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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

    @Will

    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?

    http://azizonomics.com/2013/01/16/of-wages-and-robots/

    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:

    http://www.dailymail.co.uk/news/article-2265253/Andrew-Tinney-The-regime-fear-inside-Barclays–boss-lied-shredded-evidence.html#ixzz2IaCEq1cG

    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

    @Tom

    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.

    http://www.guardian.co.uk/business/video/2012/apr/19/marxist-richard-wolff-economics-video

  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.”

    http://www.theage.com.au/opinion/politics/neoliberals-economic-policy-just-a-getrichquicker-fraud-20130120-2d13e.html#ixzz2IdzqysWv

  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

    @Ootz

    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

    @Ikonoclast

    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

    @Ikonoclast
    “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

    @Jarrah

    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

    Jarrah:
    @Ikonoclast

    “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

    @Ootz
    “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

    @Ikonoclast
    “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

    @Jarrah

    “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

    @Jarrah

    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

    @Jarrah

    “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

    @Tom
    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

    @Jarrah

    “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

    @Jarrah

    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

    @Jordan

    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

    @Jarrah

    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

    http://www.smh.com.au/opinion/politics/legal-anvil-hovers-over-the-unwary-tech-user-20130122-2d51x.html

    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

    @Tom

    “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

    @Tom

    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).

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