Our Duty In A World Of Betrayal

It is the duty of the revolution to put an end to compromise, and to put an end to compromise means taking the path of socialist revolution.
-Lenin, Speech On The Agrarian Question November 14 (1917)

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From El Gran Capitan

 

Torts is the law of damages. It is the godmother of one of the most popular characters in the legal realm: the greedy, unethical personal injury lawyer. Chasing ambulances from dawn to dusk, ready to turn your scraped knee into a traumatic, devastating injury through all the smoke and mirrors the cold, impersonal legal system provides. Like many mythical figures, it derives from a real phenomenon. I once interviewed at a law firm for a paralegal position where one of the two partners pretty closely resembled this character, at least by what assessment I could make in thirty minutes. He all but asked me how good at lying I was and whether I could “handle” clients. But overall, as the film Hot Coffee aptly demonstrates, personal injury lawyers are not like this stereotype and personal injury cases are rarely if ever as easy to dismiss (though again, there are exceptions: for a laugh, check out the case Van Camp v. McAfoos).

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The End of Dodd-Frank Part 1: Thus Spoke Volcker

The Volcker Rule, also know as United States Code Section 1851, was the consolation prize for the Glass-Steagall Act failing to get reinstated. It prohibits banking entities from engaging in proprietary trading or acquiring “any equity, partnership, or other ownership interest in or sponsor a hedge fund or a private equity fund.” For Glass-Steagall Act supporters, it was viewed as too little. For those who support continuing the abolition of Glass-Steagall, such as presidential candidate Hillary Clinton, the Volcker Rule is viewed as a go-around. They want to get rid of it because the very same banking connection to proprietary trading, hedge funds, and private equity funds helped bail out these institutions during the recession. And then they, in turn, were bailed out by the federal government and other banks.

The Volcker Rule was made explicitly in recognition of this dynamic: the constituents said no more bailouts, so Congress made it impossible for bailouts to ever happen again, at least in the way they did with Bear Sterns and others. One criticism raised quite fairly is that the Volcker Rule may not actually prevent bailouts. But often it is under the delusional rationale of free-market dogmatism, rather than recognizing that a porous, watered down version of Glass-Steagall will never be a substitute, even in the short term, for the reinstatement of Glass-Steagall. Not to mention that it was only this year that the rule actually took effect, and it won’t be until next summer that we see audits to check for compliance. Until then, the effects  of the rule are at best conjecture. But we do not have time: the last minute sellings of prop desks and CLO’s at least demonstrate continued interests by the banks to engage in activities prohibited by the Volcker Rule.

The most succinct but comprehensive capitalist argument against the Volcker Rule I have found was provided George W. Madison, Gary J. Cohen, William A. Shirley  in the Banking and Financial Services Policy Report, entitled “Reconsidering Three Dodd-Frank Initiatives: The Volcker Rule, Limitations On Federal Reserve Section 13(3) Lending Powers, AND SIFI Threshholds” (34 No. 6 Banking & Fin. Services Pol’y Rep. 1). They divide criticisms of the Volcker Rule into four types: Risk, Liquidity, Complexity, and Competition. While they do not address Competition directly because they claim their criticisms are not concerned with it, their underlying ideology, both express and implicit, centers on competition as regulatory and I will criticize that in turn. However, because I see the questions of liquidity and complexity as being subsumed within the question of risk itself, I will in the interest of time focus solely on the arguments made about risk.

The structure of “Reconsidering…” introduces each criticism with Chairman Volcker’s rejection of similar criticisms. While I doubt the truncated summaries are not necessarily accurate representations, I do agree that Volcker’s justifications often fall short or are simply wrong. In other words, this is not me countering Madison et al’s arguments to defend Volcker’s as much as to assert options outside such a constricted binary.

The financial industry is rather torn about how to handle the criticisms of risk. Risk is far too important to their industry for them to accept changes that significantly lower risks. Let’s give a brief illustration of what risk means to finance. Before the United States’ credit rating was downgraded to AA+, U.S. Treasury bonds in a one year period were practically a risk-free investment: there should be no difference between your expected return and actual return. That looks like this:

risk free

 

Where is the variance curve? There is none: the actual results will always line up with expected results. Now let’s look at hedge funds, as conveniently set next to the more secure mutual funds:

 

YTD HF performance_1

 

And the risk of hedge funds, despite providing unconscionable high returns during the housing bubble and the recession, has steadily been increasing.

 

20140621_ABC2_0

 

And since banks started making these sorts of investments post-Glass-Steagall, their standard deviations have on average increased. A simple, non-causal relation I’m sure.

