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Monday Message Board

January 21st, 2013

Another Monday Message Board. Post comments on any topic. As usual, civilised discussion and no coarse language. Lengthy side discussions to the sandpits, please.

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  1. Ikonoclast
    January 21st, 2013 at 07:56 | #1

    “Twenty people are confirmed dead and 50,000 are homeless after days of severe flooding in the Indonesian capital Jakarta.”- ABC News.

    “Located on the northwest coast of Java, Jakarta is the country’s economic, cultural and political centre, and with a population of 10,187,595 as of November 2011, it is the most populous city in Indonesia and in Southeast Asia, and is the thirteenth most populated city in the world.” – Wikipedia.

    “Jakarta lies in a low, flat basin, averaging 7 metres (23 ft) above sea level; 40% of Jakarta, particularly the northern areas, is below sea level… Moreover, Jakarta is sinking about 5 to 10 centimeters each year, even up to 20 centimeters in the northern coastal areas.” – Wikipedia.

    Combine the above problems with sea level rise due to global warming. At what point globally will damage from all global warming factors exceed World Gross Product as WGP itself begins to decline from resource limitation effects? It would interesting to model that one.

  2. Jim Rose
    January 21st, 2013 at 09:53 | #2

    Flood control is a problem in developing countries because they are poor especially if it rains a lot – monsoons.

    Rich countries build flood levees and dikes and so on. Voters treat loss of life in floods as a failure of governments to tame nature.

  3. Will
    January 21st, 2013 at 12:27 | #3

    I recently received a relic of my past in my email inbox this morning. Does anyone else know that the Sandy Hook shooting was a government psyop by the Illuminati/NWO agents to prepare the US people for disarmament (they used the standard operating procedure of bizarre references to Hitler, Stalin, Mao, Pol Pot etc with respect to gun control) so that said NWO can proceed with their campaign of concentration camps and genocide? It was very smugly pointed out that the armed conservative American people are the last hope of humanity, all the other countries having surrendered their weapons a long time ago and being analogous to chattel.

  4. Ikonoclast
    January 21st, 2013 at 13:56 | #4


    ROFL. White lunatics with guns! With any luck they will just shoot each other and leave the rest of us alone.

    Note: I am white so I can call white lunatics “white lunatics” without any hint of rascism.

  5. Chris Warren
    January 21st, 2013 at 14:35 | #5

    What university textbook, what model, what equation, which part of Keynes; explains this empirical tendency?


    What part of Marx, explains it?

  6. Chris Warren
    January 21st, 2013 at 15:00 | #6

    So how do you model economies where major players deliberately create “a culture that is high risk and actively hostile to compliance”, see:


    There is no economic lever you can grab to pull the economy out of its nosedive while these capitalists remain in their places.

  7. January 21st, 2013 at 15:02 | #7

    @Chris Warren

    I don’t think its formally modelled in Keynesian economics, but I do agree that its a non-sustainable trend. In my opinion, the problem arises from the the fact that Keynes, accepted Arrow-Debreu model which assumes technology change is exogenous.

    Although new growth models have now changed that assumption to endogenous, there was not much mention of “capital biased technology change” in the current mainstream economics profession (including New Keynesians before Krugman pointed out the issue). I guess its one of the examples where market incentive does not align to social benefits and that economists simply had too much faith in the market and capitalism to think that the benefit of technology change will be efficiently distributed to benefit the society.

  8. Chris Warren
    January 21st, 2013 at 16:06 | #8


    Yes precisely. Models with exogenous variables are one of my pet peeves.

    It is hard to object to modelling if the modelling is correct. This highlights the importance of the underlying understanding prior to the construction of a model.

    If you try and work out your understanding using a model – it is too late.

  9. Ikonoclast
    January 21st, 2013 at 17:14 | #9

    @Chris Warren

    In my opinion, the empirical tendency can be explained by pointing out the ideologically driven political campaign to strip labour of rights; bargaining rights, wage rights and conditions rights. There is no purely economic inherent tendency for wages / profits to settle at any particular ratio under a democratic mixed economy capitalist system other than the obvious limits at the extremes. Unrestrained laissez faire capitalism with no labour rights will push wages down to the reproductive costs of labour.

    Wages cannot be pushed below the reproductive costs of labour. Reproductive costs of labour include costs of sustenance, shelter and reproduction, care and education of the next generation of workers. One suspects that capitalism has a “crumble point”. Push the profits’ share below a certain value and the capitalist system fails to self-sustain and crumbles away leaving a worker owned and managed system.

    Before wages are pushed right down to reproductive levels (when workers have historically enjoyed better rewards), there will be a crisis and conflict; possibly a revolution. Where attempts are made to seriously reduce the profit share of capitalists by whole percentiles (I mean by one or more chunks of 10% each), the oligarchic capitalists will get seriously nasty and employ violent reaction (using the suborned state and its police and military apparatus) to murder sufficient workers to cow or attempt to cow the rest.

    The flash points are socio-political though based ultimately on fundamental material considerations as the reproductive cost of labour and the break even point for the reproduction of capital. (At least I think so. I admit my notion of a “break even point for the reproduction of capital” is pretty vague.)

  10. Ikonoclast
    January 21st, 2013 at 17:28 | #10

    Popular Marxist Richard Wolff on the future of economics in America – video.

    “Richard Wolff’s critique is simple: American capitalism is dying. And his answer is simple, too: the taking over of workplaces.” – attached blurb.


  11. Jim Rose
    January 21st, 2013 at 17:58 | #11

    @Ikonoclast what is he doing in the green party of the USA. is Wolff trying entryism because he is fully aware that running as a marxist would win no votes because his message fell with the Berlin wall.

    there are 70 in congress who belong to democratic socialist of american so socialists can get elected by running for office and winning democratic party primaries.

  12. Chris Warren
    January 21st, 2013 at 18:33 | #12

    @Jim Rose

    Maybe he is avoiding the sectarianism that blights history.

    If the Green want an ecological future they, unlike you, better look past the Western constructed Cold War.

  13. Ikonoclast
    January 21st, 2013 at 21:26 | #13

    @Jim Rose

    The USSR was a crony-criminal, absolutist state capitalist system. Nothing Marxist about it.

  14. Jim Rose
    January 22nd, 2013 at 05:42 | #14

    @Ikonoclast you are re-writing history. marxists of the day thought the opposite and they betrayed their countries to support the USSR.

  15. Chris Warren
    January 22nd, 2013 at 06:01 | #15

    @Jim Rose

    How is Ikonoclast’s view “re-writing history”?

    Some Marxists at the time, thought otherwise, many did not.

    But then capitalists betrayed huge swathes of the world’s population to fund their fancy manor houses and estates dotted across the countryside of not-so-Great Britain.

    And you will find that statements such as marxists “betrayed their countries” have no more fidelity to reality than saying Christians abuse children.

  16. Ootz
    January 22nd, 2013 at 06:45 | #16

    If marxists ‘betrayed their countries”, then neo liberals send them broke. The apostles of neo liberalism have conducted a 30-year global experiment, which resulted in total failure, according to George Monbiot. ” ..staring dumbfounded at the lessons unlearned in Britain, Europe and the US, it strikes me that the entire structure of neo-liberal thought is a fraud.”
    He quotes last year’s annual report by the UN Conference on Trade and Development: ”Relearning some old lessons about fairness and participation, is the only way to eventually overcome the crisis and pursue a path of sustainable economic development.”


  17. Ikonoclast
    January 22nd, 2013 at 07:00 | #17

    @Jim Rose

    Jim, if you are an Australian conservative, no doubt your prefer patriots like ‘Pig Iron’ Bob Menzies. Attorney-General and Minister for Industry Robert Menzies earned the nickname ‘pig-iron Bob’ with his stand against the waterside workers who refused to load scrap iron heading for Japan in 1938. No doubt, you also approve of his pre-war admiration for Nazi Germany.

    “In August 1938, as Attorney-General of Australia in the pro-Appeasement Lyons government, Menzies visited Germany, letting it be known that he was “prepared to give Hitler the benefit of the doubt, and draw my conclusions about Germany myself.”

    Menzies spent several weeks in Nazi Germany and was extremely impressed with the achievements of the “New Germany” (such as the abolition of trades unions, suppression of the right collective bargaining, outlawing of the right to strike); he was also “deeply impressed” by the “spirituality” of the German people, their unselfish attitude, their less materialist outlook on life, and their preparation to make sacrifices on behalf of the Nation. On returning to Australia the following month Menzies unashamedly expressed favourable views of Nazism and the Nazi dictatorship, based as he said on his own first hand experience. In October 1938, after five years of escalating violence against the Jews and others, and scarcely one month before the infamous Nazi atrocity known as Kristallnacht, he made a speech in Sydney where he drew a contrast between the quality of the leadership of Lyons (then Australian PM) and Hitler (then German Chancellor); Menzies’ critique strongly favoured Hitler.” – Wikipedia.

