led some to call for writing off the mortgage debts, simply eliminating them to strengthen the economy. [14] Accordingly, home foreclosures are a far more critical indicator of the country's economic health than new housing starts.

The national debt, of course, is the greatest preoccupation of the political class in the Great Regression. It casts into deep shadows all other concerns for the welfare of the American public. While the $14.5 trillion national debt nearly equals the nation's $15 trillion Gross Domestic Product (GDP), the nation's debt is nevertheless the reddest herring of all. Public discussion of the huge debt finds politicians principally decrying social security. Some look to military cuts and a few questions the wisdom of wars in Iraq and Afghanistan. Others want to shrink the federal government altogether. Yet no vision is offered, no comprehensive plan that addresses the weaknesses in American economy that steered the U.S. and much of the world into this disastrous course. Meanwhile, the corporate class (top 1 percent) aggressively absorbs much of the wealth in the economy. Yet very little of public discourse includes serious consideration of recent history.

A brief profile of wealth distribution in the United State provides startling evidence of who benefits most from public policies and practices. It also suggests a partial but important explanation for conservative resistance to any new taxes, especially on the wealthiest Americans. In 2007, the top 20 percent of households owned 85 percent of the nation's private wealth, leaving just 15 percent for the lowest 80 percent. At the wealthiest level the concentration of wealth is even more striking. The top 1 percent owned 34.6 percent of all private wealth and 42.7 percent of financial wealth including 38.3 percent of privately held stock, 60 percent of financial securities and 62.4 percent of business equity. A class comparison of private net worth, however, is even more compelling. The combined net worth of the 400 wealthiest Americans in 2007, as measured by Forbes magazine, was $1.5 trillion; and the combined net worth of the poorer 50 percent of American households was $1.6 trillion. [15] At the same time, as much as 80-90 percent of all stocks, bonds, trust funds, and business equity is held by the upper 10 percent of American households. Incredibly, the bottom 40 percent of Americans holds only 0.3 percent of the nation's private wealth. [16]

Not surprisingly, income distribution in the U.S. follows a similar pattern. In the period 1980-2006, the wealthiest 1 percent's share of national income doubled from 9.1 percent to 18.8 percent. More strikingly, over the same period the income of the wealthiest 1 percent grew from 12.5 times the median household income to 36 times the median. [17] In a 2011 study, the Congressional Budget Office (CBO) calculated that the income earned by the upper 1 percent of income earners grew by 275 percent, from 1979-2007. By contrast, the lowest 20 percent of income earners increased only 18 percent. The middle 60 percent of income earners grew 40 percent over the same time period. Most dramatically, in 2010, 15 percent of the population - those in poverty - earned 3.4 percent of the income while top 20 percent earned 49.4 percent. [18] At the same time, the wealthiest .01 percent of Americans experienced a 400 percent increase in income from 1979-2005. Moreover, even a college degree does not guarantee the level of prosperity it once did. Since 2000 the gain in income for college graduates has been nonexistent. The economy is so warped by the financial crisis that those with a four-year college degree "but no further degrees are less likely to get workplace health coverage than workers with only a high school degree were in 1979". [19]

More distressing yet, studies by the United Nations and the Central Intelligence Agency, employing the internationally accepted 'GINI Coefficient', reveal that income disparity in the United States is worse than it is in Egypt. In Egypt 19.6 percent of its people live below its poverty line; in the United States 14.5 percent live below it. When the population of poor Americans is broken down by group, one finds that rate of poverty among African Americans is greater than the rate of poverty in Egypt, one in four and one in five respectively. [20] In addition, those in the .001 percent of American income earners paid a lower tax rate than approximately one-third of middle income Americans. Overall, based on Internal Revenue Service 2009 tax tables, those individuals making less than $75,000 a year paid more income taxes collectively than Americans making over $1 million. [21] Yet millionaires control 56 percent of the nation's wealth. [22]

