Fair Warning: Julian Assange's "Cypherpunks"

http://lareviewofbooks.org/article.php?type=&id=1621&fulltext=1&media=#article-text-cutpoint

Adam Morris on Cypherpunks

Fair Warning: Julian Assange's "Cypherpunks"

April 28th, 2013

WIKILEAKS FOUNDER JULIAN ASSANGE’S newest book Cypherpunks: Freedom and the Future of the Internet is intended as an urgent warning, but it seems to have fallen on deaf ears. Despite boasting publicity blurbs from a curious medley of public intellectuals — Slavoj Žižek, Naomi Wolf, and Oliver Stone among them — Cypherpunks may just as well have sunk to the bottom of the sea. Although Assange is one of the most vital and polemical activists alive, nobody’s talking about Cypherpunks, and nobody seems to have read it. This is a pity, since the book rings a justifiably strident alarm bell over the erosion of individual privacy rights by an increasingly powerful global surveillance industry. 

Though Cypherpunks raises issues of pressing concern, its neglect is not all that mysterious. “This book is not a manifesto,” Assange begins. If only it were! The pretense of writing one — especially when widely rumored to be wanted by the US government and an international cause célèbre — would probably have garnered Assange more attention. A good old-fashioned manifesto would have been more readable, too: Cypherpunks is irritatingly structured as a discussion between Assange and three coauthors, the digital activists Jacob Appelbaum, Andy Müller-Maguhn, and Jérémie Zimmermann. The intention may have been to emphasize the sort of “messy” participatory democracy favored by Occupy, Anonymous, and other emergent political forces loosely affiliated with WikiLeaks and influenced by anarchist political theory. But the “discussion” occasionally slides into pedantic softball-lobs, ego-stroking, and phony-sounding debate that will leave the reader wishing for a more tightly edited and coherent declaration of the trouble Assange thinks we’re in. 

Aside from the annoying format, the general disregard of Assange’s book is probably due in no small part to its discomfiting thesis. Cypherpunks would have the reader nakedly confront a truth that even a clear-eyed realist like Al Gore would find inconvenient: the dark steed on which we are “galloping into a new transnational dystopia” is nothing less than our favorite toy, tool, and distraction. “The internet,” Assange states portentously in the introduction, “is a threat to human civilization.” According to Assange, the “Information Superhighway” that Gore championed throughout the 1980s and 1990s ought now be renamed the Highway to Hell. Or at least — to borrow Assange’s terms — the Highway to “Postmodern Surveillance Dystopia.”

Assange’s pessimistic outlook derives from his very personal confrontation with “the enemy,” which is his unsubtle shorthand for the hybrid entity he sees taking shape as the internet continues to “merge” with governments increasingly controlled by multinational corporate interests. Assange describes the emergence of this “invasive parasite” as one predicated on mutual interest in surveillance and control. He believes that, if it remains unopposed, the resulting supranational “surveillance state” will “merge global humanity into one giant grid of mass surveillance and mass control.”

"We know the new surveillance state,” Assange says of himself and his coauthors, “because we have plumbed its depths.” They have also met its wrath. WikiLeaks has been the subject of an ongoing Department of Justice investigation ever since the organization rose to prominence in 2010 with the release of video footage of an American helicopter attack on unarmed journalists, publication of classified documents related to the wars in Afghanistan and Iraq, and the leak of hundreds of thousands of US diplomatic cables. High-ranking US officials like California senator Dianne Feinstein, who chairs the Senate Select Committee on Intelligence, have called for Assange’s prosecution. Assange, in turn, has cited these American demands of vengeance as his reason for resisting extradition to Sweden, where he faces arrest on charges of sexual misconduct. Sweden, Assange believes, would be the first stop on a longer extradition journey to the US.

Luddites and conspiracy theorists will be as titillated by Assange’s opening salvos on the surveillance state as anarchists and hardcore privacy activists. Indeed, it was the “threat to human civilization” quote that surfaced and then circulated listlessly around the blogosphere at the time of the book’s publication. The bluntness with which Assange damns the current drift of internet-related activity is probably the reason nobody wanted to read Cypherpunks: it’s easier to write Assange off as having jumped the shark. For most Westerners, the internet has made many aspects of daily life so easy and convenient that we dare not imagine its sinister double-edge. We want to retain our endless up-to-the-moment entertainment, on-the-fly driving directions, and breezy one-click payments with home delivery. Internet use has developed in ways that have normalized self-absorption and conspicuous consumption; our society’s feel-good relationship with the internet has anaesthetized the gradual but near total loss of privacy involved in the tradeoff. For most users, thought of the internet as a technology of mass surveillance and control, then, is both uncanny and unwelcome. And yet, Assange and company assure, that is exactly what the internet has become.

But another obvious reason for the book’s vanishing act is its surprisingly proprietary method of distribution. A manifesto could have been Xeroxed and tossed daily from the balcony of the bobby-besieged Ecuadorian embassy in London, where, since August 2012, Assange has been granted asylum. Or it could even have been disseminated on the internet, thus poisoning the bowels of the very beast Assange believes threatens to destroy all our freedoms. Alas, Cypherpunks is only available as a conventional copyrighted text (or e-book) distributed by an independent publisher who has, with due respect for convention and copyright, decreed that “no part of this book may be reproduced or transmitted in any form or by any means.” Despite actually discussing proprietary control as one of the clear impediments to the liberating potential of new communication technologies, Cypherpunks does not offer further comment on its own self-imposed limitations beyond its martyr’s performance of self-banishment to the province of the Unread.

Its internal contradictions notwithstanding, Cypherpunks is a pertinent wake-up call. While we’ve been busy chuckling at the subtitled antics of cats, the internet has become increasingly monitored and militarized: all of our web-based communications are now intercepted by military spy organs. The internet, Assange claims, has become an occupied public space, and “we are all living under martial law as far as our communications are concerned.” This observation is in tune with Michael Hardt and Antonio Negri’s nearly decade-old warning about the encroachment of martial law in their 2004 book Multitude, in which the authors claim that the military and the police are becoming indistinguishable. With the military occupation of cyberspace, Assange argues, control is being insinuated into the most quotidian of activities. Further thickening the aura of shadows and cigar smoke, he asserts, in his introduction, that this threat to our freedom has been cleverly concealed by those in “national security circles” and “the global surveillance industry.”

Assange understands the encroachments of the parasitical surveillance state into private communications as state violence enabled by corporate collaboration. He is not the first to read the writing on the wall. Beginning as early as 1946, thinkers like Max Horkheimer and Theodor Adorno have warned of the imbrication of entertainment with disciplinary social control in the form of the “culture industry.” Since then a lineage of theorists influenced by Guy Debord’s Society of the Spectacle (1967), Michel Foucault’s late lectures on biopolitics, and Gilles Deleuze’s 1990 essay on the rise of the “control society” have expanded on these ideas, cautioning against the advent of technocratic governments that will crush opposition and difference through mass-surveillance and data- and statistics-driven managerialism. More recent works bring these theories to bear on the internet. Alexander Galloway’s book Protocol (2004) made explicit the link between the material architecture of the internet and the decentralized management style favored for the administration of such biopolitical control societies.

