Michael Perelman 

The Financial Crisis Goes Beyond Finance

The crisis today in mortgage lending does not come as a surprise to me. I discussed the build up to the crisis in a book published last year, The Confiscation of American Prosperity (1).

The book describes more than three decades of concerted efforts to restructure the economy to respond to the antiauthoritarian spirit of the 1960s. Most important of all, the counterrevolution to the 60s was concerned about a decline in the rate of profits. The objective was to remake the United States as a capitalist’s utopia with strict market discipline for ordinary people, while showing special favors on business. Tax cuts, deregulation, and a more business-friendly legal structure became the order of the day.

In this environment, the legal framework for union organization soon became unfriendly. Success showed up relatively quickly in the labor market, where capital halted the increase of wages by 1972  – the year when real hourly wages peaked. Since then wages have oscillated but never again reached that level.

Profits began to recover, but on closer examination the recovery was unusual. In competitive industries, profits were not particularly high. Profits in producing goods concentrated in industries protected by intellectual property or government favoritism were better. But the big profits came in finance. Even major industrial firms, such as General Motors, Ford, or General Electric began relying on their financial divisions for much of their profits.

What was happening? According to the textbook model of economic growth, new productivity translates into higher wages, which, in turn, create more demand, which spurs industry to produce newer or better products, increasing productivity. In recent decades, debt rather than income spurred demand.

As profits recovered, more affluent people saw their portfolios increasing, creating what economists call the wealth effect: the increasing value of their stocks, and later of their houses, was treated as income, which generated demand. Frequently, people used their houses to borrow money to support this demand.

Production of physical goods was largely neglected. I am reminded of a conversation between Samuel Johnson and James Boswell, a quarter millennium ago. Boswell observed:

“Very little business appeared to be going forward in Lichfield. I found however two strange manufactures for so inland a place, sail-cloth and streamers for ships: and I observed them making some saddle-cloths, and dressing sheep skins: but upon the whole, the busy hand of industry seemed to be quite slackened. “Surely, Sir, (said I,) you are an idle set of people.”

“Sir (said Johnson) “We are a City of Philosophers: we work with our Heads, and make the Boobies of Birmingham work for us with their hands.”(2)

Johnson, of course, was being ironic. The philosophers of the new economy were not. They breathlessly referred to a weightless economy (3). Tom Peters, the management guru, derided old-line businesses as “Lumpy-object purveyors” (4). Even Alan Greenspan is fond of rhapsodizing about how modern production techniques are making the economy lighter and lighter:

“The world of 1948 was vastly different from the world of 1996. The American economy, more then than now, was viewed as the ultimate in technology and productivity in virtually all fields of economic endeavor. The quintessential model of industrial might in those days was the array of vast, smoke-encased integrated steel mills in the Pittsburgh district and on the shores of Lake Michigan. Output was things, big physical things.

“Virtually unimaginable a half century ago was the extent to which concepts and ideas would substitute for physical resources and human brawn in the production of goods and services. In 1948 radios were still being powered by vacuum tubes. Today, transistors deliver far higher quality with a mere fraction of the bulk. Fiber-optics has [sic] replaced huge tonnages of copper wire, and advances in architectural and engineering design have made possible the construction of buildings with much greater floor space but significantly less physical material than the buildings erected just after World War II. Accordingly, while the weight of current economic output is probably only modestly higher than it was a half century ago, value added, adjusted for price change, has risen well over threefold”.(5)

Nobody seemed to sense that anything was awry. Leaders in the U.S. were content to let the modern equivalent of the boobies of Manchester produce their goods in Asian sweatshops, and then borrow the proceeds from their masters to support their consumption.

The game depended upon continued growth, whether illusory or real. Deregulation helped to promote illusions of prosperity. So did the dot.com hysteria of the late 1990s. When the bubble burst, the Federal Reserve came to the rescue with low interest rates. Temporarily lacking sufficient confidence in the stock market, real estate seemed a better bet.

Real estate prices soared. People could borrow more on their houses. And with rapidly rising real estate prices, people could comfortably lend money to people who could not afford the loans because, after all, real estate would always increase in value.

To make the illusion even more solid, people believed that they could avoid risk. Ratings agencies told investors that paper based on this real estate was just a shade more risky than U.S. government bonds. To seal the deal, investors sold “insurance,” which promised to cover losses if the investment would go sour.

This insurance business was so brisk that the amount of insurance sold was many times more than the face value of the investments. After all, selling this insurance was an easy way to profit from real estate market, which had ahead to go nowhere but up.

When the music stopped playing, the regulators discovered that nobody was watching the store. Far more insurance was sold than the insurers could afford to cover. The ratings agencies are putting their seal of approval on the paper to get more fees.

The government just agreed to buy up bad debt to the tune of $700 billion, bailing out both crooks and incompetents. The government debt will give the neoliberals excuse to cut more programs to help needy people, while bailing out the rich.

Something similar happened a few decades ago with another war, a different Bush, and the same John McCain. Many years ago, Lyndon Johnson, who would have just celebrated his hundredth birthday, found himself stuck in a war he couldn’t win. He also knew that if he raised taxes to pay for the war, the public would demand an immediate halt with a fury that he could not resist. Johnson relied on borrowing, which raised interest rates.

Savings and loan institutions, like the investment banks today, borrowed short and lent long. In this case, people put their savings in the banks and the banks lent out money on 30-year mortgages. To prevent gouging and make mortgages affordable, the savings and loans were prevented from paying interest rates high enough to keep depositors from exiting, which could leave them bankrupt.

The Reagan administration, including daddy Bush, moved to deregulate the savings and loans. Given this newfound freedom, crooks and nincompoops (including the current President Bush’s younger brother) rushed in to take advantage of profiting from other people’s money. As the scope of this disaster was becoming obvious, five senators, including John McCain along with Alan Greenspan (perhaps the Godfather of the recent financial crisis), rushed in to defend one of the more egregious Savings and Loan operations run by Charles Keating. Oh, yes, a small savings-and-loan in Arkansas, which was connected with Bill Clinton (who later allowed Congress to deregulate the current financial system, led by Senator Phil Gramm, John McCain’s chief economic adviser) also ran into difficulties.

The savings-and-loan scam crashed leaving the government to pick up the pieces at a cost that is still debated, but which was still well over $100 billion – pocket change today.

The difference today is that our politicians now promise effective regulation this time around, just as they did with Sarbanes-Oxley in the wake of crash of Enron and the rest of the dot.com boom.

The Financial Side of the Financial Crisis

This crisis should be a teachable moment, but speculative excesses are a part of the DNA of capitalism. Leo Tolstoy began his epic novel, Anna Karenina, with the famous observation, “All happy families resemble one another, but each unhappy family is unhappy in its own way”. Much the same can be said about depressions. Each depression seems unique and subject to as many interpretations as the most dysfunctional family. Hence what is unique to this crisis is the way that its build up departs from the general textbook model. Also, as I mentioned above, the other defining characteristic of this crisis is that debt rather than income spurred demand.

Financial assets demand a different treatment. Capital reacts with horror when wages increase, demanding the Federal Reserve to slam on the brakes. In contrast, soaring prices of financial assets are presumed to be incontrovertible evidence of a healthy economy.

The increasing value of these assets spurs people to increase consumption, often taking on debt, confident that their assets will appreciate even more. As Mark Twain observed about an earlier Gilded Age: “Beautiful credit! The foundation of modern society … “I wasn’t worth a cent two years ago, and now I owe two millions of dollars”.”

In 2000, when the excesses and frauds of Enron, World Com, and the dot.com boom came to light, financial markets shuddered. The Federal Reserve came to the rescue lowering interest rates, which reduced monthly mortgage payments, allowing people to buy more expensive housing.

Once housing prices begin to rise, housing becomes an investment as well as the source of shelter. In addition, people, who suffered losses during the dot.com bust, saw housing is a safer investment than the stock market. Housing then transmuted into personal ATM machines, allowing people to borrow freely on the rising value of their property.

Underlying this financial froth, something more ominous was occurring. Business refused to spend much for investment in productive activities. Again, the textbooks tell a different story. They teach that high profits translate into investment, which create jobs, spurring demand, and making the economy grow. Such was not the case this time around.

Earlier this year, the British financial journalist, Martin Wolf, observed:

“The US itself looks almost like a giant hedge fund. The profits of financial companies jumped from below 5 per cent of total corporate profits, after tax, in 1982 to 41 per cent in 2007.”(6)

This estimate is probably too conservative because many nonfinancial companies increasingly depend upon finance. General Electric, and in their more prosperous years, Ford and General Motors, largely depended upon finance. Retail companies offer credit cards in effect, selling insurance on their products in the form of extended warranties.

