Archive for the ‘Capitalism’ Category

Kirkpatrick Sale’s bet on the world of 2020

June 11, 2020

The Luddites in action

Back in 1995, Kevin Kelly, the editor of Wired magazine, made a bet with Kirkpatrick Sale, the critic of technology.  The bet was that, by the year 2020, technology would have produced a much better world.

Kevin Kelly believed then and still believes that technological progress will automatically produce a better world.  Kirkpatrick Sale believed the opposite.  He thought then and still believes that the world has been on the wrong course since Columbus’s voyages in 1492.

My old friend in Texas called my attention to a 2019 article, in which Sale described the bet and told how he foresaw the world going wrong:

First, an economic collapse. I posited that it might take the form of a worldwide currency devaluation, in which the dollar loses its standing as the world’s reserve currency and becomes effectively worthless even in this country, and a global stock-market crash and depression.

Second, a political collapse, with upheavals both within nation-states and between. I saw the collapsed economy leading to maybe the bottom fifth of society in the developed world, no longer bought off with alcohol and drugs and celebrity and consumerism, rising up in rebellion and creating havoc and disarray throughout; at the same time a similar rebellion of the poor nations, no longer content to take the crumbs from the table of the rich, and simultaneously fighting violent guerrilla wars and flooding into the developed nations to escape their misery.

And finally, perhaps over-arching, an environmental collapse, in which global warming and ozone depletion, for example, made some areas like Australia and Africa unlivable and caused ice packs to melt, and old diseases, released from melting ice and deforested swamplands, mixed with new and spread deadly infections to all continents.

Source: CounterPunch.org

Kirkpatrick Sale’s predictions haven’t come true, at least not completely, but they seem much more probable than Kevin Kelly’s faith in inevitable technological progress.

I have to say, though, that, in 1995, I would have bet on Kelly’s side.

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Is green technology a mirage?

June 9, 2020

If a problem cannot be solved, it may not be a problem, but a fact.  [Attributed to Donald Rumsfeld]

It is possible to ignore reality, but it is not possible to ignore the consequences of ignoring reality.  [Attributed to Ayn Rand]

A new Michael Moore movie, “Planet of the Humans,” is an attack on the renewable energy movement.  Environmentalists by and large are outraged, and some demanded the movie be suppressed.

It actually was taken down from YouTube for 11 days, but it’s back up now.  If it is taken down again, you can view it on the Planet of the Humans Home page.

It runs for 100 minutes, which is a long time to watch something on a computer screen.  But it held my interest, and maybe it would hold yours, too.

In the first part of the movie, director Jeff Gibbs shows that solar panels and windmills are built through energy-intensive industrial processes and that they are made of materials such as high-grade quartz and rare earths that are scarce and non-renewable.

Solar panels and windmills wear out and have to be replaced.  In one scene, he visits Daggett, California, which pioneered in the development of solar and wind energy.  He sees a wasteland of dilapidated panels and windmills, because the pioneers couldn’t afford to keep them up.

And they don’t even fully replace fossil fuels.  Because of variability of sun and wind, backup electrical generators have to keep spinning, and the ones that aren’t hydroelectric use coal, gas and nuclear fuel.

In the second part, he looks at the environmental destruction caused by biomass energy.  There is no gain from freeing yourself from dependence on coal companies and embracing logging companies.

He makes a big point of pointing out the corporate ties of environmental organizations such as the Sierra Club and of environmentalists such as Al Gore, Robert F. Kennedy Jr., Richard Branson and even Bill McKibben.

He questions the whole premise, promoted by advocates such as Al Gore, that it is possible for middle-class Americans to enjoy our current material standard of living simply by adopting a new technology.

Fossil fuels made possible a world with an exponentially increasing population with the average individual using an ever-increasing amount of fuel and raw materials, Gibbs said.  Such a world isn’t sustainable, he said.

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Piketty’s new book on economic inequality

May 26, 2020

The French economist Thomas Piketty made a big splash with Capital in the 21st Century (published 2013, translated into English 2014).  He showed why, all other things being equal, the rich will get richer and the rest of us will get less.

In different countries in different historical periods, the rate of return on income-producing property exceeded the rate of economic growth.  This was true whether the income-producing property was real estate, government bonds, corporate stocks or something else.

What this meant was that, in the absence of revolution, war or something else that wiped out the value of their assets, the rich would get richer and everybody else would be left behind.

Piketty’s new book, CAPITAL AND IDEOLOGY  (published 2019, translated 2020), is more ambitious and complicated.  He thinks it is an even better book that its predecessor and I agree.  It is a great work.

He looked at all the forms that economic inequality has taken in the past few centuries and all the different ways that inequality has been rationalized.  While his earlier book was based mainly on data from France, Great Britain and the United States, the new book tries to be global in scope.

He said it is important to understand not only the forms of economic inequality, but the reasons why people accept them.

His book covers several kinds of “inequality regimes”:

  • “Ternary” societies in which most wealth is controlled by hereditary kings and aristocrats and an established church or religious institution.
  • “Ownership” societies in which property ownership is regarded as a sacred right, superseding everything else.
  • Slave and colonial societies.
  • “Social democratic” societies, which limit the rights of property owners.
  • The hyper-capitalism of today, which is a backlash against social democracy and Communism.

The degree of inequality in any nation or society is not the result of impersonal economic law, he wrote; it is the result of choices that could have been different.  History does not consist of class struggles; it consists of a struggle of ideas and a struggle for justice.

