Week-end Wrap – Political Economy – October 11, 2020
by Tony Wikrent
Dear Readers — I had no choice but to abandon Blogger this past week. The workaround to the miserable new version of Blogger, suggested by a reader two weeks ago, simply would no longer work. So, sorry that this post comes a good bit later in the day than past posts.
VOTE!
See something? Report voter suppression and obstacles to voting.
[Twitter, via Naked Capitalism Water Cooler 10-8-20]
Strategic Political Economy
“Encyclical Letter Fratelli Tutti of The Holy Father Francis On Fraternity And Social Friendship”
[The Vatican, via Naked Capitalism Water Cooler 10-7-20]
From the section “Re-envisaging the social role of property”:
119. In the first Christian centuries, a number of thinkers developed a universal vision in their reflections on the common destination of created goods.[91] This led them to realize that if one person lacks what is necessary to live with dignity, it is because another person is detaining it. Saint John Chrysostom summarizes it in this way: “Not to share our wealth with the poor is to rob them and take away their livelihood. The riches we possess are not our own, but theirs as well”.[92] In the words of Saint Gregory the Great, “When we provide the needy with their basic needs, we are giving them what belongs to them, not to us”.[93]
120. Once more, I would like to echo a statement of Saint John Paul II whose forcefulness has perhaps been insufficiently recognized: “God gave the earth to the whole human race for the sustenance of all its members, without excluding or favouring anyone”.[94] For my part, I would observe that “the Christian tradition has never recognized the right to private property as absolute or inviolable, and has stressed the social purpose of all forms of private property”.[95] The principle of the common use of created goods is the “first principle of the whole ethical and social order”;[96] it is a natural and inherent right that takes priority over others.[97] All other rights having to do with the goods necessary for the integral fulfilment of persons, including that of private property or any other type of property, should – in the words of Saint Paul VI – “in no way hinder [this right], but should actively facilitate its implementation”.[98] The right to private property can only be considered a secondary natural right, derived from the principle of the universal destination of created goods. This has concrete consequences that ought to be reflected in the workings of society. Yet it often happens that secondary rights displace primary and overriding rights, in practice making them irrelevant.
The Socialist Moment, and How to Extend It
Harold Meyerson, October 9, 2020 [American Prospect]
Sanders has always made it plain that socialist leader Eugene V. Debs was his hero, but in Judis’s telling, the key to Sanders’s zeitgeist-changing success was his move away from the socialist insularity that Debs espoused. While nominally remaining a political independent, Sanders won election to Congress on a social democratic platform of greater regulation of capital, greater power for workers, an expansion of social welfare and economic rights, and a pledge that he’d caucus with the Democrats. When he began running for president in 2015, Sanders made clear his model of socialism was the Scandinavian mixed economy. But as Judis recounts, after Columbia University historian Eric Foner sent him an open letter that emphasized a more American pedigree for socialist initiatives, Sanders took the hint. As I recounted in the Prospect, in Sanders’s two speeches that he billed as his definition of socialism—one given at Georgetown University in 2015, the second at George Washington University in 2019—he cited Franklin Roosevelt and Martin Luther King as his forebears in the struggle for socialist reforms.
Yanis Varoufakis: How Progressives Could Still Win the 21st Century
[Naked Capitalism, October 8, 2020]
NC’s Yves Smith introduces Varoufakis’s article by excerpting from Richard Kline’s 2012 essay, Progressively Losing:
In my considered view, ‘progressives’ lose because they do not have it as a goal to win. Their principal concern is to criticize the moral failings of others in society, particularly the moral failings of those in power.
At best, progressives seek to convert. In the main, they name and shame—ineffectively. American ‘progressives’ distrust political power, period, are queasy about anyone having it, and suspicious toward anyone who actively seeks it, including other putative progressives. The contest as progressives conceive it is fundamentally a moral one: they believe they are right, and want their opposition to see the light and reform/conform. Thus, they don’t frame what they engage in as a fight but rather as a debate.
