148 thoughts on “Monday Message Board”

  1. Finished Picketty. What I don’t get is Picketty’ s claim that there is a solution to the general tendency of capitalism to economic inequality increase – with all its costs/destruction of social and political equality, and so democracy – and that is a wealth tax. Then his claims that i) Such a tax/solution is not possible under such conditions (is “utopian”), but ii) that capitalism is the only game in town. Is it meant to be a tragedy of the TINA type?

    What use is this? Or is it this that explains his popularity? Critque without edge?

    So e can’t get out of the spiral of I

  3. I like the last line. It’s kinda Zen.

    But seriously, all bourgeois economists have trouble admitting capitalism is in its terminal death spiral as predicted by Marx. Picketty has said essentially that;

    (a) capitalism is unreformable;
    (b) capitalism is unopposable; and
    (c) an alternative is unimaginable.

    He is correct about point a. He is correct about point b once capitalism has become a global political economy, sole public discourse and an enforced elite power ideological-monoculture which it has largely done. He is incorrect about (c) as he merely displays the lack of imagination, knowledge and courage typical of bourgeois economists.

    However, even point c is currently unimportant. Alternatives can be imagined but not implemented due to the all but total current power of capitalism as operated by the oligarchs and captured post-democratic governments subservient to the interests of capital. We are now in the post-democratic era.

    The short circuit of the impasse will come about due to a final crisis of capital accummulation and/or with the collision with the real enviroment. With the former it might be possible to squeeze cycles out of capitalism almost indefinitely while having global oligarchs, a smallish technocratic elite and mass poverty with or without wars and mass deaths. The latter (collision with the real environemnt is most definitely inevitable. Environmental destruction and the limits to growth will prevent the infinite growth and/or indefinite duration of capitalism. At the point where this becomes palpably obvious to the masses an extraordinary revolutionary upheaval (for good and bad) will occur or a collapse into total barbarism or extinction are also possible.

  4. Greg Hunt seems to believe that the 5% reduction in carbon dioxide (including perhaps other GHG emissions) is an appropriate level of ambition given the reality of global climate change. Of course, as we know, Australia does not make a significant contribution to overall emissions, so it not our problem. Apparently, if we succeed at reducing emissions by 1/20, this will be equivalent to the US reducing their’s by roughly 1/8.

    He claims to Lexi Metherell:

    There’s no debate; there’s no denying that during the carbon tax era emissions fell at one-sixth the rate of the pre-carbon tax era.

    Is this claim accurate?

  5. I’d go on Figure 4 of this document

    Click to access nggi-quarterly-update-june-2014.pdf

    It doesn’t quite go back to year 2000 and I’m not sure if land use changes are included. We see that emissions grew from the turn of the century but showed an impressive decline from 2012. However as of mid 2014 we are well up on the starting point noting Australia’s population has increased by millions this century. It seems reasonable to expect a coal fired emissions uptick in 2015 even with a flat economy due to the combination of weaker hydro, higher gas prices and lack of carbon pricing.

    The notion of an 80% emissions cut years 2000-2050 has been widely bandied about or 1.6% per year. That means the period 2000-2020 should see a cut of 32%. We might not make 5%. As the Hollywood producer might have said ‘in two words path etic’. FWIW I also think the Climate Change Authority’s call for the purchase of foreign permits is an extremely weak copout.

  6. @wmmbb
    My take on Hunt’s assertions is that during the years immediately preceding the Carbon Tax’s introduction the GFC had impacted negatively on economic activity and therefore CO2 output (less power used etc). So once again Hunt cherry picks these years to compare the Carbon Tax years to.

    If you take the figures from 2000 (or before) there was a steady increase in CO2 production, tailing off slightly during the GFC years and then further suppressed through the Carbon Tax. but Hunt (& his LNP mates) refuse to acknowledge the GFC let alone the effectiveness of the Carbon Tax.

  8. Thanks, ikonclast. With your first alternative – oligarchic cycle-free capitalism (and mass deprivation, etc.). Would it remain capitalist? I mean, I see a return of slavery or some such here, and slaves are not able to enter into the labour market themselves. If most can’t be labour market players – with all the pricing consequences for production, investment etc – still capitalism? Or closer to more ancient types of eco-social-political systemsas, say, ancient Greece?

  10. @Ikonoclast
    I’d bank on the ecological crisis being the one to hit home before a global economic crash. We are entering the age of the big storms. As an atheist I noted that the pope’s conversion to the cause followed a visit to the Philippines in the wake of Typhoon Haiyan.