To understand inequality, he wrote, it is necessary to understand the reasons for choices at various “switch points” of history—the French Revolution, the British constitutional crisis of 1911, privatization in Russia after the fall of Communism.

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Neoliberalism’s failure in a time of pandemic

April 1, 2020

The United States is unprepared to deal with the coronavirus pandemic—short of hospital beds, short of test kits, short of ventilators and other medical supplies.

This is not merely because of the negligence of a few individuals.  It is the result of acceptance of the philosophy of neoliberalism.

Neoliberalism teaches that business corporations should be structured so as to keep costs as low as possible and revenues as high as possible, and that all institutions should be like business corporations.

It also teaches that accumulation of wealth by individuals and corporations is a good thing because private investment is the source of progress and economic growth.

What’s wrong with that? you may ask.

What’s wrong is what we see now—national needs neglected and the whole society put at risk.

Hospitals and other health care providers are told they must operate with maximum efficiency.  All resources must be fully utilized all the time—no empty beds, no unused equipment, no moments to relax for nurses and other staff.

This means there is no slack in the system.  It is hard to provide for the ebb and flow of illness and injury even in normal times.  In an emergency, such as this one, the health care system is overwhelmed.

Also, hospitals and other health care providers must obtain their supplies from the lowest priced source, even if that source is a sweatshop on the other side of the planet.

This means that the United States depends on China and other foreign countries for medical supplies.  If the leaders of these countries decide to limit shipments to the U.S. in order to guarantee supplies for their own people, what can we Americans do about it?

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The new age of surveillance capitalism

May 13, 2019

There are two categories of Americans who are under constant surveillance.  One consists of paroled convicts and criminal defendants on bail who are under court order to wear electronic ankle bracelets.  The other consists of everybody.

That is what I took away from reading THE AGE OF SURVEILLANCE CAPITALISM: The Fight for a Human Future at the New Frontier of Power by Shoshana Zuboff, which came out earlier this year.

It’s about the prevalence of the new business of collecting information about people, usually without their knowledge, and using that information to shape their behavior.

If you have a Roomba robot vacuum cleaner, it’s making floor plans of your house.  If you have an OnStar GPS system in your car, it’s taking notes on your driving habits.  If you have a Next thermostat, it’s recording your energy use patterns.  If your children play with Genesis toys, they’re recording your children’s behavior.

Technical experts in Canada, France and the Netherlands found that the Google Street View trucks were not only taking photographs, but using Wi-Fi to collect telephone numbers, credit information, passwords, e-mails, records of on-line dating, pornography, browsing behavior, medical information and video and audio files.

All this information has economic value.  In fact, according to Zuboff, it often has more value to the provider than the fee for the service itself.  What she calls “market capitalism,” where a business makes money by selling a product or a service, is being replaced by what she calls “surveillance capitalism,” where a business makes money by collecting, processing and using data to shape human behavior.

It’s been said that people who use social media and other Internet services, especially free ones, are the product, not the customer.  Zuboff said that, in fact, the users are not even the product; they are the raw material.   The product is the model of their behavior  derived from the data they provide.

Click to enlarge.

The frontier of surveillance capitalism is gathering up seemingly meaningless information—what is called “data exhaust” or “digital breadcrumbs”—and using machine intelligence to correlate this information with human emotion and behavior.

Machine intelligences are not sentient, they have no understanding of the human mind.  They don’t need to. All they need to be able to do is look for correlations, and test them.  They are using the behavioristic psychology developed by B.F. Skinner.  He taught that it isn’t necessary to understand how individual people think and feel.  All that is necessary is to know what stimulus evokes what response.

How often you click on a “like” button on Facebook, how hard you step on the gas when accelerating your car, your willingness to answer questions about your politics and religion—all these things can be used to create a model of your behavior, which then can be tested.

Who would want such a model?  Advertisers,  Insurance companies.  Employers.  Lenders.  Credit rating companies.  Landlords.  And, of course, politicians.

Jaron Lanier wrote about some of these issues in Ten Reasons for Deleting Your Social Media Accounts Right Now,  His explanations were more brief, more readable and more clear than Zuboff’s 525-page tome (plus 124 pages of end notes).

But Lanier thought that the problem is limited to two companies, Google and Facebook, and could be easily fixed by changing their business models from advertising to fee-for-service.  If you read Zuboff’s book, you will understand that Google, Facebook and their imitators can no more give up collecting, processing and selling personal information than Starbucks can give up brewing strong coffee.  It is is not an aberration.  It is the core of their business model.

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Oldest mountain chain ‘turned into rubble’

April 19, 2019

Hat tip to Lambert Strether.

“We took the oldest mountain chain in the world and turned it into rubble.”

Tarence Ray and Tom Sexton, known as The Trillbillies, or the Trillbilly Workers Party, are musicians and activists based in Whitesburg, Kentucky.

They talk about how mountaintop removal, a method of extracting coal in use since strip mining was outlawed about 30 years ago, completely destroys the land and makes it useless for any other purpose.

It has gone on under Democratic and Republican administrations alike, they said.

They said that since the coal industry started using mountaintop removal, coal production has increased 400 percent, but coal industry jobs have continued to decline.

LINKS

Whitesburg-based Trillbilly Workers’s Party podcast takes a left-wing view of Appalachian life by Cheryl Truman for the Lexington (KY) Herald-Leader.

The Trillbilly Workers Party by Lia Russell for Scalawag.  Free Listening on SoundCloud.

Get Real: What liberals like Paul Krugman still don’t understand about rural America by the Trillbillies’ Tarence Ray for The Baffler.