By Yanis Varoufakis. Originally published at The Correspondent; cross posted from his website:
Prerequisite 3: A Shared Vision of Postcapitalism
Consider what happened on 12 August 2020, the day the news broke that the British economy had suffered its greatest slump ever. The London Stock Exchange jumped by more than 2%! Nothing comparable had ever occurred. Similar developments unfolded on Wall Street in the United States.
In essence, when Covid-19 met the gargantuan bubble with which governments and central banks have been zombifying corporations and financial institutions since 2008, financial markets finally decoupled from the underlying capitalist economy.
The result of these remarkable developments is that capitalism has already begun to evolve into a type of technologically advanced feudalism. Neoliberalism is now what Marxism-Leninism used to be during the Soviet 1980s: an ideology utterly at odds even with the regime invoking it. Following the collapse of the Soviet bloc in 1991, and of financialised capitalism in 2008, we are well into a new phase in which capitalism is dying and socialism is refusing to be born.
If I am right in this, even progressives who still entertain hopes of reforming or civilising, capitalism, must consider the possibility that we must look beyond capitalism – indeed, that we must plan for a postcapitalist civilisation. The problem is that, as my great friend Slavoj Zizek has pointed out, most people find it easier to imagine the end of the world than the end of capitalism.
Varoufakis’s article is another example of how the left is crippled by its irreligiosity and its lack of understanding of the United States as a revolutionary experiment in republican self government. The USA is dismissed as a legitimate model because it was sullied from the start by the compromise with slave holders to achieve union. Heather Cox Richardson is great on discussing this paradox of American history and politics, including tracing how the extractive economics of the slave holding south get transferred to the USA west after the US Civil War, leading to Barry Goldwater, Ronald Reagan, and the whole assortment of conservative / libertarian sociopaths.
Overcoming this history appears to be an insurmountable obstacle for recovering the fundamental ideas of the American School, which I believe is the only way to properly formulate rules of political economy for a republic. First of all, it’s terrible history to write that Americans traditionally conceive of freedom as the freedom to get ahead economically: to acquire property, and become rich. Lost today is the idea of “competency” – that a citizen needed to make enough to be economically independent so as to have the disinterestedness to decide on public affairs. Also lost is the Judea-Christian idea that your property is not really yours, but given to you by the Creator so that you can conspire with the Creator to serve your fellow men and women and make the world a better place. [See Edmund S. Morgan, “The Puritan Ethic and the American Revolution,” The William and Mary Quarterly, Vol. 24, No. 1 (Jan., 1967), pp. 3-43.]
In addition, for most of the 19th century (except in the South, then the West), there was great distrust and hostility to concentrations of economic wealth. Among the first substantive legislative acts after independence was the prohibition of primogeniture and entails.
But more fundamentally, USA republican (small “r”, not Republican Party) political economy is based entirely on Alexander Hamilton’s understanding that the ultimate foundation of a nation’s wealth is the productive power and thought of its people. So, it’s not that people are supposed to strive for riches and accumulations of property; the proper goal is increasing humanity’s ability to control and harness the forces and resources of nature. Matt Stolller and other such well-intentioned people simply don’t understand that what Hamilton does is shatter feudal economics, because feudal economics is pretty much zero-sum: for a nation to increase its wealth, it must seize from another nation, or obtain an unfair advantage in trade. Under Hamilton’s system, a nation’s wealth increases as its people develop new and better ways of doing things. I.e., science and technology.
Thus, republicanism values each human individual for their potential to contribute to the improvement of the intellectual, material, cultural, and aesthetic conditions of life. Republicanism thus frees each person from the tyranny of the market. The market can only treat a human being as a consumer, or a commodity unit of labor.
We have now reached a point — with automation, robotics, and artificial intelligence — that the productive power of labor is so great that humanity becomes more and more able to supply its needs and wants without the need for full employment. [Which is why I was very sad to see the pictures accompanying this article was of massive manual labor.] We must embrace the reality that only around 15 percent of a workforce is actually required, and work to conceptualize and build an economy in which the vast majority of people simply are not required to work. Perhaps it looks like this: no one under the age of 21 is employed, and mandatory retirement is taken, with full pay, at 45 or 50. There is universal health care, and education is paid for however many years a person works toward a professional career. People over the age of mandatory retirement serve on local, state, regional, and national boards that award and administer stipends, grants, and honoraria to artists, musicians, authors, and entertainers.
