Capitalism

Republicans Try to Block RT from Being Shown in US

The Republicans are up to their tricks again, trying to stop American audiences from taking their news from alternative sources and so getting a clearer, different picture from that the corporate media wishes to impose. In this report by Samira Khan from RTUK, Republican Senator John McCaine and one of his colleagues are trying to pass a bill, which would allow American network providers to avoid having to carry RT – Russia Today – in the US. The ostensible reason is that Russia is using the broadcaster, which is owned by the Russian state, to influence American politics. There’s a clip in the programme of various Republicans in Congress debating and complaining that too many Americans are getting their views from RT.

The programme notes that there are three other state-owned foreign broadcasters in the US. These are France 24, Al-Jazeera, which is owned by Qatar, and, of course, the Beeb. None of these will be subject to the McCaine’s and Graham’s bill.

I’m very much aware that RT is owned by Russia, which since the Second World War has been America’s ideological and geopolitical opponent. And, despite the Fall of Communism and the introduction of capitalism, Russia still is in geopolitical opposition to America. But the claims that Russia is interfering in US politics is pure rubbish.

This twaddle ultimately comes from Hillary Clinton and her attempts to blame everyone else for her failure and corruption at the elections. She claimed that the leaked emails from the Democratic National Convention, which showed how corrupt she was in her dealings with corporate backers, and how she and Debbie Wasserman Schultz unfairly manipulated the internal electoral process within the party to stop Bernie Sanders coming to power, came from the Russians. They weren’t. They came from disgruntled members of her own party.

As for the accusation that Russia was influencing US politics, there’s no evidence that they were doing so unduly, or at least, no more than they had been. And as William S. Blum has pointed out on his Anti-Empire Report, that’s a lot less than America has interfered in other countries. He has a whole list of the countries, in which America has interfered in their politics and elections, not counting those, which the US has actively invaded or organized or backed coups to overthrow liberal and left-wing, but not necessarily Marxist or even Socialist governments. And there are pages and pages on this in Blum’s book.

This is just another attempt by the political establishment to try and shut down alternative media, and stop the American people from finding out what their country is really doing. Not just around the world, but also to them. Thanks to both the establishment Democrats and the Republicans’ promotion of corporate interests, as Pat Mills observed in one of his talks on politics and comics, there are pockets of America which are like the Third World. And this is White America, never mind Blacks, who still remain much poorer.

The corporate establishment is panicking, both in America and over here in Blighty, because people are no longer buying the right-wing propaganda churned out by Fox News and MSNBC, or by a supine BBC over here, which has turned its news into a kind of British TASS for Conservatives. (TASS was the Soviet state news agency before the collapse of Communism). They’re taking their news from alternative sources, like the Real News Network, RT, Democracy Now!, The Young Turks, Secular Talk, the David Pakman Show, Sam Seder’s Majority Report in the US, RTUK over here, media commentators like Chunky Mark the Artist Taxi Driver, and a whole plethora of bloggers and vloggers. And they’re getting worried.

It’s why establishment journos in the press and on the Beeb are whining about how the decline of their sector of news gathering and publication means that there will no longer be a consensus view that broadly unites people of all shades of political opinion. What this actually translates into is a panic that they won’t be able to shape public opinion like they could. They argue this means that opinions are becoming increasingly polarized and oppositional. It also means that they’re afraid that they can’t shape public opinion for the benefit of their corporate proprietors like they used to, and without influence and declining sales they could see all that lucrative advertising money that keeps so many of them going, drying up.

And the giants of the internet are also panicking. It’s why Google is so keen to demonetize ‘controversial’ material on YouTube. The excuse is that they’re doing so to stop racist, Alt Right, Nazi and Islamist propaganda appearing on the platform. But as so much of what is demonetized extends to left-wing news outlets, like David Pakman, Sam Seder and Democracy Now!, this excuse is very spurious and flimsy indeed. Google has said it wants to prioritise corporate content. It’s therefore just another big corporation trying to silence the critics of the corporate capitalism that’s destroying the planet and impoverishing everyone in the world except the super-rich 1 per cent.

It’s also why Facebook has also changed its policy, so that bloggers like Mike over at Vox Political also find it hard to reach their audience.

People the world over aren’t buying the corporate, establishment propaganda. They are turning to alternative media, which includes Russia Today, to find out about what’s really going on. And the corporate media is terrified. Hence this wretched bill. And I’ve no doubt that if this gets through Congress, the Tories will try something similar over here. After all, RT is also over here, as is the Iranian state broadcaster, PressTV, and they also tell the British public facts and information that they really don’t want people to see. Like George Galloway talking about the oppression of the Palestinians in Israel, and western militarism and imperialism in eastern Europe and the Middle East.

Book Review: Marx, Capital and the Madness of Economic Reason by David Harvey

Published by Anonymous (not verified) on Tue, 19/09/2017 - 8:44pm in

In Marx, Capital and the Madness of Economic Reason, David Harvey provides a new systemisation of Karl Marx’s work in order to uncover, explore and explain the ‘madness of economic reason’ in the twenty-first century. This is an impressively wide-ranging work that draws upon Marx as a toolbox for contending with the crises of capital today, but Joshua Smeltzer is left questioning whether this is the appropriate conceptual apparatus to achieve this. 

If you are interested in this book review, you may also like to listen to/watch David Harvey’s LSE lecture, ‘Marx, Capital and the Madness of Economic Reason’, recorded 18 September 2017. 

Marx, Capital and the Madness of Economic Reason. David Harvey. Profile Books. 2017.