Nor are the stakes of these discussions purely theoretical. Today, domestic spying is indeed undergoing massive expansion under the banner of “cyber security,” an Orwellian euphemism that most Americans probably find more palatable than “spying” or “data-mining.” “Cyber security” technologies are also now classified as “weapons” in order to divert more defense spending into their development, and the National Security Administration (NSA) has spent the last 10 years expanding its facilities far beyond its Fort Meade, Maryland, base. The crown jewel of these facilities is the Utah Data Center, a sprawling complex scheduled to be operational in September 2013. The $2 billion facility is nestled in the mountain enclave of a polygamist Mormon sect, a valley where Big Love and Big Brother, as NSA expert James Bamford reported in Wired magazine last year, have unexpectedly become neighbors. Facts about the facility are being kept under tight wraps by the NSA, which has deflected FOIA requests by citing the classified status of National Security Presidential Directive 54, the order George W. Bush issued in 2008 that authorized the NSA’s new projects in so-called cyber security. According to Bamford, the facility will contain thousands of servers that will archive and analyze “the complete contents of private emails, cell phone calls, and Google searches, as well as all sorts of personal data trails — parking receipts, travel itineraries, bookstore purchases” and the rest of what he calls “digital pocket litter.” Bamford also believes the data center will host a secret codebreaking unit needed to decrypt all that “secure encrypted” data transmitted over the internet: worldwide credit card transactions, stock and business deals, diplomatic cables, and the like. The energy costs of the facility alone are estimated at $40 million a year. 

The Utah center is the centerpiece of a broad expansion in NSA data-mining and storage facilities across the country: bases for the interception of communications from abroad are located in Hawaii, Texas, Colorado, and Georgia. Like Assange, Bamford thinks that strong encryption is the only remaining strategy for resisting the slide into a totalitarian surveillance state. But paired with the NSA server farms is investment in supercomputing capabilities at Tennessee’s Oak Ridge National Laboratory — the former site of top-secret atomic research and reactors for the Manhattan Project — where the government is developing juggernaut codebreaking machines to keep up with similar computers being unveiled in China and Japan.

It is cold comfort to know that, historically speaking, the NSA has been rather bad at gathering and sorting intelligence. Writing for The New York Review of Books, Bamford reminds us that the agency was caught off guard by the 1998 attacks on two east African embassies, the 2000 attack on the USS Cole, and the attacks on the World Trade Center in 1993 and 2001. Whatever the Agency’s inadequacies, it is regarded fondly by big business: neoliberal trends of outsourcing government activities to the private sector have created a booming surveillance industry in conjunction with domestic spying. By Assange’s count, there are over 1,000 independent contractors working for the NSA, “smearing out the border between what is government and what is the private sector.”

This blurred public–private divide is where privacy rights are being swiftly eroded. Consider, for a moment, one of Google’s newest inventions: Google Glass, a pair of dorky and nearly indestructible eyeglasses that can capture photograph and video, access Google’s search engine and chat functions, and triangulate one’s exact location at all times. For a company whose unofficial “code of conduct” is “don’t be evil,” this is a dubious development: Google Glass will effectively turn its users into a legion of Little Brother informers, as government agencies routinely spy on Google users by gaining access to their account information with secret subpoenas. As with other Google features like Street View and Google Earth, it is impossible to opt out of this surveillance technology. Now imagine Google Glass equipped with facial recognition technology (FRT) — as Facebook already is — and you get a dizzying glimpse into the postmodern dystopia that Assange foresees. 

Biometric data gathering, facial recognition technology, domestic drone surveillance, and the strategic interception of all private communication: these are the four horsemen of Assange’s apocalypse. He acknowledges that, even 10 years ago, surveillance on this scale would have seemed like a delusional fantasy. But now even a country like Libya can afford systems like Eagle, a product sold by the French firm Amesys and used by the Gaddafi regime for mass interception of communication. Even poor countries are setting up surveillance systems: as Müller-Maguhn claims, African countries are getting entire spy network infrastructure as a gift from the Chinese, who expect to be paid back “in data, the new currency.” 

It should come as no surprise that intrusive and aggressive data collection methods have been getting a test-drive in places under the sway — but not bound by the laws — of American empire. The Afghan government, for instance, is collaborating with US security firms and the Departments of Justice and Homeland Security to produce a biometric registry for all passengers at Kabul airport and at major border crossings. The FBI is likewise honing its spycraft by assisting with the development of a biometric database of the entire Afghan population, and the Department of Defense has already created a Biometrics Identity Management Agency to coordinate biometric data sharing among these government agencies. In addition to fingerprint collection, already widely practiced, BIMA has been working to expand its facial, iris, palm, and DNA registries. 

City police departments are not far behind: the LAPD has equipped officers with mobile biometrics devices since 2005 as part of a crackdown on undocumented workers. New York mayor Michael Bloomberg recently called the use of domestic drones and FRT in law enforcement “inevitable.” In fact, the NYPD already deploys FRT in investigative police work, and licenses for domestic drone operation have been issued with abandon, including to city governments and police departments. The “inevitable” use of FRT in domestic police work will probably broaden to include devices similar to what the military currently uses in Iraq and Afghanistan. Crossmatch Technologies, the Florida company that developed the SEEK II device that was likely used to identify Osama bin Laden at his Abbottabad compound, has lobbied the government to “document the undocumented” by using biometric technologies. In its efforts to foment wider use of biometric technologies, Crossmatch has even donated some of its rapid mobile identification technologies to the Palm Beach Gardens Police Foundation, a 501(c)(3) organization whose “mission is to secure private funding to enhance the safety of the community and the effectiveness of the Palm Beach Gardens Police Department.”

Assange and his colleagues are — tellingly — more concerned about the mass interception of communications than they are about biometric registries. But the general complaint applies to both contexts: there has been a shift from “tactical” data gathering (the kind you associate with a search warrant) to the “strategic” mass interception of all our calls, emails, and internet activity for storage and analysis. The capture of so much private information represents the extension of a domestic spying program the NSA has been conducting since at least 2001. The program began with extralegal wiretapping facilitated by the major telecommunications corporations in direct violation of the Constitution. The “antiterrorism” activities of the Department of Homeland Security (DHS) also includes more conventional spying usually associated with the FBI: recently obtained documents show the DNS engaging in routine spying on peaceful protesters.

Combine government snooping with another of Google’s new ambitions — to become the sole internet service provider of large municipalities like Kansas City, Missouri — and a very worrying picture emerges. Kansas City government was willing to grant the company a nearly regulation-free contract to install citywide fiber-optic service. Not only would this deal allow the internet access of hundreds of thousands of users to be provided by a single company, it would also enable that company to collect deep data — every search, every page visit, every electronic payment — about the entire population of a major American city. The Kansas City project requires Google to make huge investments in city infrastructure, but the venture is not a charitable one. Google expects to reap windfalls with the data. As the scholar and activist Harry Halpin recently wrote in Radical Philosophy:

Massive web platforms such as Apple, Google and Facebook are monopolies increasingly reminiscent of the golden age of capitalism, in which the new form of commodity is personal identity: every interaction with the Internet is recorded for marketing purposes, ideally with a full name and billing address.