A growing China reboots totalitarianism

October 22, 2018

Source: Dissident.

My great fear during the Cold War was that the totalitarian USSR would outlast the democratic USA.  I was afraid that a dictatorship would be able to take a longer view than a democracy, and would be better able to prioritize military and diplomatic power.

The philosopher Bertrand Russell, for one, scoffed at these fears.  He said that a democracy would always be able to outlast a dictatorship because dictators insulate themselves from bad news, while, in a democracy, contested elections and a free press provide a reality check.  The fall of Communism in Europe in 1989-1991 appeared to prove him right.

Now the Chinese government has created a new and more effective totalitarianism.  It uses social media and other new techniques to control the population more effectively than Mao ever dreamed of—while keeping the old Communist police state as backup.

When China joined the World Trade Organization in 2001, Western leaders hoped that as China made economic progress, it would become more liberal and democratic.

China has made enormous economic progress.  Hundreds of millions of Chinese have been raised from poverty.  China is a major manufacturing nation.

Economic historian Adam Tooze said Chinese economic expansion was the main force pulling the world out of recession after 2008 and today contributes as much to world economic growth as the USA and Europe put together.

The Chinese Belt and Road Initiative, aka the New Silk Road, involves investing more than $1 trillion over the next 10 years to create a railroad, highway, pipeline and electrical grid extending over the whole of the interior of Eurasia, creating an integrated economy centering on China.

But if there was a possibility that this would make China more liberal and democratic, President Xi Jinping has moved to head it off.  Since 2013, China has been cracking down not only on corruption, but also on human rights lawyers, religious believers and critics o the government.

Xi Jinping has abolished the term limits that bound his predecessors and encouraged a Mao-style cult of personality.  There are even Institutes for the Study of Xi Jinping Thought.

Social media in China are monitored, and the Chinese government is in the process of implementing a scheme by which every Chinese citizen will be given a social credit score, based on an algorithm that takes into account credit history and good citizenship, but also opinions and associations, which can determine access to education, health care, credit and even public transportation.  This is powerful, because there is no individual against whom you can protest or to whom you can appeal.

In Xinjiang, members of the native Muslim Uighur population can be sent to Mao-style reeducation camps for the least little thing, even wearing a beard.  Surveillance cameras using facial recognition technology are everywhere.

China’s leaders have found a way to harness capitalism to the service of a capitalist government—much as Lenin tried to do with his New Economic Policy in the 1920s, allowing limited private business but maintaining ultimate control.  Maybe the USSR would have become like today’s China if not for Stalin’s forced collectivization drives.

There is a possibility that much of the rest of the world may come to regard China as a better example to follow than the United States.  Unless things change, the Chinese totalitarian model may prevail not through subversion or military force, but by force of successful example and as a price of doing business with China.

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Addiction as a successful business model

August 2, 2018

The problem is not just pornography.   Promoting addictiveness is a widespread business model.

A venture capitalist named Paul Graham, writing in 2010, said it is the nature of free market capitalism to make products addictive.

He wasn’t speaking of pornography in particular, but of everything from tobacco to gambling to compulsive viewing of the Internet.

The logic of the marketplace is that the person who makes the most addictive product wins the largest market share.

More recent Jaron Lanier, a famous virtual reality pioneer, wrote a book giving 10 Arguments for Deleting Your Social Media Accounts Right Now, which is about addictive social media companies.  The business model for companies such as Facebook is behavior modification, he wrote; they cannot give that model up and stay in business.

Their artificial intelligence systems use personal information, social science information and psychology to create “engagement” — which laymen would call “addiction” — by means of advertising and propaganda.  The systems are constantly at work to increase the power of their algorithms.

Stanford University has a Persuasive Technology Laboratory, which learns how to design interactive technology to alter human thoughts and behavior in the interests of advertisers and politicians, not the individuals targeted.

Richard Freed wrote about B.J. Fogg, the head of the laboratory, and how psychological research is used not to liberate people from addictive and compulsive behavior, but the opposite.

Click to enlarge

The “Fogg Behavior Model” is a well-tested method to change behavior and, in its simplified form, involves three primary factors: motivation, ability, and triggers.

Describing how his formula is effective at getting people to use a social network, the psychologist says in an academic paper that a key motivator is users’ desire for “social acceptance,” although he says an even more powerful motivator is the desire “to avoid being socially rejected.”

Regarding ability, Fogg suggests that digital products should be made so that users don’t have to “think hard.”  Hence, social networks are designed for ease of use.

Finally, Fogg says that potential users need to be triggered to use a site.  This is accomplished by a myriad of digital tricks, including the sending of incessant notifications urging users to view friends’ pictures, telling them they are missing out while not on the social network, or suggesting that they check — yet again — to see if anyone liked their post or photo.

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Is a non-BS economy even possible?

May 26, 2018

What would the U.S. unemployment rate be if all useless or harmful jobs were eliminated?

It would probably be equivalent to the Great Depression of the 1930s.

Barack Obama, in an interview in 2006, stated the problem:

“I don’t think in ideological terms. I never have. … Everybody who supports single-payer healthcare says, ‘Look at all this money we would be saving from insurance and paperwork.’  That represents 1 million, 2 million, 3 million jobs of people who are working at Blue Cross Blue Shield or Kaiser or other places.  What are we doing with them?  Where are we employing them?”

Source: The Nation

David Graeber, in his new book, Bullshit Jobs: a Theory, quoted public opinion polls that found 37 percent of UK employees and 40 percent in the Netherlands thought their jobs made no meaningful contribution to the world.