And that is precisely what is criticized in “Reconsidering…”: “a correlation between the proprietary trading activity and the losses certainly existed, but not a significant causal relationship” (34 No. 6 Banking & Fin. Services Pol’y Rep. 1, 3). Madison et al. instead say that the problem is in “supersenior” collaterized debt obligations (CLO’s). Blaming CLO’s is convenient for industry shills: “supersenior” CLO’s are not stratified into risk tranches, under the mistaken belief that properly construct CLO’s could not completely default. The problem with that belief: (1) quite a few CLO’s were not properly constructed (2) there was risk, and the banks hid it in undercapitalized bond insurers. In both these instances, you have causes of the collapse that are easy to atomize into the fraud or mistakes of a few “bad apples.” So if CLO’s are the main problem, what is Madison et al.’s solution? Capital requirements. In 2004, the S.E.C. allowed the largest broker-dealers to apply for exemptions. Because that exemption is still in place, it gives the more conservative critics of the recession a solid campaign target to obfuscate their agenda to chip away at Dodd-Frank piece by piece. The Financial Crisis Inquiry Commission Report (FCIC) does talk about how thin capital was an important factor:

In the years leading up to the crisis, too many financial institutions, as well as too many households, borrowed to the hilt, leaving them vulnerable to financial distress or ruin if the value of their investments declined even modestly. For example, as of 2007, the five major investment banks—Bear Stearns, Goldman Sachs, Lehman Brothers, Merrill Lynch, and Morgan Stanley—were operating with extraordinarily thin capital.FCIC Report pg. xix

But here are the problems: first, the bad apple theory finds no correlation between the indisputable direct actors of the crisis and actors subverting capital requirements through the 2004 exemptions. Not only was Bear Stearns, public “bad apple” enemy number one, within the current capital requirements, they also happened to be within the pre-2004 capital requirements as well. It turns out that leverage held by the investment banks was not the fault of the 2004 exemptions at all:

Leverage at the investment banks increased from 2004 to 2007, growth that some critics have blamed on the SEC’s change in the net capital rules…In fact, leverage had been higher at the five investment banks in the late 1990s, then dropped before increasing over the life of the CSE program—a history that suggests that the program was not solely responsible for the changes. –FCIC Report pg. 153-154

The FCIC Report is being generous in saying “not solely responsible.” The capital requirement exemptions were not in anyway a major factor in the recession. They are merely a convenient scapegoat for the ill-informed and the zealots of free-market ideology. Such scapegoating is possible when the inability to see the forest from the trees pervades U.S. understanding of economics, or rather the inability to see the inherent contradictions of capital from the specific manifestations of it in various financial factors and instruments. As David Harvey points out, these contradictions are never actually solved, but rather moved around. His focus, as a geographer, is how this is done geographically, noting the examples of the U.S. to Brazil and the West to Greece. But geography is only one facet of place – financial investments, I would argue, are another. And this is the fundamental nature of capital; Karl Marx in Grundrisse states that-

…[capital] already appears as a moment of production itself. Hence, just as capital has the tendency on one side to create ever more surplus labour, so it has the complementary tendency to create more points of exchange…The tendency to create the world market is directly given in the concept of capital itself. Every limit appears as a barrier to be overcome. –Grundrisse pg. 334

And as finance experiences growth, it creates more points of exchange, which means more trades, in shorter time, with far more risk. Thus, the futility in “solving” the problems which caused the recession by imposing a single regulation that merely attempts to limit, not even growth itself, but the speed of growth. Madison et al.’s claim that short-term exchanges are not at issue is farcical. Bear Stearns demonstrates, about as clearly as one can get, that the singular function of lax capital requirements is not needed to engage in risky growth and, as Marx states in Grundrisse, such haphazard search for more points of exchange is intrinsic to capital itself.

But the Volcker Rule is hardly exempt from this criticism either, though built on slightly stronger foundation. As a Marxist myself I do not believe that there could ever be a set of regulations capable of preventing the uncontrollable swarming of capital. But while “every limit appears as a barrier to be overcome,” some barriers are far easier to overcome than others. The Volcker Rule certainly sets stronger, though not impermeable, limits to the reproduction of the conditions that created the recession than any single capital requirement ever could.

An apt analogy would be three “average people” in a race against one another. One runner is given a track that is simply a one mile line, and not given any restrictions. The second runner is given an identical track, but told “You can only run at 7 mph at any given time. But we will only check your speed once in the race, and will give you 30 seconds to slow down if you’re over the limit.” The last runner is given a labyrinth where the correct path is one-mile long, but allowed to run as quickly as they want. The first runner and second runner will likely have identical times: the average one mile time of a person is 8:18, or about 7.22 mph. That additional 0.22 mph could easily be made up while the referees are not watching. The last runner will likely have the worst time. Unlike the second runner, the last runner has actual limitations to how they can run.

But the Volcker Rule itself contains a number of loopholes, most notably the convoluted (d)(1)(G) exception to certain activities around hedge funds and private equities or the provisions governing activities outside the United States in (d)(1)(H) and (d)(1)(I). The confidence of the banks themselves in the face of the impending implementation of restrictions this coming summer may indicate that they have found, or expect to find, a means of subverting the Volcker Rule. Regardless, the specific naming of proprietary trading, private equity, and hedge funds allows future financial instruments that can be defined outside of these while serving similar functions to be engaged with by banking entities. In other words, the Volcker Rule may not be a labyrinth as much as a fork, one path with a dead end and the other leading to the finish line. How effective it will be is far too dependent on a large number of circumstances for Leftists to be comfortable with it even in the short term, and that is not even counting the 13 proposed pieces of proposed legislation (a political analysis of their viability would take far too long to go into here, but worth noting nonetheless).