The recent travails of Assange’s coauthor Jacob Appelbaum offer an object lesson in the danger of these projects. Appelbaum is one of the central figures in an ongoing legal dispute between Twitter and the Department of Justice, which subpoenaed Twitter for the IP addresses and records of the accounts used by Appelbaum, Dutch citizen Rop Gonggrijp, and Icelandic parliamentarian Birgitta Jónsdóttir as part of a grand jury investigation into WikiLeaks. Twitter, the ACLU, and the Electronic Frontier Foundation have fought the order, but it represents only a single high-profile case of far broader practice: Google receives tens of thousands of similar requests each year — most of them subpoenas sealed under court order, not search warrants — and complies with 90 percent of them. The interpretation of outdated legislation effectively allows the US government to use Google and Facebook as extensions of its own intelligence-gathering activities. In most cases, sealed subpoenas delivered to Google and social media sites prevent those under investigation from ever becoming aware that their accounts are being reviewed by the government. It is for this reason, Assange and his coauthors argue, that cryptography has become the most vital means of resisting the tightening control of surveillance society.  

Although Assange disavows the intention of writing a manifesto on the lofty grounds that “there is no time” for such histrionics, his introduction is nevertheless subtitled “A Call to Cryptographic Arms,” and Cypherpunks is clearly a summons to action. As he and his co-authors argue repeatedly throughout the book, cryptography is our last hope to resist the otherwise inevitable slide into a totalitarian regime of panoptic surveillance and control. As Assange sees it, cryptography is “an embodiment of the laws of physics” that he considers elegant and noble for providing “the ultimate form of non-violent direct action.” Free source activists will already understand the relation between cryptography and the title of Assange’s book, but the table of contents is preceded by a useful definition that informs the lay audience that “cypherpunk” is not only in broad usage in the digital activist community, but was also added to the Oxford English Dictionary in 2006. The term dates to the “crypto-wars” of the early 1990s and was revived during the so-called “internet spring” of 2011, by which the authors presumably mean the simultaneous, and not unrelated, movements connected with the war waged on WikiLeaks and the online activism that flared during the Arab Spring, in which protesters pitted social media, freedom of information, and cryptography against despotic regimes.

Assange’s author bio lists him as a contributor to the original Cypherpunk mailing list, and “one of the most prominent exponents of cypherpunk philosophy”; his organization WikiLeaks is guided by the cypherpunk motto “privacy for the weak, transparency for the powerful.” Assange is also credited as the “author of numerous software projects in line with the cypherpunk philosophy”: computer programs that facilitate privacy through encryption. His discussants are likewise active in cryptographic resistance. Appelbaum is an advocate and developer for the Tor Project, which provides freeware that uses “onion routing,” or layered encryption, to strengthen anonymity for its users; Müller-Maguhn is one of the creators of Cryptophone, a for-profit venture that markets encrypted telephone calls; and Zimmermann is a European legal activist for La Quadrature du Net, which defends online anonymity and campaigns against regulations that limit online freedoms. 

Cryptography is also central to the tactics used by Anonymous, an international movement that has acted in support of WikiLeaks by providing documents and declaring war on opponents of transparency. The movement’s participants all remain anonymous, in keeping with precedent established on 4chan and other online forums where the movement originated. In the age of identity capitalism and surveillance society, the determination to remain anonymous is an act of resistance against the knowing gaze of both corporations and the police. The movement’s decentralized and nonhierarchical affiliation of cyber activists is best known for online forms of protest and activism in the form of information leaks, hacking, and website vandalism. One of the group’s most widely used tactics is DDoS (distributed denial-of-service) attacks, in which activists cause a surge in traffic by simultaneously accessing a webpage in massive numbers, thus causing it to crash and go offline. Actions undertaken by Anonymous often employ their famous signoff: “Knowledge is free. We are Anonymous. We are Legion. We do not forgive. We do not forget. Expect us.”

The link between Assange and Anonymous began in 2008, when the latter supplied secret Scientology handbooks to WikiLeaks for publication. The movement also acted to defend Assange and WikiLeaks from their persecution by the US government. Joe Biden has referred to Assange as a “high-tech terrorist,” and corporate compliance with Joe Lieberman’s call for businesses to cut off transactions with WikiLeaks in the wake of the War Logs and Cablegate prompted an Anonymous-led DDoS attack on Paypal, Visa, and Amazon. Lieberman and others have also called for Assange’s arrest and prosecution under the Espionage Act, a demand that makes little sense given that unlike Private Bradley Manning, who faces charges for allegedly leaking classified military information to WikiLeaks, Assange is not an American citizen and therefore not capable of treason against the United States. While Anonymous remained allied with WikiLeaks throughout the Cablegate fallout, the movement has recently distanced itself from Assange, criticizing his supposed egotism after a highly publicized dinner with Lady Gaga.

Anonymous was also active in the Occupy protests of 2011–12, and continues to take on a diverse range of activism projects. These include continued support for Occupy, defense of gay rights in Africa, attacks on the Motion Picture Association of America (MPAA) and government copyright enforcement agencies, and working to expose the identities of alleged rapists in high profile sexual assault cases in Ohio and Nova Scotia. Anonymous also now appears to maintain a consistent interest in responding to Israeli aggressions against Palestinians. Israel airstrikes on Gaza this spring provoked Anonymous’s #OpIsrael retaliation, a coordinated attack on Israeli government websites, bank accounts, and social media accounts. The mass strike defaced or compromised tens of thousands of websites and bank accounts.

Social media and hacktivist groups like Anonymous represent obverse sides of the rise of identity capitalism. The opposition was made strikingly clear in 2011, when Anonymous threatened to “destroy” Facebook for violating user privacy and collaborating with government intelligence agencies. That the US media rushed to celebrate the use of Facebook and Twitter in the Arab Spring uprisings but has consistently maligned the activities of WikiLeaks and Anonymous is thus unsurprising. Having exhausted resources for regime change, cheerleaders for exporting “freedom” now uncritically regard digital communication technologies, especially Twitter, as the bearers of democracy and freedom in the Middle East and elsewhere. As Evgeny Morozov, an outspoken critic of such “internet-centrism,” has sardonically observed, “The Freedom Agenda is out; the Twitter Agenda is in.” Malcolm Gladwell also expressed skepticism in The New Yorker, pointing out that the perceived importance of Twitter and Facebook in the Iranian Green Movement and the Moldovan uprising of 2009 derived less from facts than from the desire to understand these technologies as inherently liberating. Assange likewise notes that the Mubarak regime cut off internet access in Egypt early on in the revolution, and admonishes uncritical celebration of social media for disavowing the use of Facebook by repressive governments to monitor, track, harass, and sometimes kill dissidents.

Acknowledging this double-edge, Assange asserts that “the internet, our greatest tool of emancipation, has been transformed into the most dangerous facilitator of totalitarianism we have ever seen.” But even here, he indulges in the silicon-plated myth that propels, if not entirely underwrites, this process of accelerating surveillance and control of our management society. Allow me to cast some doubt on Assange’s confident assertion that the internet is “our greatest tool of emancipation”: we did not need to await the arrival of the internet in order to end slavery, grant women the vote, or struggle for civil rights for oppressed racial, ethnic, and sexual minorities. 

