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Rebuilding the Economy Will Require Joe Biden to Think Very Differently Than 2009

Published by Anonymous (not verified) on Tue, 01/09/2020 - 9:00pm in



US Democratic presidential candidate Joe Biden speaks about on the third plank of his Build Back Better economic recovery plan for working families, on July 21, 2020, in New Castle, Delaware. (Photo by Brendan Smialowski / AFP) (Photo by BRENDAN SMIALOWSKI/AFP via Getty Images)

Democratic presidential candidate Joe Biden speaks on the third plank of his “Build Back Better” economic recovery plan for working families, on July 21, 2020, in New Castle, Del.

Photo: Brendan Smialowski/AFP/Getty Images

Joe Biden’s invocation of Franklin Roosevelt’s New Deal, in the opening words of his convention acceptance speech, offered a flash of hope that, in broad terms, the Democratic nominee has grasped the scale of the Covid-19 crisis. Yet before Biden even spoke, the head of his transition team, former Sen. Ted Kaufman, undercut that hope, telling the Wall Street Journal that, in effect, Biden didn’t mean it. “When we get in, the pantry is going to be bare,” Kaufman said. “When you see what Trump’s done to the deficit … forget about Covid-19, all the deficits that he built with the incredible tax cuts. So we’re going to be limited.” After being called out by David Sirota, the Biden campaign split the difference: There will be “stimulus” in the short run, retrenchment later.

The reassurance is not reassuring. For, like the Biden-Sanders Unity Task Force report on which the Democratic platform is based, it confirms that economic thinking on Team Biden, even among its most progressive elements, is essentially the same as that behind the Obama-Biden strategy for the previous economic crisis, from 2008 to 2009.  But the underlying situation now is in many ways much more serious and intractable.

The 2008 crisis was, at its core, a financial one. It stemmed from a rash of financial frauds, which generated a simulacrum of economic growth through mortgage loans that would never be honored in full — and that were designed, and targeted, to ensure that they could never be honored in full. When the frauds were exposed and the housing market collapsed, millions lost their jobs; millions more lost their homes. Still, overall and over time, the crisis was amenable to the conventional “Keynesian” fix: a large injection of money. The residual arguments over the Obama-Biden program in 2009 are merely over whether the injection was large enough, and whether a larger one might have averted the political backlash that hit the administration in 2010.

Remarkably, although the recovery was slow and neither the labor force nor homeownership ever returned to pre-crisis levels, the United States was able to sustain an economic expansion after 2010. The position of the country was helped by an unexpected surge in low-cost natural gas and high-cost oil production. The expansion was continued, in the first three years of Donald Trump’s term, by large tax cuts weighted to the wealthy and a booming stock market — the “everything bubble” as it is sometimes called. The jobs created, it is true, were mainly at relatively low wages. Nevertheless, they were created. The U.S. returned to full employment, conventionally defined, by around 2018. This fact — a slow-motion success story — no doubt bolsters the confidence now of those who set the policy back then.

The next recovery will not be kickstarted by exports, by business investment, or by the purchases of durable consumer goods.

The long expansion relied very heavily on the consumer. While personal consumption had been the source of the pre-crisis boom, and fell sharply in the slump, its share of gross domestic product recovered after early 2015 and remained throughout well above levels of any previous post-war epoch. Total business investment, on the other hand, never returned to pre-crisis levels as a share of GDP and was at the peak in 2015 almost 2 percentage points below the previous peak in 2005, in part because the digital revolution reduced the cost of capital equipment and cut into the brick-and-mortar needs of the business sector. Government spending rose sharply in the slump and remained historically high, but as a share of GDP it declined continuously from the start of the expansion until 2020. Thus, consumer spending was the main sustaining factor for the five final years, until the pandemic hit.

There are three reasons why the experience of the last expansion will not be repeated now.