The U.S. Department of Commerce reported that in 1992 about a third of all workers employed in U.S. manufacturing industries were actually doing service-type jobs (e.g., in finance, purchasing, marketing, and administration). Updating this work, needless to say, has not been a high priority for government agencies.

Corporations also spend mind-boggling quantities of money just to purchase their own stock. After all, increasing stock prices boost executives’ bonuses. For years, Exxon has been spending more money for stock buybacks than capital expenditures, all the while whining that the company needs more incentives to drill for oil.

What investment does occur is largely financed by depreciation allowances rather than previous profits.  John Bellamy Foster offers an important measure of this reluctance to invest:

“Nine out of the ten years with the lowest net non-residential fixed investment as a percent of GDP over the last half century (up through 2006) were in the 1990s and 2000s. Between 1986 and 2006, in only one year – 2000, just before the stock market crash-did the percent of GDP represented by net private non-residential fixed investment reach the average for 1960-79 (4.2 percent). This failure to invest is clearly not due to a lack of investment-seeking surplus. One indicator of this is that corporations are now sitting on a mountain of cash – in excess of $600 billion in corporate savings that have built up at the same time that investment has been declining due to a lack of profitable outlets.”(7)

Finance is attractive for another reason: it employs relatively few people. The intriguingly-named FIRE sector, which includes finance, investment, and real estate, employs only about 8 percent of the private labor force. So, 8 percent of the workers generate 41 percent of the profits. Massive investments in information processing make such results possible.

Of the investment that does appear, finance may represent a disproportionate share. The government does not have recent data on types of investment by industry. The data do show that investment on information processing and software is about 37 percent greater than investment in industrial equipment and manufacturing equipment. Of course, information processing is also important in manufacturing, but the data is suggestive.

Where Did The Money Go and Will Jobs Also Disappear?

On Monday, September 29 the stock market lost more than $1 trillion, about as much money as the Gross Domestic Product for an entire month. The next day, two thirds of the value suddenly reappeared. Yet, for the most part the tumult left most people unaffected, at least for the moment. More important, will the evaporation of all of this wealth affect ordinary people?

Karl Marx’s concept of fictitious capital is very useful in understanding these wild swings. I have explored this subject in more detail in an earlier book, entitled Marx’s Crises Theory: Scarcity, Labor, and Finance.(8)

For Marx, capitalism uses markets to distribute labor into productive activities, but it does so very imperfectly. Part of the problem is that lack of knowledge about the future causes imperfect investments. These imperfections magnify as the economy seems to prosper making people become giddy about their chances of success.

Crises are capitalism’s way of purging unproductive investments. In this way, crises eventually make the economy stronger, unless they become so severe that they shatter the foundation of capitalism.

The crises will become more violent if the distribution of income becomes too lopsided, leaving investors flush with money, while consumers are relatively strapped. Massive amounts of money will flow into speculative ventures, creating bubbles. In effect, a market which is supposed to be a wonderful feedback system to inform capitalists about the needs of society, takes on a perverse logic of its own.

Eventually, the bubble pops and there is hell to pay. The question today is how extreme this shock will be. Capitalism has shown quite a bit of resilience in the past. What is happening now could turn out to be relatively mild or could be severe.

I use San Francisco as an analogy for my students. There will eventually be a serious earthquake that will do enormous damage. Nobody can predict what will happen. Even when the earth begins to tremble, the severity of the event may be in doubt.

Wall Street uses a somewhat related term, leverage, to describe the ability to magnify potential profits by investing borrowed money. When the economy begins leveraging, business borrows money to invest – not necessarily in productive assets. Leveraging can continue as long as people feel confident enough to finance these investments.

The government’s modest limits on leverage have been systematically weakened, to the point where investment banks would be putting up as little as 3 cents, and even less, for each dollar invested. The riskiness of such practice should be obvious. A mere 3% drop in the investment would wipe out the bank’s own share of the investment.

The Federal Reserve also promoted increased leverage by holding interest rates low. Other regulators also paved the way for more leverage. Companies that choose the path of lower profits and lower risks are written off as stodgy and old-fashioned. Their stocks will flounder, reducing executive’ bonuses. So, Wall Street investors willingly increased their leverage and risk. After all, investors prefer companies with high profits. Few are willing to take the time or have the expertise to understand the risks that might make profits appear high.

In Wall Street-talk, increasing leverage works so long as investors maintain a balance between fear and greed. By fear, Wall Street means a reluctance to take on too much risk. Although Wall Street normally applauds greed, it associates excess greed with a foolhardy approach toward risk. During euphoric times when fear of risk subsides, people put money in ridiculous schemes.

In his delightful book, Charles Mackay, related tales of shady operators bilking early investors a few centuries ago.

“One projector set up a company to profit from a wheel for perpetual motion. Another projector proposed “A company for carrying on an undertaking of great advantage, but nobody to know what it is.” “Next morning, at nine o’clock, this great man opened an office in Cornhill. Crowds of people beset his door, and when be shut up at three o’clock, he found that no less than one thousand shares had been subscribed for, and the deposits paid. He was thus, in five hours, the winner of 2000 pounds.  He set off the same evening for the Continent. He was never heard of again.”(9)

The newfound wealth during times of growing leverage can create more demand, which can increase jobs and wages. As noted previously, such has not been the case. Speculative wealth has not produced growth in wages for ordinary people or any significant growth in jobs. In fact, cutting jobs to increase profits has been a major factor in sustaining the boom. A few years ago, the business press praised this practice as financial engineering, as if it were providing a productive service.

One factor that contributed to the lopsided economic growth without jobs, which characterized the recent decades, is the practice of leveraged buyouts. Private equity companies, as they are known, buy up other companies using borrowed money, often based on the assets of the target companies. The takeover artists claim that they can create managerial efficiencies, making their takeover look attractive to potential investors. In reality, they charge their targets exorbitant fees, often paid for by debt that the companies must eventually pay back. Then, to cover this burden, the companies must cut both wages and jobs, as well as looting significant value from pension plans. Private equity businesses than turn around and sell these supposedly rejuvenated, but actually hobbled companies to an unsuspecting public, which fail to see the similarity between such investments and the perpetual motion machine that Mackay described.

In describing the necessity of a bailout for finance, the alarmists, who are not necessarily wrong, point to the job losses associated with the corporate restructurings that will follow bankruptcies. But these restructurings have been going on for decades. The bailout, however, is intended to facilitate a continuation of the destructive financial practices, which have also caused significant hardship to labor.

Obviously, a collapse will also harm workers and other ordinary people, but in the wake of a collapse the country will stand a better chance to restore some sanity to the economy.

Conclusion: Capitalism 101 (A Foundational Course)

Capitalism is the most efficient system known to mankind. Central to this efficiency is the supposed ability of markets to channel capital where it is most effective. The current financial crisis might be expected to throw some doubts on this dogma, but I do not expect that to be the case.

For example, in 2001, in the wake of dot.com bubble, the New York Times reported on one of the many excesses of the period:

“In the last two years, 100 million miles of optical fiber – more than enough to reach the sun – were laid around the world as companies spent $35 billion to build Internet-inspired communications networks.  But after a string of corporate bankruptcies, fears are spreading that it will be many years before these grandiose systems are ever fully used.”(10)

As mentioned earlier, the response was not to rethink the system, but to double down lowering interest rates to re-ignite the stock market. Investors, the government, and even ordinary people applauded the decision of Federal Reserve Chairman Greenspan, who appeared to be the wisest man in the universe at the time.

Greenspan’s manipulation of the interest rate appeared to be so beneficial, because it occurred without any direct effect on the proverbial taxpayer. Parenthetically, why is it that this taxpayer ranks so much higher in our concern relative to the workers who make everything possible?

In retrospect, Greenspan’s policy provided the fuel that helped to make the current crisis more threatening. Just as the solution to the dot.com crisis produced the current crisis, the present bailout, if it works at all, will create the preconditions for the next one.

The purpose of the bailout is to create confidence. Back in the 19th-century, the governor of Illinois gave an excellent analysis of the way confidence worked in financial markets. He said that confidence “could only exist when the bulk of the people were under a delusion. According to their views, if the banks owed five times as much as they were able to pay and yet if the whole people could be persuaded to believe this incredible falsehood that all were able to pay, this was ‘confidence’.”

His words may perhaps be the most succinct analysis of fictitious capital that I have read.

