Häften för Kritiska Studier har fyllt 50

Published by Anonymous (not verified) on Fri, 06/12/2019 - 3:31am in



År 1968 utkom det första numret av Häften för kritiska studier. Under de femtio år som gått sedan dess har mer än 200 nummer utkommit. För att fira detta tog några av tidskriftens redaktions-medlemmar ett initiativ till en jubileumsskrift som kommer ut nästa månad. Yours truly har ett bidrag med i skriften och tänkte därför […]

Reform Scotland’s corporation tax proposals are an exercise in promoting tax avoidance

Published by Anonymous (not verified) on Fri, 06/12/2019 - 12:00am in

A think tank called Reform Scotland has issued a report this morning entitled ‘Growing Up: A Corporation Tax For Scotland’.

There are things you need to know about Reform Scotland. The first is that it appears to be heavily influenced by the finance sector in Scotland. The second is that it very clearly has close associations with Charlotte Street Partners, which will ring alarm bells with those familiar with Scottish independence politics.

The new report shows both influences, combining the usual economic incoherence of the finance industry when it comes to tax with the type of economic policy for Scotland that those familiar with the Growth Commission might expect. What it suggests is that Scotland should (and I quote in full before discussing quite how inappropriate these policies are):

Create a corporation tax policy designed to encourage the creation of more businesses and which contributes towards a policy environment aimed at growing the number of entrepreneurs and higher earners in Scotland.

Once the tax has been devolved, the opportunity should be taken to design a policy that can attract more entrepreneurs, new businesses and, ultimately, more top rate taxpayers to Scotland.

One scheme that could be considered is to offer a zero rate of corporation tax for new businesses setting up in Scotland for a set period after they begin to earn profits.

Corporation tax is charged on profits (revenue less costs) and many new businesses may not make any profits to begin with, but a zero rate could be offered for a period once profits are being made. Such a policy would have no cost because it is applied only to new businesses setting up in Scotland. However, it is important to recognise that although a business may not pay corporation tax for a period, it contributes in other ways to public revenue, particularly through employment.

Such a policy would send a clear message that Scotland is open and a place to do business, as well as encouraging innovators to set up here and lay roots for the longer term. Further, policies could be designed to aid particular sectors, as well as to help grow existing businesses.

I have read the report. It is a very strange document.

First of all it is paranoid about the fact that Scotland has a high level of social security payments, without ever asking why.

Second, it is as paranoid about the lower number of businesses per head of population in Scotland when compared with the rest of the UK without ever asking why England's data is so heavily distorted by the machinations of the finance industry that generates vast quantities of apparent businesses that are just mechanisms for regulatory abuse.

Third, it thinks that government spending is directly financed by tax, when as a matter of fact this is not true as all serious economists now agree.

Fourth, it does not stop for a moment to wonder why Scotland might be so much better off without the income and wealth disparities that now blight so many countries, including England.

Fifth, it thinks that without more higher paid people (presumably in the financial services sector) there will not be the chance for Scotland to progress.

Sixth, it does not note that independence would be the solution to this, since Scotland could then have its own financial services centre and genuine civil service and other  such activities, now almost all lost to London.

In summary then, the economic underpinning of the report reflects deeply flawed logic in almost all it says before ever bgetting to the issue of corporation tax.

On that issue the report assumes that because Northern Ireland has devolved corporation  tax powers (albeit that it has never used them and cannot until Stormont sits again) so too should Scotland. This is a false comparison. If there was a justification for devolved corporation tax powers to Northern Ireland (and I have argued for a decade that there is not) it was to remove a border with Ireland, constant with the Good Friday Agreement. No such argument applies to Scotland. So the argument fails all logic tests.

Reform Scotland, however, clearly believe that tax at 19% (which is the UK corporation tax rate) is a major impediment to small business development. There is not a shred of evidence to support this. But they want it anyway.

And, what is more, they claim this is ‘costless’ bevcause they say it would only apply to new small businesses. At this point it is reasonable to ask how much they know about tax.