In other words, Hamilton’s vision of political economy for a republic necessarily leads to the inexorable advance of the productive powers of labor to the point that human labor itself is no longer required to provide human needs and wants. Perhaps this is a utopian ideal that will never be reached, but we have reached the point where we must contemplate an economy in which so little labor is required to provide human needs and wants, that it is no longer possible to provide everyone employment. At this point, what sense does it make to tie income so directly to employment? And keep in mind that republican political economy is fundamentally hostile to concentrations of wealth and economic power, which are always used to corrupt the polity. So, having income derived from usury, speculation, arbitrage, asset price inflation must be discouraged if not prohibited.
This focus on increasing the productive power of labor, and ultimately freeing humanity from the need to work, I think, is how you inject a positive vision into progressive ideas and policies. This is an amazingly optimistic view of humanity and its role as co-creator of the Universe with the Great Architect of the Universe. This positive vision rings out in the speeches of people like John Quincy Adams, Noah Webster, and others. Just look for speeches given at opening ceremonies of things like the Erie Canal and the hundreds of local railroads built before the Civil War. You often also find it in speeches commemorating Independence Day.
The obvious problem, of course, is the pillaging of natural resources and despoliation of the environment. But if you realize that all environmental problems are actually, fundamentally, engineering problems, then you realize that once you destroy the dictatorship of banking and finance, you can fully — and safely — implement visions such as the Green New Deal.
What can republicanism offer the left?
Bruno Leipold, 28 January 2016 [Oxford University Political Blog]
…. the republican conception of freedom has the potential, as Alex Gourevitch has argued (from 5:00 minutes onwards), to recapture the value of freedom from the right. In popular discourse, freedom and liberty have become nearly completely associated with capitalist freedom: the freedom to dispense with one’s property without government intervention. Socialists and progressives have instead mostly been consigned to making their arguments in terms of equality, fairness and community. Gourevitch points out, that this is a rather strange development, given that the right is historically associated with the values of order, authority and tradition. Their modern stranglehold on the understanding of freedom means that they have managed to lay claim to one of society’s most cherished values. Republican freedom however has the possibility to disrupt that monopoly on meaning.The recovery of the republican conception of freedom is the result of the collaborative work of Quentin Skinner and Philip Pettit. They argue that under narrower conceptions of freedom, people are only unfree when their actions are interfered with. But under republican freedom, a person is unfree if someone has the capacity to arbitrarily interfere them. Take for example a slave with a benign master (a favourite metaphor amongst republicans). The master is kind and rarely, if ever, interferes with the actions of the slave. A republican would argue that the slave remains unfree because the master retains the power to interfere. The master could at any moment have a change of heart, and that makes the slave entirely dependent on the continuing good will of the master. Worse still, the slave might even have adjusted their behaviour to meet the expectations of the master, so that we might not even witness much interference. The slave is therefore, in republican terminology, dominated by the master (hence the term freedom as non-domination). Historically republicans like Algernon Sidney, have used this slavery metaphor (sometimes a little opportunistically, since many republicans had no objections to actual slavery) to argue that an absolute monarch makes her/his subjects unfree, because their are no limits on her/his power. People are therefore only free when they live in a free republic….
The second contribution revolves is the importance republicanism places on politics, popular sovereignty and public participation. There are many strains of socialism (from technocratic social-democracy, to Fabianism and Stalinism) that have not placed great emphasis on the idea that ordinary citizens should have extensive participation in political decision-making. There is a tradition in socialism of seeing politics as less important, irrelevant even, when compared to economics. This perhaps most clearly shown in the frequent socialist trope that once we reach socialism, politics will disappear. In contrast, republicanism celebrates the public life. For some republicans this is because public participation has intrinsic value – that it promotes people’s essence as political beings. For others the justification is instrumental – in that popular participation is the only way to ensure that a republic remains free. By combining that language of popular sovereignty with the left’s familiar call for social justice, republicanism can provide away to articulate a powerful democratic alternative.