Now class, here is the question for all the students in Capitalism 101: explain to me how is that markets are so efficient in directing capital where it is most needed. Extra credit if you can do so without any giggles.

Michael Perelman is professor of economics at California State University at Chico, and the author of fifteen books, including Steal This Idea: Intellectual Property Rights and the Corporate Confiscation of Creativity, The Perverse Economy: The Impact of Markets on People and the Environment, Railroading Economics: The Creation of the Free Market Mythology, and The Confiscation of American Prosperity: From Right-Wing Extremism and Economic Ideology to the Next Great Depression. His daily reflections on various political economic issues can be found at his blog, Unsettling Economics.

References:

(1) Michael Perelman, The Confiscation of American Prosperity: From Right Wing Extremism and Economic Ideology to the Next Great Depression, Palgrave Macmillan (2007)

(2) James Boswell, Life of Johnson, 6 vols., Oxford University Press (1934-64)

(3) Diane Coyle, The Weightless World: Strategies for Managing the Digital Economy, MIT Press (1998).

(4) Tom Peters, The Circle of Innovation: You can’t shrink your way to greatness, Knopf (1997).

(5) Alan Greenspan, “Remarks” at the 80th Anniversary Awards Dinner of The Conference Board, New York, October 16, 1996.

(6) Martin Wolf, “Why it is so hard to keep the financial sector caged”, Financial Times, February 6, 2008.

(7) John Bellamy Foster, “The Financialization of Capital and the Crisis”, Monthly Review, April 2008.

(8) Michael Perelman, Marx’s crises theory: Scarcity, labor, and finance, Greenwood Press (1987)

(9) Charles Mackay, Extraordinary Popular Delusions and the Madness of Crowds (1852)

(10) Simon Romero, “Shining Future Of Fiber Optics Loses Glimmer”, The New York Times, June 18, 2001.

Partho Sarathi Ray 

Science and the Age of Enlightenment

Modern science, as we know it today, is the daughter of the European Enlightenment. That age of intellectual ferment beginning in the early 18th century established “reason”, instead of divinely ordained revelation, as the basis of knowledge. At its core was the questioning of traditional institutions, morals, and customs which had previously upheld the supremacy of the church in the intellectual sphere, and feudal relations in the social sphere. In this intellectual atmosphere, science, the process of systematic pursuit of knowledge, underwent a huge qualitative change from its earlier reliance on scriptures and classical Greek authorities like Aristotle, into a methodology dependent on reason, critical questioning, and establishment of clear relationship between cause and effect by direct observation. As Rene Descartes, one of the intellectual giants of the Enlightenment, famously declared, and Karl Marx, probably the most complete intellectual offspring of the Enlightenment, adopted as his favourite motto, “de omnibus dubitandum“, that is, “Doubt everything”, became the reigning methodology of scientific enquiry.(1) Based on this methodology of critical questioning emphasized by the rationalists like Descartes, Spinoza and Leibniz, and the complementary methodology of direct observation emphasized by empiricists like Locke, Berkeley and Hume, modern science was born, and further developed over the period of three hundred years. Therefore science, as we know it today, is considered to be an objective understanding of nature, a system of knowledge that explains the material basis of reality, independent of the nature of the observer and transcending the social or political conditions of the time.

Modern science is one of the greatest intellectual triumphs of humanity, as man has taken a giant leap forward from the infancy of his curiosity, when every natural phenomenon bore divine or diabolical agency, to an age where all of his questions seem to be answerable under the powerful illumination of science. Science seems to have revealed objective truths about material reality, truths independent of the time and space of their discovery, truths for all ages, truths that give science the aura of transcendence. And attesting to this power of science has been the great advances of technology that have sent humans to the moon and given us insights into the very basis of life.

The dialectical nature of science

As practicing scientists, this aura of objectivity of science gives us a sense of destiny, makes us feel that we are in the pursuit of understanding material reality as it is, independent of the subjective conditions around us. And to the layperson this makes science appear to be infallible and all-powerful, representative of ultimate truths. However, this objectivism in science also opens the door to a mechanical materialism as science is now thought to deal with objective properties of matter that transcends the subjective conditions that might be a result of human activity, although science is essentially a human activity. It also gives rise to reductionism and determinism, where the properties of smaller and smaller parts of matter are thought to solely influence the properties of “wholes”, in increasing orders of magnitude. Marx, who had also arrived at a materialist conception of the world, however rejected this mechanical materialism, instead insisting on a dialectical analysis of nature that recognized that humans and nature exist in a coevolutionary, and interactive, relationship.(2) Engels’ Dialectics of Nature was an unfinished attempt in this direction which was advanced by a generation of British scientists in the 1930’s, who were committed to a historical materialist and dialectical philosophy.(3) These scientists, Hyman Levy, Lancelot Hogben, J. D. Bernal, Joseph Needham, J. B. S. Haldane, and historian/philosopher of science Benjamin Farrington – struggled to retain within the emerging natural sciences the possibility of dialectical uncertainty and opposed their reduction to the mechanistic materialism which has been the reigning philosophy of science.(4) Growing out of the work of these early critical intellectuals, though undeveloped and still at times insufficiently dialectical, a more developed science grounded in materialist dialectics came to the fore in the 1960s and 1970s with the work of Marxist-influenced biologists – particularly Richard Lewontin, Richard Levins, and Stephen Jay Gould at Harvard, then the leading center of evolutionary biology. Their work provided a genuinely dialectical materialist approach to science that questioned some of the long-held beliefs about the transcendence of science and suggested that science, and our understanding of it, is a product of the dialectical relationships between humans and nature and between humans and their social condition.

Science and capitalism

To understand this dialectical nature of science, we need to look at the socio-economic context in which modern science was born and have henceforth developed. At the time when the Enlightenment was changing the intellectual horizon of Europe, the socio-economic conditions were also being fundamentally and irreversibly changed by the birth of a new mode of production, capitalism. As the Enlightenment was questioning the traditions that upheld the feudalistic relations of production, capitalism was breaking down the same production relations. The two processes were so complementary, that looking at it from the basis of historical materialism, we can understand that the material basis for the intellectual ferment that gave rise to the Enlightenment was actually the change that was happening in the way in which the productive property was owned and controlled, combined with the corresponding changes in the social relations between individuals based on their connection with the process of production. As the feudal nobility and the church was losing the ownership and control over the means of production and the serf, previously bonded to his feudal master and his estate, was becoming an agent free to sell his labour, the intellectual climate that had upheld these relations for the past five hundred year or so, was also disappearing. The idealism inherent in the philosophical thought of the previous centuries had looked at the world as an idealized place, divinely conceived and maintained, where man’s relationship with nature, just as his relationship with other members of the society, was static and ideal. These ideas of stasis and stability were being fundamentally changed into a notion of natural and social evolution. Change was in the air, and change was in the thoughts of the intellectual giants of the time. And out of this ferment was born modern science, with the imprint of the times as its birthmark. Therefore, if the Enlightenment is the mother of modern science, the father is undoubtedly capitalism. And the new science, as it developed, carried the indelible marks of this birth, such that science, as we understand it today, is capitalist science. The concept of change, of impermanence, which was so important to the process of replacement of feudalism by capitalism, also became a central tenet of science. Just as the ideas of change in society were formalized and systemized by Marx in his historical materialism, the concept of change in nature was ordained as the central tenet of the theory of evolution by Darwin, undoubtedly one of the greatest scientific achievements of all times. The idea of the constancy of change, rather than constancy itself, has become a central idea of science, and especially of biology.

Capitalism also put the individual as the central player in society. It was no more the church, or the nobility, or the royal families that owned the means of production in society. It was no more the serf tied to his master and his land by ancient feudal relations who was required for the mode of production that capitalism was engendering. Instead, it was the free individual, freed from the age-old ties of kinship and loyalty, from the hierarchy of the church, free to sell his goods and labour power, the bourgeoisie and the proletariat, who was the motive force behind the capitalistic mode of production.  This new emphasis on the individual was celebrated in John Locke’s Two Treatises of Government, where he stated that individuals in society had “natural rights”, including the right to property.(5) Locke’s writing had great influence on the bourgeois revolutions of the 18th century, the American and French revolutions. This celebration of individualism in the social sphere left its imprint over scientific thought, in the form of Cartesian reductionism.(6) Descartes contributed the idea of studying smaller and smaller parts of matter to understand the nature of material reality, and this methodology called “reductionism” is universally followed in science today. Reductionism placed the atom in the centre of the physical world, just as the individual occupied the centre of the social. This idea of the freely-interacting atom, free to make and break bonds with other atoms, gave birth to the atomic theory of matter and the to fields of nuclear physics, and later of quantum mechanics, areas that defined scientific enquiry in the 20th century.