    The point is that unless one is very careful to measure political movements by the yardsticks of real democracy and real individual rights, it is very easy to get caught up in misled enthusiasm for dangerous movements. The conservative right wing were and are just as easily misled as leftist enthusiasts have been. The US today teeters on the brink of fascism of the corporate capitalist kind but my guess is that you haven’t noticed that yet. Indeed, in many ways it is already over the brink.

  18. Ikonoclast
    January 22nd, 2013 at 07:24 | #18


    I agree, the empirical evidence is in after the “30 year” experiment. Actually, I think the experiment has been running closer to 40 years.

    “The apostles (of Hayek and Friedman) have conducted a 30-year global experiment, and the results are in. Total failure.” – Monbiot.

    This goes further than Monbiot is willing to take it. The failure is not just the failure of Hayek-Friedmanite style capitalism. The failure is of capitalism itself. Capitalism is a failure. The rule of the rich elite for themselves with no regard for other humans or the environment is antithetical to human rights, antithetical to democracy and antithetical to environmental sustainability.

    Those who can’t see that capitalism is about to fail catastrophically are blind adherants who cannot read the clear empirical signs. The clearest sign is the failure of capitalism to take scientific advice in 1972 with regard to the limits to growth. The capitalist system chose (that is the rich oligarchs and their suborned governments chose) to ignore the irrefutable case for limits to growth and embark on a final orgy of production of unneccessary consumerist junk, extravagent luxury for the wealthy and wasteful consumption of resources. These resources, if properly utilised and even left partly unutilised as the case required (e.g. fossil fuels), could underwritten a transition to a sustainable, material steady state economy. That opporunity is now lost. It’s a missed opportunity of immense and tragic proportions.

  19. January 22nd, 2013 at 08:31 | #19


    Speaking of Menzies (Attorney General in 1934), Nazis and fascism – remember that he tried to stop anti-fascist activist Egon Kisch from addressing crowds in Australia.

    This is from the debate in Parliament 14 November 1934:

    “Mr BRENNAN (Batman) …The fact was that after Herr Kisch had been in England for some time and when he was in Paris, a kind of mock trial or inquiry was proceeding in London into the burning of the Reichstag. Evidence was taken before a self-constituted tribunal designed to show mainly that the accused were denied that justice that they were entitled to in that connexion. When Herr Kisch left France for England to give evidence on that matter he was refused admission by the action of the Fascists in Germany acting in co-operation with the Fascists in Britain who are now acting, apparently, in co-operation with the Fascists in Australia. … The Government, and especially the Attorney-General, have bungled the matter inexcusably, the Attorney-General sacrificing accuracy and a sense of responsibility to his insatiable hunger for notoriety and the applause of his press claqueurs.”

  20. January 22nd, 2013 at 08:36 | #20

    Of course, Menzies was keen to stop people like that coming to Australia in boats.

    His reply:

    “Mr MENZIES (Kooyong – Attorney-General) [4.23] – The matter raised by the honourable member for Batman (Mr. Brennan) is, I agree, one of importance, and I rather welcome the opportunity to explain to honourable members and through them to the public exactly where the Government stands in connexion with it. The action in relation to Herr Kisch was taken pursuant to certain provisions of the Immigration Act which have for a long time enjoyed the sanction of this Parliament. Parliament has declared its policy, and reinforced – if I may use the expression – the right of every civilized country to control the terms upon which foreigners shall enter it. We have, as an independent country, a perfect right to indicate whether an alien shall or shall not be admitted within these shores. …”

    I believe that is the origin of the catchcry: “We shall decide who comes to this country and the manner in which they come.”

  21. Jarrah
    January 22nd, 2013 at 08:37 | #21

    “The failure is not just the failure of Hayek-Friedmanite style capitalism.”

    I’ve never understood this Big Switch thinking, the idea that in the early ’70s the entire world just threw a switch to change from Golden Age to neoliberalism. Such an assertion ignores historical reality and defies common sense.

    Furthermore, while there have been innumerable failures in economic management, some even attributable to Hayekian or Friedmanite ideology, to say that ‘style’ of capitalism (whatever that actually means) is a failure sounds like a comforting mantra for an anti-capitalist rather than a rational assessment.

    “Capitalism is a failure. The rule of the rich elite for themselves with no regard for other humans or the environment is antithetical to human rights, antithetical to democracy and antithetical to environmental sustainability.”

    Your second sentence isn’t an objectively functional description of capitalism because it could equally apply to feudalism, communism, and basically every socio-economic system except some forms of anarchism.

    “scientific advice in 1972 with regard to the limits to growth”

    Advice which turned out to be incorrect.

    “a sustainable, material steady state economy”

    I have done more than a little reading about how a steady-state economy would work, and I still don’t understand how it could without authoritarianism.

  22. Ootz
    January 22nd, 2013 at 09:40 | #22

    Jarrah, according to Monbiot “Last year, the world’s 100 richest people became $241 billion richer. They are now worth $1.9 trillion.” Since you have done more than a little reading on steady-state economy, could you explain to me how sustainable this trend is in the long run? If you truly believe in that there are no limits at all, then you are on the economic equivalent of escape velocity and on the way to outer space. In regards to “I still don’t understand how it could without authoritarianism.”, you may want to reread Monbiot’s last couple of sentences on the failed neo liberal experiment and the motive behind this obscene disproportionate wealth distribution.

  23. Ikonoclast
    January 22nd, 2013 at 10:13 | #23


    A point by point refutation of your arguments follows.

    1. There was a big change in the modus operandi of capitalism in the 1970s. Previously, we had the Keynesian “social democratic” accommodation which accorded significant rights to labour, implemented or extended the welfare state, expressly fostered a public sphere and a private sphere in the economy (a mixed economy) and followed a demand side theory, i.e. public spending could increase aggregate demand to overcome recessions and depressions. With the rise of monetarism, neoclassical economics and supply side theory, the previous “Keynesian consensus” was tossed out.

    At a deeper level, capitalism had reached a crisis of growth and capital accumulation. Continued growth of at least 3% is required by the capitalist system. New areas of investment are needed to re-invest accumulated capital and get the return capitalists require. To overcome the stagnation of the 70s, wages were repressed (never to rise again in real terms in the US), state assets were privatised, the welfare state was progressively retrenched, the world economy was globalized, production was off-shored from the mature capitalist countries to undeveloped or under-developed countries with low age structures, debt was pushed on the consumer class (to replace the lost wage growth) and so on. The costs of enviornmental damage and social damage were externalised off the capitalist balance sheets.

    All these processes too have their end point. Wages cannot go below the reproductive costs of labour. Welfare payments cannot be reduced to less than zero. Debt cannot be taken on for ever. It must be paid off or defaulted upon. Once all state assests are sold and plundered there are no more to plunder. There are not endless undeveloped countries to expand into. The environment cannot be endlessly damaged before it reaches a point where it will not sustain us.

    How have you missed all this history? Only those with no understanding of history and political economy could fail to see an inflection point in the 1970s.

    2. To say neoclassical economics is a failure and that capitalism itself will prove a failure is not comforting. Indeed, it is profoundly frightening if you think the consquences through. Those who are trying to comfort themselves through denial are those who think everything is rosy in the capitalist garden. In terms of the failure of neoclassical-monetarist capitalism consider the following. Does no real wage growth since 1979 in the US sound like success to you? Does 8% unemployment in the US sound like success to you? Does the Global Financial Crisis and the failure of the US “jobless recovery” sound like success to you? Does 25% unemployment in places like Spain and Greece sound ilke success to you? Does the Chinese pollution crisis look like success to you? Does 4 degrees C or more of global warming already built into the climate system sound like success to you?

    3. The scientific advice in 1972 with regard to the limits to growth was and is correct. If you are saying the advice about limits to growth is incorrect then you are saying the earth is infinite in size and thus has no limits to growth. That is the logical corollary of your statement. I wonder, do you believe the earth is infinite in size?

    It is commonly believed because of misrepresentation by capitalist apologists and cornucopians (believers in endless growth) that Limits to Growth predicted collapse by 2000. This is not correct. It predicted that if we did not change our trajectory and methods by 2000 then a collapse would occur by about 2050 plus or minus about 10 years. Subsequent studies show that this projection is still on target to become reality.

    3. A steady state (or even declining economy) will be forced on us by the laws of physics whether we will it or not and regardless of what kind of political economic system we adopt. The specious philosophy of voluntarism (in the sense that we can voluntarily create any kind of future) is refuted by the empirically discovered natural laws (the laws of physics of the known cosomos).

    Voluntarism is a school of thought that regards the will as superior to the intellect and emotion. By extension it regards human will, ingenuity and action as superior to “nature” and thus unbound and unbounded by the natural laws (laws of physics and chemistry of the known cosmos). Voluntarism of this school (like modern cornucopianism of the Julian Simon variety) is complete, specious nonsense.

  24. Ikonoclast
    January 22nd, 2013 at 10:16 | #24

    In the above, I meant “low wage structures” but actually “low age structures” is true too and not entirely irrelevant to the point.

  25. Chris Warren
    January 22nd, 2013 at 11:17 | #25


    “scientific advice in 1972 with regard to the limits to growth”
    Advice which turned out to be incorrect.

    This is just your religious dogma. Better qualified researchers realise that the Club of Rome view was correct.