"Wisdom and knowledge, as well as virtue, diffused generally among the body of the people being necessary for the preservation of their rights and liberties; and as these depend on spreading the opportunities and advantages of education in various parts of the country,and among the different orders of the people, it shall be the duty of legislators and magistrates in all future periods of this commonwealth to cherish the interests of literature and the sciences, and all seminaries of them, especially the university at Cambridge, public schools, and grammar schools in the towns; to encourage private societies and public institutions,rewards and immunities, for the promotion of agriculture, arts, sciences,commerce, trades, manufactures, and a natural history of the country; to countenance and inculcate the principles of humanity and general benevolence,public and private charity, industry and frugality, honesty and punctuality in their dealings, sincerity, good humor, and all social affections, and generous sentiments among the people. "
Commanding Heights: PBS September 2000 interview of John Kenneth Galbraith
pbs.org/wgbh/commandingheights, September 28, 2000
Hayek and His Road to Serfdom
INTERVIEWER: In your books you like treat him [Hayek] with a sort of elegant scorn. What did you dislike about his ideas?
JOHN KENNETH GALBRAITH: Oh, there's no doubt about it, they were ideas related to the dominant business community and gave substantive thought to ignoring the poor, ignoring the unemployed, ignoring the Depression. He was above all that and arguing strenuously for what the establishment, the fortunate, found favorable.
Amazon workers march to Jeff Bezos’ mansion, calling for higher wages, protections
[Los Angeles Times, via Naked Capitalism 10-7-20]
Economic Armageddon: The COVID Collapsed Economy
Fed Lending Saved Corporate America. It Could Do the Same for Cities and States.
[Intercept, via Naked Capitalism 10-10-20]
Doomed to fail: Why a $4 trillion bailout couldn’t revive the American economy
[Washington Post), via The Big Picture 10-6-20]
An avalanche of U.S. grants and loans helped the wealthy and companies that laid off workers. Individuals received about one-fifth of the aid.
The Carnage of Establishment Neoliberal Economics
Are Corporations Scamming Their Shareholders? How Corporations Scam Their Shareholders and Screw Over Workers
Bruce Bartlett, The New Republic, September 28, 2020
C-suite executives use share buybacks to manipulate stock prices for their own benefit, and no one else’s….….there’s also growing evidence that share buybacks come at the expense of long-term profitability and the economy as a whole, because they lead managers to reduce or postpone investment spending for new projects, research and development, advertising and maintenance in order to meet near-term earnings targets. Buybacks also tend to raise corporate indebtedness and leverage, which can increase bankruptcies in an economic downturn. In other words, managers are literally destroying shareholder value as a routine way of doing business. This helps explain why nonresidential fixed investment has fallen even as overall profitability has risen.
The 2017 tax give-away appears to have led to an increase in share buybacks at the expense of federal revenue and corporate investment. Pressure to maintain corporate payouts may also be responsible for larger-than-necessary layoffs during the COVID-19 crisis.
ritholtz.com/wp-content/uploads/2020/10/Screen-Shot-2020-10-05-at-6.48.15-AM-1024x585.png
Wealth of the 50 richest in the US equals the poorest half
[web24.news]
New data from the US Federal Reserve, providing a comprehensive look at the wealth of the United States during the first half of 2020, show marked disparities by race, age and class. While the richest 1% of Americans have a combined net worth of $ 34.2 trillion, the poorest half (about 165 million people) own just $ 2.08 trillion, or 1.9% of the entire household wealth.
For their part, the nation’s 50 richest people have a combined net worth of nearly $ 2 trillion, according to the Bloomberg Billionaires Index, representing an increase of $ 339 billion since the beginning of 2020.