Reductionism has also played a very influential role in biology. The rediscovery of the laws of heredity, originally formulated by the Austrian priest Gregor Johann Mendel, in early 20th century, gave birth to the field of genetics.(7) Later, the discovery of the material basis of heredity, the gene, showed that it was this all important molecule, the DNA, which transferred genetic information from the parent to the offspring, and suggested that it could determine every property of an individual, from his height to his intelligence. The gene was accorded the same place in biology that the atom had been accorded in physics and chemistry. This gave rise to what is referred to as “genetic determinism”, which, more to the awestruck common man than to the practicing biologist, meant a determination of every human trait and behaviour by the genes one carried.(8) Bourgeois ideology, which sought to justify existing social hierarchies, has utilized genetic determinism to justify and rationalize social and economic inequalities in terms of domination that was biologically derived and teleologically predetermined – whether in terms of racism, sexism, or differences in intelligence. Posited against this, and somewhat as a reaction to extreme formulations of genetic determinism, has been a sort of superorganic holism, mainly in ecology. This holism preferred to look at entire ecosystems, at the sum total of the interactions between individuals or between individuals and the environment. These two schools of thought in biology, at many times in opposition to each other, went on along with the nature versus nurture debate that rages on in biology, where the contention is whether it is the genes or the environment which controls and determines human traits and behaviour.

Dialectical biology

The above-mentioned biologists, Lewontin and Levins, and Gould, rejected these one-sided notions of mechanical reductionism and superorganic holism and the hierarchical conceptions of life and the universe that they both generate. Instead they suggest a dialectical and materialist approach that understands that the world “is constantly in motion. Constants become variables, causes become effects, and systems develop, destroying the conditions that gave rise to them”.(9) They propose that “things change because of the actions of opposing forces on them, and things are the way they are because of the temporary balance of opposing forces”.(10) This introduces a dialectical understanding of relations between organisms and nature. This is very important for biology, as biology is at the same time at the cutting edge of science today and is also close to our lives as individuals and species. Understanding of biology influences our responses to multiple things of vital importance to the well being of our society and the world, from the Nazi conception of racial superiority, to the caste divides that still render our society apart, to the religious fundamentalist opposition to the teaching of evolution in U.S. schools. An understanding of the dialectics of biology allows both practicing biologists and lay people to formulate responses to such issues without being overawed by the objectiveness and infallibility which are claimed for science.

It would be interesting to look at a particular example to illustrate the dialectical approach to biology, drawing from Lewontin and Levins’ book, The Dialectical Biologist.(11) If we look at the disease tuberculosis, which is still a major affliction of people in India, and also in other countries of the world, the reductionist approach tells that the disease is caused by the pathogenic bacterium Mycobacterium tuberculosis. However, from a holistic point of view it would be said that malnutrition is the cause of tuberculosis, because many people infected by the bacteria do not develop the disease if they are not suffering from malnutrition. In contrast, a dialectical understanding of biology will suggest that it is the interaction between Mycobacterium infection and nutritional status which determines whether a person will have the disease or not. So, looking at cures for tuberculosis should involve studying both these conditions which dialectically interact to bring about the disease. However, it can also be argued that many people who have healthy nutritional status also have tuberculosis after being infected by M. tuberculosis. The dialectical approach can be further extended to explain this phenomenon: in the case of nutritionally sufficient people suffering from tuberculosis, it is the dialectical relationship between the infecting bacterium and the susceptibility genes of the individual which determines whether the person will suffer from the disease or not. Therefore, at every level of interactions that exist in nature and constitute life, an entity is both a subject and object, and a dialectical analysis is necessary to understand these interactions between organisms and the environment and genes and the environment.

The field of biology where the dialectical approach is most important is evolutionary biology. Evolution by natural selection is the grand unifying theme of all modern biology and its proposition by Charles Darwin in his 1859 book On the Origin of Species was a monumental achievement in the history of science.(12) However, Darwin’s theory of natural selection was also formulated in the backdrop of the socio-economic context of his times, marked by the intense class struggle between the bourgeoisie and the working class in the well developed capitalist economy of contemporary England.  Indeed, the Darwinian idea’s of the struggle for survival and the survival of the fittest was influenced by the ideas of Thomas Malthus, who in his An Essay on the Principle of Population suggested that as the rate of increase of the population is greater than the rate of increase in available resources, there is always a competition for the limited resources which results in a segment of the population being relegated to poverty.(13) Darwin’s theory of selection between the individuals of the same species, based on their “fitness” or the ability to leave the maximum number of offsprings, was therefore a product of the intellectual climate of that heyday of capitalism. However, to suggest that the theory of evolution by natural selection was the product of a certain socio-economic context certainly does not detract from its validity as the most appropriate, and proven, explanation of the diversity and complexity of life.

Darwin elevated the conditions of existence – external selection pressures – to primacy in explaining evolution, so as to establish natural selection as the dominant force behind the evolution of species. However in this process, he established a view of natural selection as predominantly one-sided – i.e., the external factors were seen as largely determining the evolutionary process, and not as equally the consequence of the evolution of life. Whereas this ultra-Darwinian view of evolution focuses nearly exclusively on the external, modern evolutionary biologists often focus nearly exclusively on the internal in their acceptance of genetic determinism. Lewontin and Levins suggested a third, a dialectical approach to understanding the interactions of internal and external factors in determining evolution, stating “natural selection is not a consequence of how well the organism solves a set of fixed problems posed by the environment; on the contrary, the environment and the organism actively codetermine each other.”(14) This focus on interactions, transformation, and historical constraints over the process of natural selection is immensely important in developing a dialectical understanding of the process of evolution. The other great evolutionary biologist, Stephen Jay Gould went further to state “the three classical laws of dialectics [formulated by Engels] embody a holistic vision that views change as interaction among components of complete systems, and sees the components themselves…as both products of and inputs to the system. Thus the law of “interpenetrating opposites” records the inextricable interdependence of components: the “transformation of quantity to quality” defends a systems-based view of change that translates incremental inputs into alterations of state; and the “negation of negation” describes the direction given to history because complex systems cannot revert exactly to previous states.”(15) Gould’s influential idea of evolution by “punctuated equilibrium”, in which organisms evolve by large leaps interspersed by long periods of evolutionary stasis explicitly follows the laws of dialectics.(16) Gould considered the dialectical laws to be explicitly punctuational. According to him “They (the laws of dialectics) speak, for example, of the ‘transformation of quantity into quality.’ This…suggests that change occurs in large leaps following a slow accumulation of stresses that a system resists until it reaches breaking point. Heat water and it eventually boils. Oppress the workers more and more and bring on the revolution.”(17) The dialectical approach is an immensely powerful methodological advance in our conception of science and is essential for the transition from “capitalist science” to a “socialist science”.

Towards a socialist science

Every epoch in human history is marked by its own intellectual tradition. Therefore, the Enlightenment, and the revolution in scientific thought that it engendered, marks the epoch of capitalism. It does not mean that science becomes subjective, but the imperatives before science, the questions scientists ask, and the methodologies adopted to answer them reflect the dominant socio-economic relations of the time. Therefore, the transition to a socialist society must be accompanied by a revolution in scientific thought that would result in the development of a “socialist science”. This new science would be based on a clear dialectical materialist understanding of the relationships between man (and all organisms) and nature, and between man and society. The failure to bring about this revolutionary change in scientific thought and practice was one of the major failings of the socialist experiments of the 20th century, and contributed in no small part to their collapse. Yet for sometime in the 1920s and early ’30s, a materialist and dialectical approach was the intellectual foundation for many prominent Soviet scientists, such as V. I. Vernadsky, N. I. Vavilov, and Alexander Oparin, in their various research projects regarding the creation of the biosphere, the original centers of the agricultural world, and the emergence of life.(18) All of this subsided, however, with the tightening grip of Stalinism in the 1930s. A more rigidly mechanistic approach became dominant in Soviet science (taking the name of “dialectical materialism” while vacating it of any meaning), putting an end to the early stages of a hopeful and exciting investigation that had begun to mark the birth of socialist science. The most adverse, and long-lasting, effect of this approach was the rise of Lysenkoism, which pretty much destroyed biology in the Soviet Union and barred the way for the budding revolution in scientific thought.(19) Trofim Lysenko, who was in charge of agricultural affairs in the Soviet Union, practiced a form of Lamarckism, which derived from the theories of heritability of acquired characteristics and had already been disproved by Darwin’s theory of evolution by natural selection.(20) With the blessings and active support of the Stalinist establishment Lysenko went about imposing these non-scientific practices, mainly in agricultural science and genetics, and denounced practicing geneticists as proponents of “fascist” or “bourgeois” science, leading to the execution of many and the imprisonment of Vavilov, the greatest Soviet biologist. Lysenkoism replaced a proper dialectical understanding of heredity and evolution by a forced belief that heredity had a limited role in evolution and changes could be brought about in organisms by human intervention which would be inherited in subsequent generations. Although these ideas were mainly adopted in agricultural practice, leading to processes like “vernalization” of wheat, it had a wider ideological implication that Soviet practices could actually purge humans of “inherited” bourgeois instincts and lead to the creation of the “socialist man”. Lysenkoism marked a complete failure of understanding the dialectical approach to science, instead adopting a mechanistic approach based on pseudo-scientific theories. When Lysenkoism was finally discarded in 1964, Soviet science tried to return to the mainstream of western scientific practice, any attempts at developing a truly dialectical approach to science having been long abandoned. A socialist science never came into being in the Soviet Union.