First, the pandemic has obliterated the global market for many advanced capital goods in which America excels. Aircraft are a major example. The civil aviation industry depends on worldwide demand, not U.S. demand, and world demand is dead so long as more airworthy planes are parked on the ground than are in the air. In a slightly different vein, the U.S. oil business turns on a world price. It is doomed so long as the selling price is half the cost of getting fracked oil from the ground in West Texas. Construction of offices and retail malls: also dead and done as a substantial share of clerical work shifts to the home office and of shopping to online distributors. The sale of automobiles will slow as commuting and shopping demand fewer miles of travel, and cars therefore last longer. In many other sectors, cheap digital equipment will replace expensive facilities and human labor. Overall, the next recovery will not be kickstarted by exports, by business investment, or by the purchases of durable consumer goods. There is nothing that Keynesian stimulus can do about that.

When we come to the consumer, there is an even bigger problem. It is that the largest share of increased spending in the last recovery — and the secret of American success at job creation — was not in the purchase of goods, but in the production and consumption of services. The U.S. economy after the crisis saw a vast growth in jobs in bars, restaurants, coffeehouses, hotels, resorts, spas and casinos, gyms, ride-shares, massage and tattoo parlors, hair and nail salons, boutique shops, and high-end grocery stores, as well as in child care, education, cultural events, and elective medical procedures — the entire panoply of services with which a wealthy society tends to pamper itself. In effect, the U.S. economy became a gigantic carnival of doing each other’s washing and scratching each other’s backs.

The pandemic has washed much of that away. Direct personal contact, crowded spaces, and mixing are the essence of many services and have been suppressed, necessarily, for health reasons — and will remain. There is an assumption, in many quarters, that if and when the pandemic recedes, these will simply return, and things will start up where they left off.  This is neither a safe assumption nor even a reasonable one.

Back when most spending, at the margin, was for goods produced in American factories, the simple provision of money could flip the switch that got things going. Customers placed orders, businesses hired workers, and the engine started up. In an economy in which domestic spending is overwhelmingly directed at services, the jobs will not return until the customers, collectively, are willing to buy the services that they, themselves, collectively provide. But they will not be willing until they have the jobs, which depend on the prior presence of customers. This is a classic catch-22. It is precisely the dynamic — the virtuous circle — of self-reinforcing demand that the pandemic has obstructed and will continue to obstruct.

 People walk past a closed business in a Manhattan shopping district on August 12, 2020 in New York City. Following a massive drop in tourism due to the Covid-19 pandemic and a work culture that increasingly keeps people at home, New York City is seeing a large exodus of chain stores and other retail businesses. Many of these businesses were struggling before the Covid outbreak due to the growing trend of online shopping and the situation has only worsened since. According to the commercial real estate services firm CBRE, average asking rents along 16 major retail areas in Manhattan have declined for the eleventh consecutive quarter.  (Photo by Spencer Platt/Getty Images)

People walk past a closed business in a Manhattan shopping district on Aug. 12, 2020 in New York.

Photo: Spencer Platt/Getty Images

Even when the threat of the virus recedes — if it does recede — these services will not return easily for a more basic reason. They are generally not essential. They are add-ons that grew up with our wealth, and most Americans can, by and large, do without them. American households in the middle class and up live in houses, the byproduct of postwar policies of suburbanization and homeownership. If they have to, people who live in houses can cook, clean, and entertain themselves at home. In recent years, the economy grew by persuading them to leave home: to go out, to buy food, get exercise, and have fun on the market. The economy can and will retreat along the same lines, as  families with incomes decide to spend less and save more, while those without incomes cut back on everything because they have to. It will retreat along those lines at least until the uncertainties of the pandemic start to recede. But the uncertainties can’t recede, so long as people who provide all those services do not first experience a sustained improvement in their prospect for jobs — and there, once again, is the catch.

The firms that provide the jobs cannot survive these conditions indefinitely. Service businesses generally operate with fixed costs, including rent and interest, that demand a high level of customer pass-through. Bars must be packed, restaurants full and noisy on the weekends, concerts sold out, or the businesses behind them cannot be sustained. The combination of public health restrictions on their capacity with high household savings and low patronage driven by economic insecurity is lethal to their prospects. A New York Times survey shows a falloff in August of almost 25 percent in visits to businesses compared to 2019, even though incomes have been kept up by relief programs. How long businesses can hold out is anyone’s guess. But many have given up already and many more will follow. And once a commercial strip or mall or neighborhood begins to go dark, blight weighs on the survivors. This is something we can see all around us right now.

