Posts Tagged ‘economics’

The Political Right and the ‘Bottom Line’

March 8, 2018

Do the right look after the budget bottom line in government?

Probably not anymore. Not if it interferes with giving taxpayer’s money and possessions to the corporate sector.

In the US, we have corporate tax cuts, massively increased military spending and license for corporations to pollute and poison people – none of this will apparently cost the public anything.

In Australia, the Right wing Coalition has blown out the debt since taking over, and plans to blow it out even more, with more military spending, more spending on supporting the Adani corporation dig up and burn enough coal to wipe out climate stability, tax cuts for corporations who don’t pay any tax and so on.

Then there is the Coalition in NSW. They apparently have plenty of money to throw at developers, while selling off public goods, making life easy for coal miners to pollute, and destroy our water table, and harder for ordinary people to protest. They constantly make massive commercial in confidence deals with public money. They sign contracts with private enterprise before business cases and Environmental Impact Statements are finished. They support the idea of public money being spent on private enterprise sports stadiums, when the sports organisations are tax exempt because they are supposed to provide their own facilities. They make totally stupid decisions with public transport – new trains without toilets on long routes, new trains that can’t fit in the tunnels, new tunnels that can’t fit normal stock. They dig up rail access into the centre of Newcastle so that developers can build on the ex-tracklines. They think that a major new tax on transport in Sydney (through the Westconnex set of motorways) is a great idea as long as the tax is a toll going to private enterprise, and it won’t end up funding public hospitals, schools or renewable energy research – and the public funds the building of the new roads. Cost, of course, blows out massively as it is remuneration for private business, and people get thrown out of their homes and undercompensated. This is either a pure waste of money and incompetence, or a deliberate policy about giving money to those who already have it, at the cost of everything else. The other way of seeing this is as normal crony-capitalism in action. The corporations control the parties who control the State, and the State exists to benefit the ruling corporations.

The last two Federal Coalition leaders, have both failed to deal with any of the problems we face at all – in fact they have run away from them, tried to put the cost on the less wealthy, or have simply made the problems worse.

It is always easy to pretend to live prosperously if you sell off your assets and overspend – eventually it hits, and that could be the grand idea, bankrupt the government and throw ordinary people to the wolves. Sometimes, as Walter Steensby says, it looks as though the neoliberal philosophy thinks that people and nature are just costs and an obstruction to its own development, and they need to be disposed of.

The Right often only seems to worry about the bottom line when there is a chance that money might be going to people who actually need it to survive.


What is ‘Crony Capitalism’?

March 5, 2018

Crony capitalism describes two situations: the situation in which different capitalists co-operate to distort the market and maximise their profits, and the situation in which people in government either support, or are bought by, corporations to make laws that favour those corporations, or offer some other kind of subsidy, protection or help. More generally, the second half of the definition describes the case in which the State largely governs on behalf of big business, because business is defined as possessing all the virtues and abilities that matter to the society, and many businesses collaborate to maintain the general dominance of business and crush resistance.

In crony capitalism risks of business and costs of business are usually diffused onto the general taxpayers (with the wealthy often paying little tax). For example, in crony capitalism, pollution and environmental destruction is encouraged as it lowers costs to business, and usually just poisons the poorer sections of the population, who don’t count. Any regulations which try to enforce business responsibility for their actions are usually seen as ‘red-tape’ and repealed. Laws are generally designed to help maintain business benefits, and the courts arranged so that non-wealthy people have relatively little chance of success in using the law against business power.

Crony capitalism encourages situations in which ‘workers’ organising to protect their rights, conditions and wages, are frowned upon or prosecuted because they disrupt business, while federations of business organisations are considered normal and acceptable.

Crony capitalism is driven by, and results in, plutocracy.

Crony Capitalism is the normal form of capitalism, and power plays are a normal part of competition in markets.

Some remarks on the Communist Manifesto

March 3, 2018

If you read the Communist Manifesto, you will find that Marx and Engels briefly describe the dynamics and results of capitalism, and they claim it is pretty much to produce a situation similar to that we find we are in now….