As the internal contradictions of capitalism are becoming more glaring, the scientific thought processes that have been the product of the capitalist era would also become insufficient for explaining, and managing, the various challenges confronting humanity. Just as science of the feudal era was replaced by capitalist science, the latter would have to be replaced by a socialist science. A dialectical understanding of science is needed in order not only to comprehend how the world came to be, but also to understand how it can be changed.

References:

(1) Descartes R. The Philosophical Writings Of Descartes in 3 vols. Cottingham, J., Stoothoff, R., Kenny, A., and Murdoch, D., trans. Cambridge University Press (1988).

(2) Foster J.B. Marx’s Ecology. Monthly Review Press (2000).

(3) Engels F. Dialectics of Nature. International publishers Co (1968).

(4) Clark B. and York R. Dialectical Nature: Reflections in Honor of the Twentieth Anniversary of Levins and Lewontin’s The Dialectical Biologist. Monthly Review (2005).

(5) Locke J. Two Treatises of Government. Book Jungle (2008).

(6) See (1)

(7) Bardoe C. Gregor Mendel: The Friar who grew peas. HN Abrams (2006).

(8) Gould J. S. The Mismeasure of Man.  Revised and Expanded. Norton (1996).

(9) Levins R. and Lewontin R. C. The Dialectical Biologist. Harvard University Press (2006).

(10) Ibid.

(11) Ibid.

(12) Darwin C. The Origin of Species. Barnes and Noble Classics (2003).

(13) Malthus T. R. An Essay on the Principle of Population. Prometheus Books (1998).

(14) See (8)

(15) Gould J.S. “Nurturing Nature” in An Urchin in the Storm: Essays about Books and Ideas. Norton (1987).

(16) Gould J.S. and Eldredge N. “Punctuated equilibria: An alternative to Phyletic gradualism” in Thomas J. M. Schopf, ed. Models in Paleobiology. Freeman (1972).

(17) Gould J.S. “The Episodic Nature of Evolutionary Change” in The Panda’s Thumb. Norton (1980).

(18) See (4)

(19) See (9)

(20) Lecourt D. Proletarian Science? : The Case of Lysenko. Humanities Press (1977).

“EMBEDDED” IN ARROYO’S MILITARY, US SOLDIERS ENGAGE MUSLIM INSURGENTS IN THE PHILIPPINES

“With six hundred engaged on each side, we lost fifteen men killed outright, and we had thirty-two wounded – counting that nose and that elbow.  The enemy numbered six hundred – including women and children – and we abolished them utterly, leaving not even a baby alive to cry for its dead mother. This is incomparably the greatest victory that was ever achieved by the Christian soldiers of the United States.” – Mark Twain, Weapons of Satire (Syracuse University Press, 1992, p.172)

Unless US soldiers rape a Filipina date, or Abu Sayyaf bandits kidnap American tourists, nobody notices what’s going on in the Philippines today. But now that Britney Spears just belted out her tempting warble of “sneaking into the Philippines,” can the PENTAGON Special Forces not be far behind to get a piece of the action? Before you can say “Yo Mama!” US troops are found already “embedded” in the Empire’s most Americanized islands where savage class wars have been raging for decades.

The US invaded the Philippines in 1898 during the Spanish-American War, but it created the “first Vietnam” (to quote the historian Bernard Fall) when 1.4 million Filipino recalcitrants had to be “neutralized” to convert the revolutionary Philippine Republic into an “insular possession.”  Mark Twain praised the US government’s success in acquiring “property in the three hundred concubines and other slaves of our business partner, the Sultan of Sulu,” referring to the “civilizing mission” of US diplomacy over the Muslim inhabitants of the southern Philippines (E. San Juan, US Imperialism and Revolution in the Philippines, 2007). But in the 1906 siege at Mt. Dajo and the 1913 rout at Mt. Bagsak, both in Jolo, the US military had to massacre thousands of Muslim men, women and children to complete the islands’ pacification. The victors seemed not to have learned anything, so history is repeating itself.

A hundred years after, the U.S. seems to be doing the job again.

Washington-Manila Homeland Jihad?

The government offensive to retake space occupied or “liberated” by the Moro Islamic Liberation Front (MILF) enters its seventh week. Disguised as a police action, the 6,000 soldiers of the Armed Forces of the Philippines (AFP) battled about 3,000 MILF guerillas in the provinces of Lanao del Norte, North Cotabato, Maguindanao and Sarangani.  By the last week of September, the total casualty figure surpassed three hundred as government troops (with their US advisers/trainers) and Moro (Muslim citizens of the Philippines) militants clashed in the southern Philippines. The scale of violence and magnitude of civilian suffering reached a crescendo enough to alarm the European Union, but not Bush, Condoleeza Rice, nor the two US presidential candidates.  BBC News (9/26/2008) reported that the International Committee of the Red Cross bewailed the plight of tens of thousands of refugees and evacuees, the killing of civilians by indiscriminate AFP aerial and artillery bombardments, and the potential for sectarian “ethnic cleansing.” According to the National Disaster Coordinating Council, more than 300,000 people have fled their homes, several hundred people have been killed and injured, and $2 million worth of crops and infrastructure damaged. At least 120,000 people have died since fighting broke out 40 years ago between the Muslim separatists and the neocolonial state, with no end in sight.

With full-scale war between the formidable Moro guerillas and the AFP about to sweep the country, the U.S. military presence suddenly caught media attention. It was confirmed by government officials that the headquarters of the U.S.-Philippines Joint Special Operations Task Force Philippines (JSOTF-P) is found inside Camp Navarro of the AFP’s Western Mindanao Command in Zamboanga City, Mindanao. Accessed only by U.S. personnel, the physical infrastructure was sealed by permanent walls, concertina wires and sandbags, with visible communication paraphernalia (satellite dishes, antennas, etc.). From this place, US military operations against domestic insurgents – whether belonging to the Abu Sayyaf Group (ASG) or to the MILF, the Moro National Liberation Front (MNLF), or the New People’s Army (NPA) – are launched and directed. In lieu of economic-social reforms, the government’s militarist solution to poverty, unemployment, and extra-judicial killings and kidnappings – over 1,000 victims so far – will only create a refugee crisis, more atrocities and “collateral damage” of innocent civilians, loss of national sovereignty, and impunity for criminal violence committed by the military and police.

Re-occupying “Our Possessions”

The Camp Navarro U.S. outpost is only one of many disposable, low-profile “lily-pad” stations of “forward deployment” for the US military in the post-9/11 period.  Tom Engelhardt recently counted more than 750 US military facilities in 39 countries. But many more are not officially acknowledged, such as the 106 bases in Iraq or those in Afghanistan; or in countries like Jordan and Pakistan where bases are shared (Tomgram 2008; Chalmers Johnson, Sorrows of Empire, 2003). This applies to US military installations in the Philippines. US troops in the Philippines refer to their Jolo launching-pad as “Advance Operating Base-920” devoted to “unconventional warfare”(Herbert Docena, Focus on the Global South Media Advisory, 8/15/2007). The JSOTF-P started in 2002 in Mindanao, part of the Pentagon’s realignment of overseas basing network (Michael Klare, “Imperial Reach,” The Nation 4/25/2005). The bases are now called “cooperative security locations” (CSL), a euphemism mentioned in the May 2005 report of the US Commission on Review of Overseas Military Facility Structures, or Overseas Basing Commission. CSLs can be existing military or private facilities available for US military use. These are located in Clark, Subic, Mactan International Airport in the Visayas, in General Santos City airport, in the aforementioned Zamboanga AFP outpost, and in other clandestine areas (Julie Alipala, Philippine Daily Inquirer, Mindanao Bureau, 11/26/2007).