    See: http://www.newscientist.com/article/dn16058-prophesy-of-economic-collapse-coming-true.html

    Although you can always argue about timing and details.

  26. Jarrah
    January 22nd, 2013 at 11:20 | #26

    “Since you have done more than a little reading on steady-state economy, could you explain to me how sustainable this trend is in the long run?”

    Depends on your definition of ‘long run’, and in what sense of ‘sustainable’ – economic, political, physical, etc.

    “If you truly believe in that there are no limits at all”

    Since I haven’t said any such thing, nor even hinted that I might hold such a belief, this is a strawman argument. Of course there are limits.

  27. Jarrah
    January 22nd, 2013 at 12:11 | #27

    “Previously, we had the Keynesian “social democratic” accommodation…With the rise of monetarism, neoclassical economics and supply side theory, the previous “Keynesian consensus” was tossed out.”

    This is what I mean by Big Switch thinking ignoring the actual complexities of the evolution of political economy since WWII. Your simplistic take is immediately refuted by the fact we have just been through a massive exercise in applied Keynesianism (the economic stimuli across the globe), and of course never really gave it up, as even a casual look at economic policies since the ’70s will show.

    “which accorded significant rights to labour, implemented or extended the welfare state”

    Again the over-simplification. Since the supposed abandonment of this feature, in some parts of the world labour rights have decreased, but in others they have increased. And the welfare state has never stopped expanding in size and scope in most advanced economies, despite repeated attempts by the right wing to cut it here and there.

    There’s also the unspoken assumption that prior to the Big Switch everything was just fine and dandy. On the contrary, there had been a sustainability crisis in Keynesianism developing during the 1960s. The rise of neoliberalism wasn’t just a front in the culture war, but a response to actual problems.

    “Continued growth of at least 3% is required by the capitalist system.”

    An assertion without foundation in theory or practice.

    “The costs of enviornmental damage and social damage were externalised off the capitalist balance sheets.”

    They were never on them in the first place. Luckily, in general people start caring about the environment once they’re rich enough to not worry about the next meal or next season, something that only became possible thanks to capitalism. The strongest correlation for the good health of a particular environment (with people living in it) is with wealth.

    “Only those with no understanding of history and political economy could fail to see an inflection point in the 1970s.”

    An inflection point, sure. A Big Switch where suddenly capitalism became unsustainable? No.

    “Does no real wage growth since 1979 in the US sound like success to you?”

    No, no, and no. But why do you think the Big Switch is to blame? Have there been no other changes in the global economy, no demographic changes, no technological changes, no sociological changes, that might have been contributing factors?

    “Does 8% unemployment in the US sound like success to you? Does the Global Financial Crisis and the failure of the US “jobless recovery” sound like success to you?”

    Why concentrate on the US? Cherry-picking much? What about right here, where wage growth since 1978 is 25% and unemployment is 5.4%?

    “Does 25% unemployment in places like Spain and Greece sound ilke success to you?”

    Yeah, because their economic collapses are all because of ‘capitalism’, and not because of anything else. These are spectacularly bad examples to rest your argument on.

    “Does the Chinese pollution crisis look like success to you?”

    Since that’s a function of industrialisation and weak or non-existent property rights – the former being utterly independent of capitalism and the latter being a prevention of capitalism – you have unwittingly bolstered my case.

    “If you are saying the advice about limits to growth is incorrect then you are saying the earth is infinite in size and thus has no limits to growth.”

    A ludicrous strawman that doesn’t pass the laugh test. I say specific advice was incorrect, therefore I think resources are infinite? Please don’t troll me.

    “By extension it regards human will, ingenuity and action as superior to “nature” and thus unbound and unbounded by the natural laws (laws of physics and chemistry of the known cosmos).”

    Since human ingenuity builds on itself, manifested as technological change, many of the limits we worry about today will be irrelevant in the future. Features of capitalism (like price signals leading to greater efficiency or substitution) mean that our use of resources is highly adaptive.

    Personally, I think capitalism will itself become irrelevant thanks to technological change. Capitalism is the emergent behaviour when you have people living with scarcity and private property. When nanotechnology (and eventually picotechnology) reaches the point of being able to transcend such things, the only limit will be the heat death of the universe.

  28. January 22nd, 2013 at 13:29 | #28


    “This is what I mean by Big Switch thinking ignoring the actual complexities of the evolution of political economy since WWII. Your simplistic take is immediately refuted by the fact we have just been through a massive exercise in applied Keynesianism (the economic stimuli across the globe), and of course never really gave it up, as even a casual look at economic policies since the ’70s will show.”

    The need for stimulus recommended by the IMF (2% of GDP) in the immediate aftermath of the GFC fell far short of what was needed. Some countries implemented larger stimulus and some implemented smaller stimulus to the recommendation which is fine because the damage of the GFC to the economy can vary. The detail to look for is how the stimulus is designed, as there are difference in the multiplier and short term impact of consumption spending and investment spending as well as various sub-categories in the two type of spending (e.g. temporary tax cut, spending on public transport, health and education etc). Prominent Keynesian economists in the US, such as Krugman, Christina Romer and Galbraith calculated a number around 2 trillion was needed but only around 800 billion was pass and later reduced to less than 700 billion. Other than that, infrastructure spending in the package was far too small, 105 billion, when the infrastructure spending in US have a far larger multiplier (quite a number of estimates close to 3, including DSGE models) due to decades of lag behind Japan, South Korea and China. Krugman commented straight after the negotiation of the stimulus that it was not enough to kick start a recovery hence the current state of the US at least was predicted by Keynesians.

    With regards to post 70s budget deficits, situations varies, some due to actual discretionary spending but most are due to automatic stabilisers. The budget stance for any period will have to be calculated eliminating cyclical factors rather than just looking at surplus or deficit.

    The 3%, or to be more accurate 3.5% real GDP growth is a figure for Australia. This figure means that when the annual increase in labour productivity, labour force and technology is taken out, the unemployment rate will remain unchanged.

    “non-existent property rights”

    This is false. It also does not relate to pollution.

  29. Ootz
    January 22nd, 2013 at 14:11 | #29

    Jarrah, I’ll let you define an appropriate time value for the sustainability of disproportionate accumulation of wealth. You’ll find history is littered with bloody test cases, starting with Herodotus account of Croesus, the first to mint coins, only to pay mercenaries with it. Further, I would have thought that economic, political (social?) and physical (ecological?) sustainability are all linked. As to my strawman argument, at least it flushed out your “there are limits”. So, since we were ill-advised in 1972 by science, what constitutes your limits to growth? Personally, I am with Lucius Annaeus Seneca “Non avaritia, non crudelitas modum novit”.

  30. Chris Warren
    January 22nd, 2013 at 15:20 | #30


    Capitalism is the emergent behaviour when you have people living with scarcity and private property.

    Wrong – other economic systems can exist on this basis.

    To get capitalism you need to show how those with private property use this to accumulate income from other members of society.

  31. January 22nd, 2013 at 15:39 | #31

    Is Gillard TRYING to lose the next election?

    It’s really sad to see all the ALP die-hards justifying her dictatorial announcement that a ‘captain’s pick’ from outside the ALP will replace a NT senator who, presumably, will simply be sacked.

    At least have the decency to get the proposed senator to join the party first and then quietly do a deal to get someone to ‘decide’ they want to spend more time with the family.

    It certainly looks like a very public humiliation of Crossin for speaking up about the Howardesque ALP treatment of refugees (and probably secondarily for being a Rudd supporter).

  32. Jordan
    January 22nd, 2013 at 20:58 | #32


    “Continued growth of at least 3% is required by the capitalist system.”

    An assertion without foundation in theory or practice.

    This is the most important point to understand capitalism and its succes or failure; 3% continued growth.

    3% is the lowest inflation that is not too dangerously close to deleveraging which starts deflation which is capitalist economy killer. Since wealthy hate inflation that destroys accumulated wealth they want it the lowest posssible. And growth % is around inflation %.

    Inflation of 2% only can start deleveraging process. Just take a look at the world today and you can see that majority of countries in recession have inflation around 1.5% and are in a deleveraging process. Australia did succed in preventing the deleveraging but barely and is on the edge of it. Once it starts your economy will crush and burn without more stimulus to prevent it from starting.

    I wrote many times about dangers of deflation and benfits of inflation on an economy. And how when debt growth which enables economic growth is suspended by inability of income growth to sustain debt growth and that starts deleveraging which colapses the economy. You can read it in Trifecta comments.

    The Big Switch did not happen all at once as you stick it to Ikonoclast, but it did happen when income growth is replaced with debt growth as economic generator in 1972. The Big Switch process did happen over long period of time, forces that worked on it did start at the end of the WWII and over time they sold the ideology to the public. There was a failure in Keynesian economy but it was external, not internal.

    The failure of Keynesian theory came from Military Industrial complex fighting wars in Vietnam instead of spending those resources on populations benefit. In times of economic expansion they spent more because of wars even tough that was contrarian to Keyness. Meddling in Middle East provoked a punishment from oil exporters and they reduced production in order to stop Israel and its supporter USA from further wars.
    They did succed somewhat, just as Osama Bin Laden did follow that same logic and pushed USA into wasting its resources into neverending wars.
    This is all external influence on Keynesian policy failures, or if you want, succes of forces that wanted it to fail.