Another piece of proposed legislation could alter the Volcker Rule if enacted, and that’s Elizabeth Warren and John McCain’s 21st Century Glass-Steagall Act. While hardly the means of putting an end to any triggering of mass dispossession by recession, the strict separation of banking activities significantly reduces the effect of risky financial actors on commercial banks, as well as ending poor assessments of risk that give undue power to diversification of investments regardless of the kind of investment. Further, for those of us interested in pushing for worker cooperative banking, nationalized banking, public banking, etc., a Glass-Steagall reinstatement would decrease the short-term competitive edge commercial banks have by investments too risky for small, community or municipal public banks to take on. While it only has six co-sponsors and the bill’s prospects are rather grim, the idea has enough popularity to stay in the media, albeit with a far less Leftist lens than I give it.

But we can all act on this issue immediately in two simple ways. The first is to refuse the resignation to commercial banks being above the law and regulation. To refute the rewriting of history to claim that the recession was not caused by a lack of regulation. To state plainly that the banks got bailed out and we got sold out, and that we cannot accept that as business as usual. And the second is to divest. Divest from predatory financial institutions. Divest from the big commercial banks that have profited from investing in those institutions. Stop making investments with the sole goal of profit, and start taking conscious measures to avoid the schemes that hurt people of color, women, and the working class. To do so completely is impossible: there is no ethical consumerism when capital only exists from the surplus value extracted from labor. But to change that larger problem requires rebuilding society in a way that will be made far more difficult if our communities are torn apart by increasingly brief gaps between recessions.

Read Part 2 on Orderly Liquidation Authority here.

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The End of Dodd-Frank

6281762077_bc5ab9a1d5_zMost Leftist groups face a fairly unwieldy task of challenging a whole range of complicated issues with far less funding and time than their conservative counterparts. That is compounded by an overall focus on trying to prevent individual people from suffering which, while a noble endeavor, does not change the conditions that created that suffering.

So I want to start producing more technical legal but no less radical analysis, especially for the purposes of crafting both policy for the near future and setting our sights on some more distant visions of a socialist world. These are obviously the conjectures of a 1L student with a rather transparent agenda, so take that for what it is worth: if anything, this exercise is more to build up my own experience. I welcome any criticisms that readers may have.

I have three series planned so far, on issues with a rather abysmal lack of Leftist insight, at least in the legal realm. The latter two, because I do have many colleagues in friends in the respective field, will be released much later, and those will be on Prison Abolition and Constitutional Crisis. The first, which I will start immediately, is on the Dodd-Frank Act. With a Republican-controlled Congress enacting revisions to the financial regulations, revisions crafted by the lawyers of the banking and finance groups, it seems like a timely subject in need of an injection of truth. Because these lawyers are attempting to rewrite history, somehow re-constructing the recession as the fault of regulation and restriction. Here is what I am planning to cover:

Part 1 – Thus Spoke Volcker: The Volcker Rule, U.S.C. 1851, is essentially the consolation prize for advocates who failed to reinstate the Glass-Steagall Act. It prohibits banking entities from (1) engaging in proprietary trading and (2) having any pecuniary interest in a hedge fund or a private equity fund. The challenges to it are eloquently summed up in Madison, Cohen, and Shirley’s “Reconsidering Three Dodd-Frank Initiatives”: Risk, Liquidity, Complexity, and Competition. I’m going to pick apart how circular the logic of these challenges are, how their claims of wanting to reduce risk ring hollow, and how segregation between the banking industry and such risky financial institutions and instruments is crucial to preventing a virtual replication of the recent recession in a matter of a few years. In fact, that will happen because the Volcker Rule just is not the Glass-Steagall Act. With the recent repudiations of some of the very people who formerly championed the end of the act, the time for its reinstatement could be at hand.

Part 2 – But Who Will Save OLA?: The Orderly Liquid Authority was put in place to allow the government to intervene in financial corporations where normal bankruptcy is not possible. The collapse of Lehman Brothers was, in large part, unstoppable due to the inability of such intervention. The OLA is being challenged on a number of constitutional grounds, namely the First Amendment, the Due Process Clause, and the Takings Clause. I will refute that the OLA is unconstitutional, and further assert that its authority should be extended beyond the current scope of agencies. While it would be delusional to think that such Keynesian measures will stop another crisis of capital from ever occurring, the regulations need to be extended to at least temporarily prevent any further dispossession of wealth from the working class, and especially the Black working class, communities.

Part 3 – The Chilling Effect of Capitalism on Stability in the Congo: Here I will talk about a portion of the Dodd-Frank Act which have been chipped away by stare decisis. The constitutional arguments largely lean on the recent move to extend First Amendment protections to corporations. This trend is dangerous, and may require legislative intervention to really prevent. That is unlikely to happen with the current composition of Congress, so I will explore alternatives to the arguments the S.E.C. and others have failed with.

Part 4 – Financing a Democratic Future: Why should a socialist care about regulating an industry which they find to be inherently oppressive? Here I will explore the pros and cons of fighting for reforms, raising consciousness among the working class about how capital functions, and what role the legal profession can play in pushing for public ownership of the banks and other means of financing cooperatively owned businesses.

No Consideration For The Alienated Worker

State Archives of Florida, Florida Memory. Working in the refining industry in the early 20th century was incredibly dangerous for the low-wage workers, whose labor built wealth that is still held today by the great-grandchildren of the capitalists of that time.