Doubtless the internet now plays an important role in strategies to influence social change. But so did television in the 1950s and ’60s, and no one would have called TV a great tool of emancipation. To do so is to express one’s ignorance regarding corporate control of televised media. Like Galloway, who asserts that protocol is not necessarily “bad,” but rather “dangerous,” Assange explains that technologies are not politically neutral, but can be used for a variety of ends. “Good” or “evil,” if you like. And the fact that the motto of a company trained in his critical crosshairs (“don’t be evil”) could seem so mordantly Orwellian from the perspective of privacy rights is evidence of a Silicon Valley’s bad faith.  

Assange gets the last word in the “discussion” with his interlocutors in Cypherpunks. In the final pages, he insists that complaining about the “burgeoning security state” is not enough; we must instead “build the tools of a new democracy.” This would be a vigilant democracy, one that is aware of the political ambiguity of communications technologies and the complicity of big business and corporate media in eliminating legal protections on privacy. Debate surrounding the Cyber Intelligence Sharing and Protection Act (CISPA) gives an idea of the current situation in America. Although recently shelved by the Senate, which is working out a version more concerned with protecting privacy, the House CISPA would allow companies to share data with each other and with government agencies like the NSA. The House CISPA would, in effect, legalize many of the domestic spying activities that were or are conducted extralegally or in legal gray areas. A lobbying firm representing Google and Yahoo supports the bill, while the ACLU and Electronic Frontier Foundation remain vehemently opposed. Although the House bill has been sidelined in the upper chamber, Republicans on the Senate Intelligence Committee have already expressed concern about perceived failures in information sharing between agencies in the wake of the Boston marathon bombing. Coupled with Americans’ show of eagerness to inform on their fellow citizens by participating in the misguided and frenetic crowdsourcing of police work, the senators’ opportunity to look tough on terror will likely weaken privacy provisions.

With the corporate hijacking of the government and the prioritizing of “security” above all else, Assange and his Cypherpunks discussants seem to see successful resistance to surveillance and control through legislation as unlikely. This leaves privacy defense up to individuals themselves, who must begin to understand the communications technologies they use. In Appelbaum’s words, people need to get “socially used to” coding in order to modify their own software. 

This kind of individual responsibility sounds like a good thing. But such a position usually ignores structural inequalities that drastically alter one’s capability of awareness, let alone resistance. Education is one such factor. This is exactly where a class-based analysis of Assange’s ideology finds the impasse between techno-libertarianism and traditional leftist politics. Assange ends his book by fantasizing about the imminent dystopian future. His valedictory reverie begins with a self-romanticizing anecdote about “smuggling” himself into the Sydney Opera House to take in a performance of Faust (Assange’s cultural allusions have never been subtle; his memoir Julian Assange: The Unauthorized Autobiography is clumsily littered with them). The heavy-handedness exposes a superiority complex that plays out in Assange’s concluding morality tale: while our lone hero strolls the waterfront after the opera, he spies through the glass panels a rat that has likewise smuggled itself into the Opera House, where it is merrily “scurrying back and forth, leaping on the fine linen-covered tables and eating the Opera House food, jumping on to the counter with all the tickets and having a really great time.”

This droll tableau becomes, in Assange’s hands, a metaphor for “the most probable scenario for the future”:

an extremely confining, homogenized, postmodern transnational totalitarian structure with incredible complexity, absurdities and debasements, and within that incredible complexity a space where only the smart rats can go […] All communications will be surveilled, permanently recorded, permanently tracked, each individual in all their interactions permanently identified as that individual to this new Establishment, from birth to death […] So I think the only people who will be able to keep the freedom that we had, say, twenty years ago — because the surveillance state has already eliminated quite a lot of that, we just don’t realize it yet — are those who are highly educated in the internals of this system. So it will only be a high-tech rebel elite that is free, these clever rats running around the opera house.

This is elitism plain and simple, and it ought to have been purged from the book. It would have been more productive to conclude this non-manifesto with more practical information about how everyday internet users can protect themselves, a nuts-and-bolts tutorial like the one that can be found on the Electronic Frontier Foundation’s Surveillance Self-Defense site. 

Moreover, the notion of a “high-tech rebel elite” is embarrassingly redolent of the likes of Ayn Rand, and a form of libertarian neoliberalism that has found so many devotees in Silicon Valley. Assange himself dismissively refers to these “California libertarians,” a strange and contradictory socio-political class that has gained tremendous power and prestige in recent years. The hodgepodge of free-marketeering and wannabe counterculture that characterizes the California libertarians is worthy only of caricature, and the rise of this ideology in the new powerhouse of the US economy was presciently characterized by Richard Barbrook and Andy Cameron in their 1996 essay “The Californian Ideology” (a text that is available for free perusal online).

In Assange’s rodent parable, the rat serves as a stand-in for Assange himself, who seems bizarrely eager to reprise the role of John Galt in Rand’s plodding opus Atlas Shrugged. In that novel, a visionary elite led by Galt abandons a welfare state full of moochers and takes to the hills, leaving the freeloaders — we know them today as the 99% — to go to hell in a handbasket, wondering “Who is John Galt?” Down on the docks, another lone hero wanders. “Who is Julian Assange?” he imagines the future masses wondering. If the effective media blackout surrounding Assange and WikiLeaks continues, we’ll start to hear that question sooner rather than later.

Malmö Konsthall, the exhibition 24 Spaces

http://www.konsthall.malmo.se/o.o.i.s/5256

24 SPACES – A Cacophony
4 May – 18 August 2013
Part of Malmö Nordic 2013

Malmö Konsthall wants to use the exhibition 24 Spaces to present a number of non-commercial artist- or curator-driven activities. This is an attempt to use the Nordic region as a starting point to examine various alternative exhibition spaces. We have also invited Sweden’s four post-secondary art education institutions plus the Konstfack University College of Arts, Crafts and Design in Stockholm and The Royal Danish Academy of Fine Arts in Copenhagen to participate in order to showcase the diversity of their styles, their similarities and differences. We intend to highlight all the diverse artistic forms of expression which are currently being created or exhibited in the Nordic region and our geographic vicinity.

The 24 Spaces exhibition literally creates spaces for non-commercial activities. For the exhibition, Malmö Konsthall has been divided into 24 spaces of 80 square metres each. One of the spaces will be in the park adjacent to Malmö Konsthall.

Participants have been able to decide themselves how their allocated space will be used and how many people will exhibit there. Some participants might choose to present one artist, others, several different ones. Some spaces will feature the same exhibition throughout this time period, whilst others maybe present a series of artists and a therefore changing exhibition over time.

There is a clear interest in global collaboration and an awareness of its importance, and we hope that the various contributions to 24 Spaces will promote discussion and dialogue.

Participating spaces:
1857 (NO)
The Royal Danish Academy of Fine Arts (DK)
Index – The Swedish Contemporary Art Foundation (SE)
kim? Contemporary Art Centre (LV)
Kling & Bang gallery (IS)
Koh-i-noor (DK)
Konstfack University College of Arts, Crafts and Design, Stockholm (SE)
Malmö Art Academy (SE)
The Royal Institute of Art, Stockholm (SE)
Lilith Performance Studio (SE)
NoPlace (NO)
OEI (SE)
PARENT (SE/IS)
Pist Protta (DK)
Ruler (FI)
SIC (FI)
The Gardens (LT)
The Living Art Museum (IS)
Tidens Krav (NO)
Tove's Gallery (DK)
Transmission Gallery (GB)
The Umeå Academy of Fine Arts (SE)
Valand Academy, Gothenburg (SE)
VI, VII (NO)

Welcome to the opening Friday May 3, 5-9 p.m. 