  33. Jarrah
    January 22nd, 2013 at 21:53 | #33

    @Chris Warren
    “Wrong – other economic systems can exist on this basis.”

    Not without authoritarianism. Private property and free exchange IS capitalism, as I understand it. I realise people have different definitions, but I find those unconvincing or conflationary. Happy to have that conversation if you want.

    “To get capitalism you need to show how those with private property use this to accumulate income from other members of society.”

    Why do you persist with the Marxian fallacy? It’s self-evidently wrong. They accumulate income in conjuction with other members of society. There are all sorts of ways someone with assets or capital or money can extract more than their fare share, but those ways inevitably involve the manipulation of the confluence of government and enterprise.

  34. Jarrah
    January 22nd, 2013 at 22:15 | #34

    Your extended description of the supposed inadequacy of the US stimulus (seriously, what is the obsession in this thread with just one country?) is a quibble at best. The fact remains that the underlying rationale and the method of execution of the stimuli around the world was firmly grounded in Keynesianism, thus utterly refuting Ikonoclast’s repeated assertion that there was a wholesale Big Switch from golden age hunky-doryness to failing failure. And that’s without referencing the repeated Keynesian solutions-that-weren’t since the supposed Big Switch, in places like Japan.

    “This is false. It also does not relate to pollution.”

    Well done on ignoring half my point, ie the ‘weak OR non-existent property rights’. FYI, that is definitely true – China is notorious for what we would call ‘eminent domain abuse’, ie the subordination of local interests to a centrally determined public good. And it most certainly does relate to pollution, as China has devastated many environmental assets because it could ignore the effects on the people actually living in an affected area, due to those people lacking the property rights to resist the development, extractive industry, or polluting industry that impacts negatively on the environment. If the central committee decides a chemical plant should be built on the outskirts of Chongqing, then nothing can stop it because the farmers working the land have no proper recourse, no strong legal right to hold onto their property if they so wish.

  35. Ootz
    January 22nd, 2013 at 23:47 | #35

    Last week, the Anglia Ruskin University in Cambridge launched a lengthy research report “Resource constraints: sharing a finite world – Implications of Limits to Growth for the Actuarial Profession.The evidence and scenarios for the future” It assessed the resource constraints which are likely to affect the world economy and concluded that in a BAU scenario,“ …. the assets of pension schemes will effectively be wiped out and pensions will be reduced to negligible levels.”

    Dr Aled Jones, the inaugural director of the Global Sustainability Institute at Anglia Ruskin University and lead author writes in the Guardian “The multiple overlapping resource constraints, coupled with climate change, may produce a set of connected risks that are more difficult to respond to. This systemic risk in the global economy would not be identified by examining each resource on its own. … Will the increasing cost of resources, the impact of climate change and the scale of biodiversity loss, result in investments into new methods of doing things or merely increase our investments into business as usual? Will any individual, organisation or sector take responsibility for a transition to a new economic paradigm or a new technological revolution? Will society or physical events force this responsibility in time (or too late)?”

  36. Jordan
    January 23rd, 2013 at 00:15 | #36


    “Wrong – other economic systems can exist on this basis.”

    Not without authoritarianism. Private property and free exchange IS capitalism,

    That is so funy. Private property is reduced as time goes by. You know that in slavery people could be included in private property. In feudalism, wast trakts of land were king’s private property at disposal to give to other nobility and transfer them the property.
    By your logic slavery and feudalism are capitalism since they had private property.

    Free exchange is not so free as it used to be. Today states have much more influence by tax and spend policy on free exchange then ever before in history. And thats how it is for the last century.

    What you compering capitalism to is what define your idea of capitalism. You compare capitalism to socialism and thats how you got your definition. You do not take historical perspective only comparing what capitalism is turning into and you as a conservative want to conserve that system.

  37. Jim Rose
    January 23rd, 2013 at 05:42 | #37

    @Megan I can find no information on Egon Kisch’s view of the nazi-soviet non-agression pact of 1939. he was a communist.

    Did either the communist parties in the West or marxists in general repudiatate the USSR as a facist collaborator in 1939 after this pact with Hitler?

  38. Jordan
    January 23rd, 2013 at 07:11 | #38

    @Jim Rose
    The whole communist and marxist world was totaly under STallin’s autocrathic control. Those that weren’t like Barcelona Commune he destroyed, or Tito’s Yugoslavia he put under embargo just as USA put Cuba under embargo. Remember Trotsky?

    WHy do you ask about communist parties repudiating Hitler-STallin packt? Did capitalist parties repudiate it at the time?

  39. Katz
    January 23rd, 2013 at 08:00 | #39

    Jim Rose :
    @Ikonoclast you are re-writing history. marxists of the day thought the opposite and they betrayed their countries to support the USSR.

    Which countries and what do you mean by “betray”?

  40. Chris Warren
    January 23rd, 2013 at 08:30 | #40


    I am not concerned about labels. However I do expect some rigor. So there are 3 forms that need specification:

    I) A society with private property and free markets. This, by itself, will not necessarily end up in a GFC.

    II) A society with private property and free markets, plus having one class accumulating wealth at the expense of others is not this. This is feudal and has no inherent tendency for economic crisis.

    III) A society (as above) but where the accumulation is achieved, not by feudal relations, but by the power of capital. This is a different form of economy and one that will go into crisis if the level of profit does not decline to zero.

    So, if you call the first one “capitalism” what label do you want for the third?

  41. J-D
    January 23rd, 2013 at 08:50 | #41

    @Jim Rose
    Wait, what? Are there really 70 members of the Democratic Socialists of America in Congress? Who are they, and where are you getting this information from?

  42. Chris Warren
    January 23rd, 2013 at 08:51 | #42


    Stalin died in 1953.

    The Associated Labour Act was passed 1976, after a new Constitution in 1974.

    Tito died in 1980.

    Yugoslavia was not under Stalin’s autocratic control.

    Socialist Cuba did not exist until long after Stalins death.

  43. January 23rd, 2013 at 09:16 | #43


    I detailed the US case because I have more knowledge about the issue. I have not looked in detail with regards to the economic structure, the detail of the stimulus and other factors which affects stimulus measures implemented in EU or other countries hence I avoid commenting too much on that matter. 2% GDP stimulus definitely fell far short of what was needed when there was such a large drop in output, however you criticism on my comment’s focus the US was a valid point.

    If you believe that the world is still practicing Keynesianism post 70s that is fine, people are entitled to their beliefs.

    With regards to China, I’m sorry, but you know absolutely nothing. I guess it depends what your definition of property right is. In China, you are allowed to own assets (house, car etc); private companies are allowed their own assets; people are allowed to own copyrights or patents (my father has a patent himself for research in Chinese Medicine); people are allowed to buy shares in listed companies and invest in land and properties, and other assets such as paintings etc. If these meant people do not have property rights, I’ll need you to define what you mean by property rights first.

  44. January 23rd, 2013 at 12:17 | #44


    For people who are unaware, apparently Australian have to beware of US laws as well. I would also appreciate if anyone know enough about the Trans-Pacific Partnership trade agreement on whether if we officially became “US citizens” or not.

  45. Ernestine Gross
    January 23rd, 2013 at 12:27 | #45


    “In my opinion, the problem arises from the the fact that Keynes, accepted Arrow-Debreu model which assumes technology change is exogenous.”

    Your opinion is an anachronism!

    The Arrow-Debreu-McKenzie model was developed after Keynes’ wrote – about 20 years later.

  46. January 23rd, 2013 at 12:55 | #46

    @Ernestine Gross

    You are right. I apologise to readers who read the post. What I should said is that Keynesians accepted the Solow-Swan growth model which assumes technology change is exogenous.

  47. January 23rd, 2013 at 12:56 | #47


    One of the scariest things about the TPPA is its secrecy. Our mainstream media (rare exception, above) has been negligent/complicit in avoiding publicity of it and exploring its draconian potential.

    Today’s ‘National Security’ announcement specifically raised the ‘Cybercrime’ strawboogeyman.

  48. kevin1
    January 23rd, 2013 at 12:56 | #48

    @Megan #20
    Megan, I was in the South Aust Immigration Museum recently where they have a nice display on White Aust policy and the Dictation Test: truly an evil connivance to selectively discriminate against the immigrant. Passing a Dictation Test “in any European language” was required, apparently at the discretion of the govt people. Kisch spoke a few languages, so I think they gave him a test in Gaelic, which he failed but later was able to have it acknowledged on appeal to not be a European language. From memory of the display the test operated from 1909 to sometime in the 1950s, and not one person passed it over all that time! Was it Primo Levi who talked about the “banality of evil.” Sounds like Stasiland.

    Do Australian children get taught about these things in school?

  49. Ikonoclast
    January 23rd, 2013 at 13:01 | #49

    According to Wikipedia:

    “Capitalism is an economic system that is based on private ownership of capital goods and the means of production, and the creation of goods and services for profit. Elements central to capitalism include capital accumulation, competitive markets, and a price system.”