Find this book: amazon-logo

David Harvey, the author of The Companion to Marx’s Capital series and numerous other books on Marx and Marxism, has returned once more to the German philosopher and political economist, this time in order to provide a systematisation of Marx’s work that could explain and unearth the symptoms of a pervasive ‘madness of economic reason’ in the twenty-first century.

Part of Harvey’s drive to present an updated version of Marx relevant to the twenty-first century is directed against two intellectual sparring partners: on the one hand, recent biographies of Marx by Jonathan Sperber and Gareth Stedman Jones that, while ‘invaluable’, ‘both […] forget that the object of Marx’s study in Capital was capital and not nineteenth-century life’ (xiii); and on the other, ‘a supposedly scientific, highly mathematized and data driven field’ of orthodox economics (xiv). While Harvey’s engagement with the latter runs through the text, he largely avoids engaging with a historical reading of Marx’s work, preferring instead to present Marx as providing the answers to contemporary economic crises.

As a result, Harvey uses Marx’s work as a toolbox from which he updates and applies diverse concepts to illuminate the contemporary contradictions of capital. Harvey’s analysis is impressively wide-ranging, covering topics as varied as global natural resource consumption and Chinese economic policy (178-84), the Greek debt crisis (83, 205) and proposals for new trade agreements such as TPP and TTIP (160-64). As Harvey is at pains to illustrate, across the world ‘daily life is held hostage to the madness of money’ (172), generating a state of seemingly perpetual crisis. Against this, he suggests that Marx’s work is an ‘open door through which we could progress to ever higher understandings of the underlying problems that inform our current reality’ (209). Indeed, Harvey’s new book invites the reader to enter into the conceptual world of Marxism and encourages a critical distance from the language of economic necessity.

Image Credit: (Marco Gomes CC BY 2.0)

Meant as a ‘guide,’ Harvey places particular emphasis in this book on the clarity of language and accessibility for a general reader. Particularly in the first chapter, Harvey seeks to explain key concepts in the vocabulary of contemporary Marxism through basic examples, such as the exchange of shirts and shoes in the market (4). Indeed, Harvey wants to show Marx as a thinker deeply relevant for the present, demonstrating, for instance, why the 15 dollar minimum wage proposals of both Bernie Sanders and Black Lives Matter would ‘amount to naught if hedge funds buy up foreclosed houses and pharmaceutical patents and raise prices […] to line their own pockets out of the increased effective demand exercised by the population’ (47). To safeguard against this, Harvey argues that we need ‘strict regulatory intervention to control these living expenses, to limit the vast amount of wealth appropriation occurring at the point of realisation’ (47). Perhaps following Marx’s famous dictum, Harvey provides both an explanation for contemporary crises as well as a means of changing them.

And yet, at crucial moments, Harvey seems to forget the general audience for whom the book is intended. For example, Figures Two and Three on ‘Visualizing Capital as Value in Motion’ (6) and ‘The Three Circuits of Capital’ (151) attempt to make Marx ‘no more difficult to understand than the standard visualization of the hydrological cycle’ (7) – certainly a worthy endeavour. However, the text provides no key for the dizzying array of colour-coded arrows, leaving the reader to guess the significance of using a dotted black line to connect ‘reproduction of Labour power’ to ‘Labour power’ versus using a solid black line to connect ‘commodities’ to ‘Labour power’. Likewise, ‘Money Capital’ is the only term to be highlighted in black and surrounded by a grey box, but the significance of this formatting is left without explanation. For someone who hasn’t spent half a century interpreting Marx, an interpretative key would have been welcome.

Likewise, Harvey states in the opening chapter that ‘the only way to be true to my mission is to tell the story of capital in Marx’s own language’ (4). And yet the rest of the chapter is surprisingly light on citations of Marx’s work – there are only three, and all are to Grundrisse – let alone Marx’s language. For example, Harvey tells us that ‘at worst, Marx tends to concede […] that the rate of profit will tend over time to equalise between industrial capital and the other distributive forms’ (20), but this statement is not followed by any direct reference to Marx’s work.  Moreover, Harvey readily jettisons the idea of using Marx’s language when, on the subject of environmental protection and renewable energy, he notes that ‘Marx did not consider questions of this sort, but the visualisation here constructed, based on his thinking, is easily adapted to take such questions into account’ (22).

It seems then that we are confronted not with Marx’s language or even Marx’s thought, but rather Harvey’s revision and systematisation of it. This is particularly noticeable in Harvey’s discussion of Capital Vol. 2, in which he faults Marx for not conforming to his own expectations, noting that Marx ‘ignores the facts of distribution’, which Harvey finds ‘particularly annoying’, or that ‘oddest of all […] is the assumption that all commodities trade at their value’ (29).

Harvey ends his book with an apocalyptic warning:

to pretend [capital] has nothing to do with our current ailments and that we do not need a cogent, as opposed to fetishistic and apologetic representation of how it works, how it circulates and accumulates among us, is an offence against humanity that human history, if it manages to survive that long, will judge severely (210).

Finding a solution to the manifold crises of capital is certainly an imperative, but it remains a question if Harvey’s conjuring of the Ghost of Marxism Past will ultimately provide the appropriate conceptual apparatus to do so.

Joshua Smeltzer is a doctoral student at the University of Cambridge pursuing a PhD in Politics and International Studies, with a focus on twentieth-century German Political Thought.

Note: This review gives the views of the author, and not the position of the LSE Review of Books blog, or of the London School of Economics. 


