Sunday, 29 August 2010

The Conspiracy Theory – 3: The Mother of All Conspiracies

Truth precludes contradictions. That’s the meaning of explanation. Explanation, whether of a murder mystery or events in the world of finance, is the resolving of contradictions surrounding a narrative.

Take the charter school initiative which I said was being driven by speculative capital. So there are a few hedge fund types behind the charter school movement. Does that constitute the takeover by speculative capital of the country’s education system? Putting it differently, is the push for the expansion of charter schools “the same” as creating the CDO market? Schools are not sexy and exciting ventures the way more well-known speculative capital-driven fields such as derivatives and structured finance are. Maybe school privatization is one of those won’t-hurt-to-make-a-few-extra-bucks-on-the-sidelines ventures of a few entrepreneurs. How do we know it is the full frontal assault of speculative capital on public education?

The question contains the nucleus of the answer. We tell the difference between the two from the scale of the attack; the larger the scale, the more contact points with the old system and, therefore, the more “ironies” and contradictions. What sort of ironies and contradictions, you may ask? Look at this story from the Financial Times of July 29:
At the annual convention .. of the American’s largest teachers’ union, the body’s president accused Mr Obama ... of spearheading the most “anti-educator, anti-union and anti-student” administration he could recall.

To a degree that almost no one anticipated 19 months ago, Mr Obama … had alienated the largest single historical provider of cash and volunteers to the Democratic Party – namely the teachers’ union.

Yet Mr Obama’s reforms, which have been taking place at the state level and often in the teeth of union opposition, have brought about what even critics concede is the most rapid school reforms America has seen in a generation.

And it has all been spurred by an astonishingly small sum of cash. Under [the] “Race to the Top” programme, Washington has offered states the prospect of a share of $5bn in prize money for those that carry out the most thoroughgoing reforms of their schools ... In their quest for a slice of these “competitive” funds – so names because the money bypasses the rigid formula funding methods by which Washington’s spending is normally allocated – a majority of state governments have fallen over backwards to amend the way they run their schools.

The teachers’ unions, meanwhile, have been left gasping at the speed with which their objections have been overruled, often by Democratic-run state governments. “The effect of Race to the Tops has really been a very pleasant surprise,” says Robin Chait, an education expert at the Centre for American Progress, a liberal think-tank. “Nobody would have expected that you could leverage so much change, so rapidly, with such a small pot of money.”
Let us see now. The president of the nation's largest teachers’ union calls the Obama administration the most “anti-educator, anti-union and anti-student” administration he could recall.

How could that be? Obama, a community organizer, a Harvard Law Review editor, a law professor who speaks in long sentences being more anti-educator, more anti-union and more anti-student than, say, Bush and Cheney?

In itself, that is difficult to explain. Then we learn that the teachers’ union has been the “largest single historical provider of cash and volunteers to the democratic party.” Given the role of money in U.S. politics and the historical links of teachers’ union with Democrats, the Obama administration’s hostility towards the union becomes downright impossible to explain, especially in light of the non-confrontational, consensus-seeking approach of the administration to all matters large and small.

There is more.

According to the article, “Mr Obama’s reforms [have taken place] “in the teeth of union opposition, by an astonishingly small sum of cash”, a mere $5 billion that in Washington calculus amounts to small change. “Nobody would have expected that you could leverage so much change, so rapidly, with such a small pot of money,” an education expert says.

How many “ironies” did you count in this story, things that did not make sense or were out of the ordinary?

Some unknown persons, obviously in the position of power and authority, placed the $5 billion earmarked for privatization out of the “strict” federal budget allocation process – quite a feat to pull in itself, no matter how small the sum. Some unknown persons compelled the Obama administration to take a stand against its most powerful and generous backers. That, too, is quite a feat; imagine a Republican president taking a stand against the Chamber of Commerce. Then, someone wrote the language of the cynically named “Race to the Top” program in such a way that all 50 states would fight each other and bend backwards to get their hands on a meagerly sum. The meagerly sum was then leveraged many times to spectacular effects. There was strong arming at the state level, too — in all 50 of them. In New York, for example, where the state representatives were cool to the idea of charter school, their salary increase was tied to, i.e., made conditional upon, their approval of the expansion of charter schools.

At the individual level, these are all conspiracies, in the sense that unbeknownst to the general public, they are plotted and executed to benefit a select few.

But those are not the conspiracies I am talking about.

Step back and look at the chessboard of national politics. Who – or what – could accomplish all these feats in a spectacularly short period of time? Which force is it, stronger than the teachers’ union attacking the system simultaneously at the state and federal level, leveraging a small sum into multiple effects, circumventing the federal budgetary allocation process, forcing the state governments to change the way they run their schools and making the FT editors to describe all this as “reform”?

And, yes, and positioning its teachers as hot and sexy commodities in town, the next “masters of the universe”?

The force is speculative capital, the latest offshoot of finance capital, which continually expands to take over the functioning mechanism of all areas of social activity, including, gradually, those of the government. From Vol. 1:
In the absence of government authority, the only remaining source of discipline was private finance, which stepped in and assumed the role of regulator. Governments achieve stabilization through decree; finance capital does it through arbitrage ... In the absence of government regulation, arbitrage-induced equilibrium is the regulator of markets.
The destruction that follows is through and through. First, by speculative capital pervading all areas of social life, and then, when the takeover is complete and “there are no options”, by destroying the arbitrage relations, i.e., the social relations, that gave rise to it.

The willful ignorance not to see this is the true conspiracy of our age.

I will return with the Epilogue.