I know I have already touched on this with both the law and with contracts in particular, but invariably there is the temptation to dismiss the system wholesale as a completely disingenuous legal fiction only meant to give the veneer of legitimacy to the undemocratic operations of the capitalists. And I do not deny that the system has no democratic or empirical legitimacy. But it is important to understand how the system works nonetheless, because capitalists have constructed them meticulously to serve the different functions of dispossession and exploitation needed to create wealth and sustain the system itself. Thus we can construct a number of useful correlations between legal mechanisms and economic or political concepts in order to chip away at the system until there is sufficient consciousness to do away with it entirely.

Aside from the bourgeoisie academic Marxists who have the problematic “noble-savage” notion of the working class, most of the Left recognizes an overwhelming need for raising consciousness among the working class. Consciousness is in a dialectical relationship with alienation, and there are four kinds of alienation in Marxism:

  1. Alienation of the worker from the products of their labor
  2. Alienation of the worker from the production of their labor
  3. Alienation of the worker from the self as a producer
  4. Alienation of the worker from other workers

Consequentially, the Left has designed a number of means to counter each of these alienations, both broadly and specifically. Here a few illustrative examples.

  1. To counter alienation from the products of their labor, the adoption of profit-sharing.
  2. To counter alienation from the production of their labor, the use of collective bargaining.
  3. To counter alienation from the self as a producer, the creation of cooperatives.
  4. To counter alienation from other workers, organizing in unions.

And in turn, capitalists and their state retaliate against this resistance with:

  1. Outsourcing.
  2. Company-controlled contracts.
  3. Price undercutting
  4. Right to work laws

In my contracts class, we read a case called Plowman v. Indian Refining Company (20 F. Supp. 1 (E.D. Ill. 1937)) that relates to each of these four types of alienation, but for the sake of brevity I am going to focus on the use of “consideration” requirements to determine the enforceability of contracts, and how it was used in this case to alienate workers from the products of their labor and from themselves as producers.

Plowman is a great example of a case where the judge made his ruling not simply to resolve the legal issue but to formulate policy not even needed to resolve the issue at hand. Because in the legalistic sense, the workers did not have a bit of a case. Their administrators (the court’s ruling occurred after many of the workers had died) sought to collect money promised to them, claiming that the company had guaranteed it for life and that they had terminated the arrangement less than a year later. At evidence was a letter which read:

…Effective August 1, 1930, you will be carried on our payroll at a rate of $_______ per month. You will be relieved of all duties except that of reporting to Mr. T.E. Sullivan at the main office for the purpose of picking up your semi-monthly checks. Your group insurance will be maintained on the same basis as at present, unless you desire to have it cancelled.

[Signature of the vice-president]

There are two reasons why this letter is not enforceable that have nothing to do with consideration. The first is the lack of essential terms and the ambiguity created therein. Specifically, there is nothing in the letter to demonstrate that the offer was for payments until the end of the workers’ lives. Therefore, it fails at being an offer to enter into a legally binding contract, and is merely a notice of what the company plans to do.

The second is that the vice-president was not authorized to make this agreement. The laws around civil liability of corporations for their employees’ actions is a labyrinth of obfuscation to protect corporate actions. It is the power of agents to bind their principals, and the vagueness of its terms (i.e. agent’s actual authority is to perform “acts necessary or incidental to achieving the principal’s objectives”. Restatement (Third) of Agency § 2.02(1).) gives corporations considerable leeway.

In other words, the agreement was not binding. However, the judge created a hypothetical where both of these issues were not present so that he could address consideration. I have found few terms in contracts that more profoundly reifies social relations into commodity relations. It is a cruel irony that the term is called “consideration,” as it serves as crucial foundation for the purging of social considerations in a capitalist society.

More far-reaching than currency and a step-child of debt even more sadistic than its parent, consideration is the notion that contracts require a thing of value to be exchanged for a performance of promise. Particularly, the law wants consideration to be the inducement of benefit by detriment or detriment by benefit, the so-called bargain theory of consideration. Increasingly moving away from even feigning an interest in “fairness,” the courts do not police equivalency of this exchange, and the presence of value in either benefit or detriment is measured solely in exchange value. Consideration fills the “social welfare”-shaped hole in capitalism’s social organization. While its fellows “offer” and “acceptance” are, to a certain degree, a part of democratic organization, consideration is wholly a legal fiction of the capitalist world. What György Lukács wrote on reification demonstrates just how powerful the concept of consideration is:

Its basis is that a relation between people takes on the character of a thing and thus acquires a ‘phantom objectivity’, an autonomy that seems so strictly rational and all-embracing as to conceal every trace of its fundamental nature: the relation between people…The modern capitalist concern is based inwardly above all on calculation-Lukács “Reification and the Consciousness of the Proletariat”

Lukács goes on to write that this system renders judges into statute-dispensing machines for the capitalists. Pardoning his ignorance on the specifics, it is very much true that consideration allows judges deciding cases to weigh exchange value over social value in nearly every instance.

Plowman presents a rather blatant example of this since the plaintiffs had the audacity state that there was “moral consideration” even if there was no consideration through exchange value. “However strongly a man may be bound in conscience to fulfill his engagements,” writes Judge Lindley, “the law does not recognize their sanctity or supply any means to compel their performance.” Judge Lindley then goes on to emphasize that he of course values that old workers are provided for, and extols the virtues of the old poorhouse system. Rather, the court requiring a company to do so would be overreaching its power, a power that should be left up to the legislature. What was this moral consideration? Mostly it was the past work of the workers. And what better way to alienate workers from the products of their labor and from themselves as producers than to legally declaring that their past work (the infrastructure they built, the new workers they trained, and simply the labor by which they produced value) has no value in consideration.