William Blum on Socialism vs. Capitalism

William Blum, the long-time fierce critic of American and western imperialism, has come back to writing his Anti-Empire Report after a period of illness. He’s an older man of 84, and due to kidney failure has been placed on dialysis for the rest of his life. This has left him, as it does others with the same condition, drained of energy, and he says he finds writing the report difficult. Nevertheless, his mind and his dissection of the ruthless, amoral and predatory nature of western capitalism and corporate greed is as acute as ever.

There’s a section in the Anti-Empire Report, where he discusses the advantages of socialism versus capitalism. He notes that there were two studies carried out under George Dubya to see if private corporations were better than federal agencies. And the federal agencies won by a huge margin every time. He writes

Twice in recent times the federal government in Washington has undertaken major studies of many thousands of federal jobs to determine whether they could be done more efficiently by private contractors. On one occasion the federal employees won more than 80% of the time; on the other occasion 91%. Both studies took place under the George W. Bush administration, which was hoping for different results. 1 The American people have to be reminded of what they once knew but seem to have forgotten: that they don’t want BIG government, or SMALL government; they don’t want MORE government, or LESS government; they want government ON THEIR SIDE.

He also states that the juries’ still out on whether socialist countries are more successful than capitalist, as no socialist country has fallen through its own failures. Instead they’ve been subverted and overthrown by the US.

I think he’s wrong about this. The Communist bloc couldn’t provide its people with the same standard of living as the capitalist west, and the state ownership of agriculture was a real obstacle to food production. The bulk of the Soviet Union’s food was produced on private plots. Similarly, Anton Dubcek and the leaders of the Prague Spring, who wanted to reform and democratize Communism, not overthrow it, believed that Czechoslovakia’s industrial development was held back through the rigid structure of Soviet-style central planning.

However, he still has a point, in that very many left and left-leaning regimes have been overthrown by America, particularly in South America, but also across much of the rest of the world, as they were perceived to be a threat to American political and corporate interests. And for the peoples of these nations, it’s questionable how successful capitalism is. For example, in the 1950s the Americans overthrew the Guatemalan government of Jacobo Arbenz after he dared to nationalize the banana plantations, many of which were own by the American corporation, United Fruit. Benz was a democratic socialist – not a Communist, as was claimed by the American secret state – who nationalized the plantations in order to give some dignity and a decent standard of living to the agricultural workers on them. The government that overthrew Benz was a brutal Fascist dictatorship, which imposed conditions very close to feudal serfdom on the plantation labourers.

Which leads to a more general point about the emergence of capitalism, imperialism and the exploitation of the developing world. Marxists have argued that capitalism had partly arisen due to western imperialism. It was the riches looted from their conquered overseas territories that allowed western capitalism to emerge and develop. Again this is a matter of considerable debate, as some historians have argued that the slave trade and plantation slavery only added an extra 5 per cent to the British economy during the period these existed in the British empire, from the mid-17th century to 1840. More recently, historians have argued that it was the compensation given to the slaveowners at emancipation, that allowed capitalism to develop. In the case of the large slaveholders, this compensation was the equivalent of tens of millions of pounds today. At the time the plantation system was in crisis, and many of the plantation owners were heavily in debt. The slaveholders used the money given to them by the British government – £20 million, a colossal sum then-to invest in British industry, thus boosting its development.

This system has continued today through what the Swedish economist Gunnar Myrdal termed ‘neocolonialism’. This is the international trading system which the former imperial masters imposed on their colonies after the end of imperialism proper following the Second World War. High tariffs and other barriers were imposed to stop these countries developing their own manufacturing industries, which could produced finished goods that would compete with those of Europe and the west. Instead, the former subject nations were forced through a series of trade agreements to limit themselves to primary industries – mining and agriculture – which would provide western and European industry with the raw materials it needed. As a global system, it’s therefore highly debatable how successful capitalism is in providing for people’s needs, when the relative success of the capitalist west has depended on the immiseration and exploitation of countless millions in the developed world.

And in the developed west itself, capitalism is failing. In the 19th century Marx pointed to the repeated crises and economic slumps that the system created, and predicted that one of these would be so severe that it would destroy capitalism completely. He was wrong. Capitalism did not collapse, and there was a long period of prosperity and growth from the late 19th century onwards.

But terrible, grinding poverty still existed in Britain and the rest of the developed world, even if conditions were slowly improving. And the long period of prosperity and growth after the Second World War was partly due to the foundation of the welfare state, Keynsian economic policies in which the government invested in the economy in order to stimulate it, and a system of state economic planning copied from the French.

Now that Thatcherite governments have rolled back the frontiers of the state, we’ve seen the re-emergence of extreme poverty in Britain. An increasing number of Brits are now homeless. 700,000 odd are forced to use food banks to keep body and soul together, as they can’t afford food. Millions more are faced with the choice between eating and paying the bills. In the school holiday just passed, three million children went hungry. And some historians are predicting that the refusal of the governments that came after the great crash of 2008 to impose controls on the financial sector means that we are heading for the final collapse of capitalism. They argue that the industrial and financial elite in Europe know it’s coming, are just trying to loot as much money as possible before it finally arrives.

The great, free trade capitalism lauded by Thatcher, Reagan and the neoliberal regimes after them has failed to benefit the majority of people in Britain and the rest of the world. But as the rich 1 per cent have benefited immensely, they are still promoting neoliberal, free trade policies and imposing low wages and exploitative working conditions on the rest of the population, all the while telling us that we’re richer and generally more prosperous than ever before.

Back to Blum’s Anti-Empire Report, he also has a few quotes from the American comedian Dick Gregory, who passed away this year. These include the following acute observations

“The way Americans seem to think today, about the only way to end hunger in America would be for Secretary of Defense Melvin Laird to go on national TV and say we are falling behind the Russians in feeding folks.”