That is because the evidence is that when the whole of the UK offered a 0% starting rate of corporation tax it encouraged a wave of small business incorporation. I stress, these were new business incorporations, they were not new small businesses. The reality is that the vast majority of genuine small businesses not already set up for tax abuse purposes (as so many so called consultancies that disguise the reality of an employment  are) are in fact unincorporated. This pays in all sorts of ways for most genuine small enterprises. But if they’re offered a 0% tax rate you can be sure they’ll incorporate in droves. And they’ll be new companies. So they will qualify for the new rate. And they will avoid income tax as a result.

I can’t tell you how much this will cost precisely, because no one knows. I can assure you that there will be a significant cost. It is already thought tax motivated incorporation costs the UK as a whole about £3 billion a year now, meaning £200 million is likely in Scotland. It is reasonable to think a loss considerably in excess of this would result from the Reform Scotland plan.

So what Reform Scotland are actually doing is promoting a giant tax avoidance scheme that will be profoundly costly and will have to be rapidly unwound as the UK scheme from Gordon Brown has to be within a couple of years as it was such a mistake.

I have recommendations for Reform Scotland

First learn about economic realities.

Second learn about how tax really works.

Third do your research.

Fourth, don’t promote tax abuse: it really does not look good.

As proposals go, anywhere, in this election period this has to be one of the worst so far. This so called think tank really does need to think again.

John Hassler — etablissemangsekonom med dimljuset på

Published by Anonymous (not verified) on Thu, 05/12/2019 - 10:43pm in



Det finns dåliga idéer. Men så finns det osannolikt dåliga idéer, du kan knappt föreställa dig hur någon kan ha tänkt tanken. Som att Jimmie Åkesson vill etablera omskolningsläger – ”internatskolor” – där stökiga ungdomar ska marschera i takt och fostras till präktig svenskhet … Sedan kommer professor John Hassler med ett förslag som är […]

An independent review of public procurement is badly needed

Published by Anonymous (not verified) on Thu, 05/12/2019 - 7:32pm in

For all those who think all is rosy in SNP Scotland, I hate to disillusion you. It isn't. I share this from CommonWeal's Ben Wray, published this morning, as evidence:

The decision of Calmac, a Scottish Government owned public company, to sue the Scottish Government over it's awarding of a ferry contract to outsourcing giant Serco is stunning, and should lead to big questions being asked about the procurement process, and how fit for purpose it is.

The contract, on publicly subsidised routes in the North between Aberdeen and Lerwick and Kirkwall, and from Scrabster to Stromness, is at least six-years long and worth £450 million. So in ferrying terms, it's a big deal. For the Scottish Government to choose to reject a bid that was more competitive on price from a public sector bidder which is already running ferry services on the west coast, and instead accept one from Serco, a company engulfed in scandal, the latest of which is making asylum seekers intentionally homeless in Glasgow as temperatures plummet, is bizarre. When you add in to the equation that the bidding process weights bids 65 per cent on price and 35 per cent on bid quality, then it does start to smell a bit fishy.

Hopefully the court case will reveal exactly why Serco was given the contract. But this fiasco should lead to bigger questions being asked about the procurement process. Why, for example, is the track record of the bidder not apparently considered? What about terms and conditions for the workforce? What about climate emissions?

Then there is a strategic question that should surely be considered. The Scottish Government should be looking to build up its own assets, and one of its assets is Calmac. Choosing to support and subsidise a multi-national that has no long term interest in Scottish ferrying beyond how much zero's it adds to its profits is nonsensical. An independent review of public procurement is badly needed.

The question is, of course, of broader importance. This election is about who should be running public services, amongst other things. And it should also be about how we choose outsourcers when that is necessary. And what this decision highlights is that the considerable opacity around this process at present leads to very odd outcomes, at the very least.

I agree with Ben: an independent review of public procurement is badly needed.

The LibDems cannot claim they will fix social care by running a government surplus when the exact opposite would be true

Published by Anonymous (not verified) on Thu, 05/12/2019 - 7:23pm in

I had an interesting exchange on Twitter with a person called Giles Wilkes this morning:

It's worth knowing a bit of Giles' background. He now works for the Institute of Government, but as they say of him:

Giles is a senior fellow at the Institute for Government. Before joining the Institute, Giles spent two and a half years as special adviser to Theresa May on industrial and economic policy, and four years in a similar role to Vince Cable in the Department for Business, Innovation and Skills.

He has also been a writer of editorials for the Financial Times, Chief Economist at the think tank CentreForum, and spent 10 years in the financial markets.