As Friedrich Engels wrote in The Principles of Communism:

Labor is a commodity, like any other, and its price is therefore determined by exactly the same laws that apply to other commodities. In a regime of big industry or of free competition – as we shall see, the two come to the same thing – the price of a commodity is, on the average, always equal to its cost of production. Hence, the price of labor is also equal to the cost of production of labor. But, the costs of production of labor consist of precisely the quantity of means of subsistence necessary to enable the worker to continue working, and to prevent the working class from dying out. The worker will therefore get no more for his labor than is necessary for this purpose; the price of labor, or the wage, will, in other words, be the lowest, the minimum, required for the maintenance of life.

There is no consideration, by the capitalist or humane definition, for the alienated worker. And their denial of social welfare is heralded by the paradoxical waxing-poetic of how our society values its workers.

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Atomizing Black Students

Few things pique the fury of the right wing quite like affirmative action. While affirmative action refers to a broad political range of actions taken to empower or uplift the disenfranchised, conservatives and even many liberals see affirmative action as one thing: cheating. That people of color who benefit from affirmative action are not working as hard, not achieving as much, and still asking for all the “rewards” of a college education or secure living wage job. This social narrative of cheating is as old as the Protestant work ethic, but in a world where media access has made us increasingly more empathetic to each others struggles, the capitalists are rightly concerned that we are gradually becoming more non-receptive to these arguments. Some capitalists are going with the flow, embracing diversity as just a new commodity to be owned by the bourgeoisie to exploit the working class. Other capitalists are worried about even conceding this ground, that it would create conditions of “racial balancing” (reparations, returning land to communities, etc.) that could seriously disrupt the social hierarchies that have helped sustain capitalism for the past 500 years. Outside of the tech industry and the nonprofit industry, this line in the sand attitude is the one held by most capitalists. While groups like McDonald’s and Victoria’s Secret will have anti-discrimination policies, these are meant to govern the relations between the lowest workers and their immediate management. In Fisher v. University of Texas (2013), there were many amicus briefs from major corporations filed in support of affirmative action.

However, these briefs can fairly be seen in totality as a PR move rather than a political move. Because groups that these corporations and their executives fund also filed amicus briefs, but in support of the petitioner. The CATO Institute, the Center for Individual Rights, the American Civil Rights Union, Judicial Watch Inc., Center for Constitutional Jurisprudence, and most of the judges on the majority opinion receive donations and funding from major corporations like Coors-Miller, the Koch Brothers, Walmart, Amway, BNY Mellon, Olin Corporation, and the Alleghany Corporation. Most of these corporations are international conglomerates that have controlling stakes in the majority of businesses in the United States, particularly through financing. William C. Richardson is a great example of this: in 2007, he was on the board of both Kellogg (filing for affirmative action) and BNY Mellon (filing against affirmative action through their various think tanks). It is also no coincidence that Richardson is now part of the Exelon Committee on Corporate Governance and CEO Emeritus of the W.K. Kellogg Foundation. This duality is necessary to maintain the illusion that the corporations which directly sell to individual consumers are on our side and care about the things that we care about. If it was clear that all the corporations were against working people, especially working people of color, it would necessarily create consciousness beyond the alienation that is experienced in the society of the corporate spectacle. This atomizing of individuals is the main purpose of constricting and preventing affirmative action.

Sandra Day O’Connor, as much as I wish it were not so, is one of the most important judges in the history of the United States. Particularly she was successful in laying the framework for a neoliberal border for affirmative action to not go beyond in Grutter v. Bollinger and Gratz v. Bollinger. Basically, the standard was placed on a scale of “racial quotas/balancing” to “holistic, individual diversity evaluation with a good faith effort to pursue race-neutral means.” This holistic standard has not satisfied either side: as represented by Justice Ginsburg, it is seen as unnecessary “subterfuge” that bounces around the issue of affirmative action, and as represented by Justice Thomas, it is seen as a standard that perpetuates racial classifications. These sides were pitted against one another in Fisher I, but the Court failed to deliver a strong opinion overruling Grutter or Gratz. Instead, Kennedy attempted to gut Grutter by saying that the “good faith consideration of race-neutral alternatives” had to be a “good faith demonstration of race-neutral alternatives” to a court. As such the case was remanded back to the Texas court. But what happened next was very surprising: the Texas court doubled-down, stating that because race was so entangled in a holistic review of diversity that it would create more of a racial classification to try to eliminate race from the admissions method.