“What we’re doing in Vietnam is using the black man to kill the yellow man so the white man can keep the land he took from the red man.”

For more, see https://williamblum.org/aer/read/150

‘World Accumulation & Planetary Life’ – Jason W. Moore, 10th October

Published by Anonymous (not verified) on Tue, 19/09/2017 - 4:07pm in

World Accumulation and Planetary Life

or Why Capitalism Will Not Survive until the ‘last tree is cut’

Jason W. Moore

6-7.30pm, 10th October

Ben Pimlott Lecture Theatre, Goldsmiths

Why does it seem easier to imagine the end of the world than to see the end of capitalism? Part of the answer turns on a rift between radical economic and ecological thought: one emphasizing capitalism’s economic woes, the other, how capitalism propels manifold biophysical crises, climate change above all. In this talk, Jason W. Moore suggests how we might mobilize the insights of both in a new synthesis that reveals the exhaustion of capitalism’s business-as-usual strategies, cohered over five centuries of conquest, colonialism, and capital accumulation. Arguing that capitalism is a world-ecology of power, re/production, and nature, Moore shows how this long history of the degradation of work and life – human, but also of all natures – might be transcended through new, revolutionary, ecologies of care and hope.

Jason W. Moore is an environmental historian and historical geographer at Binghamton University, where he is associate professor of sociology. He is author or editor, most recently, of Capitalism in the Web of Life (Verso, 2015), Anthropocene or Capitalocene? Nature, History, and the Crisis of Capitalism (PM Press, 2016), and, with Raj Patel, A History of the World in Seven Cheap Things (University of California Press, 2017).

 

This event is hosted jointly by PERC and the Centre for Understanding Sustainable Prosperity.

To find Goldsmiths, click here. The Ben Pimlott Building is one minute walk from New Cross Gate, and easily visible by the large metal GOLDSMITHS lettering on the roof.

The post ‘World Accumulation & Planetary Life’ – Jason W. Moore, 10th October appeared first on Political Economy Research Centre.

Book Review: After Piketty: The Agenda for Economics and Inequality edited by Heather Boushey, J. Bradford DeLong and Marshall Steinbaum

Published by Anonymous (not verified) on Mon, 18/09/2017 - 9:32pm in

In After Piketty: The Agenda for Economics and Inequality, editors Heather Boushey, J. Bradford DeLong and Marshall Steinbaum bring together contributors to reflect on the influence of Thomas Piketty’s Capital in the Twenty-First Century and to draw attention to topics less explored in Piketty’s analysis. While this is a work of serious scholarship that is suited primarily to an academic audience, these reflections on inequality as an economic as well as moral, social and political issue are of significance for all, finds Asad Abbasi. 

After Piketty: The Agenda for Economics and Inequality. Heather Boushey, J. Bradford DeLong and Marshall Steinbaum (eds). Harvard University Press. 2017.

Find this book: amazon-logo

Life expectancy for people living around Canary Wharf is 89 years. For people at Canada Water, the next stop on the Jubilee line, life expectancy is 78 years. The life expectancy gap of eleven years between these two stations is equal to that between Switzerland and Bangladesh or between British women born in 2011 and British women born in the 1950s.

What explains such a dramatic change in life expectancy within a two-minute tube journey? One probable answer is that London is an unequal city. The richest ten per cent in London own 62.8 per cent of the city’s total wealth. This disparity pervades other forms of inequality such as education, political voice and even the ‘basic unit of inequality’, the life expectancy rate. But how can we account for this unequal distribution?

In 2013, Thomas Piketty’s Capital in the Twenty-First Century provided a sophisticated explanation for inequality in the western world. Unequal wealth, Piketty posited, has less to do with productivity or efficiency than with ‘the process by which wealth is accumulated and distributed’ which ‘contains powerful forces pushing towards divergence, or at any rate towards an extremely high level of inequality’ (2013, 27). Analysing this, Piketty found that historically the return on capital (r) consistently floated above the growth rate (g): r > g. In other words, wealth grows faster than economic output. This implies that the tiny fraction of people with capital will continually receive a larger share of the total wealth of the economy resulting in unequal wealth distribution, such as the one we see in London. Only a shock that increases growth, such as education or technology, or one that decreases capital, such as wars, will lessen wealth inequality.

After Piketty: The Agenda for Economics and Inequality, edited by Heather Boushey, J. Bradford De Long and Marshall Steinbaum, further explores the ‘process by which wealth is accumulated’ and the ‘powerful forces’ that shape the divergence. After Piketty starts with a neat, formal summary of Piketty’s Capital, serving as a solid foundation for anyone not familiar with this work.

Image Credit: (jmettraux CC BY 2.0)

The thrust of After Piketty is not that Piketty got everything wrong in his analysis but that he missed a few important points, which this book highlights. After Piketty is split into five parts. The first discusses reception of Piketty’s Capital, and in the last section Piketty is given an opportunity to respond to the ideas discussed in the volume. The middle three sections, which form the core of the text, are ‘Conceptions of Capital’, ‘Dimensions of Inequality’ and ‘Political Economy of Capital and Capitalism’. The editors have done an astute job assembling chapters of such variety under these categories.

Though George Orwell is referenced in this book, After Piketty is no Animal Farm. Readers without a background in economics will find some chapters daunting, terminology-wise. Each chapter introduces a niche aspect of inequality. Yet, the book binds together at least four common themes. First is praise of Piketty’s work and its transformative influence on academia, policy and legislation. The second articulates the need for better wealth data. The third common theme is the book’s principal focus on the US. Almost all the chapters deal with inequality in the US, except a few in which Europe, Britain and the Global South are discussed. The fourth theme, and the one which I will discuss in this review, is about the ‘process’ of wealth accumulation and the ‘powerful forces’ causing wealth divergence.