    We ought to add that the capitalists (the owners of the means of production) extract surplus value from their workers who are wage labourers with only their labour to sell. To the capitalist class we ought to add the “rentier”. Indeed many capitalists are rentier-capitalists.

    The “rentier” receives income derived from economic rents, which can include income from real estate, patents and copyrights.

    The defining characterstic of the rentier-capitalist is that he/she owns property and by “right” of this “ownership” obtains a very large income generally without work or effort. Any individual work or effort that a rentier-capitalist undertakes as a sole person can be no more work than one person can do, thus the work that a capitalist-rentier might undertake can be no more than that of a manager, book-keeper or overseer. Any income above this amount must come from the surplus value of work performed by other workers. Said “surplus value” is not paid to the workers but appropriated by the capitalist-rentier. This appropriation of part of the workers’ produced value is theft. The supposed legitimisation by the system of bourgeois ownership is not morally valid.

  50. January 23rd, 2013 at 13:09 | #50

    To be clear in the above comment, the Keynesians refered to above are the neo-classical synthesis (A.K.A. Neo-Keynesians).

  51. Jarrah
    January 23rd, 2013 at 16:31 | #51

    “By your logic slavery and feudalism are capitalism since they had private property”

    Since you are ignoring the second criteria, it’s no wonder you’ve arrived at such a ridiculous conclusion.

  52. Jarrah
    January 23rd, 2013 at 16:40 | #52

    “If you believe that the world is still practicing Keynesianism post 70s that is fine, people are entitled to their beliefs.”

    I presume by this condescending dismissal that you don’t want to actually discuss whether my ‘belief’ has any basis. Is that because you suspect I might be correct?

    “If these meant people do not have property rights”

    Why do so many people insist on erecting strawmen? I didn’t say “do not have property rights”, so basing your argument on a false accusation is a waste of your time and mine.

    Perhaps you’d like to do some research before lodging your foot so firmly in your mouth.

  53. Jarrah
    January 23rd, 2013 at 16:50 | #53

    “We ought to add that the capitalists (the owners of the means of production) extract surplus value from their workers who are wage labourers with only their labour to sell.”

    So what? Workers extract surplus value from their collaboration with the capitalist too. This is why both groups (so far as they can be distinguished in reality) join up to produce.

    “The “rentier” receives income derived from economic rents, which can include income from real estate, patents and copyrights.”

    Not any old income from real estate, only the extra derived from artificial scarcity. Also note that the second two are government-provided monopolies, and thus antithetical to capitalism.

  54. Jordan
    January 23rd, 2013 at 17:02 | #54

    Maybe you could read second sentence to see that i did not ignore it.

    Real differences in capitalism vs feudalism is in what is produced. Rest of the descriptions is equaly applied. Feudalism does not have slavery, which is only difference from it. Feudalism is based on agrarian production, just as slavery.

    Feudalism has a description of a “rentier” from capitalism and capitalism is about that relationship translated onto capital goods and means of production that produces other then food. Not much of a difference in relations just difference in products.

    Democracy changed that relationship, but not as much as it did change banking system. Before democracy, debt would be forgiven after king’s death. Whatever debt king (state) accumulated, it would be forgiven, hence there were many royal assasinations for that purpose. For me, it was hard to swallow such widespread fratricide in history of assasinations untill i connected it with higher purpose of forgiving the debt of state as a new begining for the new king.

    If a king lived long time it succeded only by looting other countries to pay off debt. Force of a compund interest is a killer of an economy. Even Moses knew that and ordered a Jubilee every 7 years. Deutoronomy:15. Romans were first in history of banking that did not have Jubilee and erased it from Izrael, when Jesus advocated return of a Jubilee, Romans killed him.

    I am connecting history of economic tought by Michael Hudson, Richard Wolf and Robert Lietar and pulling out other relations in history known to me.

    Keynes offered another solution to debt besides looting other countries and since then there was no wars within developed world. Except in Yugoslavia.

  55. Jarrah
    January 23rd, 2013 at 17:27 | #55

    “Maybe you could read second sentence to see that i did not ignore it.”

    In your disparagement of my definition, where you conclude that feudalism and slavery fit, you ignored it.

    “Real differences in capitalism vs feudalism is in what is produced.”

    The real difference was cultural. See Appleby’s ‘The Relentles Revolution’.

  56. Jordan
    January 23rd, 2013 at 18:03 | #56

    No i did not ignore it, i said that free market is less free today then ever in history.

    The real difference was cultural. See Appleby’s ‘The Relentles Revolution’.

    So, are you agreeing that culture of getting sick of death and suffering is leading the change in relations of production and consumption?
    That was my point just expressed in other words.

    What is produced is about economic observation, what changed it in human is psychological observation. Just a different point of observation in POV, not difference in understanding.

  57. Chris Warren
    January 23rd, 2013 at 18:41 | #57


    You are struggling because you are not using concepts in a rigorous way. Citing other authors who also may have done so (if so – Appleby) does not help.

    Just cherry-picking a few characteristics that apply generally, and assume they apply specifically to capitalism – is futile. But then to pretend that they define capitalism is fallacious.

  58. Jordan
    January 23rd, 2013 at 18:47 | #58

    A culture is a visible result of social coordination. The social coordination is changing violence and suffering in political and economic history led by idea in Bible in form of a better world-heaven.
    That social coordination is enlarged and strenghten by speed of communication. As social coordination becomes stronger it enlarges state sizes and relations in production and distribution. Speed of communication is hugely advanced by internet and planes hence you can expect social coordination to enlarge and consider the whole world as a single social organization prety soon.

    Such huge social coordination changed differences in developed areas across the world. Last few decades were marked with lessening the difference by developing China, S. America, India and Africa somewhat. That is a mark of social coordination on the level of the whole world. It was led by right wing political spectrum which is on the first look opposed to such thing. But that is a product of it. It looks like social coordination in aristocrats is working toward better world no matter what is a policy prefference. Something of an aristocratic benevolence/ philanthropy that changes the world for the better led by social cooperation and culture of discust for death and suffeering.

    Social coordination suported by speed of communication will change the world in the imediate future much more then we can imagine, led by discust toward human suffering and death. It is going toward idea of heaven on earth given in Bible.

    Social coordination can organize production and distribution as it wants, limited only by a notion of what is possible. Every change always have loosers who will fight the change and such conservativism changes it for the better toward more durable solutions.

    J.M. Keyness expressed idea of new financial system that enables change for the better.
    MMT is a slightly changed Keyness theory of a system that enables even better world if allowed to creep in into conservative population who fear loosing what they have.
    As i wrote before, you can understand MMT only if you are ready to forget what you can loose, but think of what everyone can get and it is based on strict separation of real values vs nominal values.

    Neoclassical economic understanding assumes that nominal price is representative of real value of products and services and never looks back. It assumes that nominal value is real value. MMT keeps separated nominal from real value to reach to the process by which enables distribution with the least suffering to anybody.
    Neoclassical theory is protected by fear of loosing an advantage over others.

  59. Julie Thomas
    January 23rd, 2013 at 19:09 | #59

    “Luckily, in general people start caring about the environment once they’re rich enough to not worry about the next meal or next season, something that only became possible thanks to capitalism. ”

    Oh come on, do you really believe this? Got a reference?

    The old hunter-gatherers were people who cared about the environment?

    And you make far too much of Ikon’s ‘simplification’ of issues. In a discussion some things have to be simplified, you know that.

  60. Jarrah
    January 23rd, 2013 at 19:35 | #60

    @Julie Thomas
    “Oh come on, do you really believe this? Got a reference?”

    Yes and yes.

    “The old hunter-gatherers were people who cared about the environment?”

    No, in general they did not. Their small ecological footprint was due to low population.

    “In a discussion some things have to be simplified, you know that.”

    Absolutely. Every single one of my comments, for example, has been massively simplified. There is a difference, however, between simplification and incorrect blanket statements.

  61. Jarrah
    January 23rd, 2013 at 19:39 | #61

    “No i did not ignore it”

    Yes, you did:

    By your logic slavery and feudalism are capitalism since they had private property.

    ..which totally ignores the fact I stated private property AND FREE EXCHANGE was a succinct definition of capitalism.

    Please stop trolling. I admit I’ve encouraged you by replying, so unless you deal with what I actually write, I won’t do so again.

  62. Jarrah
    January 23rd, 2013 at 19:40 | #62

    Note to Ikonoclast and Julie Thomas – my replies to you are in moderation due to having links in them.

  63. Jordan
    January 23rd, 2013 at 19:59 | #63

    You ignored what Chris Warren wrote to you.
    You assumed that free market did not exist in slavery and feudalism and i am saying that it did exist with same processes and laws troughout history so you can not claim that free market exists only in capitalism and hence define it.

    Wasn’t market at the time so free that included sales of people?

  64. Jordan
    January 23rd, 2013 at 20:15 | #64

    Here is a transcript of speech of representative Jim McDermont to hearing on a debt ceiling by GOP.