He is a LibDem. You'll be unsurprised to hear that he is from the Orange Book, neoliberal wing of that party. We have, I admit, crossed swords before. And I am unashamed of pointing out the hollowness of his party's agenda, about which I have previously written:

The LibDems are promoting the most hard-right, neoliberal, callously indifferent economic agenda of any mainstream party in this election

I stand by that assertion. In that post I said:

This [LibDem policy of running a government surplus] is hard-core, right-wing neoliberal economic illiteracy. It manages to make George Osborne look left-wing. And it shows not the slightest understanding of economics, the role of government in society or the nature of money and its relationship to tax. It's also callously indifferent to society, the role of government, all who work in it and all who are dependent upon it.

To claim that it would help those in social care, when it would deny them funding by forcing the government to cut spending to run a surplus, is quite absurd.

And I have to say, I think the Institute of Government might be a little concerned about a senior adviser who is quote so rude when the falseness of his argument is exposed.

Desperate Tories Now Using Smear Manuals against Labour and Lib Dems

Published by Anonymous (not verified) on Thu, 05/12/2019 - 4:15am in

I love the smell of Tory fear in the morning! You can tell how desperate the party of Thatcher and Johnson are when they’re reduced to lies and smears. Not that they were above them anyway, but now they seem to be rapidly abandoning any attempt at fair play. Mike reports that an article in today’s Groaniad reveals that the Tory party is equipping its doorstep campaigners with special dossiers they are to use against their opponents. There’s a 17 page one for Labour, and a 19 page one for the Liberal Democrats. These manuals contain such fictional statements that Labour’s immigration policy would open the door to 840,000 migrants a year, and that the Lib Dems are trying to push sex work as an appropriate career for schoolchildren and policies that are pro-pimp.

Mike comments that people seem to believe some of this nonsense, but that it isn’t putting them off voting Labour. Someone had tweeted him personally that in spite of Labour’s ‘open door policy on immigration’, they were still going to vote for the party. As this person was doing the right thing, Mike didn’t correct them.


Okay, the accusation that Labour is in favour of open door immigration and this country being swamped with non-White immigrants has been a staple of the right and the far right since forever and a day. It’s one of the constant lines – or lies – repeated by newspapers like the Heil, for example. The other stereotypical smear against Labour, and one which Private Eye has parodied mercilessly in the past, is that a Labour government will bring mortgage prices down. I haven’t seen jokes about that line recently in the magazine, perhaps because if the Heil actually did run, the exorbitant house prices at the moment would mean that Labour’s vote would actually go up.

But the accusation that the Lib Dems are promoting pimping and prostitution is a new one. I think it comes from a conference the Lib Dems held a year or so ago, which was about improve conditions for sex workers. One of the talks was about taking the stigma out of it. But the Lib Dems don’t seem to pushing pro-pimp policies or encouraging schoolgirls to get jobs as prostitutes.

But it does seem more than a tad hypocritical on the part of the Tories as they are and have been.

Way back in the 1980s, when Maggie Thatcher that was unchaining the power of private industry, one industry that a certain section of her minions definitely wanted unchained from state prohibition was prostitution. There was a certain section within the Tory party, as I recall, that wanted it legalised. I think they used the same arguments for it that have been around ever since the late 17th century-early 18th century economist Bernard Mandeville put them forward. Mandeville was an early advocate of free trade against the prevailing mercantilism, in which the state rigidly regulated trade between nations and colonies. Mandeville wanted publicly funded brothels. These, he argued, would allow the men, who used prostitutes to satisfy their lusts legally, while protecting decent women from their attentions. I think the Lib Dems, who set up the conference also had a feminist angle. They seem to have felt that if prostitution was legalised, it could be properly regulated to keep the prostitutes themselves safe. I think the models for such legislation are the continent and Australia. I’m sceptical that these arguments actually work in practice. But the main point here is that the Lib Dems haven’t necessarily promoted anything that the Tories weren’t debating nearly forty years ago.

But the Tories are forcing people into prostitution.

It is by and large the last refuge of the poor and desperate, women and men who can’t make ends meet any other way. Under Thatcher there was a series of scandals in which Tory politicos were caught using rent boys. So much so that there was a sketch on Spitting Image in which a Tory politician, explaining what his government has done to the nation, declares that it has opened lots of work for young men to a lad. When the lad asks what work it is, the Tory replies that it is as a rent boy, and he’ll see him later.