Third, as the pandemic lingers and people cannot work, arrears for rent, mortgages, and utility bills are piling up. According to one survey, about a third of households failed to make their full rent or mortgage payment in July — for the fourth month in a row. Landlords have begun again to file for evictions — understandably from their point of view but disastrously for the economy as a whole. As the fear of eviction or foreclosure returns, households will save even more, and spend even less, hoping to have enough in reserve, in case of bad luck or sustained joblessness, to keep the bailiff from the door.

The Covid-19 pandemic has changed our economy for the long term. The changes are due to our advanced technology, not our backwardness; to our wealth, not our poverty; to our past access to credit and therefore, to our fixed commitments in relation to current incomes; to our houses and suburbs and cars; and to the fact that we have had, and still have, an affluent society. The decision, by millions of anxious Americans each acting in their own best interest — to eat and play at home, to save more and spend less, to protect their health and to hang on for as long as possible — creates an economic problem that cannot be palliated by money alone. This is not the postwar America of competitive consumerism and pent-up demand on which the magic of Maynard Keynes worked so well.

Something else must be done, going far beyond mere money. Or else, it’s depression all the way down.

The point of all the measures taken in April — the CARES Act, with extended unemployment benefits, payroll protection, small business loans, and direct payments to tax filers; and the Federal Reserve’s moves — was to buy time for social distancing and other measures to bring Covid-19 under control. The assumption was that the economy would then recover on its own. Even though the public health measures did not work, the funds did buy time for American households to pay rent, mortgages, utility bills, and (as it turned out) to put something aside for the summer and fall. They kept the country from falling apart as the pandemic spread. A new round of income supports can, of course, buy more time and is indeed urgent right now. But it will not, by itself, set the economy on a path toward renewed growth and high employment. Something else must be done, going far beyond mere money. Or else, it’s depression all the way down.

The outlines of that something else are only just coming into view. Some of the basic elements are the following:

1. The sectors producing advanced capital goods for world markets, energy for domestic use, weapons, and the construction sector must be mobilized, as if in a wartime effort, to a new set of purposes. These should aim at sustainable energy, mitigation of climate change, public health, and the reconstruction of life itself around safe and sustainable patterns of activity. Renewed infrastructure of all types, new transportation systems, new amenities, natural conservation, and cultural investments are all parts of this challenge. The Green New Deal is now doubly necessary, not only to transform the energy basis of the economy, but also to ensure that there is an economy to be transformed.

2. For the many millions who cannot find jobs in the private sector, there must be a job guarantee for all seeking to work, at a modest living wage, in the public sector. The pandemic has cut not only services jobs, but also office jobs and construction, so that nearly 40 million American workers have been displaced. Many will not be called back even if their employers survive. Yet there is work enough for everyone: in teaching, in caring, in public health, in parks and libraries, in art and culture, in maintaining our communities, and in providing food and housing and other basic services to those in need, and if the jobs are made available, people will sign up for them by the millions.

3. Service providers must be restructured so they can be sustained at reduced volumes. They must get loans on easy terms to reconfigure their physical layout to protect both customers and workers. But they also need assistance in meeting their costs. Cooperative private-public ownership and partial municipalization of service firms, with local government getting support from the federal government, is one promising path. In Germany, small businesses got a share of their costs covered by their localities, and so can survive, whereas in the U.S. they are failing.

4. Manufacturing capacity sufficient to meet the basic requirements of public health and sustenance must be rebuilt on domestic soil, so as to be immune from the disruptions to trade associated with the pandemic or other threats to global supply chains. We cannot be caught again, as we were this spring and summer, unable to provide basic protective equipment to health care workers and indeed to the whole population. For this purpose, a new structure of financing will be required, a Health Finance Corporation along the lines of the Reconstruction Finance Corporation that operated from 1932 to 1956.