  • Globalisation of a particular culture;
  • Destruction of national industries;
  • Inflation of the size of particular cities;
  • Increasing inequality (particularly in wealth distribution);
  • Increasing monopolization (ie more and more companies and owned by a small number of other companies);
  • Making labour an appendage to the machine;
  • Freeing capital from local regulation;
  • Turning the State into a managing agent for the benefit of upper corporate class;
  • Increasing the spread of directives and the control of land and people;
  • Turning all values into property or monetary exchange.
  • I don’t know of any other 19th Century figures who score so many accurate predictions. Yes they seem to have been wrong on the inevitability of revolution, but that is one missed prophecy and that was optimism in play.

    Nowadays we would probably add to these predictions, the idea that capitalism will destroy its civilization by destroying the ecology in an orgy of mass death and destruction; but we would have to say we have no idea what kind of organisations will follow on from its self destruction.

    Superfunds and ‘We are the shareholders’

    February 19, 2018

    Australian Banks are trying to defend their excessive profits and lack of competition by using the furphy that because Superannuation funds are large owners of shares, that their profits benefit ordinary Australians who own the shares through those funds. However, reality is more complicated than that

    1) Large amounts of fees are siphoned off in fees to the super funds, and go to superfund managers – so the main beneficiaries are the managers and people with large superfund holdings, not ordinary Australians, unless perhaps the funds are industry based. The first fund I was in cost more in entrance and exit fees than I could possibly earn on input. This is clearly not the banks fault, but it indicates something odd about the way ‘we’ own these shares. Putting it in another way, the rational action of fund managers acting for their own benefit with these shares, does not have to deliver maximum benefit to the people who pay into the fund.

    2) We “ordinary Australians” do not own the shares. We cannot vote, we cannot influence bank policy because of those shares. We do not hold the rights associated with those shares. Those shares are owned by the superfund, and any input into the bank will tend to benefit the fund not its members. It is irrelevant as to whether it might be ‘better’ for large institutions to take those rights away from us and exercise them as if they owned the shares – which they do (again the point is that the institutions have the ownership, not ordinary Australians).

    3) This fictitious ownership only exists as long as we keep paying the super company. Again we do not own the shares, we pay the Superfunds to own them, hopefully (but certainly not guaranteedly) on our behalf.

    4) However, the public pays the costs and losses associated with those shares, while the funds continue to pay out to themselves, irrespective of loss. This is the usual privatization of profits, publicization of loss common in capitalism.

    5) The banks may also have holdings in the Superfund, and these holdings are large enough to be used to outweigh any objections that individual members have to the way they operate. and use the shareholdings to benefit themselves and shut down inquiries by the fund into the way profits are made, declared and distributed.

    6) It is more than likely that most of the bank shares are owned by a very few, and only a few shares owned by the many.

    As usual, the market is structured by political action, usually the action taken by those who are wealthy, and is intended to benefit them. The market is rarely ever neutral – it is intertwined with power relations.

    (Some of these arguments borrowed from a critical thread in response to an article on the Conversation)

    Origins of Capitalism?

    February 7, 2018

    Capitalism is a mode of power (primarily economic), based on appropriation of people’s goods and labour, and the distribution of wealth.

    There are a number of forms of what is called capitalism. In my lifetime, where I live, we have had socialist-capitalism and we now have neoliberal capitalism, with more or less complete domination by the corporate sector. Scandinavian capitalism differs from French capitalism, differs from Anglo-capitalism and so on.

    Capitalism is not trade. Trade exists in all societies, including ones that most people would not call capitalist. (China is weird, if people want to praise it they point out it is now capitalist, and if they want to condemn it they point out it is now communist. In either case there is trade.)

    The origins of any of these forms of capitalism depend upon a heap of contingent factors, particularly including politics, and clearly cannot be summarized in a readable post – so this is only a summary for Anglo-capitalism.