The CATO Institute perhaps phrased the conservative view best in an amicus brief to the Court for the upcoming Fisher II case when they said that holistic review was “opaque” and as such could hide “racial balancing.” Here I believe the CATO Institute is being more intellectually astute, albeit with astounding amorality, about the issue than many of their liberal counterparts. They have recognized that Sandra Day O’Connor’s attempt to make holistic review into a tool that atomizes people failed, that the social understanding of race is such that any classification of race opens a window to the ability to recognize people not as individual failures but rather as people who as a community have been exploited and oppressed. To give it a Trotskyist spin, CATO recognizes that affirmative action could be used as a transitional program to raise consciousness among people of color. That what is blamed on “individual failings” is more accurately tied to legacies of history and the material oppression carried out by corporations and the state. From Columbus Day to Abraham Lincoln being portrayed as against racism, the capitalists try their best to create hegemonic narratives that deny any history that could provide an explanation for the poverty and violence of communities of color outside individual “laziness”, “savagery”, etc. Affirmative action’s danger to the ruling class has never been that it would allow the lazy to get rich or even, as Clarence Thomas would say, that it will make people have negative perceptions of people of color. Rather, the danger is that it would awaken people to the possibility that they deserve not only the facade of “equality of opportunity,” but reparations for the 500 years of colonialism and white supremacy waged against their communities.

Yikes! Reparations are a quick way to summon the ire of even the more liberal capitalists. And the liberals who support affirmative action will do everything in their power to avoid it. They will claim that their support for affirmative action derives from “diversity” being a compelling governmental interest, particularly for its ability to “break down stereotypes” and thus allow “all students to explore, develop, and express their individuality” (from the NAACP’s amicus brief in Fisher). Joshua Civin, counsel to the director of litigation at the NAACP Legal Defense Fund, Inc., wrote the following in an op-ed for The American Constitution Society:

An admissions system that relies exclusively on class rank may overlook students who take intellectual risks by enrolling in demanding classes outside their comfort zone.  Or prodigies who focus all their energy on a subject in which they excel.  Or late bloomers like Albert Einstein.

In an op-ed about use of racial classifications in university admissions, Civin does not cite any of the reasons why racism specifically could impact students. Instead, he cites race-neutral, capitalist-appealing  traits like taking risks, being a prodigy, and commodifying their talents. And wouldn’t an example of a scientist who could not start work as early as their white counterparts because of economic and social constraints be more appropriate, like Roger Arliner Young? As Ta-Nehisi Coates wrote in his essay “The Case for Reparations”:

This confusion about affirmative action’s aims, along with our inability to face up to the particular history of white-imposed black disadvantage, dates back to the policy’s origins…America was built on the preferential treatment of white people—395 years of it. Vaguely endorsing a cuddly, feel-good diversity does very little to redress this.

There will be no happy ending to this story through any definition of affirmative action established by the Supreme Court. Whatever hopes there were to use affirmative action as a tool to build consciousness were squashed when the CATO Institute and their associates realized how dangerous even an atomized version of affirmative action could be. But there is hope. You cannot atomize reparations. You can not say that reparations need to be handed out as part of individualized holistic assessments of welfare benefits. And most importantly, there is no race-neutral gloss of why we should support reparations. There are plenty of questions to be answered: how would reparations intersect with transferring ownership of the land and property to communities? How would reparations work on an international scale? But the simple assertion of supporting reparations already takes us far past the pathetic standards held in Grutter and Fisher. Who knows where they could take us.

Struggles for reparations have already seen some unprecedented victories in the past few years. Here are just a few:

Survivors of Chicago Police Torture

The people of Jamaica

The people of Haiti

Farmer-Paellmann v. Brown & Williamson

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The Permanent Jury Nullification: A Trotskyist Argument For Jury Nullification

UPDATE: An interesting case for advocates of jury nullification to keep an eye on.

In my criminal law class, one of the concepts we have studied thus far is the idea of jury nullification. For those of you not familiar, jury nullification is when the jurors ignore the instructions of the judge, the “law finder” of the court, to render a verdict of not guilty. Jury nullification has a rather complicated historical record: on the one hand, it has been used by social movement like the anti-war movement in order to prevent the incarceration of people who took direct action against the state. On the other hand, it has led to white supremacist court rulings, from the killers of Emmett Till to Colin Murphy. Jury nullification is thus very controversial, even among Leftists. It finds a considerable amount of support among both the Left and Right libertarians, who see it as a glorious example of the individual(s) overcoming state oppression in order to protect their communities. In U.S. hegemonic doctrine (or what less-antagonistic lawyers would call “case law”), jury nullification has been found to be a power inevitably granted due to the rights of the Fifth Amendment for juries to be the democratic check to state power as the court’s “fact finders” and the Sixth Amendment for protection from double jeopardy. In other words, if you give juries the power to render verdicts with only guiding instruction and those verdicts of acquittal are absolute, there is no constitutional way to outright criminalize jury nullification. But of course, a capitalist state is never held back by such pithy restraints as “following its own laws.”

In People v. Williams (25 Cal.4th 441, 106 Cal.Rptr.2d 295, 21 P.3d 1209, 2001), an 18 year old young man had sexual intercourse with a 16 year old girlfriend. If help to the standard of consent between two adults, the girl’s assent would have been considered consent. But because of her age, Williams was charged with the misdemeanor offense of unlawful sexual intercourse with a minor. When the case reached the California Supreme Court, the following exchange between a juror and the presiding judge:

Judge: It’s been reported to me that you refuse to follow my instructions on the law in regard to…unlawful sexual intercourse, that you believe the law to be wrong and, therefore, you will not hear any discussion on that subject. Is that correct?

Juror: Pretty much, yes…

Judge: All right. Well…I would remind you…that you took an oath at the outset of the case in the following language: ‘Do you and each of you understand and agree that you will well and truly try the cause now pending before this Court and a true verdict render according only to the evidence presented to you and to the instructions of the Court.’ You understand that if you would not follow the instructions that have been given to you by the court that you would be violating that oath? Do you understand that?