5. Public health must be reconstructed, accessible to all at no out-of-pocket cost. This call goes beyond the conventional discussion of public options and single-payer schemes to recognize that Covid-19 has created a financial crisis for America’s health care sector. Like everything else in America, health care is a business. And as the economy has fallen, reducing accidents and other infectious diseases, and as elective procedures have been postponed, providers are seeing fewer people, so that — like every other form of business — many hospitals and clinics cannot cover their costs. The solution is to make the health care sector cooperative, to assure that appropriate services are available to all. Indeed Spain and Ireland nationalized all health care services in the pandemic; America could do the same or find a less drastic solution.

 Ty Wright/Bloomberg via Getty Images

Students wearing protective masks study inside of the Thompson Library on the first day of classes at Ohio State University in Columbus, Ohio, on Aug. 25, 2020.

Photo: Ty Wright/Bloomberg/Getty Images

6. For the duration and beyond, renters and mortgage holders must be shielded from evictions, foreclosures, and utility stoppages, consistent with good behavior supervised by local authorities, and there must be reasonable facilities to write down unpayable debts, along with reasonable compensation to small landlords. Student debt and medical debt are also good candidates for general relief.

7. Ultimately, since these debts are also the assets of those who lent the money, the reality is that a successful economy after Covid-19 requires a redistribution of financial wealth. If the pandemic is to be defeated, and if a viable social order is to emerge in the aftermath, the balance sheets of American households will have to be rewritten to carry a burden of debt that is manageable, given less market activity and lower market incomes. This means that the assets of the wealthy, as well as the debts of the overburdened, will have to be written down. There must be a general redistribution from creditors to debtors, reversing the trend of the past 40 years. The redistribution, by the way, will occur. It can be done through a decade of depression, as in the 1930s, or two decades of inflation, as in the 1960s, or it can be done by sensible restructuring and debt relief, as was done in the immediate aftermath of World War II.

8.Finally, with a widespread write-down of debts and assets, the financial sector must be restructured, since that sector holds many of the assets that will lose value. The ultimate financial consequences of this pandemic are not yet clear, and where the weak points of the financial system will emerge is still somewhat obscure. But it is certain that those weak points exist and when they are exposed, they will prove profound. The big banks that cannot make it can be taken over and run as public utilities; this can be done under present law. Necessary payments, savings, and credit functions can be sustained by providing public options, through postal banking and a public electronic payments system, managed by the Fed. Over time, regional and local banks can be supported to build a new economy in place of the one that Wall Street distorted and, ultimately, helped to destroy.

It is a delusion to think that markets will restore us to well-being on their own.

No spirit of radicalism animates these ideas. They are not driven by ideology nor by any past commitment to any agenda. They follow as matters of logic and fact from an understanding of the situation. The previous structure of the American economy was highly efficient in some ways.  It supported, although unequally, a high living standard for a very large part of the population. But circumstances have changed in ways that cannot be controlled or reversed, and that will not evaporate on their own, whatever happens to the virus and the pandemic.

It is therefore a delusion to think that markets will restore us to well-being on their own. It is a delusion to think that the mere injection of money, however great and generous and however needed for the short run, will bring back the happy mix of jobs and incomes we’ve just lost. It is a delusion to think that the easy methods of the postwar economists, whose ideas have dominated liberal thought and response to economic crises for 70 years now, will work in the face of the Covid-19 challenge. The path forward requires planning and action on a far larger scale. It requires skills, imagination, local knowledge, commitment, and mobilization that resemble — but actually surpass — those brought to bear in the New Deal.

The only good news is that other unprecedented crises have happened before. In most cases, the result has been disaster. But there are a few moments in American history when the country rallied to do what was necessary, overcoming the odds, the powers, the old ideas, and the bad actors who stood in the way. It did so in 1861, in 1933, and in 1942. And here we are again.

Biden was right to invoke Roosevelt and the New Deal. America needs for him to mean it.

The post Rebuilding the Economy Will Require Joe Biden to Think Very Differently Than 2009 appeared first on The Intercept.