Now maybe that is exaggerated.  Maybe some of them think they make a contribution, but that it’s not “meaningful.”

Offsetting this, the inherent bias of people is to think we are accomplishing more than other people think we do or the objective facts indicate.

For example, public relations, advertising, lobbying, consulting and even speculation on financial and commodities markets have their uses.  It is just that they play more of a role in the economy than they should.

I myself think the U.S. military and intelligence services are much greater than necessary to protect the homeland from attack.  Of course, if the mission is to make the United States the world’s only superpower, no number could be great enough.

The question is: What would happen if all these people were thrown on the job market, all at once?

It would be a catastrophe, unless there were some sort of basic income guarantee (which Graeber advocates) or basic job guarantee.

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BS jobs, sh*t jobs and moral envy

May 25, 2018
  • Huge swaths of people spend their days performing tasks they secretly believe do not really need to be performed.
  • It’s as if someone were out there making up pointless jobs for the sake of keeping us all working.
  • The moral and spiritual damage that comes from this situation is profound.  It is a scar across our collective soul.  Yet noone talks about it.
  • How can one even begin to speak of dignity in labor when one secretly feels one’s job should not exist? 
  • David Graeber: On the Phenomenon of Bullshit Jobs (2013)

David Graeber, in his new book, Bullshit Jobs: a Theory, describes the frustrations of people doing jobs that they know are useless or even harmful, because the meaningful jobs are either unavailable or low-paid.

He said that forcing people to engage on tedious activities that serve no useful purpose, or, worse still, pretending to work when they actually aren’t, constitutes a kind of spiritual violence.

Not all useless or harmful jobs are BS jobs. Graeber defines a BS job as one you know is useless, but you have to pretend is necessary.

I think many of the people who invent BS jobs, or invent useless tasks for the useful workers, are under the impression they are making a positive contribution.  Graeber said his strongest critics are business owners who deny the possibility that they could be paying anybody to do anything useless.

A certain number of people think the world is divided into predators and prey, and pride themselves on being successful predators.  An example would be the bankers and financiers who, prior to the 2008 financial crash, made subprime mortgage loans to suckers who could never pay them off, then collateralized the mortgages and sold them to other suckers.

What all these jobs—hedge fund managers, telemarketers, diversity consultants, receptionists who never get phone calls, consultants whose advice is never heeded, supervisors with nothing to supervise—is that, if they went on strike, nobody would notice.

What Graeber calls the sh•t jobs are just the opposite.  Food service workers, health care workers, trash collectors, janitors and cleaners—all these workers labor under worse conditions and for lower pay than in BS jobs, and, contrary to reason and justice, they get less respect.

Coincidentally or not, the sh•t jobs are disproportionately done by black people, Hispanics and immigrants.

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Graeber said many of us have come to accept the idea that work consists of following somebody’s order to do something we dislike.  It follows, then, that if you want good pay, job security and benefits, you are lacking in moral character.  He calls this rights scolding.

It takes two forms.  Among right-wingers, if you think you are entitled to anything that working people in the time of Charles Dickens didn’t have, you are a fragile snowflake.  Among left-wingers, if you think you are entitled to anything that the most oppressed person alive today has, you are told to check your privilege.

It also follows that people whose jobs are fulfilling, such as school teachers, are not really working.  The idea is: You get to do work that is pleasurable, useful and respected.  How dare you want good pay and job security in addition?  Graeber calls this moral envy.

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Managerial feudalism and BS jobs

May 23, 2018

BULLSHIT JOB: A form of paid employment that is so completely pointless, unnecessary or pernicious that even the employee cannot justify its existence even though, as part of the condition of employment, the employee fells obliged to pretend that this is not the issue.  [David Graeber]

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Huge numbers of people work in jobs that they themselves think are completely unnecessary.  Many of them would prefer to do something useful, but useful jobs on average pay less.  Sometimes they quit and take a lower-paying useful job anyway.

Some five years ago, David Graeber, an American who teaches anthropology at the London School of Economics, wrote an essay for an obscure left-wing magazine called Strike!, about the phenomenon of bullshit jobs.

The article struck a nerve.  It got more than a million hits on the Internet, crashed the Strike! web site several times and was translated into more than 10 languages.

A YouGov poll soon after found that 37 percent of full-time employees in the United Kingdom thought their work made no meaningful contribution to the world.  A survey in the Netherlands put the number as high as 40 percent.  I imagine a survey in the United States would be much different.

Graeber himself communicated with hundreds of unhappy, useless employees via e-mail.

The result is his new book, Bullshit Jobs: a Theory.

He learned about a museum guard whose job was to report if a certain empty room ever caught on fire; a military sub-contractor who drove more than a hundred miles in order to give a German soldier permission to move a piece of equipment from one room to another; a receptionist who, to fill her time, was tasked with jobs such as sorting paperclips by color.

But most of his reports are about people who worked in offices—making studies that were never read, making proposals that were never acted on or not doing anything at all, but doing their best to look busy.

How can there be so many admittedly useless jobs?  We live in a time of austerity and layoffs.  Full-time jobs are being replaced by temporary jobs.  That is true of government as well as the private sector.

One thing that free-enterprise advocates and Marxists agree on is that competitive capitalism produces economic efficiency.  Free-marketers think everybody benefits and Marxists think that only the capitalists benefit, but they agree on the drive of business to maximize profit.

Maybe this is wrong.  Maybe competitive capitalism is a myth.  Maybe we live under what Graeber calls managerial feudalism.