Since corporations are not compelled to divulge how much their annual tax payments are, it is often a matter of speculation as to how much American corporations actually pay. Nevertheless, as a percentage of Gross Domestic Product (GDP), the corporate tax burden has fallen approximately 70 percent since the 1950s and 1960s, from nearly 6.5 percent to just over 2 percent in 2010. [23] In the mid-1950s, though, corporate profits were taxed at a 90 percent rate; today the mean corporate income tax may be less than 20 percent. Nancy Folbre, an economics professor at the University of Massachusetts Amherst, points out that, in the period 2000-2005, tax loopholes in the U.S. tax code brought the average corporate tax down to 13.4 percent from the statutory corporate tax level of 35 percent. [24] Contrary to what conservatives claim during this Great Regression, the U.S. has the second lowest tax rate in the developed world, just above Iceland. [25] Moreover, tax code loopholes and subsidies that benefit corporations, business owners and business investors cost the U.S. treasury $364.5 billion in 2011. [26]
The concentration of wealth and income is also reflected in the U.S. Congress. The gap in total net worth between elected representatives in Washington, DC and those they represent has never been greater than it is today. In the period 2004-2010, the median net worth of members of Congress went up 15 percent while the median net worth for all Americans fell 8 percent. According to a report in the New York Times on December 27, 2011, "[M]illionaire status is now the norm" and "rarefied air in the Capitol these days is $100 million." [27] In addition, members of Congress receive taxpayer funded health insurance and a generous pension, two benefits that the vast majority of its members seems loath to share with Americans who most need them.

Costly election campaigns ($10 million for Senate and $1.4 million for House) also ensure that only the wealthy are serious candidates for Congress and that close ties with individual and corporate funders are nurtured. Moreover, the strategic political clout of this corporate class - the richest 1 percent owns 50.9 percent of investment instruments - is evident in the current presidential election campaign. The Center for Responsive Politics projects that the 2012 presidential election campaign may cost as much as $6 billion, up from $1 billion in 2008. [28] This is a by-product of a 2010 U.S. Supreme Court decision (Citizens United v. Federal Elections Commission) that corporations may make unlimited contributions to election campaigns; that, as a matter of free speech, they are protected under the First Amendment. On the other hand, President Obama characterized the decision as "a major victory for big oil, Wall Street banks, health insurance companies and other powerful interests that marshal their power every day in Washington to drown out the voices of everyday Americans". [29]

As might be expected, the politics of the Great Regression involves the corporate class, elected officials and their appointees protecting the interests of the wealthy far more aggressively than the interests of the overwhelming majority of Americans. Thus a Congress of millionaires backed by other wealthy individuals and corporations carefully constructs the forum for public debate, selects the issues to be debated and establishes the parameters of the debate. To this very point, in 1999 the banking industry pushed through Congress, with the support of a majority of Democrats in both houses and signed by President Clinton, the repeal of the Glass-Steagall Act (1933) which separated commercial banks from investment banks to protect commercial bank depositors from risky investments. The subsequent lack of adequate regulation and lax regulatory enforcement enabled corporate speculative strategies to invest enormous sums in the housing market, driving it upward, inveigling unwary homeowners and local governments into specious financial positions, and imperiling the entire financial system by investing more capital in their avaricious schemes than was adequately backed by their corporate assets. Then, when the financial house of cards collapsed, trillions of dollars of the public treasury shored up these same financial institutions.