The Rotten Alliance of Liberals and Neocons Will Likely Shape U.S. Foreign Policy for Years to Come

Published by Anonymous (not verified) on Tue, 01/09/2020 - 9:00pm in

 In early June, a group of former officials from the George W. Bush administration launched a PAC supporting Joe Biden’s...

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Michael Hudson: How an “Act of God” Pandemic Is Destroying the West: The U.S. Is Saving the Financial Sector, Not the Economy

The coronavirus’ effect has been to help defeat the financial sector’s enemy, governments strong enough to regulate it.

Teachers Strike Authorization Vote Looms as Union and City Launch Last-Ditch Safety Talks

Published by Anonymous (not verified) on Tue, 01/09/2020 - 7:55pm in

Teachers are going down to the wire with a strike threat in New York City over their assessment that planned Covid protections are inadequate.

We need money to solve the problems we face but left and right are conspiring to deny that it’s readily available to address the problems that we face

Published by Anonymous (not verified) on Tue, 01/09/2020 - 5:48pm in

This is the front cover of today's Guardian:

What it makes clear is that some face hunger as a result of increasing poverty in the UK.

Whilst others face literal injustice.

And yet more face social injustice as a result of educational disparities.

And all because of a background of a health system that is still not coping.

But what is the government discussing? They are talking about which very marginal tax rate increases to make, which discussion is anyway (I am quite sure) just a softening up exercise for the claim to be made that there are no acceptable tax increases and so we must have austerity instead.

Our state is failing. The programme with this aim, first put in place by Cameron and Osborne, is now beginning to succeed. The most basic delivery of services is now becoming hard, if not impossible,  in the face of demand. And the planned response is, I have no doubt, to make further cuts, even as we face economic meltdown.

And yet this is a country rich in resources.

Everyone could be well fed in this country.

The people to make our courts, schools, healthcare and so much more could be found. They are in this country, now. Many or doing jobs that add little value to society right now because that’s the way we organise our economy. We refuse to value what is important to our wellbeing. And the result is hunger, injustice, inequality and failing health.

Which is because we believe that we can only have health care, justice and so much else as mere by product of whatever it might be that the private sector wishes to persuade some to buy even though they really do not need it, whilst refusing to accept that some needs go wholly unfulfilled, we end up with this dire situation.

The pretence that tax pays for public services comes with a cost attached.

The pretence that tax creates injustice for the wealthy that requires that the state be kept small has massive consequences.

The claim that there is such a thing as taxpayers’ money and that it is limited in supply imposes rationing on those with greatest need.

And these claims are all fallacies. They are myths propagated by a few to pretend we cannot deliver what is really required in our society.

Despite which many on the left buy into this belief that the state is constrained by a shortage of money from the private sector. Labour did under Corbyn. It still is under Starmer. They too carry responsibility then with their claims that ‘Everything is fully costed’ as the world’s of many collapse around them.

No wonder I get angry with those who say there isn’t enough money when the thing needed to start solving these problems is currently available in almost limitless supply, cost free, given the current state of the economy.

When are we  going to accept that fact, for fact it is?

The recession to come: does it have to be this way?

Published by Anonymous (not verified) on Tue, 01/09/2020 - 5:09pm in

I have, for some time, been saying that the recession we are facing will be worse than the official forecasts suggest, precisely because those forecasts cannot tell it like it really is, and because the economic impact of the coronavirus lockdown has yet to be fully seen because companies have yet to run out of money and furlough has yet to end. I discuss the consequences in this video.

Tracing the roots of progressive views on the duty to work – Part 4

Published by Anonymous (not verified) on Tue, 01/09/2020 - 1:39pm in

This is Part 4 of my on-going examination of the concept of ‘duty to work’ and how it was associated with the related idea of a ‘right to work’. In Part 3, I extended the analysis to the Western democracies of the Post World War 2 period and found that progressive political parties and movements firmly considered the two concepts to be fundamental elements of a progressive society. In this part, I extend that analysis and consider ways in which the ‘duty to work’ has been justified, drawing on the idea of reciprocity and social obligation. I also show how the emergence of neoliberalism has broken the nexus between the ‘right to work’ responsibilities that the state assumed in the social democratic period and the ‘duty to work’ responsibilities that are imposed on workers in return for income support. That break abandons the binding reciprocity that enriched our societies.