Back in the days before the French Revolution, the peasants, who were the main producers of wealth, paid so much in taxes and rent they could barely live.  They supported an aristocracy, who, in turn, supported an economic class of coachmen, door keepers, lace makers, dancing masters, gardeners and the like, who were generally better paid than the peasants.

Just like the aristocrats of old, the prestige of managers in organizations is based on the number of people they have working for them.  Prestige is not based on whether they are useful or not.  In fact, employees whose work is essential are a threat.  They have the power to quit or go on strike or to unexpectedly reveal they know more than the boss.

So the incentive is to diminish the role and power of those who do necessary work while inventing new jobs whose existence depends on the discretion of the job creators.

A large number of new jobs are administrative staff.  They are different from administrators who make actual decisions.  Their job is collect quantitative information about the work of the useful employees on the principle that “you can’t manage what you can’t measure.”

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Book note: The Making of Global Capitalism

May 30, 2017

International financial organizations such as the International Monetary Fund and the World Trade Organization have come to be a kind of world government, dictating policy to supposedly sovereign governments.

I recently read a book, The Making of Global Capitalism (2012) by two Canadian leftists named Leo Panitch and Sam Gindin, on how this came about.   I thank my friend Tim Mullins for recommending it.

It’s quite a story.  It is not well understood.

The first part of the story is the U.S. New Deal.   President Franklin Roosevelt and the Democratic Congress gave the U.S. Treasury Department and the Federal Reserve System the authority they needed to stabilize the crumbling U.S. financial and banking system.

The second part is the 30 years following World War Two.   Under the leadership of the U.S. Treasury and Federal Reserve, international financial institutions were created that duplicated the U.S. system.  They presided over the era of greatest peace and prosperity that North Americans and Europeans had ever since.

The third part is what happened after that.  The world’s financial system endures a series of ever-greater financial crises.   To deal with them, international financial  institutions demand the surrender of gains made by American and European workers and the middle class in the earlier era.

The irony is that a financial governing structure created by American power is now stronger than ever, while the actual American economy is rotting away beneath it.

Panitch and Gindin described in great detail how this happened, step-by-step,.

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An SF writer’s diagnosis and cure for capitalism

April 27, 2017

In the opening of Kim Stanley Robinson’s new SF novel, New York 2140, two unemployed financial software engineers known as Mutt and Jeff—unemployed because they refuse to design a possibly illegal program for high-speed trading—contemplate a flooded lower Manhattan from atop the former Metropolitan Life building.

One of them says he has figured out what’s wrong with capitalism.

The basic problem with capitalism, he says, is that the forces of the market forces producers to sell products below cost.

How can you sell below cost and survive?  By offloading your costs onto someone else—onto customers, onto neighbors, onto taxpayers, onto the wider community and onto future generations.

This enables an individual enterprise to survive (sometimes), but, in the long run, leads human society into bankruptcy.

In the novel, global warming has taken place, sea levels have risen and lower Manhattan is under water.  Skyscrapers such as the Met Life building are still survive amid a kind of new Venice.  Uptown Manhattan is 50 feet higher in elevation, and is dry.  In the middle is a tidal zone, where the poor and homeless congregate.

Some environmental problems have been solved, or at least are being coped with.  Gasoline, jet fuel and other fossil fuels no longer exist.  Air travel is by dirigible, ocean travel is by sailing ship and land vehicles are electric.   But the financial structure and distribution of income are more or less like they are now.

New skyscrapers—”superscrapers”—in uptown are owned by the world’s wealthy elite, as investments or as one of multiple homes, and are often vacant.

A hurricane late in the novel leaves many homeless.  They try to storm the vacant uptown towers, and are turned back by private security forces, who outgun the New York Police Department.

Rather than attempt a violent revolutionary overthrow, the common people attempt a political and economic jujitsu.

They join in a nationwide debt strike.  On a given day, they stop paying their mortgages, student loans and credit card balances.  The financial system is go highly leveraged with debt upon debt that it comes crashing down, just as in 2008.   So the financiers go to Washington for another bailout, just as they did then.

But this time, the President and Federal Reserve Chairman, who are in on the plan, act differently.  They tell the banks and investment companies that they would be bailed out only on one condition—that the government be given stock of equal value to the bailout, as was done in the bailout of General Motors.   Those who refuse this deal are allowed to fail.

Now the federal government has the authority to force the banks to act as public utilities.  And the huge profits that once flowed to the financial elite now flow to Washington, which makes it possible to adequately fund public education, infrastructure improvement, scientific research and all the other things the country needs.

And so the American people live happily—not ever after and not completely, but for a while.

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Neoliberalism and Its Discontents (1)

April 13, 2017

What follows is notes for the first part of a talk for the Rochester Russell Forum scheduled at Writers & Books Literary Center, 740 University Ave., Rochester, NY, at 7 p.m. Thursday, April 13, 2017

Neoliberalism is the philosophy that economic freedom is the primary freedom, economic growth is the primary goal of society and the for-profit corporation is the ideal form of organization.

It is the justification for privatization, deregulation and the economic austerity currently being imposed on governments by lenders.

Neoliberalism has its roots in classical liberalism, which arose in the 18th and 19th centuries.  Classic liberals said that the purpose of government is to protect human rights, including religious, intellectual, political and economic freedom.   They fought the absolute power of kings and the privileges of aristocrats and demanded the right of individuals to determine their own fates.

Classical liberalism came to be supplanted in the early 20th century by a belief that government regulation and welfare could, if well thought out, enhance human freedom by giving individuals more choices.   A graduate of a public school or university, for example, has more options than a person unable to afford an education, so taxing the public to pay for public schools and universities would be a form of liberation.