    Historically, one argument is that this capitalism grew out of the inequalities, violence and wealth accumulations of feudalism. It was boosted in the UK by dispossession of people from their land, which provided a class dependent on wage labor for survival, and who could be hired and dismissed with little cost or sense of social obligation. Wealth accumulation was also boosted by the slave plantations in the Americas, which pretty obviously depended on dispossession and non consensual labour. It was also boosted by private citizens engaging in piracy on the Spanish treasure ships on behalf of the crown. The British Tudor (and later) Monarchy promoted non-aristocratic citizens to positions of power and wealth, which weakened the aristocracy. This movement was accompanied by the rise of a powerful mercantile class, and between them they began to change the form of British politics and economic structures into one far less dependent upon royal patronage or the ties of feudal obligation.

    Then the development of the steam engine, together with an abundance of coal, plus further political action and repression, allowed the relatively secure work and trade of crafts people to be destroyed, so more people became dependent upon capitalist industrialists for survival and more profit was channeled towards those who owned and controlled the technologies of production. The search for markets and resources to support this production led to Empires, as for example when the East India company took over India and destroyed local crafts and to help with their exports of cheap machine made materials (made with Indian cotton). There is a little dispute, but basically the now-standard argument is that the company and its accompanying British Rule completely destroyed the Indian non-capitalist economy and was largely responsible for the mass poverty and inequality that the 20th Century Indian State has had to deal with.

    Capitalism has also taken advantage of fossilised energy. It is the development of energy, from slavery, wage labour to coal that produced whatever abundance was shared by the more fortunate members of capitalist society. The steam engine depended upon coal, but around about the start of the 20th Century, oil and petroleum upped the portability and effectiveness of energy once again and with it the apparent abundance. However, this abundance depends on power relations and law which allows pollution and poisoning costs to be ignored by the producer, or diffused onto those of ‘lesser importance’. It is always the way that the poor have pollution poured on top of them. This could be realistically known as ‘trickle down economics’. The current problem for capitalism is that the pollution it, and its variants, are engendering is likely to destroy the ecological systems it has depended upon but has refused to acknowledge. Today we see that battle being conducted in the form of a struggle over climate change and appropriate action.

    While the economy is not natural, but political and embedded in power relations, it does need to be acknowledged that conquest and appropriation, in itself, does not lead to capitalism. The way plunder was organized in the Spanish Empire, for example, seems to have destroyed their economy. It was not invested in manufactures and trade – the ‘bloated’ aristocracy won out over the mercantile class and the peasants.

    Everywhere that capitalism has gone, it has tried to destroy non-capitalist economies, through dispossession of property, the imposition of wage or indentured labour, and taxes which required people to pay cash which they had to earn through wage labour. There are endless colonial and business reports complaining about the laziness and irrationality of ‘natives’, who had better things to do with their lives than hold down jobs, and who did not need jobs to survive(until that independence was destroyed).

    Capitalists always argue that capitalists are wealth creators and deserve special privilege and powers. Because large capitalists end up owning most of that wealth they are usually able to buy politicians and propaganda, and control society to act to give them those special privileges and powers. Hence capitalist power tends to reinforce itself, and make all life even more dependent on capitalist action, and capitalism seems like “common sense”.

    We had a relatively generally prosperous period when capitalists feared revolution, but since that period has passed, wealth and power now accumulate primarily at the high ends.

    Stages of social collapse….

    February 2, 2018

    Slightly Edited from “How societies collapse” by Umair Haque

    Step one. The economy stagnates, [and social mobility declines. Largely because the elites, (religious, military, or mercantile) monopolise property, markets, and information, and control the government to protect themselves. They keep up, or increase, patterns of behavior that destroy the ecology they depend upon]. Life becomes harder and meaner for most people. The elites will deny the stagnation and destruction because, otherwise, they have admitted that they have failed, or are making things worse: in this way, a social contract and any sense of mutual obligation is broken and never gets repaired. [Note after and during the Great Depression and post WWII, there was an attempt to fix things up, because it seemed obvious that the ruling elites faced revolution if they did not.]