In the first half of 2011 the Government Accountability Office (GAO) conducted a first-ever audit of the Federal Reserve. What they discovered in the audit is absolutely astonishing, a spectacular indictment of the government. The GAO's investigation not only indicates how much official deception corrupts the public dialogue but also underscores the influence of Wall Street in Washington, DC. The GAO found that $16 trillion was given at zero percent interest to U.S. banks and corporations and foreign banks across the globe. None of these trillions of dollars has been repaid to the United States. Senator Bernie Sanders (Independent of Vermont) described this shocking discovery as "a clear case of socialism for the rich and rugged, you're-on-your-own individualism for everyone else". [30]
While the Federal Reserve provides $16 trillion in interest-free loans to corporate entities without any apparent urgency to be repaid, the political culture in Congress continues to center on the size of the national debt. The backdoor lending of multiple trillions to corporate entities, too, is a finding that is unlikely to reach the threshold of acceptable public debate. Though it could reinforce the conservative argument to limit the size and power of government, it might also illuminate the relationship between the corporate world, the major political parties, and the U.S. government in general.

The GAO's discovery, the apparent official cover-up or calculated silence, and the colossal magnitude of the funds nevertheless indicate how high the stakes are in the Great Regression. The system must prevail at all costs - literally. Of course a global financial meltdown would have been disastrous for billions throughout the world and needed to be avoided. However, the revelation of the astronomical magnitude of the rescue has not inspired any public debate about how corporate-oriented this publicly financed bailout is. The historic, unprecedented size of the bailout alone demonstrates how dramatically unstable the global economy actually is. It also unveils how this period of Great Regression, driven by the unquenchable appetites of the world's largest and most strategically connected financial institutions, compounds the hazards humanity faces.

Conclusions

During the present Great Regression prevailing institutions, values, theory and practice actively oppose the fundamental reforms needed to adapt to evolving social and ecological conditions and the profound challenges they entail. Concentration of wealth at the national and global scales appears to be the natural course of liberal economy and the source of political influence and corruption holding back reform. The liberal ideas of laissez-faire and pursuit of economic self-interest have become shallow justification for undermining democracy. Along with other liberal economic principles, they distort public perception and policy at critical moments.
It is as if concentration of wealth, leadership duplicity, corrupt corporate culture, and degenerating democracy are hardly relevant to the current crisis. Moreover, the relation of wealth concentration to the other corrosive social elements is overlooked, perhaps simply ignored by the political class. Though it would be difficult to quantify, there are strong indications that the concentration of wealth has contributed significantly to the economic, ethical and moral bankruptcy of the United States and other states. Greed chases across the world the lowest wages and taxes, reinforcing the economic marginality and virtual disenfranchisement of undetermined millions, perhaps billions, in poorer nations, reducing standards of living in the wealthier states, and depriving all states of just tax revenues. Greed overwhelms values of conservation and promotes a global culture of overconsumption. Greed diverts attention from social and ecological problems, aggravating them by obscuring or denying the social and ecological costs through legislation, litigation, even negotiation. Greed profits from war, both in its preparation and its prosecution. Greed compels the public to protect the private wealth that accumulates to a few. Greed wantonly spends the future of many to enrich the present of a very few.

Yet, within the ideology of capitalism greed is generally presented as human nature, something quite natural, an element of human biology given salubrious range in "free markets" to ensure both economic growth and opportunity. As Nobel Prize economist Milton Friedman in Capitalism and Freedom (1962) suggests, unfettered pursuit of self-interest - "economic freedom," he calls it - is the basis of political freedom. [31] However, Associate Justice on the Supreme Court Louis D. Brandeis, considered by legal scholars to have written some of the most brilliant defenses of "freedom of speech" and the "right to privacy," placed the issue of political freedom in a different light one hundred years ago: "We may have democracy, or we may have wealth concentrated in the hands of a few, but we cannot have both". [32]

It is a mistake, however, to assume that capital interests cannot salvage a few more years, perhaps even a decade or two, of qualified economic recovery. They have plenty of ways to do this: massaging monthly and quarterly bureaucratic statistical reports; maintaining lower interest rates; expanding consumption among the more economically buoyant middle class through aggressive advertising techniques and new and redundant products; pushing into natural gas and other cleaner burning fossil fuels; generating economic growth through military adventures; setting artificially low prices by raising productivity with lower wages and technological innovation; creating lucrative markets through speculation; social investment to subsidize the creation of jobs in the private sector. These are just a few of the possibilities. For the corporate class they continue to be rewarding strategies, technologically more possible than ever, but now shorter-lived and more socially and environmentally destructive. Yet such strategies are only possible because social and environmental costs are not reflected in prices since the state does not adequately regulate or tax the corporate class, the wealthiest Americans. Ultimately, these measures do nothing to distribute wealth more fairly and economically prudently, nor do they achieve an economic and political climate in which alternative voices and new visions are nurtured.