    There is another factor which is extensive wars which will be increasingly impossible to finance without the degradation of the living conditions masses of people. This explains the militarization of police forces in all developed economies. They certainly are heralding in an epoch of lawlessness and repression and probably slavery as well.

  11. @Tony Lynch

    I was rushing my explanation and didn’t express myself very well or comprehensively enough. Because of that you got my basic drift but you also got a few wrong impressions about my argument.

    I did not mean cycle-free capitalism, I actually meant more business cycles of capitalism. It seems that one penultimate problem of Capitalism is overaccumulation. This is short for overaccumulation of capital. This leads to a crisis of capital accumulation. I am not sure how much Marx you have read so forgive me if I give a much abridged explanation. I will pinch the text from Wikipedia;

    “Overaccumulation is one of the potential causes of the crisis of capital accumulation. A crisis of capital occurs due to what Karl Marx refers to as the internal contradictions inherent in the capitalist system which result in the reconfiguration of production. The contradiction in this situation is realized because of the condition of capitalism that requires the accumulation of capital through the continual reinvestment of surplus value.

    Accumulation can reach a point where the reinvestment of capital no longer produces returns. When a market becomes flooded with capital, a massive devaluation occurs. This over-accumulation is a condition that occurs when surpluses of devalued capital and labor exist side by side with seemingly no way to bring them together. The inability to procure adequate value stems from a lack of demand.”

    If you are not used to Marxist analysis this might be a bit hard to follow. In everyday speak, in our current environment, overaccumulation of capital starts happening when the most powerful capitalists (the top oligarchic and transnational corporate ones now) become too successful for their own or anyone else’s good. This situation starts to occur when these top capitalists start getting very powerful, very wealthy and getting their own way most of the time. Profits go up and wages stagnate or even go down on real terms. The profit share of the economy goes up and the wages share goes down.

    Workers start struggling to buy things or pay off their mortgages. For a while, further financialisation (consumer debt mainly) can can occur and stave off the problems. But sooner or later a recession occurs (though this is surely not the only cause of recessions). Now the recession means less economic activity (lack of aggregate demand) so some productive enterprises have idle capacity (idle premises, plants and machinery) which is fixed capital and thus now a form of idle capital. The rising rate of unemployment means more idle labour as well. Capital can now just go into money holdings i.e cash deposits. This is because there is obviously no point at this juncture in investing it in more productive assets. Even some current ones are already idle. Capital can also go into bonds, debentures, shares, share buybacks, derivatives etc. thus pushing up the value of these paper assets which Marx calls “fictitious capital”.

    Wikipedia quote;

    “Fictitious capital contrasts with what Marx calls “real capital”, which is capital actually invested in physical means of production and workers, and “money capital”, which is actual funds being held. The market value of fictitious capital assets (such as stocks and securities) varies according to the expected return or yield of those assets in the future, which is at best only indirectly related to the growth of real production. Effectively, fictitious capital represents “accumulated claims, legal titles, to future production” and more specifically claims to the income generated by that production.

    Fictitious capital could be defined as a capitalisation on property ownership. Such ownership is real and legally enforced, as are the profits made from it, but the capital involved is fictitious; it is “money that is thrown into circulation as capital without any material basis in commodities or productive activity”.

    Fictitious capital could also be defined as “tradeable paper claims to wealth”, although tangible assets may themselves under certain conditions also be vastly inflated in price.

    In terms of mainstream financial economics, fictitious capital is the net present value of future cash flows.” – End quote.

    Now we can start to see the problem. Wealth flows into fictitious capital which is dependent on future cash flows. But really, these future cash flows are much less likely ot be realised because the economy is in a production slump. Low real production basically equals likely low real cash flows into the future. The is even more the case because capitalist economies tend to slump fast and recover slow. Employment and business cash flows take a long time to recover. The only rapid way to short circuit this stagnation is a full depression (other than government intervention via high deficit spending).

    Capitalists do not in the main deliberately cause a depression (though a minority might be angling for it) in the same way that most car drivers do not deliberately cause a car crash. But if you drive the economy or the car too fast or make other “critical turning point” mistakes then a crash can occur. The full depression satisfies the required condition of capital destruction. A lot of paper wealth disappears, fortunes are lost, seemingly safe valuable stocks turn into penny-stocks, bonds turn into junk bonds, bankruptcies, defaults and write-offs occur. Capital destruction occurs. Fictitous capital disappers into thin and the remnant returns to a more realistic value propotional to real production. However, even then the path to recovery is not clear without massive government intervention in most cases.