What Explains the Divergence?

Image Credit: (Amanda Slater CC BY SA 2.0)

Chapters Two and Three by Robert Solow and Paul Krugman – originally published as reviews for Piketty’s Capital in New Republic (April 2014) and New York Review of Books (May 2014) respectively – lead the discussion of Piketty’s analysis. For Krugman, not wealth but the ‘compensation and income’ (67) of the top tier, at least in the US, are the source of the divergence. Solow, however, agrees with Piketty that r > g causes divergence, but suggests that this equation is ‘not rooted in any failure of economic institution’ but ‘on the ability of the economy to absorb increasing amounts of capital without substantial fall in rate of return’. The absorption of capital, Solow explains, ‘may be good for the economy […] but […] not for equity within the economy’ (55). But is it an inherent quality of economy to absorb capital without a fall in rate of return? Not really.

For Suresh Naidu (Chapter Five), the process of wealth accumulation is not ‘guaranteed, but instead must be maintained via government administration and the legal systems’ (115). Naidu dissects Piketty into ‘Domestic Piketty’, in which politics plays a passive role, and ‘Wild Piketty’, where politics, and in particular institutions, form an important framework for understanding capital. For Elisabeth Jacobs (Chapter 21), the role of the state in Piketty’s work ‘is remarkably sanitized of any question of power dynamics’ (517). Power is ‘everywhere and nowhere’ in Piketty’s history (512). Jacobs uses Albert Hirschman’s categories of voice, exit and loyalty to show the politics behind the ‘powerful forces’.

For Laura Tyson and Michael Spence (Chapter Eight), the ‘powerful force’ causing inequality is digital technology. Digital technology enables two things. First, technology enables capital to move towards cheap labour. Second, it substitutes low-cost workers with machines. For David Weil (Chapter Nine), it is the ‘outsourcing’ of jobs, which ‘allows redistribution of gains upwards’ (224). Through outsourcing, large firms create a ‘competition between service providers’, which results in lower wages for those working for them.

For David Grewal (Chapter Nineteen), ‘legal foundations’ form the powerful force which enables the ‘persistent dominance of capital over the rest of the economy’ (472). Markets are not something ‘in the abstract’ but a type of ‘socioeconomic regime’ (478). And it is the ‘higher order constitutional protection for property’ (485), which is difficult to change, that provides the persistent high rate of return throughout history for the propertied class – the elites.

The elites, Boushey notes in Chapter Fifteen, ‘are increasingly marrying each other’ (374), affecting present income and future bequests (375), thereby resembling the marriage markets of the nineteenth and twentieth centuries. However, elites of our times are unique because they are, according to Gareth Jones (Chapter Twelve), ‘Non-Doms’: mobile and living in several countries at one time. Jacobs makes a similar argument: ‘Global elites can essentially shop for the destination that will treat their resources more favourably’ (537).

Just like the elites, the capital of the twenty-first century is also different from earlier eras. The rate of return is maintained by forming ‘extra legal spaces’, such as tax havens and other offshore jurisdictions which blur legal controls and capital information (290). The City of London, Jones suggests, doesn’t pay its accountants £2 billion per year for accurate information (292).

Even if, as described by Piketty, the process of accumulation and the forces of power that render wealth inequality prove correct  – that is, r > g –  even then, for Branko Milanovic, high inequality is avoidable. The famous ‘Elephant curve’, which appears in Christoph Lakner’s chapter on global inequality, shows that the low-income earners in the west, the blue collar workers, gained zilch from globalisation. Think Brexit. The remedy, Milanovic proposes, is ‘wider ownership of capital’ (256).

For Daina Ramey Berry (Chapter Six), it is important to analyse the initial divergence of income between the rich and the poor. Contrary to Piketty’s ‘anodyne model of capital accumulation’, Ramay writes that the ‘colonial and antebellum 1 percent became rich by exploiting enslaved people’s labour’. For Berry, Piketty ignores ‘the fact that the slave trading and slave labour were at the foundations of western economies from the fifteenth century through nineteenth century’ (129).

In response, if not outright defence, Piketty admits that his book didn’t ‘devote sufficient attention’ to slavery. He does point out that ‘slave value reported’ in his work attempts the ‘first explicit computation’ of a slave economy (549), but also that these are ‘based upon total number of slaves recorded in census, whether they are owned by private individuals, corporation, or municipal governments, so I am not sure they are as strongly underestimated as suggested by Daina Ramey Berry’ (658, n15).

In the final chapter, Piketty explains, defends and elaborates upon Capital. Capital, Piketty notes, embodies multidimensional history, rooted as much in politics as in economics. Capital serves as an ‘introduction’ to this history (548-53). ‘Had I believed’, Piketty quips, ‘in the one dimensional neoclassical model of capital accumulation […] then my book would have been 30 pages long rather than 800 pages’.

Piketty argues that capitalism contains an inherent capacity to produce unequal societies. In order to rein this tendency, he suggests implementing a global wealth tax. More importantly, Piketty hopes that his work provokes discussion on wealth and inequality. After Piketty not only generates such debate, but also deepens it by highlighting the gaps missed by Piketty. For this reason, After Piketty ticks the box as being as much an ‘homage’ to, as a critique of, Piketty’s Capital.

After Piketty is not your typical holiday read. It is work of serious scholarship. The academic language of some chapters pinpoints its intended audience: scholars, students, policymakers and politicians. Yet, the topics discussed in the book affect all citizens. High inequality should concern everyone because it is a moral, social and political issue.