    ““The whole world is watching this hearing. It is the first hearing on this issue. The whole point of a society is to create and run a government to make order for people. People don’t like chaos and this hearing is about how to create chaos to get what you can’t get politically with votes.”


    This represent the difference in worldview between conservatives and liberals.
    Conservative base their worldview as individual in the world fighting for its own benefit, on the other hand, liberals base their worldview as group of individuals fighting for benefit of all, toghether and in coordination.
    Due to such worldview; for liberals a government is a group that works for benefit of most in the whole group that decides on how trough social coordination, while conservatives see government as an obstacle to advancement of particular individuals.

  65. Jim Rose
    January 23rd, 2013 at 20:33 | #65

    @Jarrah on ‘still practicing Keynesianism post 70s’, Greg Mankiw in a 2006 JEP article made great use of Laurence Meyer’s recent memoir A Term at the Fed to show who was really influencing modern macroeconomic policy making.

    The book by Meyer left the reader with one clear impression: Recent developments in business cycle theory, promulgated by both new classicals and new Keynesians, have had close to zero impact on practical policymaking in the USA.

    Meyer’s analysis of economic fluctuations and monetary policy is intelligent and nuanced, but it shows no traces of modern macroeconomic theory.

    Meyer’s reasoning would seem familiar to someone schooled in the neoclassical-Keynesian synthesis that prevailed around 1970 and had ignored the scholarly literature ever since.

  66. January 23rd, 2013 at 21:02 | #66

    There was no Keynesianism in the 70s.

    I have just a piece on that after the laughable piece by Arnold Kling which Sinclair Davidson linked.

    You only use fiscal policy when monetary policy doesn’t work i.e a liquidity trap. That happened during the GFC but never at any other time in the USA post war!

    David Glasner made the incisive comment once the General Theory was more about monetary economics.

    Most people have never read the book. It wasn’t his best book and in some places hard to read but it is essential reading.

  67. Jordan
    January 23rd, 2013 at 21:29 | #67

    JR you are right in real terms since deficit spending has the same effect as fiscal policy, and
    nottrampis you are right in literal sense only.

    Problem is that fiscal spending by deficit spending have a danger of comming under attacks by deficit hawks and ask to reduce debt that such spending has accumulated.

    Since deficit and debt are not a problem for sovereign state in time of fiat money and it can increase indefinetely unless politicians say that it can’t. It is not a problem operationaly only politicaly.

  68. Julie Thomas
    January 24th, 2013 at 06:55 | #68


    That link is really inadequate, but the reasoning on which I base this assessment will not be acceptable to you, or understood by you, until you address the problem that Chris Warren has raised about your – very prolific and energetic – efforts to defend what is an indefensible position.

    And again, you take such a simplistic view of life. The question of whether hunter-gatherers ‘cared’ for the environment can be ‘won’ by you if you rely on old-fashioned outdated ideas of what life – psychological as well as physical – was like for the hunter-gatherers. There is lots of new stuff from Anthropology and evopsych about how dodgy these old assumptions were. Pfft, so much rubbish written about human nature based on the notion that the white man was the peak of human evolution.

    So, you are necessarily simplifying and I don’t think you have been criticised for doing that?

    But the simple message I get from your arguments, is that capitalism is a good thing, the best thing humans have come up with and despite all the problems, we should continue on with this same ideology; that growth is an unquestioned good and any other possibility a bad thing.

    The thing is Jarrah, the thing that you don’t really get, is that there are a lot of people like me, who have ‘rational’ – as rational as yours anyway – and evidence based reasons for arriving at the conclusion that the last 30 years have not been ‘good’ and on balance, looking back, all the choice and freedom that people like you insist is ‘progress’ and essential, seems to have only made some people, perhaps people who have your particular personality type, happy.

    Let’s not argue about the happiness research; as an ex-psychologist, I am not impressed with self-report data and real measures of happiness, such as suicide rates and health – both physical and psychological, are showing that people are not happy with all the choice and stuff they have been suckered into thinking are good things.

    And you support this obscene imbalance of power where marketers can lie and mislead and use any psychological coercion they like to convince people that they need to buy stupid ugly stuff. Of course there is good stuff that came about through capitalism; the question is was it worth all the bad things?

  69. Ikonoclast
    January 24th, 2013 at 07:47 | #69

    @Julie Thomas

    It is very clear that capitalism is at a final crisis point. Naturally, a lot who have been beating the capitalist drum for a very long time are in complete denial about the looming realities.

    1. Capitalism demands endless growth. The biosphere is a finite system. Ergo capitalism is in conflict with the laws of physics and the laws of ecology.

    2. Climate change analysis shows at least 4 degrees C of global warming are already built in to the natural systems. With current unabated growth in greenhouse emissions 6 degrees C plus will soon be built in. This will be catostrophic to the biosphere. Certainly, global civilization will collapse over about the next 100 years. Regional adaptations may allow remnants of our species to survive.

    3. Many other analyses (e.g. ecological footprint analysis) and signs (mass extinctions and range migrations of species) show the dire state earth’s biosphere systems are in.

    4. At the same time, a massive rearguard justifcation, defence and apologia for capitalism is mounted to prevent positive change. This, coupled with the immense momentum of the system, its modes of production, demographics and geopolitics make it immensely difficult to turn the ship of political economy around. This could perhaps been averted if post 1972 we had taken Limits to Growth seriously and begun to change our system including jettisoning capitalism. We actually needed to have fossil fuels phased out by 2000 and the world population stablised by that date. The 30 years from about 1972 to 2002 were our last chance. Instead we saw an exponential growth and intensification of all the wrong things. Our fate was sealed.

    A comprehensive catabolic breakdown of civilization will now occur and the process has already started. The current economic crisis will be permanent and indeed will deepen. There is no way now to grow out of this crisis. There are not enough quality resources left to underpin the neecessary growth.

    Around the globe, the first signs are the food crises beginning to overtake certain countries. Food crises will deepen and widen. In Australia, this will take the form of rapid food inflation. By 2022, I suspect so-called middle class families wanting to eat to the same standard will need to increase spending on food and non-alcoholic beverages from the current 17% to about 35% i.e. a doubling.

    Households will also find it very difficult to keep household “infrastructure” running. The quality and reliability of whitegoods is declining rapidly and this decline will become systemic. It will soon be very difficult to buy a fridge, dishwasher or washing machine that lasts longer than two years. Most households could dispense with the dishwasher and probably will. It is a little more difficult to do without washing machines and fridges though in time people will have to do so. Ironically, the load on our grid may be lessened by the collapse of the whitegoods and air-conditioning industries as the “middle-class” becomes unable to afford these items.

    Capitalism has entered the mode of churning out the cheapest stuff possible with built-in obsolesence the norm. Nothing in the whitegoods arena is now meant to last longer than the warranty period. This of course is an inefficient use of our remaining resources and energy sources. Cars (although the best ones still remain reliable) are also a great waste of our remaining resources. The costs of cars and fuel will also escalate rapidly over the coming decade. A transport crisis will occur as many people can no longer afford automobiles and our inadequate mass transit system is in no position to take up any slack. This transport crisis will compound unemployment and other economic problems.

    I could go on but you get the picture.

  70. January 24th, 2013 at 07:58 | #70

    right in a literal sense only?

    in what way am I wrong?

    By the way I have some lovely Ry coder stuff before my rant against Kling

  71. Jordan
    January 24th, 2013 at 08:42 | #71

    in that deficit spending is not allways called fiscal policy.

  72. January 24th, 2013 at 09:07 | #72

    anything to do with the budget is fiscal policy.

    In normal times when there is an economic downturn Keynesians would argue let automatic stabilisers ( passive fiscal policy) do their work BUT make monetary policy your main tool.

    The GFC was a bit like a Depression , it lead to a liquidity crisis and therefore made monetary policy impotent. Hence the need for active, not passive, fiscal policy

  73. Chris Warren
    January 24th, 2013 at 09:18 | #73


    I may sound like a pedant here, but this statement:

    1. Capitalism demands endless growth. The biosphere is a finite system. Ergo capitalism is in conflict with the laws of physics and the laws of ecology.

    needs qualification.

    Capitalists will still demand their profits even if there is no growth, or even in a long-run recession, or even during wars, when growth is corrupted.

    However capitalism only seeks growth because it maximises profits. If a capitalist could make 10% in a no-growth, sustainable project, and 5% developing growth, – no growth will occur.

    Modern capitalism has captured normal economic activity and then parasitically claimed it as its own. However this faux association with growth means that capitalism has some funds it can use to temporarily fund countervailing tendencies, eg welfare state.

    Of course capitalists have to be forced to fund the welfare state, and if they can erect a military dictatorship to avoid this sliver of humanity – that is what they will do if they get the nod from the world’s centre of capitalism (originally UK, more recently USA). These hugely profitable capitalist dictatorships ringed America – and boosted American growth in the 1950′s-1970′s

    South Korea
    South Vietnam
    Saudi Arabia
    Dominican Republic

    Thankfully much of the Yankee fascism has been thrown out, although America dispatched many terrorists to prop-up its satellites, and arranged many assassinations, so America is in early deep trouble – surviving mostly on the fact that the dollar is still the reserve currency.