The earlier parts in this series are:

1. Tracing the roots of progressive views on the duty to work – Part 1 (August 4, 2020).

2. Tracing the roots of progressive views on the duty to work – Part 2 (August 11, 2020).

3. Tracing the roots of progressive views on the duty to work – Part 3 (August 20, 2020).

4. Tracing the roots of progressive views on the duty to work – Part 4 (September 1, 2020).

Society and reciprocity

We concluded Part 3 with the clear understanding that there was an intrinsic link in Western social democracies in the Post World War 2 Period between the concepts of ‘right to work’ and the ‘duty to work’.

These work-related concepts, upon which policy was based, were considered to be the foundations of modern, progressive societies aiming to achieve increased increased equity, effective pathways to social mobility, poverty reduction and income security.

The state was committed to using its policy instruments to ensure there were enough jobs to absorb the desires to work, and, in return, citizens who were able to work were considered to have a communitarian responsibility to contribute to the material prosperity of society through work.

As part of this consensus, it was clearly understood that those who were unable to work for various reasons (age, health, etc) were to be provided with dignified income support.

The continuity of this societal consensus did not conceive of a class of workers who would be able to receive state income support (as a right) and thus enjoy the material benefits of production derived from the work of others.

Binding this consensus was a notion of reciprocity.

This principle extends well beyond concepts of work responsibilities.

Western democracies use parliamentary authority to grant rights to citizens but these rights also carry responsibilities (duties). And many of those responsibilities are explicitly coercive, and I will talk more about that presently.

We should be explicit here to disabuse people of the idea that a ‘duty to work’ means the same thing as a legal compulsion to work. The two are different obviously, although that seems to evade the understanding of many on social media.

Of course, Marx observed that while under capitalism superficially freed workers from the manorial coercion of the feudal system, such that they could choose freely which jobs they might take and who they might work for, the coercion of capitalism lay in the fact that workers did not have a choice whether to work at all.

Unlike owners of capital, who could enjoy access to the income distribution system without exerting any labour effort, workers had to work for someone if they wanted to eat.

And within socialist thinking, that was a motivation for the duty of work type ethics being formalised because they wanted no group being able to live off the work of others (bar those affirmed or unable to work).

Within social democracies, these ideas were expressed somewhat differently (the language was different) but the sentiment remained.

Even in the US, the concept of the ‘work ethic’ was a powerful social disciplining force.

Liberals who evoke ‘natural’ rights to freedom miss the point that all these ‘freedoms’ are social products – constructs that societies agree on in some way or another.

There is no real way of determining which of these constructed ‘rights’ are more privileged over others.

In his 1980 article – ‘The Obligation to Work’ – (see reference in Part 2), Lawrence Becker wrote:

No one is self-made. Whatever good there is in our lives is, in part, a product of the acts of others. Moreover, it is also the product of others’ fulfilling their putative social obligations: obligations of restraint (such as are found in the criminal laws against murder and theft), of care (as found in the law of negligence), of effort (“trying” to help) …

All the standard theories of justice support a requirement (obligation) of reciprocity, that is, a proportional return of good for good …

Citizenship obligations may be thought of as the institutionalized demands of our benefactors for reciprocity. Thus, an important class of nonvoluntary social obligations is justified.

He goes on to discuss the complexity that can be involved in determining proportionality in the “good for good” principle.

The question he explores is whether the ‘duty to work’ can be justified within this reciprocity ideal.

He understands that “Obligations must be scaled to competence, ability, and benefits … it would be impossible to justify any proposal to require the same work from everyone”.

Why would anyone think they were exempt from a “social obligation to work”?

Some use the arguments we debated in Philosophy 101 – I “did not ask to be born”.

I did not ask my mother to nourish me when I was young.

But I receive the benefits from the work of others.