As the United Kingdom negotiates exit terms with EU officials, it seems that ‘decades of inequality’ in Britain, and the EU’s commitment towards the ‘profit making interests of a tiny elite’, resulted in Brexit. In The Age of Uncertainty, John Galbraith warned against the tumultuous effects of unequal wealth: ‘When reforms from the top became impossible, the revolution from the bottom became inevitable’.

Asad Abbasi has a Masters degree in Political Economy of Late Development from the London School of Economics. Currently, he is researching conceptual frameworks of development.

Note: This review gives the views of the author, and not the position of the LSE Review of Books blog, or of the London School of Economics. 


Worker-owned enterprises as a social solution

Published by Anonymous (not verified) on Mon, 18/09/2017 - 3:33am in

image: Mondragon headquarters, Arrasate-Mondragon, Spain
Consider some of the most intractable problems we face in contemporary society: rising inequalities between rich and poor, rapid degradation of the environment, loss of control of their lives by the majority of citizens. It might be observed that these problems are the result of a classic conundrum that Marx identified 150 years ago: the separation of society into owners of the means of production and owners of labor power that capitalism depends upon has a logic that leads to bad outcomes. Marx referred to these bad outcomes as "immiseration". The label isn't completely accurate because it implies that workers are materially worse off from decade to decade. But what it gets right is the fact of "relative immiseration" -- the fact that in almost all dimensions of quality of life the bottom 50% of the population in contemporary capitalism lags further and further from the quality of life enjoyed by the top 10%. And this kind of immiseration is getting worse. 
A particularly urgent contemporary version of these problems is the increasing pace of automation of various fields, leading to dramatic reduction for the demand for labor. Intelligent machines replace human workers. 
The central insight of Marx's diagnosis of capitalism is couched in terms of property and power. There is a logic to private ownership of the means of production that predictably leads to certain kinds of outcomes, dynamics that Marx outlined in Capital in fine detail: impersonalization of work relations, squeezing of wages and benefits, replacement of labor with machines, and -- Marx's ultimate accusation -- the creation of periodic crises. Marx anticipated crises of over-production and under-consumption; financial crises; and, if we layer in subsequent thinkers like Lenin, crises of war and imperialism.

At various times in the past century or two social reformers have looked to cooperatives and worker-owned enterprises as a solution for the problems of immiseration created by capitalism. Workers create value through their labor; they understand the technical processes of production; and it makes sense for them to share in the profits created through ownership of the enterprise. (A contemporary example is the Mondragon group of cooperatives in the Basque region of Spain.) The reasoning is that if workers own a share of the means of production, and if they organize the labor process through some kind of democratic organization, then we might predict that workers' lives would be better, there would be less inequality, and people would have more control over the major institutions affecting their lives -- including the workplace. Stephen Marglin's 1974 article "What do bosses do?" lays out the logic of private versus worker ownership of enterprises (link). Marglin's The Dismal Science: How Thinking Like an Economist Undermines Community explores the topic of worker ownership and management from the point of view of reinvigorating the bonds of community in contemporary society.

The logic is pretty clear. When an enterprise is owned by private individuals, their interest is in organizing the enterprise in such a way as to maximize private profits. This means choosing products that will find a large market at a favorable price, organizing the process efficiently, and reducing costs in inputs and labor. Further, the private owner has full authority to organize the labor process in ways that disempower workers. (Think Fordism versus the Volvo team-based production system.) This implies a downward pressure on wages and a preference for labor-saving technology, and it implies a more authoritarian workplace. So capitalist management implies stagnant wages, stagnant demand for labor, rising inequalities, and disagreeable conditions of work. 
When workers own the enterprise the incentives work differently. Workers have an interest in efficiency because their incomes are determined by the overall efficiency of the enterprise. Further, they have a wealth of practical and technical knowledge about production that promises to enhance effectiveness of the production process. Workers will deploy their resources and knowledge intelligently to bring products to the market. And they will organize the labor process in such a way that conforms to the ideal of humanly satisfying work.

The effect of worker-owned enterprises on economic inequalities is complicated. Within the firm the situation is fairly clear: the range of inequalities of income within the firm will depend on a democratic process, and this process will put a brake on excessive salary and wage differentials. And all members of the enterprise are owners; so wealth inequalities are reduced as well. In a mixed economy of private and worker-owned firms, however, the inequalities that exist will depend on both sectors; and the dynamics leading to extensive inequalities in today's world would be found in the mixed economy as well. Moreover, some high-income sectors like finance seem ill suited to being organized as worker-owned enterprises. So it is unclear whether the creation of a meaningful sector of worker-owned enterprises would have a measurable effect on overall wage and wealth inequalities.

There are several ways in which cooperatives might fail as an instrument for progressive reform. First, it might be the case that cooperative management is inherently less efficient, effective, or innovative than capitalism management; so the returns to workers would potentially be lower in an inefficient cooperative than a highly efficient capitalist enterprise. Marglin's arguments in "What do bosses do?" give reasons to doubt this concern as a general feature of cooperatives; he argues that private management does not generally beat worker management at efficiency and innovation. Second, it might be that cooperatives are feasible at a small and medium scale of enterprise, but not feasible for large enterprises like a steel company or IBM. Greater size might magnify the difficulties of coordination and decision-making that are evident in even medium-size worker-owned enterprises. Third, it might be argued that cooperatives themselves are labor-expelling: cooperative members may have an economic incentive to refrain from adding workers to the process in order to keep their own income and wealth shares higher. It would only make economic sense to add a worker when the product of the next worker is greater than the average product; whereas a private owner will add workers at a lower wage when the new worker's product is greater than the marginal product. So an economy in which there is a high proportion of worker-owned cooperatives may produce a high rate of unemployment among non-cooperative members. Finally, worker-owned enterprises will need access to capital; but this means that an uncontrollable portion of the surplus will flow out of the enterprise to the financial sector -- itself a major cause of current rising inequalities. Profits will be jointly owned; but interest and finance costs will flow out of the enterprise to privately owned financial institutions.