The Arroyo regime readily hands out apologias for the presence of 400-600 US military personnel in the country purportedly serving “mutually beneficial ends,” as the US Embassy claims. Retired General Edilberto Adan of the Presidential Commission on the VFA (Visiting Forces Agreement) openly excuses the U.S. embedded military headquarters as a necessary fixture to maintain “control over their units.”  When Arroyo visited the US in May 2003, she boasted of having obtained from Washington $356 million in security-related assistance, the largest military aid package since the closing of US bases in 1992. She claimed that US military aid had grown to “more than 100 million dollars annually from 1.9 million dollars three years ago” (Inquirer News Service, 5/27/2003). Two million dollars were allocated for “Sulu rehabilitation” while four million was allocated to Basilan, the site of the Balikatan exercise in 2002.  As a “major non-Nato ally,” Arroyo announced that Bush will continue to give aid to support the Philippines’ “war on terrorism,” not for economic development or for social services, much less for social justice and equity.

“War on terrorists” (“terrorists”, of course, refer to those opposed to US policies; the exploitative neoliberal impositions of the World Bank, World Trade Organization, International Monetary Fund) becomes the Arroyo regime’s blanket term to legitimize US infringement and violation of Philippine sovereignty. What results is a war of terror on humanity, a “homeland security imperialism” whose latest symptomatic crisis is the collapse of the US financial system and the erosion of US economic capacity to maintain hegemony (John Bellamy Foster and Robert McChesney, Pox Americana, 2004).

Ghouls of Pacification 

A brief historical background may be helpful. When the U.S. granted nominal independence to the Philippines in 1946, one of the conditions for this grant was the retention of 23 military installations all over the pacified colonial territory. It was legitimized by the 1951 Mutual Defense Treaty which, under the aegis of Cold War anticommunism, provided for US intervention in case of foreign military invasion by a communist power (Daniel B, Schirmer and Stephen Shalom, The Philippines Reader 1987).

In reviewing the historical record of US colonial subjugation of the islands, William Blum reminds us how the US helped suppress the Huk peasant rebellion in 1940-50. At least one US infantry division collaborated with the Filipino military in killing Huk sympathizers (about 500 peasants, with thousands jailed and tortured) during the months before and after the elections of 1946. In the 1950s, through the Joint US Military Advisory Group and Col. Edward Lansdale (who became notorious for the Phoenix assassination program in Vietnam), then President Ramon Magsaysay used US military advisers, weapons and logistics in unconventional types of counterinsurgency schemes against peasant rebels. Among the CIA agents in government, Arroyo’s father Diosdado Macapagal “provided the Agency with political information for several years and eventually asked for, and received, what he felt he deserved: heavy financial support for his campaign…” Blum concludes that by the early fifties, “Fortress America” in the Philippines was securely in place: “From the Philippines would be launched American air and sea actions against Korea and China, Vietnam and Indonesia…. On the islands’ bases, the technology and art of counter-insurgency warfare would be imparted to the troops of America’s other allies in the Pacific” (Killing Hope, NY 2004, p. 42).”

The methodology of US domination changed after the end of the Cold War. Covert intervention adopted the guise of “persuasion” through the rituals of electoral democracy. This was clearly demonstrated after the February Revolution in 1986 when Marcos was overthrown by a popular-cum-military uprising and the elite oligarchy headed by Corazon Aquino was restored to power. The scenario that Philip Agee described in 1992 may still be valid: “As for the Philippines, absent agrarian and other significant reforms, US military intervention could be a last resort should the New People’s Army achieve enough momentum to create significant destabilization or even victory.  For the time being, continue the CIA-Pentagon ‘low-intensity’ methods already under way.  If unsuccessful and stalemate continues, consider a negotiated settlement as in El Salvador and rely on CIA-NED electoral intervention to exclude the National Democratic Front from power” (Ellen Ray and William Schaap, Covert Action: The Roots of Terrorism, 2003). It appears that it is with the separatist MILF, not the NPA (debilitated by vigilante incursions and internal squabbles), that the US is interested in striking a deal with the help of the US Institute of Peace and partisan Malaysian mediators. It is also an implementation of a flexible divide-and-rule strategy.

Visiting to Overstay: Penetration and Bondage

Immediately after the U.S. invaded Afghanistan after 9/11, the Philippines became the second battlefront in the “war on terrorism.” In February 2002, Arroyo allowed the U.S. Special Operations Command-Pacific to conduct “training exercises” in Mindanao.  Earlier, 660 US soldiers arrived in the Philippines, expanding Washington’s “preventive” war to Southeast Asia. The San Francisco Chronicle (18 Jan. 2002) editorialized on the “Next Battle: Philippines,” pointing out that the demonized ASG is so discrepant from Al Qaeda, and that poverty and land reform are the causes of conflict in the US neocolony. The first Balikatan war games were held involving 4,773 Filipino and U.S. troops. About 2000 US soldiers participated in counterinsurgency operations disguised as “civic action” in several provinces where the NPA was active: Pampanga, Zambales, Nueva Ecija, Cavite and Palawan. This intrusion of the US military was considered legal under the VFA ratified in 1998, just seven years after the Philippine Senate rejected the renewal of the 1947 RP-US Military Bases Agreement, thus closing the two huge US bases in Asia Clark and Subic) where the US enjoyed extraterritorial rights and inflicted all kinds of abuses and indignities on Filipinos (see Teodoro Agoncillo and Milagros Guerrero, History of the Filipino People, 1970). In June 2002, at least 1,200 military personnel comprised the largest US mission outside Afghanistan (Bobby Tuazon, Unmasking the War on Terror, 2002).

The VFA signifies the legitimized sell-out of Philippine sovereignty. Under the VFA, the US can enter the Philippines anywhere and hold military operations. It restricts the Philippine government in checking US aircrafts and ships for nuclear weapons banned by the Constitution. US authorities have jurisdiction over their servicemen who commit crimes in the Philippines while on duty. The flagrant example is the case of Marine Corporal Daniel Smith, convicted for rape last Dec. 4, 2006. Even before his appeal could be acted upon, the Arroyo government surrendered Smith to the custody of the US Embassy, placing him beyond the jurisdiction of local authorities. In October 2007, US officials promised that rape will no longer be committed during war games. Col. Ben Matthews II, commander of the Marine Aircraft Group and co-director of the Talon Vision ’08 exercise (in which Smith and his three co-accused officers were involved), spoke about “the ethics and morality of individuals, not just soldiers” (Tonette Orejas, “US Marines promise no more rape,” Inquirer10/21/2009). Meanwhile, the whereabouts of Smith has become a matter of public speculation, or “rumor-mongering” (to use the Marcos dictatorship’s neologism) as the Supreme Court investigates the legality of his transfer.

Aside from the VFA, US troops, attached employees, and their war materiel have been given unlimited and unrestricted freedom of movement, flexibility and maneuver by the Mutual Logistics Support Agreement (MlSA, 2003; renewed 2008), and the Security Engagement Board (SEB, 2006). The MLSA permits US forces to use government facilities for storage and pre-positioning of equipment as part of strategic deployments during US war maneuvers in the Asian-Pacific and Middle Eastern regions. All three agreements (reinforcing the Cold-War vintage 1951 Mutual Defense Pact and the Joint US-RP Military Advisory Group) that legalize a permanent  “temporary” U.S. military base of operations within the country eviscerate national sovereignty. Both the Arroyo bureaucracy and the mercenary AFP continue to demonstrate their function as tried-and-tested instruments of US global foreign policy and imperialist aggression.

Today, the new agreement covers “non-traditional threats,” a rubric covering a wide spectrum of reasons including terrorism, drug trafficking, piracy, and disasters such as floods, typhoons, earthquakes and epidemics.  According to Arroyo’s factotums, the US is not engaged in actual fighting; instead, US servicemen are merely providing critical combat support services by way of intelligence purveyance, logistics and emergency evacuation for AFP counter-terrorism operations. In addition to Balikatan, Kapit-Bisig war exercises have been carried out with three components: training and equipping the AFP, giving humanitarian and civil assistance, and supporting local military campaigns against Muslim militants (E-Balita, 7/25/06). Counter-terrorism thus merges with anti-narcotics and disaster preparedness to produce the public-relations mantra of fighting “transnational crimes” (E-Balita, 5/25/2007).