[…]

REFUSE TO PARTICIPATE

http://www.lacan.com/zizprayer.html

[…]

Those in power often prefer even a critical participation to silence - just to engage us in a dialogue, to make it sure that our ominous passivity is broken. Against such an interpassive mode in which we are active all the time to make sure that nothing will really change, the first truly critical step is to withdraw into passivity and to refuse to participate. This first step clears the ground for a true activity, for an act that will effectively change the coordinates of the constellation.

[…]

USA Student Loan Debt-Slavery

http://www.alternet.org/story/152809/the_$1_trillion_student_loan_rip-off%3A_how_an_entire_generation_was_tricked_into_taking_on_crushing_debt_that_just_enriches_banks

By Alex Pareene

The $1 Trillion Student Loan Rip-Off: How an Entire Generation Was Tricked into Taking on Crushing Debt That Just Enriches Banks

Young people accepted a home mortgage worth of debt before they ever even had a regular income based on phony promises.

USA Today says that at some point this year, student loan debt will exceed $1 trillion, surpassing even credit card debt. Felix Salmon says the number is closer to  $550 billion. Either way total student loan debt is rising as other debts have tailed off.  Delinquency has increased, too, since the height of the financial crisis.

It’s a huge mess.

Some people have noticed that “student loan debt” comes up a lot among the Wall Street Occupiers and the members of the 99 percent movement. Often, older people, who either attended school when tuition was reasonable, or who didn’t attend college at all in an era when a high school diploma was enough of a qualification for a stable, middle-class career, tend to think this is all the entitled whining of spoiled kids. They don’t understand that these kids accepted a home mortgage worth of debt before they ever even had a regular income, based on phony promises, and that the debt is inescapable, regardless of life circumstances or ability to pay.

Thanks to the horrific 2005 bankruptcy bill, one of the most nakedly venal modern examples of Congress serving the interests of the rentiers and creditors over the vast majority, debtors cannot discharge student loans through bankruptcy. The government is shielded from the risk, and creditors are licensed to collect by almost any means they deem necessary, giving no one in charge any real incentive (beyond basic human decency) to fix the situation.

In other words, this is unprecedentedly awful for an entire generation of young people  just entering adulthood.

“It’s going to create a generation of wage slavery,” says Nick Pardini, a Villanova University graduate student in finance who has warned on a blog for investors that student loans are the next credit bubble — with borrowers, rather than lenders, as the losers.

Even if by some miracle our unemployed and underemployed debt-laden graduates all win decent jobs tomorrow, the money they make will go into paying off these now-delinquent loans instead of anything productive for the economy as a whole. Banks will continue to see massive profits, in other words.

The impossibility of escaping student loan debt is  why an industry sprang up to foist useless, overpriced degrees on vulnerable people. It’s a scam, but a profitable one, and respectable enough for major establishment players to feel comfortable making a killing on it.

Like, for instance, Kaplan University,  a chain of for-profit colleges built on winning free government student aid money and attracting suckers to borrow small fortunes.

[…]

Student loans outstanding will exceed $1 trillion this year

http://usatoday30.usatoday.com/money/perfi/college/story/2011-10-19/student-loan-debt/50818676/1

By Dennis Cauchon, USA TODAY

Updated 10/25/2011 1:23 PM

Students and workers seeking retraining are borrowing extraordinary amounts of money through federal loan programs, potentially putting a huge burden on the backs of young people looking for jobs and trying to start careers.

By Butch Dill, AP

Full-time undergrads borrowed an average of 4,963 last year, according to the College Board.

The amount of student loans taken out last year crossed the $100 billion mark for the first time and total loans outstanding will exceed $1 trillion for the first time this year. Americans now owe more on student loans than on credit cards, reports the Federal Reserve Bank of New York, the U.S. Department of Education and private sources.

Students are borrowing twice what they did a decade ago after adjusting for inflation, the College Board reports. Total outstanding debt has doubled in the past five years — a sharp contrast to consumers reducing what's owed on home loans and credit cards.

Taxpayers and other lenders have little risk of losing money on the loans, unlike mortgages made during the real estate bubble. Congress has given the lenders, the government included, broad collection powers, far greater than those of mortgage or credit card lenders. The debt can't be shed in bankruptcy.

The credit risk falls on young people who will start adult life deeper in debt, a burden that could place a drag on the economy in the future.

[…]

"It's going to create a generation of wage slavery," says Nick Pardini, a Villanova University graduate student in finance who has warned on a blog for investors that student loans are the next credit bubble — with borrowers, rather than lenders, as the losers.

Full-time undergraduate students borrowed an average $4,963 in 2010, up 63% from a decade earlier after adjusting for inflation, the College Board reports. What's happening:

•Defaults. The portion of borrowers in default — more than nine months behind on payments — rose from 6.7% in 2007 to 8.8% in 2009, according to the most recent federal data.

•For profit-schools. The highest default rates are at for-profit schools that tend to serve lower-income students and offer courses online. The University of Phoenix, the nation's largest, got 88% of its revenue from federal programs last year, most of it from student loans.

"Federal student loans are like no other loans," says Alisa Cunningham, research chief at the Institute for Higher Education Policy. "The consequences are so high for making a mistake."

Debt Slavery – Why It Destroyed Rome, Why It Will Destroy Us Unless It’s Stopped

by MICHAEL HUDSON

http://www.counterpunch.org/2011/12/02/debt-slavery-%E2%80%93-why-it-destroyed-rome-why-it-will-destroy-us-unless-it%E2%80%99s-stopped/

[…]

Rome’s creditor oligarchy wins the Social War, enslaves the population and brings on a Dark Age

Matters were more bloody abroad. Aristotle did not mention empire building as part of his political schema, but foreign conquest always has been a major factor in imposing debts, and war debts have been the major cause of public debt in modern times. Antiquity’s harshest debt levy was by Rome, whose creditors spread out to plague Asia Minor, its most prosperous province. The rule of law all but disappeared when publican creditor “knights”  arrived. 

Mithridates of Pontus led three popular revolts, and local populations in Ephesus and other cities rose up and killed a reported 80,000 Romans in 88 BC. The Roman army retaliated, and Sulla imposed war tribute of 20,000 talents in 84 BC. Charges for back interest multiplied this sum six-fold by 70 BC.

Among Rome’s leading historians, Livy, Plutarch and Diodorus blamed the fall of the Republic on creditor intransigence in waging the century-long Social War marked by political murder from 133 to 29 BC. Populist leaders sought to gain a following by advocating debt cancellations (e.g., the Catiline conspiracy in 63-62 BC). They were killed. By the second century AD about a quarter of the population was reduced to bondage. By the fifth century Rome’s economy collapsed, stripped of money. Subsistence life reverted to the countryside.

