May Day, May Day

“It’s the final struggle,” sang the crowd of thousands in unison. The year was 1969…I was a student, exhilarated by the intellectual flora that bloomed in every corner of Paris that year. So rich. So exotic.

I had gone with a friend to a meeting of Trotskyites. At the time, I had only the dimmest idea of what Trotskyism was all about. I was hoping it was a free love group. Imagine my disappointment when I saw the crowd of humorless, earnest would-be Che Guevaras. And then, as the crowd raised its right fists in the traditional revolutionary salute, I knew I wanted no part of it.

These people were like football fans who had read Marx and Engels…hooligans with an exaggerated frontal lobe and an unbounded faith in their own ability to run other people’s lives.

Speaker after speaker exhorted the mob to continue the fight…to sacrifice themselves, like Internet investors, to the cause.

The cause was, of course, foolish. And every one of the millions of people who worked for the cause over the course of the last 10 decades was on a fool’s errand — making the world a worse place to live…both for himself and everyone else.

But that is more obvious now than it was then. Many still thought communism would work. People still had faith, in other words. The mania was still alive…the fraud was still working. GDP figures from the `60s, as I mentioned in a previous letter, showed the Soviet Union growing at twice the rate of the United States. Who could be sure they were nonsense?

Now we know. We know the whole thing was a fraud from start to finish.

May 1 is the big day for proletariat.

Back when people still believed Marx’s class theory — that is, back when there was a proletariat — huge parades were organized throughout much of the world. Communist countries used them to show off military hardware. In the West, they were used to demonstrate the voting power of the demented. Both exhibitions were threatening. Either the force of arms, or the power of the ballot, put liberty and property in danger.

It is hard to recall what a threat it was. Communism seems — like modern art — as something of a joke today. How could anyone have taken its pretensions seriously, we ask ourselves.

But it was a deadly serious matter. Socialism and its next of kin, Nazism, caused the deaths of about 100 million people — more than the population of France or Britain or Germany. Hundreds of millions had their property and liberty stolen…and even those who had no property and didn’t care about liberty suffered a severe drop in living standards. While the rest of the world got rich, socialist countries got poorer — depending upon the degree to which they put Marx’s ideas into practice.

Nazis, Bolsheviks and other parasites did more damage than any group in any period in history.

May Day no longer brings out the proletariat. They are busy going on picnics or following their stocks on the Internet.

Today, the big parade is for the intellectuals. A new book by Jean-Francois Revel, entitled “The Great Parade,” describes the parade of intellectuals who are trying to revive the ideal of 20th century socialism. Picking up the dead ideas from death camps, barbed wire walls and cheerless apartment blocks where they dropped — the Marxist apologists are giving them new life.

Revel, who is said to have been drunk for the last 25 years, is testament to the clarifying power of strong drink. Throughout the Western world, he says, “we are urged to return to the `real’ Marx.” Forget about the damage done in Marx’s name, say the resuscitators of Marxism, who, in Revel’s words, “urge a new transition towards a government that is qualitatively new, and towards a new, more human socialism.”

“The more Marxism ceases to be practiced,” writes Revel, “the less it is criticized. The more Liberalism (Western liberal democracy and the free market) is criticized, the more it is practiced.”

This creates, for the Marxist mind, a new sort of dialectic that allows him to envisage the next big inevitable shift, towards a new socialist utopia.

Nazism, a brand of socialism mixed with prehensile tribalism, was thoroughly discredited after WWII. Very few intellectuals openly long for a sort of “pure” Nazism — unblemished by Hitler’s crude attempts to apply it.

Nazism is dead. Stone dead. Because intellectuals cannot traffic in the creed without taking on the responsibility for Hitler’s crimes. Even an unremarkable comment on Hitler’s employment policies was sufficient to get Joerg Haider branded as a Nazism sympathizer. Nazism, the idea, cannot be separated from those who acted in its name.

But Marxist intellectuals, and socialist politicians, have never had to take responsibility for the crimes of communism. In fact, among Marxists, the idea of a “pure,” utopian form of collectivism — completely removed from the imbecilities practiced by socialist governments — is gaining strength, according to Revel.