And what about automation? Would worker-owned cooperatives invest in substantial labor-replacing automation? Here there are several different scenarios to consider. The key economic fact is that automation reduces per-unit cost. This implies that in a situation of fixed market demand, automation of an enterprise implies reduction of the wage or reduction of the size of the workforce. There appear to be only a few ways out of this box. If it is possible to expand the market for the product at a lower unit price, then it is possible for an equal number of workers to be employed at an equal or higher individual return. If it is not possible to expand the market sufficiently, then the enterprise must either lower the wage or reduce the workforce. Since the enterprise is democratically organized, neither choice is palatable, and per-worker returns will fall. On this scenario, either the work force shrinks or the per-worker return falls.

Worker management has implications for automation in a different way as well. Private owners will select forms of automation based solely on their overall effect on private profits; whereas worker-owned firms will select a form of automation taking the value of a satisfying workplace into account. So we can expect that the pathway of technical change and automation would be different in worker-owned firms than in privately owned firms.

In short, the economic and institutional realities of worker-owned enterprises are not entirely clear. But the concept is promising enough, and there are enough successful real-world examples, to encourage progressive thinkers to reconsider this form of economic organization.

(Here are several earlier posts on issues of institutional design that confront worker-owned enterprises (link, link). Noam Chomsky and Richard Wolff discuss the value of worker-owned cooperatives within capitalism here; link, link. And here is an interesting article by Henry Hansmann on the economics of worker-owned firms in the Yale Law Journal; link.)

Marx Capital turns 150

Published by Anonymous (not verified) on Fri, 15/09/2017 - 2:55am in

Tags 

Capitalism, Marx

Marx's capital (Volume 1) was published September 14, 1867, exactly 150 years ago. Below a few links to posts on Marx written over the years.

What makes capitalism capitalism? (on the definitions of capitalism as a mode of production)

Sraffa and Marxism or the Labor Theory of Value, what is it good for? (on the labor theory of value)

Was Marx right? Nice of you to ask, but... (on common misconceptions about Marx)

A Note on the Concept of Vulgar Economics (an important idea, often neglected)

Garegnani on Sraffa, Ricardo and Marx (on the relation of Marx with classical economics)

The last Marxist? Or shortchanging Hobsbawm (a critique of The Economist's obituary)

And this one on why Marx and Keynes are essential for a coherent heterodox alternative to the mainstream:
The meaning of heterodox economics, and why it matters

Political Economy of Labor Repression in the United States

Published by Anonymous (not verified) on Tue, 12/09/2017 - 12:31pm in

by Andrew Kolin*

The task at hand is to place the political economy of repression within the contours of U.S. history and sketch in broad terms how, over time, repression is the product of dynamic and fixed relations between capital and labor. The goal of Political Economy of Labor Repression in the United States (2017) is to represent how capital is able to repress labor given essential prerequisites. By identifying how capital and labor interact, it is possible to outline the main features of repression. The intent is not to write a comprehensive history of capital-labor relations, instead it is to select specific points in time that best illustrate how capital represses labor. While this book makes use of important histories of labor, these histories do not address the book’s central themes, how a political economy of repression is produced and reproduced within institutional frameworks often overlooked in standard histories of  labor.
Labor historians often overlook how capital-labor interactions are structured in terms of the production and reproduction of repression, ignoring the bases of repression, grounded in and expressed through institutional exclusion. They also overlook how labor repression can be overcome due to the contradictory nature inherent in a political economy of repression. The first step in outlining the possible liberation of labor from a political economy of repression is to consider the historical conditions that produce the repression of labor in the United States.
Political Economy of Labor Repression in the United StatesThere are notable exceptions to this neglect of class relations in the context of institutional arrangements. This book’s emphasis is on key historical moments that illustrate how labor repression developed in terms of two key variables: first, a dependent variable that operates as institutional exclusion as capital assumes and works to maintain control over the state and the economy, and second, an independent variable, in key historical moments where one can measure the intent of labor repression in terms of the rise and fall of American capitalism.
The dependent variable appearing as institutional exclusion generates various forms of covert repression. For the repression to be covert, it would be built into the functions of the state and the economy in which capital has achieved hegemony. This dependent variable of institutional exclusion occurs as capital achieves a monopoly of ownership over the means of production. In so doing, ownership serves to legitimate the use of covert repression of labor in the workplace. In addition, excluding labor from a primary role as a decision-maker in the state results from elite ownership of state power, which in turn, justifies policies and actions, which recreate the oppression of labor. Frequently omitted from labor histories is this dual institutional exclusion, which makes it possible for elites to monopolize the resources of power, and in so doing, dominate labor. Expressions of overt repression, such as degrees of force and violence operating outside institutional frameworks, are the most visible forms of social control of labor.
Specific events dictate the usefulness of covert and overt repression. In comparing the present to the past, capital has been successful in utilizing with a greater degree of effectiveness covert rather than overt repression, especially in the latter part of the 20th century and the start of the 21st century. A qualification in assessing the use of covert and overt repression is the extent to which labor acknowledges its institutional exclusion, seeking to organize labor so as to be in a better position to achieve limited demands. This means that capital-labor relations and repression are not a zero-sum game. Capital and labor both understand at times the necessity of forging alliances. In specific historical moments, capitalists understand it is to their advantage to seek collective agreements with labor as a means of economizing the use of repression. For labor, it is not a matter of choice. Organized labor seeks inclusion, it seeks to collaborate in order to acquire short-term gains. Having achieved institutional exclusion from decision-making, capital maintains the upper hand in framing collaboration to its own advantage. Whether capital-labor engages in collaboration or labor segments engage in outright conflict in open antagonism is often determined by the economic cycles of American capitalism.
This is not to say there are no limits to labor repression expressed as collaboration and conflict between capital and labor. The inherent contradictions in how capital seeks to repress labor present possible alternatives. To identify alternatives to labor repression is to identify the built-in limitations inherent in a political economy of repression, thus identifying how labor would liberate itself from the dictates of capital. Discussing how labor could create economic and political democracy can include an examination of why repression is essentially self-destructive. Repression of labor by capital contains the seeds of its own destruction. Since the various means utilized to repress labor always out of necessity have to be reproduced, in this process of reproduction, the repression is never finalized and complete. In reproducing repression, labor, in combination with the appropriate historical circumstances, can work toward its liberation. So while the goal is to describe the production and reproduction of labor repression, such repression is always in contradiction to the social needs of labor, that is, the liberation of labor from the domination of capital. This inherent possibility of labor’s liberation is built into the limits of a political economy of repression.
——————
* Andrew Kolin is professor of political science at Hilbert College