Further, Lawrence Becker notes that:

Each of us is a burden on others. Our mere existence diminishes natural resources; we pollute; we consume the time and energy of those who have to deal with us. We are a net burden on others if we do not make an offsetting contribution to their welfare. Now, it is a fact that some people do make an effort to offset these burdens and succeed in offsetting them. Reciprocity to them is as much in order as it is for people who produce “positive” good for us. And reciprocity here may also require a contribution produced by effort.

Why should we contribute to the society rather than just those who directly benefit us as individuals? In other words, do we have a sense of society?

Clearly, we accept the benefits that are derived from public infrastructure (so-called public goods). So all workers who produce these goods and services are effectively contributing to society rather than to specific individuals.

Once we have public goods, we also accept social obligations.

We also accept membership obligations of social groups from an early age, which clearly establishes the concept of social obligations that transcend our individual leanings.

Does this argument extend to work obligations?

Some might argue that a person might just contribute financial input and be exempt from having to expend effort. But that would offend any progressive sense of equity.

While nations in the immediate Post World War 2 period were embarking on a nation-building process and were keenly aware that all available labour was necessary to quickly improve material prosperity, it might be argued that we need less production now and technology has solved scarcity.

There is truth in that argument but it requires that societies always need work effort to continue functioning and we all benefit from that work.

And as scarcity gives way to material affluent (generalised), we have the luxury in many nations of being able to expand the concept of productivity and valued labour, which means there are unlimited jobs that can be created and performed which enhance our well-being, whether measured in material terms or other more qualitative terms.

In that sense, there remains an argument based on reciprocity for a ‘duty to work’.

Lawrence Becker wrote in this respect that:

People who are able to work, and do not work, are parasites, however unattractive and emotionally loaded that label is. People in this society all live, in part, off the labor of others. And there is a chronic oversupply of jobs which need to be done to sustain and improve the quality of life for us all. (I am not speaking here of simply income-producing jobs.) So reciprocity in the form of work seems not only appropriate but necessary in our present circumstances.

The neoliberal evolution – reciprocity abandoned

Over the last several decades, as neoliberal ideology has emerged as the dominant approach to policy, the foundations of the social democratic consensus have been fractured.

Thomas Fazi and I trace this evolution in our book – Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, September 2017).

Relevant to this discussion, is the fact that the ‘duty to work’ idea has been retained and fine-tuned (along parasitic lines), while the state has abandoned its responsibilities to provide sufficient work, which has terminally compromised the ‘right to work’ principle, especially for the most disadvantaged workers.

It is also true that progressive political parties, in many nations, have led the deterioration in this consensus by abandoning the aim of full employment and adopting pernicious activity test approaches to the unemployed that they created through the embrace of neoliberal fiscal austerity.

As an example, think about Germany (thanks to Graham and Jochem for some research help here).

I have written about the German embrace of neoliberalism many times.

Here is an early blog post – Germany attacks its unemployed! (January 4, 2005) – which was written as we learned more of the so-called Hartz reforms that transformed the way the state income support systems changed.

When the Social Democratic Party in Germany embraced neoliberalism during the Chancellorship of Gerhard Schröder (in power 1998-2005) the government made several major policy shifts.

They abolished regulative restraint on the financial markets (for example, abandoned the capital gains tax on the sale of shares) which spawned the financial excesses that are still playing out (think Deutsche Bank).

The previous Helmut Kohl CDU regime would not have been able to pull that off – a feature of social democratic parties across the globe – as neoliberal leaders!

At the same time, Gerhard Schröder’s Agenda 2010 program sought to reduce the German welfare state and impose harsh work obligations on income recipients.

The interesting point here is that at the time, Schröder and his officials made it rather explicit – that if you were not prepared to work then you would not eat!

In a Speech to the Bundestag on March 14, 2003 – Gerhard Schröders Agenda gegen den Reformstau – the Chancellor said at the 34:40 mark that (translated)

In future no one will be permitted to refuse reasonable work at the cost of the community – he must expect sanctions.

Their concept of ‘reasonable work’ was very broad.