Neoliberalism is a backlash against social liberalism.  Neoliberalism affirms that freedom of enterprise is the only important freedom.   Its well-known adherents include Friedrich Hayek, Ludwig von Mises and Milton Friedman.

It came into widespread acceptance in the 1980s, as a reaction against the manifest failures of central economic planning and as a way to break the political gridlock of the welfare state.  Ronald Reagan and Margaret Thatcher were both strongly influenced by the neoliberals.

Neoliberalism’s strongest adherents are to be found among economists, journalists, financiers, Silicon Valley executives and right-of-center parties in the English-speaking world and western Europe, and in international institutions such as the International Monetary Fund, World Bank and European Central Bank, which enforce neoliberal policies on debtor countries.

It is more of an implicit philosophy than a credo, a series of assumptions that has come to permeate our society.

What follows is my attempt to understand the logic behind these assumptions.

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Questions to be answered

March 16, 2016

I think that the United States and other Western countries are in a political and economic crisis.

I think that political leaders in the Western world must answer these questions.

authoritarianism9fd18cDoes the economic and political crisis mean that the system has failed?

If the system has failed, is this a failure of capitalism, a failure of democracy or both?

If the failure is a failure of capitalism, can the capitalistic system be fixed, or must it be replaced?

If the failure is a failure of democracy, can the democratic system be fixed, or is it doomed?

I don’t expect these questions to be addressed this year or the next, but I don’t think they can be evaded indefinitely.  I think there will be some sort of resolution, for good or for ill, within the next 10 years.

The return of right-wing populism

February 10, 2016

During the Great Depression of the 1930s, many people in Europe and North America turned to populist radical and left-wing parties, while many others turned to populist nationalist and racist parties.

The first group blamed their troubles on the wealthy elite and a failed capitalist system.  The second group blamed their troubles on foreigners, minorities and a failed democratic system.

There were exceptions and overlaps, but I think these broad distinctions apply.  Nationalism and racism are a way of diverting public discontent away from bankers and landlords.

We have the same two kinds of populism today.  In Europe, we see Jeremy Corbyn in Great Britain, Podemos in Spain and Syriza in Greece, and, on the other hand, the United Kingdom Independence Party, the National Front in France and Viktor Orban in Hungary.

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The assumptions and logic of neoliberalism

November 14, 2015

There is no such thing as society.  There are only individuals, and their families.      ==Margaret Thatcher

∞∞∞

Neoliberalism is the philosophy that economic freedom is the primary freedom, economic growth is society’s primary goal and the for-profit corporation is the ideal form of organization.

It is the justification for privatization, deregulation and the economic austerity being imposed on governments by lending institutions.

What follows is my attempt to understand the thinking behind neoliberalism.  I welcome comments, especially from those who think I am wrong or unfair.

17149339-Abstract-word-cloud-for-Neoliberalism-with-related-tags-and-terms-Stock-PhotoGovernment is by definition coercive.  All governmental authority is ultimately backed by armed force.  The role of government should be limited to protection of life and property and enforcement of contracts.   

Private enterprise is by definition free choice.  Privatization by definition increases freedom.  All income deriving from the private sector, and not involving force or fraud, is earned income.

Most people are good judges of their individual self-interest and bad judges of the common good.   People generally make good decisions as consumers and poor decisions as voters.  Consumer choice is more meaningful than the right to vote.

Free markets, though the law of supply and demand, coordinate individual choices without the direction of any particular people or group of people.  The free market is more impartial and just than any system of planning or regulation could be.

A capitalist dictatorship that protects property rights is better than a socialist democracy that attacks property rights.

Economic growth is the key to increasing economic well-being.  Growth is produced by capital—that is, by investment in machines, factories and other human-made goods that generate new wealth.  

In a free enterprise economy, capital is invested by private individuals based on the law of supply and demand.  Whatever diminishes the ability of individuals to accumulate wealth or respond to the signals of the free market diminishes capital and retards economic growth.

Money spent on welfare and charity may temporarily alleviate distress, but it will not cure poverty.  Only capital investment and economic growth will do that. 

Capital investment and economic growth should take precedence over public education, public health, the environment and other so-called pubic goods, because they are the means of generating the wealth that pays for the public goods.

Banks, investment firms and financial markets are the key institutions of society.  They must be preserved in order to support investment and economic growth.

Monetary obligations are absolute.  Any person, organization or government that borrows money has an absolute obligation to pay it back, no matter what the sacrifice.  People who don’t repay their debts or fulfill their contracts are parasites on the system.

Inequality is a good thing.  To break up accumulations of wealth that have been acquired by legitimate means is not only unjust because it destroys the just reward for achievement.  It destroys the capital by which new jobs and wealth are created.

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The international record of neoliberalism

November 14, 2015

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My economic philosophy in a nutshell

October 6, 2015

When, lo, these many years ago, I studied economics in college, I learned that capital was the most important factor in a prosperous economy.

I still think this is true.  But that doesn’t mean that owners of financial assets are the most valuable members of society.

Standard economics teaches that three  are factors of production—land, labor and capital.  “Land” means all natural resources—everything of value not created by human beings.  “Labor” means all human effort, physical or mental.

 “Capital” is the most important of the three.  It means everything that increases the productivity of land and labor—railroads, machine tools, computers.  It is the force multiplier for land and labor.  It is what makes economic growth possible.

The problem is that “capital” also means also the financial resources available (but not necessarily used) to create these tangible resources.