[…]

The Argument Nadezhda Tolokonnikova Wasn’t Allowed to Make at Her Parole Hearing

Posted: 27 Apr 2013 08:18 AM PDT

[Originally published by The Russian Reader]

https://chtodelat.wordpress.com/2013/04/27/tolokonnikova-parole-hearing/

Yesterday, April 26, 2013, a district court in Zubova Polyana, Mordovia, denied imprisoned Pussy Riot activist Nadezhda Tolokonnikova’s request for parole. According to Radio Free Europe/Radio Liberty, Judge Lidiya Yakovleva agreed with arguments made by prison authorities that it would be “premature” to release Tolokonnikova given that she “had been cited for prison rules violations and expressed no remorse,” and had not participated in such prison activities as the “Miss Charm Prison Camp 14 beauty contest.” Judge Yakovleva made her ruling without allowing the defense to make a closing argument, thus allegedly violating the Criminal Procedure Code. Tolokonnikova had written her statement out in advance. The translation below is of the Russian original as published in full on the web site of RFE/RL’s Russian Service (Radio Svoboda). Photos courtesy of the Free Pussy Riot Facebook page.

_____

“Has the convict started down the road to rehabilitation?” This is the question asked when a request for parole is reviewed. I would also like us to ask the following question today: What is  this “road to rehabilitation”?

I am absolutely convinced that the only correct road is one on which a person is honest with others and with herself. I have stayed on this road and will not stray from it wherever life takes me. I insisted on this road while I was still on the outside, and I didn’t retreat from it in the Moscow pretrial detention facility. Nothing, not even the camps of Mordovia, where the Soviet-era authorities liked to send political prisoners, can teach me to betray the principle of honesty.

So I have not admitted and will not admit the guilt imputed to me by the Khamovniki district court’s verdict, which was illegal and rendered with an indecent number of procedural violations. At the moment, I am in the process of appealing this verdict in the higher courts. By coercing me into admitting guilt for the sake of parole, the correctional system is pushing me to incriminate myself, and, therefore, to lie. Is the ability to lie a sign that a person has started down the road to rehabilitation?

It states in my sentence that I am a feminist and, therefore, must feel hatred towards religion. 

Yes, after a year and two months in prison, I am still a feminist, and I am still opposed to the people in charge of the state, but then as now there is no hatred in me. The dozens of women prisoners with whom I attend the Orthodox church at Penal Colony No. 14 cannot see this hatred, either.

What else do I do in the colony? I work: soon after I arrived at Penal Colony No. 14, they put me behind a sewing machine, and now I am a sewing machine operator. Some believe that making political-art actions is easy, that it requires no deliberation or preparation. Based on my years of experience in actionism, I can say that carrying out an action and thinking through the artistic end-product is laborious and often exhausting work. So I know how to work and I love to work. I’m no stranger to the Protestant work ethic. Physically, I don’t find it hard to be a seamstress. And that is what I am. I do everything required of me. But, of course, I cannot help thinking about things while I’m at the sewing machine (including the road to rehabilitation) and, therefore, asking myself questions. For example: why can convicts not be given a choice as to the socially useful work they perform while serving their sentences? [Why can they not chose work] in keeping with their education and interests? Since I have experience teaching in the philosophy department at Moscow State University, I would gladly and enthusiastically put together educational programs and lectures using the books in the library and books sent to me. And by the way, I would unquestioningly do such work for more than the eight hours [a day] stipulated by the Russian Federation Labor Code; I would do this work during all the time left over from scheduled prison activities. Instead, I sew police pants, which of course is also useful, but in this work I’m obviously not as productive as I could be were I conducting educational programs.

In Cancer Ward, Solzhenitsyn describes how a prison camp detective stops one convict from teaching another convict Latin. Unfortunately, the overall attitude to education hasn’t changed much since then.

I often fantasize: what if the correctional system made its priority not the production of police pants or production quotas, but the education, training, and rehabilitation of convicts, as required by the Correctional Code? Then, in order to get parole, you would not have to sew 16 hours a day in the industrial section of the colony, trying to achieve 150% output, but successfully pass several exams after broadening your horizons and knowledge of the world, and getting a general humanities education, which nurtures the ability to adequately assess contemporary reality. I would very much like to see this state of affairs in the colony.

Why not establish courses on contemporary art in the colony?

Would that work were not a debt, but activity that was spiritual and useful in a poetic sense. 

Would that the organizational constraints and inertia of the old system were overcome, and values like individuality could be instilled in the workplace. The prison camp is the face of the country, and if we managed to get beyond the old conservative and totally unifying categories even in the prison camp, then throughout Russia we would see the growth of intellectual, high-tech manufacturing, something we would all like to see in order to break out of the natural resources trap. Then something like Silicon Valley could be born in Russia, a haven for risky and talented people. All this would be possible if the panic experienced in Russia at the state level towards human experimentation and creativity would give way to an attentive and respectful attitude towards the individual’s creative and critical potential. Tolerance towards others and respect for diversity provide an environment conducive to the development and productive use of the talent inherent in citizens (even if these citizens are convicts). Repressive conservation and rigidity in the legal, correctional, and other state systems of the Russian Federation, laws on registration [of one's residence] and promotion of homosexuality lead to stagnation and a “brain drain.”

However, I am convinced that this senseless reaction in which we now forced to live is temporary. It is mortal, and this mortality is immediate. I am also certain that all of us—including the prisoners of Bolotnaya Square, my brave comrade in arms Maria Alyokhina, and Alexei Navalny—have the strength, commitment, and tenacity to survive this reaction and emerge victorious.

I am truly grateful to the people I have encountered in my life behind barbed wire. Thanks to some of them, I will never call my time in prison time lost. During the year and two months of my imprisonment, I have not had a single conflict, either in the pretrial detention facility or in prison. Not a single one. In my opinion, this shows that I am perfectly safe for any society. And also the fact that people do not buy into state media propaganda and are not willing to hate me just because a federal channel said that I’m a bad person. Lying does not always lead to victory.

Recently, I got a letter containing a parable that has become important to me. What happens to things different in nature when they are placed in boiling water? Brittle things, like eggs, become hard. Hard things, like carrots, become soft. Coffee dissolves and permeates everything. The point of the parable was this: be like coffee. In prison, I am like that coffee.

I want the people who have put me and dozens of other political activists behind bars to understand one simple thing: there are no insurmountable obstacles for a person whose values  consist, first, of her principles and, second, of work and creativity based on these principles. If you strongly believe in something, this faith will help you survive and remain a human being anywhere.

I will surely use my experience in Mordovia in my future work and, although this will not happen until completion of my sentence, I will implement it in projects that will be stronger and politically larger in scale than everything that has happened to me before.

Despite the fact that imprisonment is a quite daunting experience, as a result of having it we political prisoners only become stronger, braver, and more tenacious. And so I ask the last question for today: what, then, is the point of keeping us here?

The Philosophers Magazine, April 2013 issue

http://www.pdcnet.org/collection/show?id=tpm_2013_0061_0054_0057&file_type=pdf

The Act of Killing (2012, Joshua Oppenheimer)

Bed and Sofa (1927, Abram Room)

Rammstein: "Moscow"

lecture at Boston University

Yanis Varoufakis: The Global Minotaur

http://www.nakedcapitalism.com/2012/02/the-global-minotaur-an-interview-with-yanis-varoufakis.html#xIFgitlW1E4qjFUS.99 

The Global Minotaur: An Interview with Yanis Varoufakis

[…]

Yanis Varoufakis is a Greek economist who currently heads the Department of Economic Policy at the University of Athens. From 2004 to 2007 he served as an economic advisor to former Greek Prime Minister George Papandreou. Yanis writes a popular blog which can be found here. His latest book ‘The Global Minotaur: America, the True Origins of the Financial Crisis and the Future of the World Economy’ is available from Amazon.