More recently, there were reports a few years ago about female students turning to prostitution in order to pay the tuition fees that New Labour introduced, but the Tories and Lib Dems increased.

And let’s not forget another incident, in which a Jobcentre had to apologise for suggesting that work in sex shops was a suitable occupation for women wishing to get off the dole.

I don’t know, but it really wouldn’t surprise me if there had been an increase in prostitution in general as women were forced to turn to it simply to keep body and soul together through the poverty Tory welfare cuts, wage freezes and zero hours contracts have caused.

The Lib Dems may not have been actively promoting prostitution with their conference, but the Tories have also openly advocated it and their policies are pushing vulnerable women into it through the poverty they’re creating.

Foucault on the Idea of Europe (and Adam Smith, Hume & Kant), Part 1

Published by Anonymous (not verified) on Thu, 05/12/2019 - 2:38am in

So we find this idea, which will be at the center of the economic game as defined by the liberals, that actually the enrichment of one country, like the enrichment of one individual, can only really be established and maintained in the long term by a mutual enrichment...Consequently there is a correlative, enrichment, an enrichment en bloc; a regional enrichment: either the whole of Europe will be rich, or the whole of Europe will be poor. There is no longer any cake to be divided up. We enter an age of an economic historicity governed by, if not unlimited enrichment, then at least reciprocal enrichment through the game of competition.
I think something very important begins to take shape here, the consequences of which are, as you know, far from being exhausted. What is taking shape is a new idea of Europe that is not at all the imperial and Carolingian Europe more or less inherited from the Roman Empire and referring to quite specific political structures...It is a Europe of collective enrichment; Europe as a collective subject that, whatever the competition between states, or rather through the competition between states, has to advance in the form of unlimited economic progress.
This idea of progress, of a European progress, is a fundamental theme in liberalism and completely overturns the themes of European equilibrium, even though these themes do not disappear completely. With this conception of the physiocrats and Adam Smith we leave behind a conception of the economic game as a zero sum game. But if it is no longer to be a zero sum game, then permanent and continuous inputs are still necessary. In other words, if freedom of the market must ensure the reciprocal, correlative, and more or less simultaneous enrichment of all the countries of Europe, for this to function, and for freedom of the market to thus unfold according to a game that is not a zero sum game, then it is necessary to summon around Europe, and for Europe, an increasingly extended market and even, if it comes to it, everything in the world that can be put on the market. In other words, we are invited to a globalization of the market when it is laid down as a principle, and an objective, that the enrichment of Europe must be brought about as a collective and unlimited enrichment, and not through the enrichment of some and the impoverishment of others. The unlimited character of the economic development of Europe, and the consequent existence of a non-zero sum game, entails, of course, that the whole world is summoned around Europe to exchange its own and Europe's products in the European market.
Of course, I do not mean that this is the first time that Europe thinks about the world, or thinks the world. I mean simply that this may be the first time that Europe appears as an economic unit, as an economic subject in the world, or considers the world as able to be and having to be its economic domain. It seems to me that it is the first time that Europe appears in its own eyes as having to have the world for its unlimited market. Europe is no longer merely covetous of all the world's riches that sparkle in its dreams or perceptions. Europe is now in a state of permanent and collective enrichment through its own competition, on condition that the entire world becomes its market. In short, in the time of mercantilism, raison d'Etat, and the police state, etcetera, the calculation of a European balance enabled one to block the consequences of an economic game conceived as being over. Now the opening up of a world market allows one to continue the economic game and consequently to avoid the conflicts which derive from a finite market. But this opening of the economic game onto the world dearly implies a difference of both kind and status between Europe and the rest of the world. That is to say, there will be Europe on one side, with Europeans as the players, and then the world on the other, which will he the stake. The game is in Europe, but the stake is the world.
It seems to me that we have in this one of the fundamental features of this new art of government that is indexed to the problem of the market and market veridiction. Obviously, this organization, or at any rate this reflection on the reciprocal positions of Europe and the world, is not the start of colonization. Colonization had long been underway. Nor do I think this is the start of imperialism in the modem or contemporary sense of the term, for we probably see the formation of this new imperialism later in the nineteenth century. But let's say that we have the start of a new type of global calculation in European governmental practice. I think there are many signs of this appearance of a new form of global rationality, of a new calculation on the scale of the world.--Michel Foucault, 24 January 1979, The Birth of Biopolitics. 54-6