  74. January 24th, 2013 at 10:26 | #74

    capitalism means endless growth?

    Ever heard of business cycles? There were quite a few depressions before the grest Depression.

  75. Chris Warren
    January 24th, 2013 at 10:51 | #75

    nottrampis :

    Ever heard of business cycles? There were quite a few depressions before the grest Depression.


    What is your point?

    Capital accumulation occurs despite business cycles, although this may require greater concentration, greater population and yet more stimulus.

    No one is saying that capitalism means endless growth “forever”, because it eventually collapses in one final business cycle.

  76. Ikonoclast
    January 24th, 2013 at 12:46 | #76

    @Chris Warren

    I appreciate your reply. It’s a very good one. I have no problem with pedantry. In most cases it is accuracy and comprehensiveness. People who can’t handle accuracy and comprehensiveness in thinking get all huffy and call it “pedantry”.

    David Harvey’s video “Crisis Theory and the Current Conjucture” is very enlightening. I recommend it to all who read this blog. Even if you are pro-capitalist watch it. As John Stuart Mill said “He who knows only his own side of the case, knows little of that.”


  77. Jim Rose
    January 24th, 2013 at 16:14 | #77

    the life expectancy of the downtrodden proletariat has close to doubled under the horrors of capitalism according to Robert Fogel:
    1. Of the children born between 1835 and 1845, nearly a quarter died in infancy, and another 15 percent perished before age 15. Those who survived endured persistent malnutrition, typhoid, tuberculosis, measles, rheumatic fever or malaria while labouring hard seven days a week.
    2. Those born in the 1920s had about a 10% chance of dying before age 15.
    3. Those born in the 1960s had about a 99% chance of making it to 15.

    The idea that parents should not bury their children is a blessing of 20th century capitalism. Parents in the good old days had large families in the hope that some would live to adulthood.

    The good old days were terrible. How much extra would you want to step into a time machine and go back 100 years? 40 years back to 1972 – pre-colour TV? To the Menzies era?

  78. Will
    January 24th, 2013 at 16:37 | #78

    ^^ the above

    This is getting tiresome. Boring drivel. I wish you guys would knock off “we are for freedom and free markets and capitalism, you aren’t” crap.

  79. Chris Warren
    January 24th, 2013 at 18:52 | #79

    @Jim Rose

    All those existed under Gorbachev and in Yugoslavia.

    But under capitalism – the right to own colour TV’s is not equal. How many colour TV’s can you afford working at $2 per day?

    Thanks capitalism.

  80. Jarrah
    January 24th, 2013 at 20:13 | #80

    “1. Capitalism demands endless growth.”

    No, it doesn’t. It tends to create growth (in economic activity and capital – it would be better if you were precise about what you mean by ‘growth’). This is an important distinction. People being what they are, this tends to create growth in consumption and resource use. If people were content to keep consuming at previous, lower, more simple levels, then the fairly constant growth in productivity and efficiency that capitalism allows would deliver a diminishing use of resources, even better than your preferred steady-state economy.

    But people aren’t like that. What you want to happen would require wholesale change in our cultural expectations, even our very biology. Good luck.

  81. Jordan
    January 24th, 2013 at 20:26 | #81

    On the matter of endless growth is shown i Say’s Law about interaction of unemployment and inflation and Okun’s Law about necessary growth of 3,9% to account for population growth of 1% and productivity growth of 1% so it doesn’t cause unemployment. Having growing unemployment year over year will cause social and political instability. To prevent instability economy have to grow over 3%. Therefore, capitalism demands endles growth.

  82. January 24th, 2013 at 20:39 | #82

    the point is chris depressions mean negative growth.

    so much for endless

  83. Jarrah
    January 24th, 2013 at 21:44 | #83

    “To prevent instability economy have to grow over 3%. Therefore, capitalism demands endles growth.”

    You are conflating capitalism and ‘people who want economic stability’. Capitalism is just an ism, it doesn’t and can’t demand anything at all. Like so many intellectually lazy people, you think ‘capitalism’ means ‘whatever is the current socio-economic complex’. Capitalism is a big part of our current system, but still just a part.

    Your assertion (without foundation in theory or practice, as I’ve said before) implies that capitalism collapses when there isn’t 3% economic growth. Your theory doesn’t give a time limit, but let’s say 20 years is a reasonable time. Japan has had less than 3% growth since the early ’90s. Why hasn’t capitalism collapsed there?

  84. Jordan
    January 25th, 2013 at 02:29 | #84

    Instability doesn’t mean collapse, but it is true that implies to all other systems.
    Japan did not have instability because of good employment no matter finacial collapse in 1992. Unlike present USA, Japan have kept employment good for 2 decades but with fiscal spending that reached 230% debt to GDP. They did not allow collapse of financial system to cause high unemployment.

    Japan have GDP corresponding population rate which is also falling.
    Okun’s Law considers productivity growth and population rate. In Japan, both were falling last two decades. ANd working hours were also falling, from 72 to 58 hours a week. All of it just says much about GDP as measure of wellbeing.

    Bush was just siting there expecting that stimulus of 2008 would bring the financial crisis over election time and dump it to new president. But stimulus worked for only 3 months, it gave every person only $600, what was stimulus in Australia? AUD 2300?

  85. Jordan
    January 25th, 2013 at 03:01 | #85

    Yanis Varoufakis presentations also point to Savings(capital) glut as the problem of present capitalism. There is no enough assets to invest to in the world for such ammount of capital.
    Since 1980s, that saving glut is pushing down interest rates which led to lower inflation. Without benefits of higher inflation eating up debt, it came to the debt limit and that started deleveraging and unemployment.

    Huge deficits in developed world had some effect of clatching onto capital glut but at the same time interest paid out on that capital also enlarged it and exascerbated the problem. SImple high marginal taxes acros the world would solve that problem easy. Tax it instead of borrowing it for what deficit spending is used is the way to solve the problem of Saving glut.

    For those that cry wolf about high taxes, let me point out that such savings (except pension savings which low interest rates are ruining) are never going to be used for consumption and thats why they keep growing. It is a surplus which can never be consumed by owners of that capital, they allready have consumed what they wanted, this is saving after consuming.

  86. Jordan
    January 25th, 2013 at 05:07 | #86

    On a side note, it looks like Krugman finaly understood the correct relationship between private sector and public sector:

    Those who claim to be deeply upset about public sector deficits should be asked, what would have happened, given this attempt by the private sector to move into surplus, if the public sector had tried to stay in balance. Can you say Second Great Depression?

    It says that private sector (all of us) is a beneficiary of deficits of public sector which MMT is desperately tring to show to clueless economists who argue against public sector deficits and go for surplus as something moral and good for people.

  87. Chris Warren
    January 25th, 2013 at 06:20 | #87


    In fact capitalism has restricted growth in the Third World.

    It has also misallocated growth in Western societies and according to Christine Legarde is now producing “contraction”.

    A normal, non-capitalist growth would not produce this worsening disaster.

    But like bad apples – one capitalist eventually destroys everyone.

  88. Chris Warren
    January 25th, 2013 at 08:34 | #88

    Life under Capitalism, but not as we know it…

    In capitalism, unions are typically banned, as this assists profiteering. However workers can fightback, sometimes at the risk of their lives (as in Colombia).

    In Korea – capitalism runs riot and still displays the values of the Kwangju massacre of pro-democracy students. Currently – according to LabourStart …

    The President of the Korean Government Employees’ Union (KGEU), Kim Jungnam, launched a hunger strike in the streets of Seoul outside the offices of the Presidential transition committee on 15 January.

    He is protesting the sacking of 137 workers, among them the union president and general secretary, who are being punished for their union activities. They are accused of being leaders of an “illegal organization” — the KGEU.

    President-elect Park Guenhye, who will take office on 25 February, has pledged to achieve social integration. The KGEU is demanding that she recognize the union and reinstate the sacked employees.

    Kim will continue his hunger strike until these issues are resolved.

    We call upon trade unionists around the world to show their solidarity by sending off messages of protest and solidarity today.

    Click here to send off your message.

    Please spread the word – share this message with your friends, family, co-workers and fellow union members.

    Thank you!

    Eric Lee

  89. January 25th, 2013 at 09:08 | #89


    I agree with Zhang’s paper that there there are difference in the level enforcement of property rights (some areas strongly enforced while some areas are very weak) in China. He’s argument that the “asymmetric property rights” is related to China’s growth is an interest point which I have not looked into.

    For the argument that, “asymmetric property rights” is one of the reason for China’s pollution you’ll have to explain other countries, say, the top 10 polluted countries in the world.

    Furthermore, to argue industrialisation being utterly independent to capitalism is a strange argument if you argue capitalism tends to create growth because growth in consumption will need to be accompanied with growth in production. On a global scale, even if China didn’t industrialise, some other country will have to, if the local manufacturing industry declines or fails to meet the grow in demand.