Health Care Crisis
Health Care: The Best and the Rest
[New York Review of Books, via Naked Capitalism 10-5-20]
I have misgivings linking to this, because it is a review of Which Country Has the World’s Best Health Care?, by Ezekiel J. Emanuel, whose younger brother is Democratic Party oligarch Rahm Emanuel. For years, Ezekiel J. Emanuel has been promoting restrictions on life sustaining procedures, especially for the elderly, while also criticizing employment-based health care and promoting national health care to replace it. But the review itself, especially the first half, is an excellent summary of the health care issue in USA since World War Two.
“Even as the Economy Grew, More Children Lost Health Insurance”
[New York Times, via Naked Capitalism Water Cooler 10-9-20]
“The share of children with health coverage in the United States fell for the third consecutive year in 2019, according to census data, after decades of increases. The decline occurred during a period of economic growth — before the coronavirus pandemic caused broad job losses that might have cost many more Americans their health insurance. A report Friday by the Georgetown Center for Children and Families found that the ranks of uninsured children grew the most in Texas and Florida, and that Latino children were disproportionately affected. Nationally, the number of children without health insurance rose by 320,000 last year alone, to a total of nearly 4.4 million children, the report found.”
Disrupting mainstream economics
[Los Angeles Review of Books, via Mike Norman Economics 10-9-20]
The meteoric rise of MMT may be surprising to its many detractors (Clintonite liberals hate MMT as much as Senate Republicans do), but it shouldn’t be. Its basic message — that the spending of currency-issuing governments is not constrained by tax income — is uniquely resonant in a moment when trillion-dollar stimulus packages and zero-percent interest rates are becoming the new normal…. This goes for other programs as well. Medicare for All? We can afford it. A multi-trillion-dollar Green New Deal? We can afford it. A guaranteed job for anyone who wants to work? That, too. And, Kelton argues, we don’t necessarily need to raise taxes to do all this. The size of the budget deficit or the outstanding public debt should not, by itself, affect the policy decisions of currency-issuing governments like the United States….
Still, many on the left remain critical of, or even hostile toward, Modern Monetary Theory. Marxists often criticize Kelton’s book, and MMT generally, for what they perceive as an abstract focus on the fiscal capacity of the state, far removed from bread-and-butter class struggles at the point of production. When MMT proponents argue that taxes aren’t necessary to finance public spending, that sovereign states can bypass the tax-resisting ruling class by simply spending money into existence, Marxists see an illusory technical substitute for both distributional struggles and broader socialist transformations in the real economy. Focusing on “tricks of circulation” rather than relations of production, MMT turns money printing into “the new Big Rock Candy Mountain” — the classic Keynesian vision of “revolution without revolution.” The most polemical line of Marxist critique goes even further, implying that the theory is a smokescreen that provides tax-evading hedge fund managers (like MMT founding father Warren Mosler) with ideological cover….
The deeper disagreement is about the nature of state power under capitalism. MMT literature, with some exceptions, leans heavily on the idea of national sovereignty. Framing money-issuance as a core power of sovereign nation-states, it highlights the problems that arise when the states place “self-imposed constraints” on that power, such as fixed exchange rates, gold convertibility requirements, or dollarization. The goal is for the left to escape these false limitations and “reclaim” the nation-state, harnessing its fiscal power for progressive ends. If MMT emphasizes the unrealized potential of public finance, Marxist analysis is more concerned with the limitations inherent in the capitalist state form itself. It frames the ideological separation of the political sphere (the liberal-democratic state) from the economic sphere (the market) as a key barrier to radical change. MMT looks “idealist” from this angle because it takes the capitalist division between the political and the economic for granted, imagining that delusions and wrong ideas about economics are the only things preventing the state from correcting the injustices and antagonisms of the capitalist market. With its narrow focus on formal legal prerogatives and technical details of the monetary system, MMT loses the bigger political picture. The result is a naïve optimism about the power of enlightened policymakers to achieve outcomes that are undesirable to the capitalist class.