Foucault correctly discern the significance of Kant's Perpetual Peace to Ordoliberal thought (recall here; here; here). (He mentions Kant's essay on the following page, and he begins to develops his idea about the Ordos in the subsequent lecture on 31 January.) While it is not surprising Addison is ignored, it is a bit surprising that Hume goes unmentioned because his essays on "The Balance of Trade" and "The Jealousy of Trade" are key steps in the positions described by Foucault. In particular, "The Balance of Trade" explicitly adopts a European stance (and contrasts Europe with China, in particular [recall this post]).*

One way to put Foucault's point in Schmittian terms he does not use is that once the non-zero-sum logic of mutual gains of trade is accepted as state policy, enemies can be transformed into possible mere rivals. Rivals can be genuine competitors in one sense, but since they are playing the same game also partners of a certain sort. And this transformation entails the possibility of permanent self-limitation in foreign affairs, even a route toward confederation (or "ever closer union"). I use the language of possibility because subsequent history suggests the temptation of continental-wide conquest does not disappear altogether. 

The significance of all of this is that foreign affairs is transformed from the Hobbesian state of nature to something distinctive. Foucault emphasizes the development of a species of "global rationality" (there are shades of Hegel here) and the significance of global markets for European exports and imports. I return to this point below. But before i get to that, when regional enemies are turned into regional rivals, one is incentivized to develop and sustain regional institutions and norms that manage various features (trade, communication, international law, etc.) of the rivalry. This is the possible mechanism that underwrites (recall) Smith's idea of a transatlantic empire and Kant's idea of regional con-federation.

One effect is that the world is divided between peoples (rivals) with which one has shared interests and peoples who remain possible enemies. This way of putting it makes sense of Foucault's idea that the development of liberalism generated a European subject, who viewed part of the world as ripe for, if not, colonialism and  imperialism, then at least continued mercantilism. That is, on this view, intra-European liberalism strengthened the system of global mercantilism. Foucault can grant, and even argues this, that liberalism understood itself as a limitation and correction of mercantilism (and the mercantile police state in particular). But this self-understanding, while partially correct, occludes the fact that the embrace of domestic and regional liberalism sustains a system of global mercantilism.

The benefit of this analysis is that it can explain why mercantile forces made such a powerful comeback after 1870 (as neoliberals lament and their critics acknowledge). For rather than being defeated by the victory of 19th century liberalism, its position had de facto been improved. 

Now, against Kant and Smith, Foucault comes close to implying that the non-zero sum intra-European relationships presuppose a zero-sum extra-European relationship that extracts wealth from would be enemies (in what we may call the Global South). On this view a zone of open-ended progress requires the domination of the backward, even if the shape of this domination is product of contingent features. 

It is important to register that while this is certainly not implausible (given subsequent history) this is not the necessary liberal self-understanding. Smith is quite explicit that non-zero-sum relations are possible with peoples everywhere and, as is well known, he is very critical of the mercantile spirit of war that has occasioned the "savage injustice" of non-Europeans. For both Smith and Kant, progress toward a global organization that creates non-zero-sum logic can accompany open-ended economic progress. Whether the self-conception is correct or is ideological delusion or sensible regulative ideal is, in part, an empirical question. 

I am about to wrap up. But note that there is a further implication of the division of states into European rivals and non-European possible enemies. The possible enemies are all, in principle, geographically distant. And so the grounds of enmity much fewer than among the formerly local enemies. This fact was obscured by the existence of European imperialism/colonialism itself the consequence of (a) capacity to project power globally; (b) the relative military weakness of most non-Europeans; (c) and the development or ethnic/racialist/cultural ideologies of European superiority. With global shifts of balance of power against Europe, (a-c) are de facto being undermined. So, this makes possible a form of European subject that does not thereby indirectly support global mercantilism. So, Europe's current relative weakening may, in fact, be good news for European liberalism understood as a global aspiration. If that's right, this may be the first grounds for optimism about a possible third wave of liberalism, if we can generate it.