    Another way capital destruction can occur is a massive war which amongst other things destroys not only fictitious capital but real fixed capital: factories, infrastructure, machines and excess people of labour force age if unemployment is a problem. Big capitalists love wars and usually know how to make a fortune from them in armaments and later in reconstruction.

    So, to cut a long story short, we could have further cycles relying on depressions and wars. This is what will happen if government continues to impose budget austerity and favour capitalists over workers. Our governments are now captured by oligarchic capital in this (now) post-democratic age.

    This boom, bust/war recovery capitalism could keep cycling through. If even say 80% of the world’s population was reduced to wage peonage (working poor on subsistence wages) it would still technically be capitalism. The Apple assembly factory in China featured recently IIRC with almost imprisoned workers in crowded worker barracks on site, a few dollars a day or week wages, compulsory deductions, long hours, repetitive work and almost no rights. Technically still wage workers but almost slavery too. Imperialist capitalists can certainly exploit slaves or near slaves in overseas countries.

  12. I been thinking a lot about government debt and deficits lately, and how this is arguably the most dominant political issue (not because it’s that important, but because the right forces it on the agenda), yet there is so little economics on it.

    The topics of managing government debt, the mechanics of government debt, and the supposed importance of low government debt, as far as I can tell, cannot be found in typical economics textbooks and is not taught in economics courses (other than a minor emphasis on countercyclical fiscal policy). Given that it’s so dominant politically, why is there so little attention on it in the economics curriculum?

    Consider the following questions which continually fills political discourse. The answers to these questions cannot be found in economics textbooks. My comments are in brackets.
    – Is Australia’s debt level too high or growing too fast? (No, I don’t think so, it’s very low by world standards).
    – Does spending today burden our children with massive debt? (I don’t think there’s a standard answer from economists, I believe it depends on a cost-benefit analysis on what the money is spent on).
    – Australia is spending $1B a month on interest repayments, how isn’t this a budget emergency? (It’s not unusually high as %GDP, and it’s being sustained just fine).
    – We cannot afford to spend and spend even more, true or false? (There’s absolutely no reason why we can’t spend more and more, and we should spend more and more if the spending is productive and useful to the public, although extremely high levels of debt may have adverse effects, see further below).
    – How is running exponentially increasing debt, for example US debt has more than doubled under Obama, sustainable? (As %GDP it hasn’t increased that much, and it’s sustainable because debt is endlessly rolled over, and investors have faith the government won’t default).
    – And one of the most infuriating talking points of conservative politicians and ideologues: we must run a surplus to cushion us from the effects of future financial crisis. (This is a non-sequitur, as far as I’m aware, no economic theory says this and there is no mechanism by which surpluses cushion against the adverse consequence of financial crises).

    Here’s some more interesting questions, which don’t necessarily appear in political discourse:
    – What level of debt is too high? (I don’t think economists have a good answer to this).
    – What, if any, are the adverse effects of having high government debt? (It seems to me that only the problem is crowding out the private sector which could lead to inefficient resource allocation, and intergenerational effects if resources are misallocated).
    – Australia has ~25% debt/GDP while other advanced countries have 80% to 100% debt/GDP, if other countries can have 80% debt/GDP without much adverse consequences, why shouldn’t Australia go on massive spending spree to increase debt from 25% to 80%? (I don’t have a good answer to this one, other than crowding out and risk of resource misallocation).
    – Why doesn’t the central bank pay off government debt or part of it, by printing money, and if they do what, if any, are the adverse consequences? (No idea. My guess would be institutional arrangements preventing it and the risk of inflation).

    Anyway, the point is, most of these answers I’ve picked up from reading stuff on econ blogs. But I think none of this stuff is in textbooks or papers (notwithstanding the simplistic, bogus and un-illuminating work of Reinhart-Rogoff’s 90% threshold). I also don’t think there’s really any well-articulated theory or model behind economist’s writings about government debt. Why? Given that it is so dominant as a political issue, it would be good to keep the public informed by making sure this stuff had a solid economic model behind it and was taught in Macro101.

    If anyone can point to a good, authoritative source about the economics of government debt, I’d like to see.

  13. @Kevin

    If I attempted an answer I would use Marxian and some MMT insights. People have heard enough from me on those topics. It would be really interesting if J.Q. answered you in detail from his point of view. We might actually get to find out where J.Q. stands on these issues these days. 😉

    Rightly or wrongly, I feel rather confused about where J.Q. stands now. Perhaps he can answer or link his answers given probably in the last “fantasy budget” debate where economists got to nominate their budget settings if they were treasurer.