“They admit the imperfections of applied Marxism,” writes Revel, “but they answer with the hope of an infinitely perfectible revolution that has not yet been achieved… Now that they are rid of the unfortunate reality that was the Soviet Union, for which they deny any responsibility, [Marxist intellectuals] feel finally free to worship socialism as it was meant to be — a utopia.”

Utopia is hard to argue with. It is, by definition, beyond reproach.

Bill Bonner

Ouzilly, France May 1, 2000

*** The Dow’s role as a “hook” for investors seems to have been upstaged by the Nasdaq… While the Dow sank 1.02% last week, the Nasdaq rose 5.95%. Just like the good old days…when you could depend on the TNT stocks to go up at least 1% every business day.

*** The Dow fell 149 points on Friday alone. Investors are now worried that Greenspan will increase rates 50 basis points on May 16. That will definitely be bad news to Old Economy stocks.

*** But the Nasdaq stocks breathe a different air. The elevation in Nasdaqland is so high that worldly cares…such as interest rates, inflation and the business cycle…seem a long way down and far, far away.

*** While the Dow fell, the average stock on the NYSE actually went up. There were more stocks advancing last week than declining. Still, more hit new lows than new highs.

*** Gold fell $3.70 on Friday. What do you make of that? Hard to know.

*** MSFT has been forced to revisit its options packages to employees. The company wants to be sure employees get the benefit of the options even though the price of the shares has fallen 40%. Employees end up with de facto, risk-free options.

*** I, and perhaps I alone, have maintained that capitalism — as we have known it — is an endangered species. Corporations are increasingly operated for the benefit of their employees, not the capitalists who fund them. In the new Internet Age, employees are more important than capital.

*** Warren Buffett has picked up this theme and looked at it from a slightly different angle. “For society,” he noted in his address to Berkshire Hathaway shareholders over the weekend, “the Internet is a wonderful thing. But for capitalists, it’s probably a net negative.” Buffett remarked several times that corporate executives were overpaid, and compared investing in the TNT sector to a chain letter. We have been in a period of enormous “wealth transfer,” said the sage of Omaha, “not wealth creation.”

*** Another value investor bites the dust. This time it is Stanley Druckenmiller, strategist for Soros’ Quantum Fund. Druckenmiller is leaving following a 20% loss last year…and another loss so far this year of 21.69%. Investors have withdrawn $8 billion in capital from the fund. Soros is repositioning the fund.

*** What went wrong for Druckenmiller, however, was not value investing. Instead, he announced to great fanfare last year that he was getting into the TNT sector — the high-growth, high-priced fantasy stocks. Uh…this is not value investing, Stanley; this is anti-value investing. And bad timing, too.

*** Personal savings increased faster than spending last month. An AP story tells us that the savings rate (itself a matter of some controversy) rose from a negligible 0.2% in February to a still negligible 0.4% in March. The AP reporter cheerfully tells us that it is “not as bad as it seems” because the savings rate does not take into account gains made in stocks. In the public’s mind, as in this reporter’s, there is no real distinction between speculating in stocks and putting money in the bank. But that will change…

*** For the last 18 years, Lucien Benetton has been running ads that seemed to venerate every sort of juvenile grostesquerie one could imagine. Japanese kids with orange hair. Murderers. (Benetton has an ad campaign featuring men on death row in America.) People whose sex and drug habits would have been cause for a jail term a few years ago.

…anyway, I see that Benetton and his ad guru have parted company.

*** Mugabe supporters in Zimbabwe have begun a campaign of “re-education” of farm workers who were employed by whites. The “re-education” is more like the old school of hard knocks (taken literally)…than Dundalk Community College. Instead of a degree, grads get hospitalized — 11 farm workers were hospitalized over the weekend.

*** “I don’t get paid overtime,” said Lennox Lewis, explaining why he wasted no time in his victory against Michael Grant. “Every time I hit him, he went down, so I just kept hitting him.”

*** It is the most beautiful morning I have ever seen here in Poitou. Not a cloud in the sky. Grass as green as nature can make it. And everywhere you look are bright yellow fields of rape in full bloom.

*** I got a good look at it this morning when my neighbor, Pierre, came over to enlist my help in moving a herd of cows. Easier said than done, I discovered. The huge Limousin beef cattle have a mind of their own.

*** Most impressive was Pierre’s prize bull — who looks as though he was designed by a butcher. He bulges with choice cuts in every direction.

The Daily Reckoning