Another example of this sentiment came from SPD politician Franz Müntefering when he was the Bundesminister für Arbeit und Soziales (Federal Minister for Labor and Social Affairs) who told the SPD Parliamentary Group on Tuesday, May 6, 2006, as part of the process for reforming the SGB II-Optimierungsgesetz (the social code in Germany) that (Source):

Wer nicht arbeitet, soll auch nicht essen … Nur wer arbeitet, soll auch essen.

(Those who do not work should not eat … Only those who work should also eat).

So for those who thought the ‘parasite laws’ were just a construct of the hideous Stalinist Soviet regime, thinking that Western democracies were exempt from such thinking, think again.

Here is modern-day Germany, under the rule of a ‘progressive’ social democratic government articulating just the same attitudes.

An interesting article – Faule Arbeitslose? (May 6, 2003) – published by the – Bundeszentrale für politische Bildung (BPB) – which is the Federal Agency for Civic Education in Germany, shed some light on this debate at the time.

Faule Arbeitslose = Lazy unemployed and the article discussed the willingness to work in Germany.

It quotes Gerhard Schröder from April 2001, when he said “Es gibt kein Recht auf Faulheit in unserer Gesellschaft” (There is no right to be lazy in our society) and started the debate about “eine heftige Debatte über “Faulenzer”, “Drückeberger”, “Scheinarbeitslose” und “Sozialschmarotzer” vom Zaun” (“idlers”, “slackers”, “bogus unemployed” and “social parasites”.)

It is interesting that when unemployment began to rise in Europe and the rest of the world, this nomenclature started to enter the political narratives.

In Australia, the term ‘dole bludger’ was first introduced in 1974 by a Labor Party employment minister. It was not the conservatives who started this descent into indecency, although they certainly exploited it to the hilt once they gained power.

Similarly in Germany. The BPB article documents how SPD Federal Minister of Labor Walter Arendt “triggered the first laziness debate” in the Bundestag in 1975 as mass unemployment rose.

By the 1980s, this narrative was adopted by progressives and conservatives alike.

The obligation to work was at the centre of the debates, while the right to work had largely disappeared as a responsibility of the state to guarantee.

Of course, the obligation was applied exclusively to the working class.

The banksters who did nothing more than shuffle wealth and were thus largely unproductive were given state support to expand their profit-seeking behaviour.

But the low-paid and vulnerable were shoehorned into poverty-wage, mini-jobs because the German government refused to create the conditions for full employment.

The German derivation of this was influenced by harking back to religious documents.

In the – Second Epistle to the Thessalonians – sometimes, but not without dispute, attributed to the apostle Paul, the discussion is about the way the people of the city of Thessalonica, the “second city in Europe where Paul helped to create an organized Christian community” could maintain the traditions they had been taught (either in written form or by word of mouth) as they waited the “second advent of Christ”.

In Thessalonians 2, Chapter 3, Verse 6 begins the topic – “Warning against Idleness” and we read (thanks Tom):

6 Now we command you, brothers, sin the name of our Lord Jesus Christ, that you keep away from any brother who is walking in idleness and not in accord with the tradition that you received from us.

7 For you yourselves know whow you ought to imitate us, because we were not idle when we were with you,

8 nor did we eat anyone’s bread without paying for it, but with toil and labor we worked night and day, that we might not be a burden to any of you.

9 It was not because we do not have that right, but to give you in ourselves aan example to imitate.

10 For even when we were with you, we would give you this command: If anyone is not willing to work, let him not eat.

11 For we hear that some among you cwalk in idleness, not busy at work, but busybodies.

12 Now such persons we command and encourage in the Lord Jesus Christ to do their work quietly and to earn their own living.

13 As for you, brothers, do not grow weary in doing good.

14 If anyone does not obey what we say in this letter, take note of that person, and have nothing to do with him, that he may be ashamed.

15 Do not regard him as an enemy, but warn him as a brother.

So Christians were invoking the ‘no work, no eat’ idea – as a ‘tradition’, some centuries before Stalin’s parasite approach.

In other words, these ideas have been part of human life for a very long period of time.


In Part 5, we will link the ‘duty to work’ concept with theories of justice and discuss coercion.

That is enough for today!

(c) Copyright 2020 William Mitchell. All Rights Reserved.

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