  15. @Tony Lynch

    LOL. Very droll.

    The problem probably is that I have slammed hard left again in the last 5 years though certainly not so far as Marxist-Leninist hard left. But the Overton window has gone so far right in the last few decades it is amazing and indeed scarey. This seems to have dragged centrists and even social-democrats to the right as they follow the left frame edge of the Overton window. People seem so chary of falling out of the window altogther. No doubt it is academic, career, networking and even social death to so so. I am already academically, career-ly, networking-ly and socially dead. I have nothing to lose in those senses.

  20. @BilB

    Yep, I am Ikonoklutz!

    I recently used a decking stain on ramp timbers. Something went wrong and the stain fizzed upon application to the timber! It left tiny little bubble-craters scarring the finish as it dried. I mean you could see it if you got down on your hands and knees, damnit. I shamefacedly admitted disaster to the good wife. Ten minutes later I went “Doh! I should have told her it was the whizz-bang new non-slip finish for ramps.”

    Technical footnote: Yes, I worked in the shade and cool. Yes, the dew was gone. Yes, I aged the timber for 8 weeks. Yes, I washed it down first with designated deck cleaner for old and new work. So what went wrong? Kwila is high tannin timber. Eight weeks ageing of the timber is great if you get some good rains. But eight bone-dry weeks are useless for leaching out the tannin. Tannin plus this product equals fizz. It’s all in the chemistry.

  21. @Tony Lynch
    Re your post @1:

    Starting with the easy bit, while “Piketty” is pronounced in French like Picketty. the spelling of the name is as shown in quotation marks.

    You write: “What I don’t get is Picketty’ s claim that there is a solution to the general tendency of capitalism to economic inequality increase – with all its costs/destruction of social and political equality, and so democracy – and that is a wealth tax. Then his claims that i) Such a tax/solution is not possible under such conditions (is “utopian”), but ii) that capitalism is the only game in town.”

    On a previous occasion I made the point that Piketty’s proposal of a wealth tax is best understood in a theoretical context. It is a logical solution to the problem he has identified by means of empirical data. I also argued that there is nothing in Piketty’s book, Capital in the Twenty-First Century, I could find, which states that a wealth tax is the only possible solution. In my interpretation, Piketty provided a sufficient condition for solving the problem, not a unique solution to the problem. Hence, it is conceivable that a portfolio of policy measures can achieve the same objective, namely to stop and reverse the growing income and wealth inequality.

    Your summary of Piketty’s position in i) is not quite accurate. You omitted the word ‘global’ (wealth tax). Piketty considered achieving a ‘global wealth tax’ as somewhat utopian. I do not recall Piketty having opined that a wealth tax is utopian for the EU, the USA, and few more ‘rich’ countries.

    Regarding your item ii), Piketty is an economist, one of those who does not suffer from the illusion that economists set the rules of the game. Economists tend to be blamed when there are major upheavals, such as the GFC. But a micro-second thought should make it clear that it is not economists who make the laws, enforce the laws and sit in judgment. The rules of the game are set by political processes. See for example JQ’s book, Zombie Economics, for his take on the relationship between economics and changes in the institutional environment (ie that created by law). His earlier book on Microeconomic reform is another example. It is the institutional environment – the legal and regulatory framework – which, IMO, creates the difference between ‘capitalism’ and features of the idea of a ‘market economy’ that tends to be considered as desirable in most if not all societies who also value democracy. For example, in theoretical models of economies where the only institution is ‘a price system’, relatively rich people are not being favoured by tax expenditure (negative gearing, superannuation schemes, fuel subsidies, etc). The Australian public objects to the May 2014 budget (and its December derivatives) on the grounds of it being ‘unfair’, not on the grounds of wishing an entirely different system. This also belongs to ‘democracy’. It seems to me, Piketty makes an important contribution to democaratic society, as an economist.

    In conclusion, I don’t agree with your critique of Piketty’s book.

  22. @Kevin

    Your request for answers to some or all of your questions in textbooks suitable for 101 is, IMO, technically infeasible because the subject matter in most if not all of your questions is not amenable to an answer of the type that could be given in a trade manual. One example comes to mind regarding ‘international comparisons’. Germany has a higher debt/GDP ratio than Australia and is considered to be a financially ‘sound’ economy. I would not take Germany as a point of reference for Australia because the former has a much more diversified economy than Australia. Diversification in industries tends to result in a smoothing of returns (revenue for the government). The ‘debt capacity’ is inversely related to the variance (fluctuation) of returns. This is only one example of the limitation of international comparisons.