Juror: I understand that.

Judge: Are you willing to abide by the requirements of your oath?

Juror: I simply cannot see staining a man, a young man, for the rest of his life for what I believe to be a wrong reason.

Judge: Well, you understand that statutory rape or unlawful sexual intercourse has been described to you as a misdemeanor? Did you follow that in the instructions?

Juror: I’ve been told it is a misdemeanor. I still don’t see – if it were a $10 fine, I just don’t see convicting a man and staining his record for the rest of his life. I think that is wrong. I’m sorry, Judge.

Judge: What you’re saying is not the law either concerning that particular aspect. [my emphasis added]

Juror: I’m trying as best I can, Judge. And I’m willing to follow all the rules and regulations on the entire rest of the charges, but on that particular charge, I just feel duty-bound to object.

Judge: So you’re not willing then to follow your oath?

Juror: That is correct.

The juror was excused and Williams was convicted by the newly convened jury. The state’s hypocrisy in this case is palpable: when the judge says that the juror’s opinion is not the law governing the issue, the implicit assumption here is that the jury is duty-bound to be law finders. But we know this not to be the case, precisely because the state argues the opposite when it is discouraging jury nullification! In my opinion, this juror almost avoided his dismissal. It was not until the last question where the juror explicitly stated that he was not willing to follow his oath. When he was asked a similar question for the first few times, all he stated was that he could not see a situation in which he would convict Williams, and his determination as to conviction is his power through jury nullification. There are two lessons to learn from this case: first, that juries are full of people whose commitment to the capitalist state goes far enough that they will turn you in simply for resisting the state’s assignations. Second, that the state has many loopholes by which it can pressure and prod jurors into not using jury nullification or eliminating jurors determined to use jury nullification. If jury nullification is a tool that we wish to use, then we must educate people unfamiliar with the law about due process rights and their power as jurors. But even in this aspect we must be cautious: in 2011, Julian Heicklen was charged with jury tampering for his leafletting about the jury nullification power.

Trotsky did not write much on the political landscape of the United States, which is a shame because what little writing he did do on it shows that he had a very introspective analysis of it. “Certainly the phases of development of the proletarian party in America,” he writes, “will be sui generis (unique)… It is evident that the possibility of participating in and of utilizing a “Labor Party” movement would be greater in the period of its inception, that is, in the period when the part is not a party but an amorphic politic mass movement. That we must participate in it at that time and with the greatest energy is without question” (“On the Labor Party Question in America”). Most Trotskyists in the United States, and notably Socialist Alternative, take some form of this approach to electoral politics. But when Trotsky talked about participating in and utilizing such movements, he was not simply talking about this in regards to electoral politics. I would argue that this approach is just as relevant to how Trotskyists should approach the mostly liberal and libertarian (Left and Right) movement to reform or dismantle the criminal injustice system. Similar to voting, juries are one of our few means of exercising anything remotely resembling democracy. The capitalist politicians and courts have required this sense of community legitimacy in order to carry out their reign of terror on the working class, and especially with all the populations which serve as the United States’s underclass (Black people, Native peoples, gender nonconforming people, drug addicts, etc.). After all, how are we to criticize the incarceration of our family and friends as state violence when it is a jury of their peers that made the decision? But of course this is a farce: as demonstrated in the above cases, the state will use all means at its disposal to convince juries that their options are limited to carry out the state’s own agenda, that they are little more than “yes men” to mass incarceration. This is one of the greatest tragedies of the criminal injustice system: the dramatic irony of a jury that thinks they can only be servants of the capitalist agenda, but in actuality has some of the greatest power within the system to fight that agenda.

It is vital for us to educate the working class and underclass of the importance of serving on a jury. We need to train our members in how to present themselves to be more likely to pass voir dire, and subsequently to carry out a socialist agenda while on the jury, including the use of jury nullification. One juror informing the other jurors of their own power, while it can lead to being dismissed like in the case above, has often led to the most important decisions made in courtrooms (and not just in Twelve Angry Men). We do not need to go through some obligatory political stage in order to start seizing the means of producing incarceration and other state-based punitive judgments. We, any person in this country with jury privileges, can build our conception of socialist law today through actions like jury nullification.

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Chattel Slavery, Peonage, and Labor Under Capitalism

In a class I am taking that focuses on constitutional law, we have spent the first two weeks focusing on state action and consequentially the Fourteenth Amendment, from the initial limitations prescribed by the Civil Rights Cases in 1883 to the synthesis of the Edmonson-Lugar rule, which defines when private conduct constitutes state action (in the Edmonson case, this involved a private corporation being sued for personal injury damages using peremptory challenges to get ride of two Black people from the jury. Because the jury is a state function, and peremptory challenges have no use outside of the courtroom, and finally because being discriminated against by a jury after being discriminated against by the corporation would be an aggravation of the injury facilitated by the state, it constitutes state action. If you could not tell from this complicated process (and particularly the Shelley v. Kraemer factor in the rule is something that confuses even learned legal scholars), placing private action in the public sphere of deserving protection from discrimination is arduous and limited. We actually worked through a number of state action cases, including Edmonson, before we got to the Civil Rights Cases. And the professor had us do a rather illuminating exercise, where we hypothetically went back in time and could write the majority opinion ourselves based on our own interpretations. When I did this, I certainly had a more open interpretation of the 14th amendment is necessarily limited by its language:

No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.