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Economics and the new history of capitalism

Published by Anonymous (not verified) on Mon, 11/09/2017 - 11:00pm in

Henry_P._Moore_American_-_Slaves_of_General_Thomas_F._Drayton_-_Google_Art_Project  5c79dba28c324a9794507ced2a6987c95c392552

As I tell my students, nothing gets a mainstream economist frothing at the mouth quite like mentioning Karl Polanyi.

Or at least it used to, when mainstream economists actually knew who Polanyi was and grasped—however dismissively—what he wrote about the history of capitalism.

To his credit, Eric Hilt (pdf) appears to know something about the author of The Great Transformation and how his work influenced the new history of capitalism. And his review of ten recent books, including Edward Baptist’s The Half Has Never Been Told and Sven Beckert’s Empire of Cotton: A Global History, is not as dismissive as those of other mainstream economists, such as Alan L. Olmstead.

Much of the research of economic historians focuses on questions originating in economic theory, which tend to be quite narrow. In contrast, these book present expansive narratives and explore questions that may not be amenable to the analytical tools of economists. The authors’ critical perspectives also distinguish their work from that of economic historians and make it relevant to the concerns of many popular readers. The historians of capitalism rightly remind us that economic growth and development can have human costs not captured in average incomes; that our economic history includes no small measure of cruelty, coercion, and expropriation, rather than free exchanges occurring in the context of secure property rights; and that the economic system we have today is not a natural condition, but the outcome of policy choices that could have been made differently.

Hilt is, I think, correct: the new history of capitalism does represent a reminder to—and thus an indictment of—contemporary mainstream economics, precisely because it includes an analysis of the “cruelty, coercion, and expropriation” of the emergence and development of capitalism and the idea that contemporary capitalism is “not a natural condition.”

Generations of economics students won’t have seen or heard either of those propositions. Indeed, what little history has been presented to them emphasizes exactly the opposite: that capitalism emerged both smoothly—without conflict, through voluntary decisions and the spread of markets—and naturally—in a manner that corresponds to human nature.

But then, as if he can’t help himself, Hilt chooses the side of mainstream economists against the new historians of capitalism—because they haven’t demonstrated the appropriate respect. On Hilt’s reading, Baptist, Beckert, and the others haven’t respected capitalism, either historically (because of the role of slavery and its coercive institutions in the history of capitalism) or today (especially after the crash of 2007-08 and the misery it has visited on tens of millions of ordinary citizens, in the United States and around the world). And they don’t respect the “rigor” and “sophisticated analyses” of mainstream economic history, which they “have failed to engage.”

The influence of the recent crisis and the Great Recession in these works. . .creates something of a pitfall for their analysis. Just as poor historical analogies can distort our understanding of the present, modern analogies can produce fallacious or unsound is misapplied. Although financial development often leads to volatility, and although venality and corruption among financiers seems to be as close to a historical constant as one can find, not all finance is harmful. The financial sector performs of vitally important function. . .

Ignoring the economic history literature has led historians of capitalism to make assertions that have been refuted conclusively and to get important elements of their arguments wrong.

In the end, what Hilt can’t seem to abide in the new history of capitalism are two things: first, that historically violence played an important role in the emergence and development of capitalism—rather than, as mainstream economists would have it, that the brutal institutions of slavery and government imposition of market forces are fundamentally incompatible with capitalism; and second, that methodologically the new historians fail to articulate and test “counterfactual” statements.

The fact is, mainstream economists always seek to minimize the role of violence and force in the emergence and development of capitalism and to resort to problematic causal inferences in an attempt to isolate the effects of economic, cultural, political and natural forces within a complex, evolving social totality.

So, no, capitalism didn’t need to resort to “cruelty, coercion, and expropriation” over the course of its history. But it did—and those conditions that are often hidden underneath the “very Eden of the innate rights of man” have stamped both its origins and the way it continues to operate today.

Or, as Polanyi (pdf) himself wrote,

the market has been the outcome of a conscious and often violent intervention on the part of government which imposed the market organization on society for noneconomic ends.

 

Tagged: capitalism, economics, history, mainstream, slavery, violence

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