    Nevertheless, your questions are important for the public. May I suggest you write to the Treasurer and ask for economic textbooks, theories, empirical evidence on which his decisions are based. I can’t help you on this one.

  23. @Ernestine Gross

    Unfortunately, we do not live in genuine democracies anymore, even if we once did. Economic policies are controlled by the elite oligarchs. Note, I did not write “Economies are controlled by the elite oligarchs.”

    Economies are partly controlled by human intentional control, partly controlled by human generated unintended consequences and partly controlled by natural forces outside human agency. The second point about unintended consequences can include both crude design faults and complex forces/feedbacks systemically intrinsic to the system designed and which include unintended feedbacks and unintended contradictions. Surely this includes Marx’s point about internal contradictions in the capitalist system.

    It is common, indeed almost universal, for any machine or system designed by man to demonstrate gratuitous unintended consequences and feedbacks, many deleterious to performance, due to ideosyncracies, design faults and systemic effects and feedbacks inherent in the design. The more complex the machine or system the more likely this is to happen. A system programmer would call these bugs or errors. Critical errors cause a system crash. Surely, the sign of bad faith in capitalist ideology is its claim that its system alone of all humans’ complex machines and systems is able to find a stable benign state and then function automatically and indefinitely without any internal problems. This amounts to the claim that it has no real bugs or errors and never suffers system crashes. History tells us a different story.

  24. @Ernestine Gross

    Ah bourgeois economics, the profession where you never have to stand by your profession or your advice… and where you never have to tell the dumb punters anything. Nice work if you can get it.

  25. Ernestine Gross :
    Nevertheless, your questions are important for the public. May I suggest you write to the Treasurer and ask for economic textbooks, theories, empirical evidence on which his decisions are based. I can’t help you on this one.

    @Ernestine Gross

    That/they would be the infamous economic text books titled: “Politics 101”

  26. @Kevin
    Only MMT describes present monetary system and Austrians do some of it but not all and lot of it obsolete. But allmost every economist is giving consequences from monetary systems without ever describing it. Or gives myths that were true about 80 years ago.

    But also this description is not same for different countries that have different monetary setup, MMT describes only fiat money not gold standard setup. So MMT applys only to about 6 countries that use dollars, yen, franc, pound.

  27. The extent of economic inequality is different in different capitalist countries; some are more unequal and some less so. The extent of economic inequality has not increased uniformly over time in all capitalist countries; there have been periods of time over which inequality has decreased in one or more capitalist countries. So it’s historically incontrovertible that a reduction in economic inequality in a capitalist country is possible, and to me it seems desirable.

  29. @GPS
    Another factor in the decline of emissions (mostly from the electricity sector) is that the introduction of the carbon price coincided with a decline in electricity consumption to due a multitude of factors: solar PV, the availability of energy efficient appliances such as LED lamps and heat pump hot water systems, higher electricity prices, etc. These were happening even without the carbon price.

  30. @Ikonoclast

    Re my last post: I was thinking of Joe Hockey’s economic advisers but it came out wrong.

    Back on topic, it’s interesting to consider points where Marxism and Keynesianism might concur.

    “The underconsumptionist schools of Marxist crisis theory see the inability of the working class to buy back a sufficient percentage of the commodities they produce as the cause of both periodic acute cyclical crises and the economic stagnation and mass unemployment that follow in the wake of such crises.” – Sam Williams, A Critique of Crisis Theory from a Marxist Perspective.

    But this raises THE central question. If capitalism is so inherently unequal, has such a strong bias, that it always tends when unfettered to run away into gross inequality, then is not the time for patching the system over? Is it not time to build a new system?

    I would use an analogy of an aeroplane that needs almost full stick (up or down) to maintain level flight and where previous attempts at changing control surface configurations etc have not worked much because the centres of gravity and lift are fundamentally out of whack. Better than endlessly applying full stick (strain, increased drag, increased fuel consumption and increased risk of crashes) one should design and build a new aeroplane without these fundamental configuration flaws.

    Capitalism is a system with fundamental configuration flaws. Reform (redesigning the control surfaces) does not work. History should now have proven that fact to the satisfaction of all but oligarchs and rank apologists for the system. We now need a radically new system with far fewer or none of the current fundamental design-configuration flaws.

  31. @Ben
    Ironically the mining boom has been another factor leading to emissions reductions. It contributed to the appreciation of the AUD which smashed the energy intensive manufacturing industry leading to the gradual offshoring of ‘our’ emissions – we buy shit with embodied with (e.g.) Chinese emissions instead of Australian emissions (Blame Kyoto carbon accounting). So at least we can thank Big Coal & Co for something. Not.