    Step two. Ordinary people end up competing more and more viciously to maintain their living standards [as there is no means of co-operation which is allowed. Unions and other cooperative activities are broken or declared to be evil, as they could form challenges to the elites. Competition between each other and loyalty to the elite is lauded as prime virtues.]. Social bonds break and social norms begin to disintegrate.

    Step three. People turn to supposed strongmen in the hope of gaining the safety democracy has failed to give them. This is the moment when decline implodes into true collapse. [Most of these ‘strongmen’ will defend the ruling elites while pretending to defend the people or the nation. People can regain valued cooperation by supporting the visible elite through patriotism, nationalism, party loyalty or religious fundamentalism. Things can feel better for some. There is hope.]

    Step four. The strongest groups begin to exterminate the weaker perfectly legally. The insiders’ economic portions are kept stable by excluding, or eliminating, whole social groups altogether. [Or the dominant groups intensify application of the techniques which have given them wealth and which destroy life] This fact is kept from the people, officially — but who cannot be aware at some level?

    Step five. Because the problem of stagnation is rarely solved by exterminating the weak [or destroying the ecology], the society has doomed itself to forever attempting to take its neighbouring societies harvests’ or falling apart. [In so doing, it generates enemies which can boost internal loyalty, and keep the system going until total collapse.] This is how fascism leads to atrocity, war, and mass murder.


    Bitcoin and others

    February 2, 2018

    The value of any currency (and that includes gold) depends on magic.

  • 1) Whether there is faith in the currency.
  • 2) Whether there is faith in the people who issue the currency and their ability to enforce value (through violence or expectation of violence). The value of currency is tied up with perceptions of power. If an issuer cannot generate the perception of power in others, then their currency will become worthless.
  • 3) Whether there is faith that other people value the currency.
  • 4) Whether there is demand for the currency – ie other people will accept it or exchange it for other currencies.
  • 5) How plentiful the currency is perceived to be.
  • All currency is subject to bubbles and over enthusiasms. However the more stable the issuer, the more it is likely to be valued.

    Currency is about politics, and politics is about persuasion and power, that is ritual and magic (and usually a bit of human sacrifice, because nothing shows power better than this).

    What is Socialism?

    January 19, 2018

    Usually socialism means that ‘the people’ have the right to try and influence market power, so that the inherently top down processes of capitalism involving corporations and other elites do not tread all over them. Socialism also tries to provide increased opportunity for those who are disadvantaged, or who don’t have the luck to be born to wealthy parents, without lowering the opportunities for those who start off more fortunate. Capitalism seems to try to make it harder for people to succeed if they are not born into the right class. Metaphorically, if capitalism wants dancers, it breaks the legs of everyone who is poor, has them set badly, and then claims that the wealthy dance better because they have worked harder and have more intrinsic talent. Sure some people with broken legs will find a new way of dancing, but the corporate media will scoff endlessly. Socialism approves of social mobility and people bettering themselves, even when they are not of the right class.

    Attempting to curb corporate power and insure against bad luck, usually translates into government policies such as there should be a minimum wage (rather than that competition between workers should bottom out below what is needed to live). There should be some kind of unemployment benefits (so that people can risk changing work, or not be forced to work for wages less than the benefits) and this benefit should not just time out. There is usually some kind of provision for health care, so that poor people do not have to ‘choose’ to die or suffer unnecessarily. There is usually a provision for basic pensions, or a compensation scheme, for people who are ill or injured and cannot work.

    Socialism believes that a people can only govern themselves if there is a good education system not influenced entirely by commercial factors, as commerce has little relationship to truth. So it usually believes that spending taxpayers’ money on such a system is a good investment, although it allows people to spend their own money, without subsidy, on their ideas of education, provided it meets some basic quality standards – there will always be debate about these. A socialist state usually has a well funded and independent media provider – which is free of government intervention and commercial control – this has to be fought for, as capitalists like controlling all information. Ideally a socialist government should not be able to declare war unless there is a direct attack on the country, or it consults with the people.