The War on Science and the Enlightenment
How Trump damaged science — and why it could take decades to recover
[Nature, via Naked Capitalism 10-10-20]
The Dark Side
US Politics Isn’t ‘Polarized’; It’s In Almost Universal Agreement
Caitlin Johnstone [via Naked Capitalism 10-8-20]
“Trump’s mistake by the lake: Taking his own voters for granted”
[National Journal, via Naked Capitalism Water Cooler 10-6-20]
“The new Fox News poll of Ohio, showing a 5-point Biden lead, pinpointed why Trump is in so much trouble: Members of labor unions, who swung from President Obama to Trump in the previous election, have returned to the Democratic fold. Union households in Ohio now favor Biden by 8 points, 52 to 44 percent. In 2016, Trump carried that same constituency by 13 points, 54 to 41 percent, according to exit polling. That’s a whopping 21-point turnaround. Trump’s marked decline with white working-class voters is the underappreciated story of this election. It’s easy to conflate Trump’s base of hard-core supporters with the much larger pool of his 2016 voters. His base is with him regardless, but Trump won in 2016 by picking off a critical mass of onetime Democrats and independent voters in the Midwest, many of whom have since grown disillusioned with his antics. Amid their disbelief that anyone could vote for Trump without being “deplorable,” Democrats once thought these voters were lost for good [identity politics, anyone?]. They belatedly realized that tried-and-true appeals to their economic interests—centered on health care in the midst of a pandemic—still constitute an effective message in these tribal times.”
“In big states, tiny counties, Trump attacking voting rules”
[Associated Press, via Naked Capitalism Water Cooler 10-6-20]
“When Donald Trump’s campaign took issue with a new rule on processing some votes in North Carolina, it didn’t just complain to the Board of Elections and file a lawsuit. It wrote to some of the state’s 100 local election offices with extraordinary guidance: Ignore that rule. ‘The NC Republican Party advises you to not follow the procedures,’ Trump campaign operative Heather Ford wrote in an email to county officials last week. The email urging defiance was a small glimpse at the unusually aggressive, hyperlocal legal strategy the Trump campaign is activating as voting begins. Through threatening letters, lawsuits, viral videos and presidential misinformation, the campaign and its GOP allies are going to new lengths to contest election procedures county-by-county across battleground states. That means piling new pressure on the often low-profile election officials on the front line of the vote count, escalating micro-disputes over voting rules and seeking out trouble in their backyards. The local approach already is producing a blizzard of voting-related complaints. Trump and his allies have then seized on the disputes, distorted them and used them to sow broad doubts of fairness and accuracy.”
“Trump campaign discussing plans to appoint its own state electors, no matter the results: report”
[Salon, via Naked Capitalism Water Cooler 10-7-20]
“[i]n 2000, the Supreme Court held in Bush v. Gore that the states ‘can take back the power to appoint electors.’ … According to a Sept. 23 article in The Atlantic, campaign advisers to Trump, in conjunction with Republican state leaders, are preparing to test this theory. Sources in the Republican Party, at both state and national levels, say that the campaign is considering a plan to ‘bypass’ the popular vote results and install its own electors in key battleground states where the legislatures are controlled by Republicans. Republicans control both legislative bodies in the six closest battleground states: Arizona, Florida, Michigan, North Carolina, Pennsylvania and Wisconsin. Of those six, both Arizona and Florida have Republican governors. After the national election, the plan goes, the Trump campaign would cry foul about rampant fraud and demand that state legislators ignore the ballot tabulations and choose their electors directly.” • Here is the Loyola Law Review article that lays out the scenarios discussed in this article and at greater length in the Atlantic.
The Rise of Christian Nationalism in America
[Consortiumnews, via Naked Capitalism 10-7-20]
An important explanation of how the left has forfeited to the right the political necessity of defining morality. I linked to this above, as it ties in to my exploration of what republicanism can give to the left.
America Is Having a Moral Convulsion
[The Atlantic, via The Big Picture 10-10-20]
Levels of trust in this country—in our institutions, in our politics, and in one another—are in precipitous decline. And when social trust collapses, nations fail. Can we get it back before it’s too late?
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