A quick look at what could be done immediately if measures were adopted to address the concentration of wealth and the regressive ideas that sustain it. Citizens for Tax Justice has calculated that the U.S. Treasury has lost more than $1 trillion in tax revenues from the top 5 percent of American taxpayers since the Bush tax reforms of 2001. [33] The wealthiest are presently taxed at the statutory rate of 35 percent. As late as 1965, however, the tax rate for the highest income earners was 91 percent. [34] If the U.S. re-established an effective 60 percent tax rate on the wealthiest 1 percent of Americans, closed corporate subsidies and loopholes, again compelled corporate America to shoulder 6 percent of the GDP through taxation, reduced the military budget by 20 percent and recouped 10 percent of the $16 trillion it gave away to banks and corporations, the U.S. Treasury would gain approximately $4.5 trillion in 2011. Social Security and Medicare would not have to be touched. The additional revenues would cover the $3.7 trillion fiscal deficit and have about $800 billion in surplus to begin retraining, re-educating and retooling the present workforce and economy toward greener, more sustainable practices.

To accomplish this transition, though, the United States must move beyond its Great Regression. Ideological blinders must be removed. Greater economic equality and participatory democracy are the keys to implementing the transition, to encouraging the vision and commitment needed to construct more sustainable cultures worldwide. Of course addressing climate change is indispensable to constructing a more sustainable economic future. However, as long as people are denied basic needs and opportunities for improved lives, cooperation on broader environmental issues is unlikely to occur. Even in the United States the economic recession and Great Regression have diverted attention from pressing climate change concerns. Carbon emitted into the atmosphere illustrates this point. Though the United States' carbon emissions into the atmosphere dropped by an encouraging 7 percent in 2009, it jumped again by 4 percent in 2010, according to a recent international report on carbon releases. The global carbon emission is even more sobering, however. In 2010 the world pumped the greatest absolute amount of carbon into the atmosphere in any single year since the Industrial Revolution; it was the largest percentage increment of carbon released since 2003. [35]
America's plutocracy seems, at present, just as deaf to the plight of their fellow citizens as the French monarchy and aristocracy were to the French nation in the 1790s. As happens often throughout history, those who benefit from the status quo cling to its ideologies and institutions even as fundamental ideas and established systems become increasingly anachronistic, almost impervious to reform. No vision is developed, no program of broad policy changes considered, no progress made. Platitudes become political discourse. The spectrum of political leadership lists far to the right. The most conservative segment of the political class labels social class critique "class warfare."

Nevertheless the occupation of public spaces in 2011 by those demonstrating against the power of the corporate class helped revive the notion of "class based on wealth" and related interests. "Class" has become part of the American political vocabulary again, an idea that contains the germ of an alternative social and political analysis. It can be used to deconstruct current political vocabulary, policy and theory. Together with the goals of participatory democracy, fairer distribution of society's wealth and economic-ecological sustainability, a new, healthier vision of human potential will be born. The Great Regression in the United States, moreover, indicates that conservatives in the political and corporate class are quite aware and quite fearful that the general public will recognize that "class warfare" is essentially what the rich have always understood liberal economics to be.