Interview conducted by Philip Pilkington

Philip Pilkington: In your book The Global Minotaur: America, The True Origins of the Financial Crisis and the Future of the World Economy you lay out the case that this ongoing economic crisis has very deep roots. You claim that while many popular accounts – from greed run rampant to regulatory capture – do explain certain features of the current crisis, they do not deal with the real underlying issue, which is the way in which the current global economy is structured. Could you briefly explain why these popular accounts come up short?

Yanis Varoufakis: It is true that, in the decades preceding the Crash of 2008, greed had become the new creed; that banks and hedge funds were bending the regulatory authorities to their iron will; that financiers believed their own rhetoric and were, thus, convinced that their financial products represented ‘riskless risk’. However, this roll call of pre-2008 era’s phenomena leaves us with the nagging feeling that we are missing something important; that, all these separate truths were mere symptoms, rather than causes, of the juggernaut that was speeding headlong to the 2008 Crash. Greed has been around since time immemorial. Bankers have always tried to bend the rules. Financiers were on the lookout for new forms of deceptive debt since the time of the Pharaohs. Why did the post-1971 era allow greed to dominate and the financial sector to dictate its terms and conditions on the rest of the global social economy? My book begins with an intention to home in on the deeper cause behind all these distinct but intertwined phenomena.

PP: Right, these trends need to be contextalised. What, then, do you find the roots of the crisis to be?

YV: They are to be found in the main ingredients of the second post-war phase that began in 1971 and the way in which these ‘ingredients’ created a major growth drive based on what Paul Volcker had described, shortly after becoming the President of the Federal Reserve, as the ‘controlled disintegration of the world economy’.

It all began when postwar US hegemony could no longer be based on America’s deft recycling of its surpluses to Europe and Asia. Why couldn’t it? Because its surpluses, by the end of the 1960s, had turned into deficits; the famous twin deficits (budget and balance of trade deficits). Around 1971, US authorities were drawn to an audacious strategic move: instead of tackling the nation’s burgeoning twin deficits, America’s top policy makers decided to do the opposite: to boost deficits. And who would pay for them? The rest of the world! How? By means of a permanent transfer of capital that rushed ceaselessly across the two great oceans to finance America’s twin deficits.

The twin deficits of the US economy, thus, operated for decades like a giant vacuum cleaner, absorbing other people’s surplus goods and capital. While that ‘arrangement’ was the embodiment of the grossest imbalance imaginable at a planetary scale (recall Paul Volcker’s apt expression), nonetheless, it did give rise to something resembling global balance; an international system of rapidly accelerating asymmetrical financial and trade flows capable of putting on a semblance of stability and steady growth.

Powered by America’s twin deficits, the world’s leading surplus economies (e.g. Germany, Japan and, later, China) kept churning out the goods while America absorbed them. Almost 70% of the profits made globally by these countries were then transferred back to the United States, in the form of capital flows to Wall Street. And what did Wall Street do with it? It turned these capital inflows into direct investments, shares, new financial instruments, new and old forms of loans etc.

It is through this prism that we can contextualise the rise of financialisation, the triumph of greed, the retreat of regulators, the domination of the Anglo-Celtic growth model; all these phenomena that typified the era suddenly appear as mere by-products of the massive capital flows necessary to feed the twin deficits of the United States.

PP: You seem to locate the turning point here at the moment when Richard Nixon took the US off the gold standard and dissolved the Bretton Woods system. Why is this to be seen as the turning point? What effect did de-pegging the dollar to gold have?

YV: It was a symbolic moment; the official announcement that the Global Plan of the New Dealers was dead and buried. At the same time it was a highly pragmatic move. For, unlike our European leaders today, who have spectacularly failed to see the writing on the wall (i.e. that the euro-system, as designed in the 1990s, has no future in the post-2008 world), the Nixon administration had the sense to recognise immediately that a Global Plan was history. Why? Because it was predicated upon the simple idea that the world economy would be governed by (a) fixed exchange rates, and (b) a Global Surplus Recycling Mechanism (GSRM) to be administered by Washington and which would be recycling to Europe and Asia the surpluses of the United States.

What Nixon and his administration recognised was that, once the US had become a deficit country, this GSRM could no longer function as designed. Paul Volcker, who was Henry Kissinger’s under-study at the time (before the latter moved to the State Department), had identified with immense clarity America’s new, stark choice: either it would have to shrink its economic and geopolitical reach (by adopting austerity measures for the purpose of reigning in the US trade deficit) or it would seek to maintain, indeed to expand, its hegemony by expanding its deficits and, at once, creating the circumstances that would allow the United States to remain the West’s Surplus Recycler, only this time it would be recycling the surpluses of the rest of the world (Germany, Japan, the oil producing states and, later, China).

The grand declaration of 15th August 1971, by President Nixon, and the message that US Treasury Secretary John Connally was soon to deliver to European leaders (“It’s our currency but it is your problem.”) was not an admission of failure. Rather, it was the foreshadowing of a new era of US hegemony, based on the reversal of trade and capital surpluses. It is for this reason that I think the Nixon declaration symbolises an important moment in postwar capitalist history.

PP: The old banking proverb: “If you owe a bank thousands, you have a problem; owe a bank millions, the bank has a problem” comes to mind. Was this, then, the end of the hegemony of the US as lender and the beginning of the hegemony of the US as borrower? And if so, does this provide us with any insights into the financial crisis of 2008?

YV: I suppose that Connally’s “It’s our currency but it is your problem” turned out to be the new version of the old banking adage that you mention. Only there is an important twist here: in the case of the banks, when they fail, there is always the Fed or some other Central Bank to stand behind them. In the case of Europe and Japan in 1971, no such support was at hand. The IMF was, let’s not forget, an organisation whose purpose was to fund countries (of the periphery mostly) that faced balance of payments deficits.

Connally’s phrase was aimed at countries that had a balance of payments surplus in relation to the United States. Additionally, when a heavily indebted person or entity tells the bank that it is the one with the problem, and not the indebted, this is usually a bargaining ploy by which to secure better terms from the bank, a partial write down on the debt etc. In the case of Connally’s trip to Europe, shortly after the Nixon announcement, the United States was not asking anything from Europeans. It was simply announcing that the game had changed: energy prices would rise faster in Europe and in Japan than in America, and relative nominal interest rates would play a major role in helping shape capital flows toward the United States.

The new hegemony was thus beginning. The hegemon would, henceforth, be recycling other people’s capital. It would expand its trade deficit and pay for it via the voluntary flows of capital into New York; flows that began in earnest especially after Paul Volcker pushed US interest rates through the roof.

PP: And this new hegemony grew almost organically out of the preeminence of the dollar as a world reserve currency that had grown up in the post-war years, right? Could you say something about this?

YV: The ‘exorbitant privilege’ of the dollar, courtesy of its reserve currency status, was one of the factors that allowed the United States to become the recycler of other people’s capital (while America was busily expanding its trade deficit). While crucial it was not the only factor. Another was the United States’ dominance of the energy sector and its geostrategic might. To attract wave upon wave of capital from Europe, Japan and the oil producing nations, the US had to ensure that the returns to capital moving to New York were superior to capital moving into Frankfurt, Paris or Tokyo. This required a few prerequisites: A lower US inflation rate, lower US price volatility, relatively lower US energy costs and lower remuneration for American workers.