Okay, that's it for today. Somewhat surprisingly, when later in the lecture series, Foucault turns to the Ordos and the Chicago school, Foucault does not really return to theme of European subjectivity, nor global rationality. But in a follow up post, I will try to rationally reconstruct it and address the question whether neo-liberalism generates imperial mechanisms.



*One nitpicking point: Foucault ascribes to Smith the idea of "fluctuation of the price around the value, which...was assured by the freedom of the market." (53-4) I think this is really more the position of Smith's rival, Steuart, who was, however, greatly influenced by Hume. 


The Progressive Economy Forum general election guide

Published by Anonymous (not verified) on Thu, 05/12/2019 - 12:14am in

The Progressive Economy Forum, which is made up of a range of people generally thought of as heterdox economists, has published its guide to the general election manifestos, including one by me on tax:

You can download it here. 

Markets are failing

Published by Anonymous (not verified) on Wed, 04/12/2019 - 8:11pm in



One of the great myths of modern capitalism is that markets work. Moreover, the supposedly work on the way that economists like to think they do. The Conservative Party is built on that myth. So too is the American Dream.

The myth suggests that anyone can build a business from scratch, entering a market of their choice and end up, with hard work and determination, making a fortune.

This is not true. Modern capitalism has evolved to make sure that markets do not work.

Tax havens exist to hide the truth from markets, when effective markets need the data that is hidden to operate.

And far from being open and competitive, markets have become concentrated and monopolistic. The number of businesses engaging with most of us most of the time is falling rapidly as a result.

Martin Wolf illustrated this in an article yesterday. I may not always agree with him, but he does supply some useful graphs. This shows the declining number of companies on the US stock market, indicating increasing market density:

And this is the number of new companies floated per annum, suggesting very strongly that the American Dream is just a myth:

The conclusion is obvious and is that a more concentrated market is keeping out new entrants to preserve monopoly power at cost to consumers and society at large.

This is why a new economic epoch is inevitable.

The debt delusion

Published by Anonymous (not verified) on Wed, 04/12/2019 - 7:38pm in



I have been reading Prof John Weeks' book 'The Debt Delusion'. I should say, upfront, that I know John, and enjoy his company: he is a fellow member of the Progressive Economy Forum. The book would be worth reading without that association.

In essence, John uses the book to tackle six myths, which he identifies as:

1) We must live within our means;
2) Governments should balance their books;
3) We should tighten our belts to achieve this objective;
4) Debt is always bad:
5) Government debt should be avoided by reducing expenditure and not raising taxes;
6) In combination, these mean that there is no alternative to austerity.

Readers of this blog will be familiar with such claims and that I, like John, have no time for them. For this reason I recommend the book. But I also do so because it is intensely readable. This is an economics book that uses the odd graph and table, but most certainly not formulas. Instead John uses an easy narrative flow to make his argument.

I take this example to prove my point. When dealing with the first myth, which is in many ways the most economically dangerous John opens his chapter saying:

Perhaps the most difficult of all the austerity myths to pin down is the injunction that "we must live within our means". The message deeply embodied in this phrase has little relationship to the words. Rather, it serves as the apparently definitive answer to the question "Can our government spend more?" We can imagine a politician speaking at a meeting of constituents, and a concerned citizen asked, "Why is it necessary to reduce spending on school meals?" And the elected representative answers, "The overall government budget is in deficit and we must live within our means."

If the constituent retorted with "Why must we live within our means?" the assembled group might break into laughter, because every sensible person knows " we must live within our means." If the constituent instead went to the heart of the matter and ask "What do you mean by 'means'?" the politician, if a patient person, might say, "I mean that the government obtains its money from taxation and we cannot spend money that we do not have." That would probably induce affirmative nods from the audience.

What are our "means" water or who determines them? What does " live within" convey? A dictionary provides no enlightenment. Equally vacuous is the closely related phrase, often applied to household budgets, that " families struggle to make ends meet." These cliches serve as emotional entreaties rather than practical guidelines, like "emojis" at the end of an email.

Starting in this way John gives himself the chance to explain that the constraints that we face are not financial. "Our means" very clearly is not defined by the relationship between government expenditure and taxation. If the term has any relevance at all, then it definitely refers to the capacity of an economy to meet the real needs of those who live within it. The finance follows.

For those looking for an explanation of this fact I recommend John's book.