When typhoon Frank wrought havoc in the islands, Bush dispatched the nuclear-powered aircraft carrier group led by the USS Ronald Reagan to the Philippines allegedly to assist in local relief and recovery efforts with its F-18s and 6,000 crew. Arroyo cited its tasks of aerial damage assessment and search-and-rescue operations.  The fleet hovered around the Sulu Sea (where Moro insurgents operate) and Panay Island (where the NPA is active). Senator Rodolfo Biazon and progressive groups questioned Arroyo’s welcoming of nuclear-powered vessels (which violates the Philippine Constitution’s ban on the entry of nuclear weapons) and the secrecy of its movements (Juliet Labog-Javellana, “US aircraft carrier stays at edge of RP waters,”Philippine Daily Inquirer, 6/28/2008). Arroyo’s flunkeys cheered this “humanitarian” gesture of GI Joes as more consoling than the Presidential group-hug of disaster victims which Arroyo herself couldn’t give while she was tied up in Washington begging for more money to prop up her beleaguered, subalternized regime.

An earlier intrusion of the USS Blue Ridge in February 2007 occurred during Operation Friendship, a community service project with the AFP. The ship was reported to be involved in a goodwill mission, providing medical assistance and building furniture for a school in Manila (http://rjhm.janes.com/21 March 2007). It was also in this year that the joint war-games named  “Cooperation Afloat Readiness and Training (CARAT)” to enhance the interoperability of the navy and marines were transferred from Subic and Zambales in Luzon to Zamboanga and Basilan, known bailiwicks of the ASG and the Indonesian-based Jemaah Islamiyah (EBalita, May 25, 2007).

One other alibi for US military presence in the Philippines is provided by the Pentagon doctrine of “stability operations,” non-combat activities aimed at “quieting domestic disturbances” such as the U.S. pacification drive (1899-1916) to suppress native and Moro resistance, leading to the genocide of 1.4 million Filipinos.  The chief excuse for US military presence, however, invokes the threat of international and domestic “terrorism” which justifies U.S. security support for development projects and AFP counterinsurgency actions. Beginning with the Reagan administration in the eighties up to today, the U.S. doctrine of “low intensity warfare” envisioned a flexible combination of “economic assistance with psychological operations and security measures” (Michael Klare and Peter Kornbluh, Low-Intensity Warfare, New York 1989). With the demise of the Soviet Union, “low-intensity warfare” evolved into the preventive or preemptive war on Al Qaeda and extremists, including torture, “extraordinary rendition,” and other “shock-and-awe” tactics.

Hypocrisy and Mystification Galore

In a “Focus on the Philippines” Special Report, Herbert Docena has summarized from various news reports and documents the characteristics of the US “unconventional warfare,” among them, the mixture of covert combat actions with humanitarian projects, training, and other civic actions, which are viewed as “integral” to “foreign internal defense.” Static defensive garrison forces have also been replaced by “mobile expeditionary operations,” as shown in the US operations in Sulu and Mindanao. Such counterinsurgency schemes are conducted “under the guise of an exercise,” as a US official stated (Unconventional Warfare, 2007, p. 24). Further, massive documentary evidences now exist that confirm US troops handling military equipment, defusing landmines, and using military equipment during actual hostilities. Post 9/11 US military doctrine and practice form part of a larger global war effort to repair and buttress US hegemony in various parts of the world, including the Philippines and other “friendly” nations. To achieve military and political supremacy, the US cannot accept the limitations imposed by orthodox diplomacy, treaties, and formal agreements.

The fraud of “humanitarian” succor has been repeatedly exposed. Dr. Carol Pagaduan-Araullo, chair of BAYAN (the largest federation of nationalist groups), addresses this pretext in her commentaries in Business World (9/20/2008). She asserts truth to power: “The Arroyo regime deliberately obfuscates the unbending aim of US geopolitical and military strategy in the Philippines and elsewhere: the pursuit of its own Superpower interests.  These include securing areas with strategic communication and supply lines and resources, primarily oil (such as in the Middle East, Central Asia and Southeast Asia), trade routes (such as the South China Sea) and other geographically strategic areas that will ensure its achievement of unrivaled global power.  Domestically, the US has a keen interest and long history of interfering in the country’s internal affairs, most especially countering the growing strength and influence of the local anti-imperialist, patriotic and democratic movement.”

No one today is fooled by the alibi that the miniscule ASG militants numbering 400 (wrongly identified as an al-Qaeda affiliate) constitutes a real threat to US internal security. The real targets of US intervention are the New People’s Army and the Communist Party of the Philippines, classified on 8/9/2002 by Colin Powell’s State Department as “terrorists.” In 2005 then Defense Secretary Avelino Cruz stated that the Maoist NPA is the “greatest internal security threat,” requiring the government to enter peace talks with the larger insurgent MILF (Gary Leupp, “Maoist and Muslim Insurgencies in the Philippines,” Bulatlat, 5/22-28/2008). This view dovetailed with the belief of Admiral Timothy Keating, chief of the US Pacific Command, who confirmed that the US priority targets included not only the ASG and the Jemaah Islamiyah but also the NPA: “If the government of the Philippines tells us that they need help on the New People’s Army, we would consider and respond. So, yes,” the US would lead the military assault on the NPA” (Christine Avendano, Inquirer.net, 6/28/2007).

Keating recently participated in the meetings of the RP-US Mutual Defense Board and the Security Engagement Board, two agencies directing joint war games and planning counterinsurgency agendas. In response, Fidel Agcaoili of the National Democratic Front called Keating’s remarks “interventionist,” adding that US military support for the puppet government has failed to quell the 37-year old insurgency. Communist Party spokesperson Gregorio “Ka Roger” Rosal said that the US military has long been directly engaged in unconventional, covert combat operations against the 13,500 NPA fighters in 120 guerilla fronts, backed by several thousand militias and mass partisans. Using humanitarian missions as cover, US military conducted intelligence-gathering activities in Bicol and Quezon, as well as gave training, technical assistance, weaponry and intelligence information to the Arroyo regime (Inquirer.net, 6/29/2007).   This may also explain the acrobatics of Arroyo’s stance toward the MILF and the US willingness to support MILF notions of “ancestral domain.” In short, US military presence is meant to help preserve the Philippines as a neocolonial dependency, a bastion of US hegemony, by supporting the corrupt and morally bankrupt ruling elite (landlords, compradors, bureaucrat capitalists) as their faithful agents in exploiting and oppressing 90 million Filipinos.

Ancestral Domain as “Killing Fields”

Events have overtaken the good intentions of everyone. Arroyo’s abrupt scrapping of the already initialled Memorandum of Agreement (MOA) between the neocolonial state and the MILF last August 4 exploded into fierce bloodletting. Over 250,000 civilians became refugees, with several hundreds killed, chiefly due to the indiscriminate aerial and artillery bombardment of the AFP against two small MILF detachments. Why the sudden unilateral deceit and treachery?

After more than four years of peace negotiations facilitated by the Malaysian government and the US Embassy (through the US Institute of Peace), Arroyo’s officials initialed a peace pact that would end several decades of conflict between six million Moros (the 2008 CIA World Factbook counts only 4.5 million out of 96 million Filipinos) and successive administrations since Marcos. But local officials appealed to the Supreme Court to stop the final signing, thus precipitating the hostilities. MILF chair Al Haj Murad Ebrahim said that Arroyo failed to inform her constituencies (local officials, other indigenous groups, etc.). It turned out that the real motivation behind the agreement was a secret stratagem to change the Constitution and install a federalist system so that Arroyo and her clique can maintain power after 2010 when her term ends. Clever ploy, indeed, but easily exposed and deflated.

Apart from the possibility of charter change, one may ask: Was Arroyo really intent on pacifying the MILF, just as former president Fidel Ramos pacified the MNLF? One lesson that escaped both parties today is the neutralization if not dismantling of MNLF gains won through enormous sacrifices by way of Misuari’s acquiescence to the 1996 peace agreement, which provides a working model for the MOA. Kenneth Bauzon drives home a point not fully articulated by academic pundits: the 1996 agreement “is essentially a neoliberal formula designed to bring to an end the MNLF’s more than two decades of insurgency. At the same time, the agreement provided legal cover for the entry of capital – both domestic and foreign, and both commercial and philanthropic – to facilitate the integration of an otherwise untapped region, the ARMM, into the global neoliberal world economic order” (in Rethinking the BangsaMoro Crucible, ed. Bobby Tuazon, CENPEG 2008). This explains why US Special Forces have tenaciously and not so surreptitiously embedded themselves in the deeply compromised state apparatus. And why the US Embassy (via the US Institute of Peace and Islamic mediators) insinuated itself in the peace talks, hoping that the Moro “ancestral domain” would easily become grist to the predatory “free market” machinery, the global capitalist commodifying engine, now suffering serious breakdown in Wall Street and Washington.