  32. We Queenslanders are going to the polls on 31 January.

    It would be nice if we had a non-neo-con alternative to vote for but sadly it looks highly probable that we will get one of the ALP/LNP duopoly as our government, again.

    Here’s hoping for a hung parliament with minor parties/independents having the balance of power – at this stage it doesn’t even matter if they’re gun-toting fundies, things are that bad!

  33. @J-D

    You need to produce evidence for this.

    Capitalism may have shown some decline in inequality BUT surely this was only because of anti-capitalist forces – social democracy – within capitalism.

    Capitalism can never reduce inequality, so you are probably confused by appearances from various forms of mixed economy.

  34. Estimates have been made for how much of UK emissions has been offshored
    http://www.carbonbrief.org/blog/2012/03/defra-the-uk-outsources-emissions
    but this subject is little discussed in Australia. Climatologist James Hansen has come late to the party on the need for ‘border carbon adjustments’ a.k.a. carbon tariffs. It would be an administrative nightmare to calculate embodied carbon in all the different imported goods and invisibles like overseas travel. However when carbon tax was $23 I thought it worked out about 20% of the landed price of aluminium billet. Make it 20% on all manufactured goods. Fuels like coal and LNG would be taxed on direct CO2 emissivity at the port of departure.

    Therefore if the world moved to a carbon customs union the good guy nations could trade freely but they must slap 20% on imports from the bad guys. Membership by consensus Survivor style. Alas Australia would probably be among the bad guys. No doubt free traders will have spasms at the thought so let’s keep world emissions increasing for another 30 years instead.

  35. Ernestine. I do not understand. Piketty’s global wealth tax is a “theoretical solution” surely means it most clearly captures the logic of any solution. Any other suite of policies will have to redistribute wealth downwards. So if the global wealth tax is utopian – because the wealthy don’ want to so redistribute, and have the power to stop it – then any suite of other policies to the same end is also utopian. My reading stands.

  37. Hermit,

    “Estimates have been made for how much of UK emissions has been offshored”

    This is a big issue – there was a Quarterly Essay a couple of years ago – Progress or the Planet? – by someone who worked under the Rudd government in treasury/finance. From memory it stated that European emissions counted by consumption rather than production had increased by 17% (? I don’t have a copy of it sorry but it should be available at libraries ) rather than declined as the counting by production method appears to show. He didn’t source the figure so I assume it’s source is possibly internal governmental reports the public aren’t privy too.

    I found some public articles on the UK specifically but not for the whole EU – these figures challenge the EU’s narrative substantially and bolster the case of developing countries. The other similar issues are emissions from international travel that doesn’t get counted, and the attribution of holiday-maker’s emissions which should be to their country of nationality not country of holiday making.

  38. On carbon customs duties there was a Lateline episode with Bjorn Lomborg quite some time ago now where Tony Jones suggested that was the obvious solution – but Lomborg – whom I loathe and detest – said this would cause trading blocs to form and trade wars – thus seemingly invoking WWI

  39. @Jordan
    Yeah I’m aware of MMT, although it’s way out of the mainstream, and Quiggin seems to like bashing MMT. But it does beg the question why there’s so little research on government debt in mainstream economics and economics education.

  40. @Tony Lynch

    Did you note my reply above at #30? That is my position now. We’ve been down the crisis-reform-regression path from the days that Engels wrote about in “The Conditions of the Working Class in England” to the 1890s depression, to the 1930s depression, to the “Keynesian Golden Age”, to the 1970s stagflation and oil shocks, to monetarism, to neoliberalism, to claims about the Great Moderation, to the 2007 GFC, to today’s essential stagnation in EU and Japan and the mediocre performance in the USA which is only benefiting the very rich. In the course of which we had several great and large wars directly related to the struggles of Capital, Imperialism and “Empire-ism”: namely WW1, Spanish Civil War, WW2, Korean War, Vietnam war, Russia’s Afghanistan War, Gulf Wars 1 and 2 and the Anglophone / NATO war in Afghanistan.

    The capitalists NEVER operate in good faith. They will always wind back any reform as soon as they can. They will always exploit labour in poor countries now (with globalisation) using wage arbitrage and concomittantly push down wages in the developed world. If the system has inherent systemic design flaws which keep leading to rising inequity*, cyclical crises and wars then a new system is required. The clinching argument for me is that capitalism (inevitably controlled by the oligarchs) is in fundamental conflict with the natural world and the Limits to Growth. Capitalism is destroying the natural and sustaining environment without paying the least attention to fact that if we have no sustaining enviroment then we will have no sustaining economy.