Landlords who receive rents contribute nothing to the wealth of nations.  Laborers who earn wages contribute a fixed amount.  Capitalists who make profits have—so I was taught—an incentive to direct their capital in a way that created the most value, and thus increase the total wealth of society.

Late in life I have come to read Karl Marx’s rebuttal.  Physical and intellectual capital is not created by capitalists, he noted.  Every railroad, every machine tool, every computer was created not by money, but by the mental and physical effort of human beings.

The increase in human wealth that physical capital generates does not go to those who created it.  It goes to those who own it.

Marx denied that the owners of capital are job creators.  He asserted that workers are capital creators.

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The passing scene – October 5, 2015

October 5, 2015

Parasites in the Body Economic: the Disasters of Neoliberalism, an interview of Michael Hudson, author of Kllling the Host: How Financial Parasites and Debt Bondage Destroy the Global Economy, on Counterpunch Radio.  Highly recommended.

More Leisure, Less Capitalism, Thanks to Tech, an interview of Jacobin contributing editor Peter Frase for Truthout.  (Hat tip to Bill Harvey)

The 2016 Stump Speeches: Bernie’s Epistle to the Falwellites by Doug Muder for The Weekly Sift.

How Steve Jobs Fleeced Carly Fiorina by Steven Levy for BackChannel.  (Hat tip to my expatriate e-mail pen pal Jack)

The model minority is losing patience by The Economist.  (Hat tip to Mike the Mad Biologist)

The Second Amendment Is a Gun Control Amendment by Adam Gopnik for The New Yorker.  (Hat tip to Bill Elwell)

Reviving Shinto: Prime Minister Abe tends a special place in Japan’s soul by Michael Holtz for The Christian Science Monitor.  (Hat tip to Jack)

AP Investigation: Are slaves catching the fish you buy? by Robin M. McDowell, Margie Mason and Martha Mendoza.  (Hat tip to Jack)

Naomi Klein’s new climate change book

October 22, 2014

Naomi KleinWe know that we are trapped within an economic system that has it backwards; it behaves as if there is no end to what is actually finite (clean water, fossil fuels and the atmospheric space to absorb their emissions) while insisting there are strict and immovable limits to what is actually quite flexible: the financial resources that human institutions manufacture, and that, if imagined differently, could build the kind of caring society that we need.

==Naomi Klein, This Changes Everything

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Naomi Klein’s brilliant new book, THIS CHANGES EVERYTHING: Capitalism vs the Climate, underlines two important things I had not quite realized.

The first is that the built-in financial incentives of the fossil fuel corporations, or capitalism generally, make it impossible for corporate executives to do anything on their own that would limit the greenhouse gasses that cause climate change.

The second is that many seemingly unrelated struggles against abuses by fossil fuel companies, or abuses by corporations generally, tie in with fighting climate change.

hoax-cop15When native Americans fight to have Indian treaties recognized in law, when small towns in upstate New York pass ordinances against hydraulic fracturing for natural gas, when ranchers and Indians protest the Keystone XL pipeline, when other protestors object to corporate trade treaties such as NAFTA, when Occupy Wall Street protesters advocate economic democracy—all these things help other people in danger from the increase in droughts, floods and violent storms.

I confess that I did not see these connections, or did not fully realize their significance, until I read this book.  I had thought of the question of climate change as primarily a question of how and how much I and other people are willing to reduce their material standard of living, or give up hope of increasing their material standard of living, so that future generations will have a decent planet to live on.

This is a real and important question, but it is not the only question.  As Naomi Klein points out, the well-being livelihoods of many people are threatened by continuing on the present course.   That is because the era of easily-available oil, gas and coal is long gone, and the methods of extracting them—deep water ocean drilling, tar sands, fracking, mountaintop removal—are increasingly costly, dangerous and destructive.

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Can workers own the means of production?

September 30, 2014

income distribution

The Marxist economist Richard D. Wolff thinks that a new form of economic organization, the worker self-directed enterprise, can gradually replace the for-profit corporation.

Richard D. Wolff

Richard D. Wolff

I hope he is right because the world needs something better than predatory corporations or oppressive government bureaucracies, which are the main choices on offer now.

But successful worker-owned enterprises have been around for a long time, and yet have never reached the critical mass that would enable them to become an important part of the economy.

Advocates of worker-owned businesses cite the example of the Mondragon Corporation, which originated in the Basque country in Spain in 1956 with a half dozen people and now is a federation of 257 businesses and co-ops employing 76,000 people in 31 countries.  But why is there only one Mondragon Corporation?  Why hasn’t it become a template for other successful efforts?

One of the things that limit worker-owned businesses, as I see it, is precisely this lack of critical mass.  There is a societal infrastructure of business schools, business services and business finance to serve the new for-profit business.  Worker-owners would have to learn as they go.  This takes a level of commitment of which many people aren’t capable, unless they are in dire straits.

One of Wolff’s ideas is to provide seed money for WSDEs by giving the unemployed their compensation in a lump sum rather than weekly checks.  This shows how he underestimates the difficulty of implementing his program.

To begin with, starting a successful small business is not something everybody can do, although many people think they can.  If you wanted a pool of people with the ability to succeed in business, you probably wouldn’t choose them from among the unemployed.  You’d be more likely to find them among people who have good jobs and money in the bank.

Then again, the American Dream is to own your own business.  Generally speaking, it is not to be part of a community of comrades who share and share alike.   We Americans think of ourselves as individualists, no matter how subservient to authority we may be in practice, and we only abandon the dream of self-sufficiency for compelling reasons.