Amid this stormy landscape enter the “humanitarian” do-gooders. In the AFP’s pursuit of two MILF commanders (Ameril Ombra Kato and Abdullah Macapaar, alias Commander Bravo), US Special Forces were sighted inside the 64th Infantry Battalion Camp in Datu Saudi Ampatuan, Maguindanao. Bai Ali Indayla of the Moro human rights group Kawagip testified that the soldiers were engaged in covert operations, such as the supervision of drones or spy planes (used in 2006 to track down the ASG leaders) and predator missile strikes. This was confirmed by Major Gen. Eugenio Cedo, then commander of the Western Mindanao Command (Philippine Daily Inquirer 9/10/2008). As usual, the US Embassy denied that the soldiers were involved in actual combat; they were only responding to the AFP request for aerial surveillance to determine conditions of the terrain and visibility, for “future civil-military projects,” to quote Rebecca Thompson, US Embassy Information Officer.

Cheering from the Sidelines?

The record of US “non-involvement” in combat is too long to be fully rehearsed here. Marites Danguilan Vitug and Glenda Gloria’s well-researched book Under the Crescent Moon: Rebellion in Mindanao (2000) may be consulted for the larger context of US meddling. Suffice it here to mention some tell-tale examples.  Asia News (July 2004) reported that US Special Forces established a training camp in Carmen, North Cotabato, to teach 150 AFP soldiers unconventional warfare tactics, night combat sniping and surveillance techniques (People’s Weekly World, 7/17-23/2004). Two German interns of Bantay Ceasefire, supported by the European Center for Conflict Prevention, witnessed US P-3 Orion planes conducting surveillance flights in contested villages in Maguindanao where the Abu Sayyaf and MILF elements operate (Evgenia Lipski and Tobias Schuldt, “What are US soldiers doing in Mindanao?” Bulatlat, 8/21-27/2005).

One is reminded of an earlier incident in 2002: the house of a Moro peasant in Basilan island, Buyong-buyong Isnijal, was raided. He was shot in the leg by an American soldier, Sgt. Reggie Lane, who participated in the actual operations. Up to now, no serious investigation has been undertaken to render justice to the victim, Just as nothing has been done to clear up the complicity of four US soldiers in the murder of Corporal Ibnul Wahid, as witnessed by his widow Sandrawina Wahid. She was also one of the witnesses who survived the Feb. 4, 2008 Maimbung massacre. She testified to the presence of US troops during the assault of AFP elite forces on Barangay village, Ipil, Maimbung, Sulu, Eight civilians (a three-month pregnant woman, two children, two teenagers, and her husband, a soldier on vacation) were slain in that combined civic-military action (Carol Pagaduan-Araullo, “Streetwise,” Business World, 9/12-13/2008).

In November 2005, 4 fully armed US soldiers joined the AFP in an encounter with the MNLF followers of Nur Misuari in villages around Indanan, Sulu. They were presumably on a “humanitarian mission,” as claimed by Col. Mark Zimmer, public affairs officer of JSOTF-P (Inquirer News Service, 9/25/2005). Two OV-10 planes dropped several bombs and fired rockets on several villages, killing 15 civilians. After the 2004 bombing of a ferry with over 100 victims, the hunt for the ASG and the Jemaah Islamiyah intensified. Two main suspects of the 2002 Bali bombings were supposed to be holed up with Khaddafy Janjalani, the ASG leader, in Jolo (E-Balita, 8/2/2006). The MNLF in Sulu were accused of coddling ASG gunmen. Despite the disclaimers, two groups (Union of Muslims for Morality and Truth, and Concerned Citizens of Sulu) demanded the immediate pullout of US troops from Sulu province for violating the VFA.  Jolo city councilor Temojin Tulawie asked: “What would US soldiers be doing within the perimeter of the area of engagement right after the bombs have fallen in Indanan if they were not party to the military offensives?” (Inquirer News Service, 9/28/2005). “They are not peacemakers but provocateurs and warmongers,” Tulawie added. Human Rights Commissioner Nasser Marohomsali asserted that the involvement of US troops clearly violated the 1987 Philippine Constitution which prohibits foreign military from participating in direct combat operations on Philippine soil.

One last incident caps this brief review. In December 2007, US troops ordered the shutting down of a hospital in Panamao town, Sulu, and prevented medical personnel from treating patients after sundown with threats to shoot anybody in the hospital if there is an attack (Al Jacinto, Arab News, 1/13/2008.  This has angered Muslim villagers and activists early this year, amid preparations for Balikatan 2008 war games in Sulu and Zamboanga where hundreds of US troops are stationed.  Washington bureaucracy, however, cannot be deterred by native complaints. In the midst of successive military exercises in Basilan, Sulu, and Zamboanga in 2005, US ambassador Francis Ricciardone revealed that the US Agency for International Development was giving two-thirds of its grants to the region at an average of $50 million a year.  Why such generosity?  Obviously, to suppress the “bad guys” of the Moro and communist insurgencies, Ricciardone confessed. This is the reason why the US “established a semi-continuous military presence,” hence the bases issue is, for Ricciardone, “an artifact of people’s imagination” (Carolyn Arguillas, MindaNews, 1/11/2006).

Despite the wrath of the Sulu communities, Christopher Hill, US assistant secretary for East Asia and the Pacific, justified the US role of assisting AFP campaigns, together with the police, in countering terrorism (GMANews.TV, 5/25/2006). What he meant was that it was all right to violate the Philippine Constitution and circumvent the vaguely and loosely formulated VFA. BAYAN secretary general Renato Reyes contended that US intelligence work, reconnaissance, and training of AFP soldiers “are part and parcel of actual combat operations” and their embedding in AFP units “shows that GI Joe is more than just an adviser and observer” (News Release, 8/15/2007). A melodramatic but highly prejudiced “insider” account of how US intelligence personnel (CIA and other unsavory characters) and US Special Forces collaborated with local officials and military agents may be found in Mark Bowden’s narrative of the pursuit and killing of one ASG leader, Abu Sabaya, entitled “Jihadists in Paradise” (The Atlantic, March 2007; for a corrective to Bowden’s racist-ethnocentric, perspective, see Jose Torres Jr, Into the Mountain: hostaged by the Abu Sayyaf, 2001).

Amid daily testimonies of the carnage and destruction affecting millions of inhabitants in the southern Philippines, progressive representatives in the Philippine Congress have urged a thorough probe into the permanent presence of US troops. Personalities such as Rep. Maria Climaco of Zamboanga City and Amina Rasul, lead convenor of the Philippine Council for Islam and Democracy, have also urged action to stop US meddling on behalf of the corrupt, bankrupt Arroyo despotism. BAYAN and other civil-society groups recently petitioned the Legislative Oversight Committee on the VFA to terminate all agreements allowing foreign troops (not only the US but also the Australians and other nationalities) interfering in the ongoing hostilities, thus violating the Philippine Constitution (News Release, 9/25/2008). They also demanded that the Department of National Defense and AFP arrange “the immediate pull-out of US troops and the dismantling of their facilities in Mindanao. However, unless millions of Filipinos commit open civil disobedience and paralyze traffic, business, and government operations – that is, unless massive “people power” erupts to protest the corruption, puppetry and criminality of the US-Arroyo regime – it is unlikely that the Arroyo clique and its American patrons would scrap the VFA and all other instruments of US control. Fighting in the jungles and countryside, in synchrony with parliamentary mass urban mobilizations, may have to accelerate until the comfortable lives of the elite and the complacent middle class becomes impossible to sustain.

E San Juan, Jr. directs the Philippines Cultural Studies Center in Connecticut, USA. He was recently visiting professor of English & Comparative Literature at the University of the Philippines, and will be a 2009 Spring Fellow of the W.E.B. Du Bois Institute, Harvard University. His recent books are US Imperialism and Revolution in the Philippines (Palgrave), In the Wake of Terror (Lexington Books), Balikbayang Sinta: An E. San Juan Reader (Ateneo University Press), and From Globalization to National Liberation (University of the Philippines Press).