  90. Tony Lynch
    January 25th, 2013 at 10:52 | #90


    So that is why, in the last week, and in a new house with Harvey Norman supplies whitegoods, i) the door to the oven fell off; ii) the dishwasher just stopped & I was told “it’s not worth fixing it”.; iii) the fridge door handle came off & the only way to fix it meant a new door; then iv) water pooled on the floor in front of the fridge and it had to be regassed – & now, again, there is that puddle; and v) the mesh inside the microwave door detached itself, presumably letting the radiation out into the room; and vi) the agitator in the washing machine decided that it wanted to free itself from any material attachment to the rest of the machine.

    I’ve had it.

  91. Sam
    January 25th, 2013 at 11:34 | #91

    I’m surprised and disappointed. I expected more from Alan Kohler in today’s The Drum. http://www.abc.net.au/news/2013-01-24/kohler-privatisation-is-good-for-qld/4482140
    He makes the silly and naive case for privatisation you rightly decry, JQ. He believes paying down gross government debt is an inherently responsible thing to do, never mind the effect on net fiscal position. All this must apparently be done to appease credit rating agencies who make the same basic error, who embarrassed themselves so thoroughly during the GFC, and who were completely ignored by investors after they downgraded the US. I now put Kohler in Paul Krugman’s category of “Very Serious Person.”

  92. Ikonoclast
    January 25th, 2013 at 11:41 | #92

    @Tony Lynch

    Yes, I am getting quite concerned about the decline in quality of most goods now. To give some recent examples from my situation;

    1. Brand new, supposedly high quality brand, $8,000 ride-on mower began snuffing out after 20 minutes operation with just 15 operational hours on the clock. Took the dealership 5 attempts to fix it, taking it away for a day or two each time. They have been good about it but they really had no option under warranty and I was starting to demand a “replacement engine since this one doesn’t work”. Tested OK for an hour once. But is it really fixed? Time will tell after this rainy spell.

    2. New fridge, less than one year old. Mid-range brand. Door closing latches are cheap plastic and both have now broken in warranty period under normal use by four sensible adults. One fixed under warranty, wonder what they will say when I claim for the other one? Clearly, as soon as 1 year warranty period is over they will break again within one year. Already, a cooling or circulation fan has become rattly and noisy. Wonder what that presages? I find fridge mechanics these days to be of the opinion “there ARE no good fridges now”. Where does that leave the consumer? All whitegoods are headed the same way.

    3. All meat purchased from the large grocery duopolies is pumped full of water. I have measured one and a half to two cups of water coming out of 1 kg of “lean, 5 star” beef mince, beef strips or round steak cut up for curries and stews. The same for chicken breasts supposedly natural, free range, organic and all the other meaningless bulldust they claim. It is actually impossible to sear this meat as the water just comes out and broils it. I’ve found a new butcher who seems better… for now… probably until the duopolies drive him out of business. Also, did you know all of Australia’s top quality meat is exported? We get only the dregs the overseas rich don’t want yet we pay top dollar for it with 25% to 33% infused water content. Where is the consumer protection in this country?

    4. All fruit and vegetables purchased from the large grocery duopolies are old (not fresh) and spoil if not used within 2 or 3 days even if stored appropriately. A proportion (about 10% to 20% it varies) is unuseable when cut open. That is, it is bad inside. Specialist fruit are a little better and much more expensive. I can recall as a kid, my uncle had a bag of potatoes under his house. These lasted for months (stored in a cool, dark place). Funny how modern potatoes go soft and grow from the eyes after a week even if stored in the same manner.

    If these trends continue, I expect possession of a middle class income will be next to meaningless within 5 to 7 years. You simply won’t be able to buy any goods worth having with it. The current whitegoods and food fiasco is the beginning of the end. Sure, we will scrape by. You can live on potato peelings if you have to. And there’s a kind of justice to it. The Western middle-class will finally get to share poverty with the third world workers they have directly and indirectly exploited.

  93. Sam
    January 25th, 2013 at 13:09 | #93

    Man, you need to stop shopping at junk stores like Harvey Norman. Good quality things still exist, but you have to buy online.

  94. Ikonoclast
    January 25th, 2013 at 14:14 | #94


    Fair enough point (not that I shop at HN very often). But with respect to refrigerators can you name a single brand worth buying now or are they all, as I suspect, junk? It’s no good naming a $10,000 or $20,000 millionaire’s brand unit and recommending it for the average middle class person.

    I’ve noticed a phenomenon now in consumer blogs where one set of people will say brand X is good (fridges or whatever), “my brand X has lasted 10 years etc. etc.” Then another set will say I bought brand X (comparable model) in the last two years and it is junk. Of course, with any brand you will find a range of people from supporters to detractors based on personal contingent experience.

    However, there seems to be a pattern that once good and reliable brands can no longer be trusted at all. Quality has declined markedly. It seems to be bound up with parts (compressors etc.) all being made in places like India and China and then assemblage happening in places like Mexico.

    Essentially, the collapse in manufacturing in USA and Europe is accompanied by off-shoring to places that do it on the extreme cheap. In addition, experienced workers are laid off in USA and Europe and in the developing world the workforce, management and quality control still havr their training wheels on. In addition, late stage manufacturing capitalism is finding it harder and harder to squeeze profits from real goods. The push is to cheap, rushed, intentionally rapid-obsolesence products.

    There are some areas where this is not true yet, notably heavy manufactures, automobiles and solar equipment from the better quality manufacturing countries namely Japan, Sth Korea, Germany and sometimes still the USA (though less and less). In time, at little as 10 years now, it will all go the same way. The decline process is inevitable for reasons of physics (limits to growth and the law of entropy) and reasons of political economy (impending collapse of late stage capitalism).

    In the meantime, we all have to live, so the search for fridge that might last longer than a few years goes on. I still have a family. If I was an old curmudgeon (well I am that) who lived on his own (not yet), I wouldn’t give a rats. I’d build myself a Coolgardie safe and make do with that. One can live on dried, cured and salted meats and fish, pickles, preserves, root vegetables, powdered milk, flour, tea, damper, some fruit dried and fresh etc. Probably be far healthier than most modern diets.

  95. Ikonoclast
    January 25th, 2013 at 14:24 | #95

    As for the shop online claim, I looked and I saw all the usual suspects; same junk as in HN or other chain stores. Maybe I am looking in the wrong place?

  96. Mel
    January 25th, 2013 at 15:20 | #96

    Ikonoclast: “Clearly, as soon as 1 year warranty period is over they will break again within one year.”

    Retail/ manufacturer warranties don’t override stat warranties. I’m surprised by how many people don’t know this. Also, if a product has a major fault, you can demand a refund or replacement. You do not have to settle on a repair.

    And yes, Harvey Norman are in my experience, lying sleazy scum. I almost shoved a defective vacuum cleaner up the ar$e of a smug salesman on one occasion last year ;)

  97. Tim Macknay
    January 25th, 2013 at 16:07 | #97

    Essentially, the collapse in manufacturing in USA and Europe is accompanied by off-shoring to places that do it on the extreme cheap. In addition, experienced workers are laid off in USA and Europe and in the developing world the workforce, management and quality control still havr their training wheels on.

    This process in now in reverse.

  98. Ernestine Gross
    January 25th, 2013 at 17:31 | #98

    Ikonoclast, your talk about future food shortages had an impact on me. On a very small corner of my garden I’ve grown tomatoes and other vegies (water from the tank of course). I’ve got a substantial excess supply of tomatoes (all plants, grown from seeds, prospered this year, the year when tomatoes are relatively cheap in the shops). I wonder how long my enthusiasm will last. I am not into the manufacture of fridges as yet but yoghurt production is on the list.

  99. Jordan
    January 25th, 2013 at 17:47 | #99

    Here is a confirmation of theory of Nominal Surplus Circulation and Big Switch of supporting agregate demand by debt instead of income with lowered credit requirements and lower interest rate untill it hit the debt ceiling by Steve Randy Waldman


  100. Jim Rose
    January 25th, 2013 at 18:53 | #100

    Katz, the Communist Party of each country was a conspiracy controlled and financed by a hostile foreign power that recruited members for clandestine work and used that apparatus to collaborate with espionage services of that hostile power. Their treason from 1939 to when Germany attacked the USSR is one of many examples.

    A contemporary analogy would be a Fundamentalist Muslim party running for elected office while partly funded by Al Qaeda, whose policies are dictated by Al Qaeda, and whose leaders and some members have aided Al Qaeda via espionage activities. It is not clear that free speech and free elections require a government to tolerate the existence of such a party, and that the government could not close it as a criminal conspiracy.

    The Venona intercepts revealed Wally Clayton, a leading official within the Communist Party of Australia, was the chief organiser of Soviet intelligence gathering in Australia. It was Venona intercepts that led Chifley to set-up ASIO.

    As Bob Carr recently recalled, PAUL Keating, as president of Young Labor in 1968, always referred to the Left of the ALP as “the comms”. important figures in the ALP Left were dual members of the Communist Party of Australia.

    See http://www.theaustralian.com.au/opinion/thankfully-whitlam-and-co-rescued-labor-from-the-reds/story-e6frg6zo-1225887763473 and Mark Aarons’ reply.

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