Farmers’ marketing co-ops came into existence because farmers thought they were being cheated by middle-men.  Electric power co-ops came into existence because the investor-owned utilities weren’t interested in serving them.  Savings and loan associations, and later credit unions, were formed because people were dissatisfied with banks.

Workers have been known to take over factories from bankrupt employers and restart the businesses.  Some co-ops are formed around political and social movements, such as selling organic food.  But worker-owned and cooperative businesses are not the norm.  There has to be a compelling reason to commit to starting one.

The commitment tends to fade when the compelling reason fades.  Even the successful cooperatives tend to wither away, or be bought out, or to incorporate.  Even the successful utopian communities, the Oneida community in New York state and the Amana community in Iowa, wound up as corporations.

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Is economic democracy possible?

September 30, 2014

feed-with-gdp

Richard D. Wolff, a Marxist economist, wrote in his recent books that capitalism has failed, and that it is necessary to replace for-profit corporations as we know them with what he calls worker self-directed enterprises.

Democracy at WorkBut for-profit corporations aren’t going to go away, even if—which remains to be seen—worker-owned enterprises offer a better alternative.

If economic democracy is the only means by which workers can keep the value of what they produce, then it is going to be necessary to reform existing corporate structures.

The USA needs legislation to curb abuses in corporate management, such as leverage buyouts, in which slick financial operators can gain control of a company with borrowed money and then milk it for their own benefit, regardless of its impact on the company.  We need enforcement of anti-trust laws and prosecution of corporate and financial fraud.

Beyond that, the USA needs to build up labor unions as a countervailing power.  Congress should enact the Employee Free Choice Act, aka Card Check, in which employees get the right to bargain collectively when a majority sign up to join a union.  It should repeal or reform the Taft-Hartley Act and Landrum Griffin Act.

But all of this falls short of true economic democracy.  True economic democracy would mean something like Germany’s co-determination system, in which employees of firms are represented on the board of directors.  I think this should be required of all companies whose stock is publicly traded.  If an entrepreneur doesn’t want to share control of a company,  then don’t sell its shares on the open market.

Economic democracy also would mean letting workers share in day-to-day management of the company, along the lines suggested by W. Edwards Deming.  Knowledge in any institution is widely distributed.  No small group has a monopoly on useful information.  I think a company will be better managed when workers and managers have the same information available.

Banking and finance are a separate issue.  There can be no economic democracy when financiers have a veto over democratic decisions.  Banks should be regulated utilities.  Bankers should be servants of the people, not masters of the universe.

When and if these things can be achieved, there will be a favorable environment for Wolff’s worker-self-directed enterprises.  The government would give them the same kind of support across the board that rural electric co-ops got in the 1930s and 1940s.  Otherwise, probably not.

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Is there a better way than capitalism?

September 30, 2014

20120314-graph-the-1-percents-jobless-recovery-01Marxists say that the trouble with the capitalist economy is that workers don’t get the full value of what they produce.  Whether or not that’s true as a general principle, it is a good description of the current direction of the U.S. economy.

capitalismhitsthefan_The Marxist solution is that the workers themselves should own the means of production.  A Marxist economist, Richard D. Wolff, said that where socialists and Communists have gone wrong is in promoting government ownership rather than worker ownership.

I recently read Wolff’s three latest books.  His view of the current economic crisis is the same as mine.   In the 1970s, overall American wages stopped growing.  Working people tried to maintain their material standard of living by putting in longer hours and having more family members in the work force.   When that reached a limit, they kept up their spending levels by borrowing.

Now the spending power of ordinary Americans has reached a limit.  Most Americans are either broke, nearby broke or paying down their debts.  That’s why the government has failed to stimulate the economy through spending or lower interest rates.

occupytheeconomy0The solution, according to Wolff, is the creation of WSDEs – worker self-directed enterprises – in which the workers themselves are the ultimate deciders of what is done with the profits (in Marxist lingo, the “surplus”).

A WSDE would be more than worker participation in management, where corporate ownership remains the same.  And it would be more than a worker-owned business, where board of directors and the rest of the corporate management structure remains in place.   And it would be more than just a co-operative, which can be organized to serve the interests of any group, not just employees.

This would not necessarily solve all problems, Wolff wrote, but it would make other problems easier to solve.  A WSDE wouldn’t lay off workers or reduce wages merely to increase the income of managers and stockholders.  Employees wouldn’t feel alienated from their work.  A worker-owned business would be less likely to be willing to pollute the community in which they live than would a board of directors responsible to stockholders who live far away.

Democracy at WorkI am in favor of more worker-owned businesses, but I think Wolff greatly underestimates the opposition to his proposed program.   Does he think the interests that engineered the sale of the Postal Service’s assets to private businesses (such as Nancy Pelosi’s husband) or advocate replacing public schools with for-profit businesses (aka charters)—does he think these interests are going to sit still and allow Wolff’s WSDEs to push them aside?

Back in the New Deal era, the federal government fostered electric power co-operatives, which provided electricity at lower rates than the for-profit corporations.  But they did not displace the for-profit corporations, nor become a model for how to operate electric utilities.

Instead the electric power industry successfully pushed for deregulation of the industry, in which competition between electric power providers was supposed to keep rates low.  Deregulation also abolished a requirement that an electric utility have enough reserve generating capacity to prevent future blackouts and brownouts.  Nobody is responsible for keeping the lights on now.

 The fact that something is economically feasible and socially desirable does not mean that it will be politically successful.   There is no substitute for political power.

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