John Ripton is History Chairperson at Gill St. Bernard's School in Gladstone, NJ and adjunct professor at Rutgers University. He participated in meetings with Israelis and Palestinians in Israel in June 2007. He writes for journals, magazines and newspapers on international affairs. He can be reached at: jripton@gsbschool.org

Endnotes

1. Mark Trader, 'U.S. Companies Most Profitable in More Than 40 Years', Wall Street Cheat Sheet, November 28, 2011.
http://wallstcheatsheet.com/stocks/u-s-companies-most-profitable-in-more-than-40-years.html/

2. Edward Luce, 'Can America regain most dynamic labour market mantle?', Financial Times, December 11, 2011.
http://www.ft.com/intl/cms/s/0/6327a7f4-21bb-11e1-8b93-00144feabdc0.html#axzz1jNDTPuZ4

3. Ezra Klein, 'Wonkbook: The real unemployment rate is 11 percent', The Washington Post, December 12, 2011.
http://www.washingtonpost.com/blogs/ezra-klein/post/wonkbook-the-real-unemployment-rate-is-11-percent/2011/12/12/gIQAuctPpO_blog.html

4. Dan Dorfman, 'The Jobs lost in the Great Recession May Return…By 2018', Huffington Post, January 9, 2011.
http://www.huffingtonpost.com/dan-dorfman/lost-jobs-may-be-back-by-_b_806363.html

5. Heidi Shierholz, 'Wage growth slows to a crawl', Economic Policy Institute, June 8, 2011.
http://www.epi.org/publication/wage_growth_slows_to_a_crawl/

6. Michael Spence and Sandile Hlatshwayo, 'The Evolving Structure of the American Economy and the Employment Challenge', Council on Foreign Relations, March, 2011.
http://www.cfr.org/industrial-policy/evolving-structure-american-economy-employment-challenge/p24366

7. Carmen De Navas-Walt, Bernadette Proctor and Jessica C. Smith, Income, Poverty, and Health Insurance in the United States: 2010 (United States Census Bureau, September, 2011), 14.
http://www.census.gov/prod/2011pubs/p60-239.pdf

8. John Gittelsohn, 'Foeclosures May Delay Housing Rebound to 2013', Bloomberg, December 22, 2011.
http://www.bloomberg.com/news/2011-12-22/foreclosures-weighing-on-prices-may-stall-u-s-housing-recovery-until-2013.html

9. Les Christie, 'Foreclosure sales still pummeling home prices', CNN Money, December 21, 2011.
http://money.cnn.com/2011/12/21/real_estate/foreclosure_sales/index.htm

10. Susanna Kim, 'Housing Prices Fell 3.9 Percent in 2011, Back to 2003 Levels', Consumer Report, ABC News, November 29, 2011.
http://abcnews.go.com/blogs/business/2011/11/housing-prices-fell-3-9-percent-in-2011-back-to-2003-levels/

11. Stephen Miller, 'Baby Boomers Could Face a Grim Retirement,' SHRM (Society for Human Resource Management), August 17.
http://www.shrm.org/hrdisciplines/benefits/Articles/Pages/GrimRetirement.aspx

12. William Greider, 'It's Time for Debt Forgiveness, American-Style', The Nation, November 14, 2011.
http://www.thenation.com/article/164216/its-time-debt-forgiveness-american-style?page=0,2

13. 'Emerging Public Health Crisis Linked to Mortgage Default and Foreclosure', Science Daily, October 20, 2011.
http://www.sciencedaily.com/releases/2011/10/111020161335.htm

14. Greider, 'It's Time'.

15. Dave Johnson, 'Nine Pictures of the Extreme Income/Wealth Gap', Campaign for America's Future, February 11, 2011.
http://www.ourfuture.org/blog-entry/2011020612/understanding-extreme-incomewealth-gap

16. G. William Domhoff, 'Wealth, Income, and Power', Who Rules America.
http://www2.ucsc.edu/whorulesamerica/power/wealth.html

17. Ian Ayres and Aaron S. Edlin, 'Don't Tax the Rich. Tax Income Inequality Itself', The New York Times, December 18, 2011.
http://www.nytimes.com/2011/12/19/opinion/dont-tax-the-rich-tax-inequality-itself.html