    * Note: The rising inequity is only reversed after great crashes when it becomes apparent that the choices are reform or revolution. Reform is chosen to salvage the system. Once stabilised, the pressure begins again sooner or later to once more push down workers wages, right and conditions.

    I recommend you read:

    “The Endless Crisis: How Monopoly-Finance Capital Produces Stagnation and Upheaval from the USA to China” by John Bellamy Foster and Robert Waterman McChesney.

    “Das Kapital” Vols I, II and III by Karl Marx (and Engels).

    I recommend the website of Professor Richard Wolff for good simple analyses of what is going on now.

    Also look at Reading Marx’s Capital with David Harvey on the net.

  41. Thanks, Ikonoclast. I did read #30, meant meant to thank you. What do you think of Wolfgang Streeck? Just read his “How Will Capitalism End?” online, from New Left Review, May-June, 2014.

  42. I thought I would check the number since someone might depend on what I said – so I was out by a sizable 30% :

    “Measured on the basis of consumption (including emissions embedded in imported goods) the EU’s emissions have risen by an astonishing 47 per cent since 1990.”

    Quarterly Essay 44 2011 Man-Made World : Choosing Between Progress and Planet

    The Author was Andrew Charlton who was head advisor to Rudd during the financial crisis and a Keynesian who had lectured at the London School of Economics. There is a spiteful article in the AFR about him from 2013 noting he then works for Coles in its Liquor division . The very spitefulness of the article makes me suspect Charlton was purged http://m.afr.com/p/national/charlton_plots_brilliant_career_ApoMfqW7MBKYCgWkqrfrEO

    John Quiggin was one of the correspondents about the essay in the next issue . The letters were similar to our usual debates here about the role of prices, technology, less material use, and fair global development.

    In his response Charlton wrote

    “Churchill famously described Britain’s equivocal response to fascism in the 1930s as “the years the locusts hath eaten” – a lost opportunity to prepare for the great threat of that age. Man-Made World was motivated by a fear that we may look back on the first two decades of the twenty-first century with a similar sense of regret. The essay argues that we should – and can – do more to protect against the threat of climate change.”

  43. @Ivor

    I did not state that capitalism has ever reduced economic inequality; I stated that reductions in economic inequality have occurred in capitalist countries, and you acknowledge that this is true, attributing those reductions in inequality to social democracy; if social democracy can reduce economic inequality in capitalist countries, then I think that’s a good thing.

  44. J-D :
    @Ivor
    I did not state that capitalism has ever reduced economic inequality; I stated that reductions in economic inequality have occurred in capitalist countries, …

    You were asked for actual data. Not semantics between capitalism and capitalist countries.

    So do you believe that capitalism has not reduced inequality?

    Are you aware of any inequality trends in any capitalist countries?

    What do you think a capitalist country is?

    Why is reducing inequality a good thing? Everyone has the right to own the property they create and everyone has different productivities and endowments. Outside capitalism, inequality may be perfectly efficient.

    People need only to object to the additional inequality created by capitalism.

  45. J-D :

    I did not state that capitalism has ever reduced economic inequality; I stated that reductions in economic inequality have occurred in capitalist countries, …

    You were asked for actual data. Not semantics between capitalism and capitalist countries.

    So do you believe that capitalism has not reduced inequality?

    Are you aware of any inequality trends in any capitalist countries?

    What do you think a capitalist country is?

    Why is reducing inequality a good thing? Everyone has the right to own the property they create and everyone has different productivities and endowments. Outside capitalism, inequality may be perfectly efficient.

    People need only to object to the additional inequality created by capitalism.

  46. @Ikonoclast

    Re 23:

    1. Genuine democracy is no more if ever. An Australian friend of mine, a historian, who took on the USA citizenship, gave a speech on the occasion of her citizenship cerimony. The subject was democracy. The crux of her erudite argument was that democracy requires all citizens to more or less continuously fight for it, not with guns or bullets, but in public discourse. Hence democracy is not a state of affairs but a process. I learned something from her speech.