Michael Parenti has a fascinating lecture on the real history of fascism, and one of the many assertions he makes about the misconceptions of fascism is that it was intentionally spurred by the actions and investment of global capitalists, from German captains of industry to infamously IBM, Coca-Cola, and Henry Ford. And then Parenti compares many of the tactics to those used by Ronald Reagan. But he makes sure to state that he is not asserting that Reagan was a fascist. After all, rather than pushing for a state cult like the Third Reich, Reagan appointed as many people into positions of power as he could that did not believe in the functions of government they were supervising. From the perspective of the United States entrance into World War II, it was a competition to see which form of capitalism would win: one with a state to strong-arm the working class vs. one with a state that passively allows private actors to strong-arm the working class. The 14th Amendment is a great example of this capitalist state theory, and it should be noted that the decision to weaken the 14th Amendment was made by the moderate section of abolitionists. Conversely, the radical abolitionists like Frederick Douglass, Thaddeus Stevens, and Wendell Phillips were all outraged by the limitations of these amendments. And Representative John A. Bingham, author of the amendment, would garishly reveal his political allegiances when he was implicated in the Credit Mobilier scandal.

As a Trotskyist, I believe in a transitional programme, including with the way I study (and hopefully one day practice) the law. Of course it is vital for us to be autonomous from the capitalist system in order to present a true, rather than assimilatory, alternative, but I want to learn how to use the capitalist law in ways that can build working class consciousness and movement. Needless to say, the limitations of the Fourteenth Amendment were rather disheartening. But that is only one portion of the Civil Rights Cases: they also made a case for the Thirteenth Amendment not offering protection to the legislation either. The Thirteenth Amendment, while including that unfortunate provision on carceral slavery, is far more powerful in that it does not require state action: it prohibits slavery for all parties. Unquestionably this Amendment was the greatest legal victory by the abolitionist movement. But in the Civil Rights Cases, the majority opinion makes the case that the discrimination against free Black peoples before the abolition of slavery demonstrates that anti-Black discrimination is not a “badge or incidence” of slavery. With the current historical record, and of course not viewing it through a lens of perpetuating white supremacy, we know this to be an utter falsehood, as the state-instituted forms of anti-Black discrimination dealing with public accommodations specifically arose in order to dehumanize Black people and thus make them ideal subjects for chattel slavery. And the Black Codes in particular still influence modern anti-Black discrimination today.

Seeing how completely the Civil Rights Cases Thirteenth Amendment arguments could be dismantled, I wondered why we see so little modern day uses of the Thirteenth Amendment. When I asked my professor about this, one part of her answer was to look at the peonage cases. While there are plenty of cases that exemplify the grotesque labor conditions of the South for Black workers, I am going to focus on the case of Pollock v. Williams because of the then Attorney General’s interpretation of it having major implications for the development of capitalism following the loss of the chattel slavery labor source. Florida had a state statute, making it a crime to leave a job without repaying an advance made by the employer to the worker. We continue to see this method of peonage used today in both legal (i.e. crowdworking per its initial labor investment in marketing oneself and bidding for jobs) and black market contexts (i.e. human trafficking in which the laborer is “indebted” to the person who provided them transportation to the country they work in). The Supreme Court struck down Florida’s statute, saying that the purpose of the Thirteenth Amendment went beyond the restrictive context of disallowing slavery; the Court stated that the Thirteenth Amendment was meant to “maintain a system of completely free and voluntary labor throughout the United States.” Attorney General Biddle took this opinion a step forward: as Risa L. Goluboff writes, Biddle believed the Thirteenth Amendment “meant the creation and protection of a unitary, national labor market.” Herein we see the capitalist motivation for Attorney General Biddle to go after peonage laws: like fascism on a macro-scale, peonage laws were meant to entrust the state with steering the labor market in ways that privileged corporations. Biddle foresaw that this methodology would create economic crisis as chattel slavery had done before it. His motivation was largely what David Harvey describes as capitalism’s tendency to move around, rather than solve, its economic crises. As Marxists we of course know that no matter how unitary or nationally-cohesive, capitalism will always bring itself to crisis again.

Nevertheless, the struggle against peonage laws (and it should be noted there were huge community forces behind this resistance as well) fits into a transitional programme regardless of the capitalists. As noted by Jennifer Roesch, “a discussion of the relationship between racism and capitalism has never been more relevant [than today].” Because of how pervasively anti-Black racism under-girds United States capitalism, it is necessary to prioritize targeting those racist structures even if it fails to create an alternative to capitalism in the short-term. For this reason, I think the next big 13th Amendment cases lie in going after these “crowdworking” companies. “Crowdworking” is the neoliberal globalization of the peonage system, only disguising the “advance” as a payment through labor rather than a payment through currency. It conforms with Biddle’s idea of a unitary, though international rather than national, labor market. Thus it is clearly an action to build further consciousness, rather than repeating the actions and frameworks of Biddle. Certainly it is a more complicated issue than this simple brief outline, but I sincerely hope that with the success of the Black Lives Matter movement will come a renewed interest in dismantling the racist exploitation in capitalist labor markets using the Thirteenth Amendment.

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