The fact that the dollar was the reserve currency meant that, in a time of crisis, capital flew into Wall Street anyway (as it was to do again years later when, despite Wall Street’s collapse, foreign capital rushed into Wall Street in the Fall of 2008). However, the volume of capital flows that had to flood Wall Street (in order to keep the US trade deficit financed) would not have materialised had it not been for the capacity of the United States to precipitate a surge in the price of oil at a time when (a) US dependence on oil was lower than Japan’s or Germany’s, (b) most oil trades were channeled via US multinationals, (c) the US could suppress inflation by raising interest rates to levels that would destroy German and Japanese industries (without totally killing American companies) and (d) trades unions and social norms that prevented a ruthless suppression of real wages were far ‘softer’ in the US than in Germany or Japan.

PP: You write in the book that US officials were actually not that concerned about the rising oil prices in the 1970s, why do you say this? And do you think that the recent speculative pressures on oil and food prices – emanating from Wall Street itself – have been largely tolerated by US officials for similar reasons?

YV: The reason is in the old joke that has one economics professor asking another “How is your wife?” and receives the reply: “Relative to what?” The whole point about attracting capital and gaining competitiveness over another company or, indeed, another country, is that what matters is not absolute but relative costs and prices. Yes, the US authorities were concerned about inflation and oil prices. They did not like their increases, especially when they could not control them fully. But there was one thing that they feared more: An incapacity to finance the growing US trade deficit (that would result if the returns to capital were not improving relative to similar returns elsewhere). It was in this context that their considered opinion was that a hike in energy prices, to the extent that it boosted German and Japanese costs more than it did US costs, was their optimal choice.

As for the comparison with the recent rise in oil and, primarily, food prices, I think this is quite different. For one, I do not see what US interests are being served by the ways in which derivatives in the Chicago marker are pushing food prices to a level that threaten the Fed’s quantitative easing strategy courtesy of the inflationary pressures they are causing. Additionally, back in the early 1970s, the US government was far more in control of financial flows and speculative drives than it is today. Having allowed the genie of financialisation out of the bottle, US authorities are watching it wreak havoc almost helplessly – especially given the inherent ungovernability of the United States, with Congress and the Administration locked into mortal combat with one another. In sharp contrast, back in 1971-73, the US government had a great deal more authority over the markets now.

PP: I’d like to move on to what I think is the key point of your book: namely, that the rest of the world is funding the US’s twin deficits – that is, the rest of the world is funding both the US trade deficit and the US government deficit.

When the twin deficits began to open up in the US there was a fundamental change in the nature of the US economy. Could you talk about this a little?

YV: The change was earth-shattering for America’s social economy. The strategy of allowing the deficits to expand inexorably came hand-in-hand with a series of strategies whose purpose was, quite simply, to draw into the United States the capital flows, from the rest of the world that would finance these growing deficits. In my book I tried to detail four major strategies that proved crucial in generating the capital tsunami which kept America’s deficits satiated: (1) a global boost in energy prices that would affect disproportionately Japanese and German industries (relatively to US firms), (2) a hike in America’s real interest rate (so as to make New York a more attractive destination for foreign capital), (3) a much cheapened American labour that is, at once, greatly more productive, and (4) a drive toward Wall Street financialisation that created even greater returns for anyone sending capital to New York.

These strategies had a profound effect on American society for a variety of reasons: To keep real interest rates high, the nominal interest rate was pushed upwards at a time that the administration, and the Fed, engineered a reduction in wages. The increasing interest rates shifted capital from local industry to foreign direct investment and transferred income from workers to rentiers. The cheapening of labour, which also necessitated a wholesale attack against the trades unions, meant that American families had to work longer days for less money; a new reality that led to the breakdown of the family unit in ways which had never been experienced before. The more family values were becoming the emerging Right’s mantle, the greater their destruction at the hands of the Global Minotaur that the Right was keenly nourishing.

The loss of wage share meant, moreover, that families had to rely more greatly on their home as a cash cow (using it as collateral in order to secure more loans) thus turning a whole generation away from savings and towards house-bound leverage. A new form of global corporation was created (the Wal-Mart model) which imported everything from abroad, used cheap labour domestically for manning the warehouse like outlets, and propagated a new ideology of cheapness. Meanwhile, Wall Street was using the capital inflows from abroad to go on a frenzy of lucrative take-over and merger activity which was the breeding ground for the financialisation which followed. By combining the domestic hunger for credit (as the working class struggled to make ends meet, even though they worked longer hours and much more productively than before), a link was created between financial flows built upon (i) the humble home of the bottom 60% of society and (ii) the financial inflows of foreign capital into Wall Street. As these two torrents of capital merged, Wall Street’s power over Main Street rose exponentially. With labour losing its value as fast as regulatory authorities were losing their control over the financial sector, the United States was changing fast, losing all the values and ditching all the social conventions that had evolved out of the New Deal. The world’s greatest nation was ready for the Fall.

PP: You mentioned the Wal-Mart model just now. In the book you make a good deal out of this model. Could you explain to the readers why you do and what the significance of it is for the broader economy?

YV: Wal-Mart symbolises a significant change in the nature of oligopolistic capital. Unlike the first large corporations that created wholly new sectors by means of some invention (e.g. Edison with the light bulb, Microsoft with its Windows software, Sony with the Walkman, or Apple with the iPod/iPhone/iTunes package), or other companies that focused on building a particular brand (e.g. Coca Cola or Marlboro), Wal-Mart did something no one had ever thought of before: It packaged a new Ideology of Cheapness into a brand that was meant to appeal to the financially stressed American working and lower-middle classes. In conjunction with its fierce proscription of trades unions, it became a bulwark of keeping prices low and of extending to its long suffering working class customers a sense of satisfaction for having shared in the exploitation of the (mostly foreign) producers of the goods in their shopping basket.

In this sense, the significance of Wal-Mart for the broader economy is that it represents a new type of corporation which evolved in response to the circumstances brought on by the Global Minotaur. It reified cheapness and profited from amplifying the feedback between falling prices and falling purchasing power on the part of the American working class. It imported the Third World into American towns and regions and exported jobs to the Third World (through outsourcing). Wherever we look, even in the most technologically advanced US corporations (e.g. Apple), we cannot fail to recognise the influence of the Wal-Mart model.

PP: Finally, where do you see us headed now as we emerge from the shadow of the Global Minotaur?

YV: The Minotaur is, of course, a metaphor for the strange Global Surplus Recycling Mechanism (GSRM) that emerged in the 1970s from the ashes of Bretton Woods and succeeded in keeping global capitalism in a rapturous élan; until it broke down in 2008, under the weight of its (and especially Wall Street’s) hubris. Post-2008, the world economy is stumbling around, rudderless, in the absence of a GSRM to replace the Minotaur. The Crisis that began in 2008 mutates and migrates from one sector to another, from one continent to the next. Its legacy is generalised uncertainty, a dearth of aggregate demand, an inability to shift savings into productive investment, a failure of coordination at all levels of socio-economic life.

[…]