18. Congressional Budget Office, 'Trends in Distribution of Household Income Between 2007 and 2009', Congress of the United States, October 20ll, x (Summary).
http://www.cbo.gov/ftpdocs/124xx/doc12485/10-25-HouseholdIncome.pdf

19. Paul Krugman, 'Oligarchy, American Style', The New York Times, November 3, 2011.
http://www.nytimes.com/2011/11/04/opinion/oligarchy-american-style.html?_r=1

20. Richard Eskow, 'We're Better Off Than Egypt - Right? Let's Take A Look', Campaign for America's Future, June 31, 2001.
http://www.ourfuture.org/blog-entry/2011010531/were-better-egypt-right-lets-take-look

21. David Cay Johnston, 'Beyond the 1 percent', Reuters, October 25, 2011.
http://blogs.reuters.com/david-cay-johnston/2011/10/25/beyond-the-1-percent/

22. Elizabeth Ody, 'Number of millionaires in the U.S. increases', Bloomberg News, March 16, 2011.
http://www.chron.com/business/article/Number-of-millionaires-in-the-U-S-increases-1682802.php

23. Felix Salmon, 'Charts of the day, corporate income-tax edition', Reuters, November 17, 2001.
http://blogs.reuters.com/felix-salmon/2011/11/17/charts-of-the-day-corporate-income-tax-edition/

24. Nancy Folbre, 'Of Loopholes and Potholes', The New York Times, July 25, 2011.
http://economix.blogs.nytimes.com/2011/07/25/of-loopholes-and-potholes/

25. Marie Diamond, 'GRAPH: Contrary To GOP Claims, U.S. Has Second Lowest Corporate Taxes In The Developed World', Think Progress, July 5, 2011.
http://thinkprogress.org/economy/2011/07/05/260535/graph-corporate-tax-second-lowest/?mobile=nc

26. Robert S. McIntyre, 'State of Robert S. McIntyre Before the Senate Budget Committee', Citizens for Tax Justice, March 9, 2011.
http://www.ctj.org/pdf/mcintyretestimony03092011.pdf

27. Eric Lichtblau, 'Economic Downturn Took a Detour at Capitol Hill', The New York Times, December 26, 2011.
http://www.nytimes.com/2011/12/27/us/politics/economic-slide-took-a-detour-at-capitol-hill.html?pagewanted=all

28. Agence France-Presse, 'Soaring PAC donations may fund a shocking $6 billion 2012 election', The Raw Story, November 3, 2011.
http://www.rawstory.com/rs/2011/11/03/pac-donations-fund-6-billion-2012-election/

29. Warren Richey, 'Supreme Court: Campaign finance limits violate free speech', The Christian Science Monitor, January 21, 2010.
http://www.csmonitor.com/USA/Justice/2010/0121/Supreme-Court-Campaign-finance-limits-violate-free-speech

30. 'The FED Audit,' Bernie Sanders U.S. Senator for Vermont, July 21, 2011.
http://sanders.senate.gov/newsroom/news/?id=9e2a4ea8-6e73-4be2-a753-62060dcbb3c3

31. Milton Friedman, Capitalism and Freedom (University Chicago Press, Fortieth Anniversary Edition, 2002).

32. Ayres, 'Don't Tax the Rich'.

33. National Priorities Project and Citizens for Tax Justice, 'Cost of Tax Cuts for the Wealthiest Americans Since 2001', accessed January 13, 2012.
http://costoftaxcuts.com/

34. Thomas Picketty and Emmanuel Saez, 'How Progressive is the U.S. Federal Tax System? A Historical and International Perspective', Journal of Economic Perspective, Vol. 21, No. 1, Winter 2007, 3.
http://elsa.berkeley.edu/~saez/piketty-saezJEP07taxprog.pdf

35. Justin Gillis, 'Carbon Emissions Show Biggest Jump Ever Recorded', The New York Times, December 4, 2011.