    2. ‘Economic policies are controlled by the elite oligarchs. Note, I did not write “Economies are controlled by the elite oligarchs.” ‘

    Notwithstanding your subsequent expansion (which amounts to a reminder that any sensible notion of ‘an economy’ includes the natural environment), I find it a bit frustrating dealing with your conceptual framework and the associated terminology. What exactly am I to think of when I read the term ‘oligarchs’ and the qualification of ‘elite’? Are there non-elite oligarchs? Terms like ‘elite’ and ‘oligarchs’ convey some meaning to me in specific contexts. But without specific context I am at a complete loss as to whether you want to say something like there is a small number of people who have power to control ‘economic policy’ (eg the government?) or whether you have some socio-political theory in mind (about which I don’t know). I am also unclear as to what you have in mind by ‘economic policy’. My thinking about ‘an economy’ is much simpler.

    Let E denote ‘an economy’, I = 1, …., n denote the number of people in E, let T denote technological knowhow possessed by the people (split up, if you like such that who knows what can be indicated), let Ne denote the natural environment (a bid broader than the term ‘resources’ in some econ textbooks) and let Ie denote the institutional environment.

    Common element of all economies: E[1] = {I, NE}
    Economies with production: E[2] = {I, T, NE} (eg people live of hunting, gathering, agricultural produce and craftsmanship as they please)
    Economies with production and an institutional environment E[k] = {I, T, Ne, Ie[k]}
    if k = ‘market economy’ then Ie is a ‘price system’.
    if k = ‘customs and traditions’, then Ie is best researched by consulting anthropologists
    if k = ‘democracy’ then laws and regulations determine the relationship among the people and regarding T and Ne.
    if k = ‘theocracy’ then laws and regulations are assumed to be provided by a deity, as revealed in a book or on tablets, or scrolls.
    if k = ‘capitalism’ then please tell me what I should think of other than laws and regulations you don’t agree with (apparently oddly, there is quite a bit of agreement between you and me on specifics, which in turn creates a mystery for me as to what you are on about).
    if k = ‘elite oligarchs’ control ‘economic policy’, then please tell me what I should think of.

    Obviously, I could refine the above list of possible and historically recorded institutional evironments but I believe I’ve said enough.

    Re @24:
    “Ah bourgeois economics, the profession where you never have to stand by your profession or your advice… and where you never have to tell the dumb punters anything. Nice work if you can get it.”

    I bothered to look up something on ‘bourgeois economics’, the first thing I could find from a source that might be trustworthy. Here is what I found: https://libcom.org/library/economic-crisis-and-crisis-theory-mattick-one.

    While I could find a few phrases that concurred with undergarduate texts from 40 years ago, including some from history of economic thought, this article contained nothing (theory and empirical) since about 1950, and it contained nothing I recall from a course on economic anthropology. So, given that time is at a premium, bourgeois economics is another term I can forget about and I conclude I don’t understand what you say.

  47. @Ivor

    I do not have enough information to answer your question about whether capitalism has reduced inequality.

    In response to your other questions, as an example only, income inequality in the US decreased between 1937 and 1947, during the whole of which period the US was a capitalist country.

    It is my view that reducing economic inequality is a worthwhile goal; it is my view that it would have been a worthwhile goal in pre-capitalist Eridu or Nekhen; but I don’t expect you to accept that view just because I hold it.

  48. @J-D

    I do not have enough information to answer your question about whether capitalism has reduced inequality.

    Irrelevant. You were asked for data to support your assertion. If you have no information about capitalism reducing inequality, but you claim that inequality has reduced in capitalist countries, then what reduced inequality?

    So you did not have enough data to even draft your original post.

    How do you distinguish inequality under “capitalism” and inequality within “capitalist countries”.

    What are you failing to say?

  49. @Ernestine Gross

    …I believe I’ve said enough.

    Hardly. You cannot set-up a market model with prices but without incomes – in the context of capitalism.

    Outside capitalism prices=incomes.

    Inside capitalism (before collapse) prices > incomes.

    bourgeois economics is another term I can forget

    Hardly. Marx bemoaned the fact that English workers needed to free themselves from a “bourgeois infection”. This dynamic based on artificially high living standard through international exploitation, underpins much of the political and economic output we see today in OECD or G20 economies.

    It is the one key blindfold that misleads many.

  50. @Ernestine Gross

    …I believe I’ve said enough.

    Hardly. You cannot set-up a market model with prices but without incomes – in the context of capitalism.

    Outside capitalism prices=incomes.

    Inside capitalism (before collapse) prices > incomes.

    bourgeois economics is another term I can forget

    Hardly. Marx bemoaned the fact that English workers needed to free themselves from a “bourgeois infection”. This dynamic based on artificially high living standards (through international exploitation) underpins much of the political and economic output we see today in OECD or G20 economies.

    It is the one key blindfold that misleads many.

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