    There are usually regulations on the ‘free market’ (as the desire of corporations to control markets completely is known), so that people cannot be injured, maimed or killed at work without some employer responsibility or compensation from the system. There are usually regulations so that corporations cannot poison, or pollute with complete impunity. It is usually expected that money earned in a country should be taxed in that country, as the money is earned in a situation built by that taxation and spending. Socialism encourages unions so that workers have some bargaining power at work and some rough power equality with their employers.

    The classic socialist states usually ran businesses in competition with private companies. The idea of this was to prevent cartels forming, to have real competition, and to try and foster innovation which is commercially risky. Socialist governments usually try and make sure there is an independent science sector as well to avoid commercial control and the issuing of harmful but profitable substances, and to try and prevent patents from inhibiting research and innovation.

    Basically socialism is about minimising the top down organisation that you get in capitalism where, when things are unchecked, you end up with a simple plutocracy and those who have the money have all the power – like we have now. Socialism encourages all people to participate in their governmental process at whatever level they wish to. It does not panic at the thought of popular action and power sharing.

    Naturally plutocrats hate the idea of sharing power, so they spend a lot of money pretending that capitalist practice leads to liberty and good for all. It has never done so. Capitalism always leads to capitalists capturing the government and using it to further their interests at the expense of everyone else.

    Some Quotations from Adam Smith

    January 18, 2018

    “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the publick, or in some contrivance to raise prices.”

    “The capricious ambition of kings and ministers has not, during the present and the preceding century, been more fatal to the repose of Europe, than the impertinent jealousy of merchants and manufacturers”

    “Civil government, so far as it is instituted for the security of property, is in reality instituted for the defence of the rich against the poor, or of those who have some property against those who have none at all.”

    “Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to only so far as it may be necessary for promoting that of the consumer. The maxim is so perfectly self-evident that it would be absurd to attempt to prove it. But in the mercantile system the interest of the consumer is almost constantly sacrificed to that of the producer; and it seems to consider production, and not consumption, as the ultimate end and object of all industry and commerce.”

    “Folly and injustice seem to have been the principles which presided over and directed the first project of establishing those colonies [in the Americas]; the folly of hunting after gold and silver mines, and the injustice of coveting the possession of a country whose harmless natives, far from having ever injured the people of Europe, had received the first adventurers with every mark of kindness and hospitality.”

    Humanities, Universities and Neoliberalism

    January 1, 2018

    The problem of the usefulness of the Humanities again. The problem is really “how do you do anything in a neoliberal age?” I’m not sure you can deal with the question of the value of the Humanities without some idea of what you are talking about, and some of the problems arise from this confusion so.

    a) Humanities is the study and understanding of, and thinking with, the best works of art, literature and philosophy that we think exist. This list should always be challengeable, because tastes and appreciations change. For example, I personally do not think the absence of Virgil is a problem, it’s an improvement. In general, this understanding requires knowing something about the socio-cultural background and reception of these works. So humanities is bound up with:

    b) Social Studies (note I’m not using the term social sciences, as there is massive dispute about the extent to which any social study can be a science in the way physics is, or biology is, or geology or astronomy are) Social studies inherently involves meaning and interpretation (so it requires (a)). Social studies is the study of how human social and cultural life works in general. Economics is a sub branch of social studies, even though it pretends not to be, primarily to protect itself from a criticism of its values.

    c) Linguistics – not the learning of languages, which could be part of (a), but attempting to understand how languages work, what the impact on thinking is, and how they function in social life. For me this includes Rhetoric, because there is little language without attempts at persuasion.

    There might be other divisions one can make, the categories do not have to be firm or bounded.

    Humanities tend to be conservative and social studies tend to be leftist or critical. On the whole, neoliberals think both are a waste of time; subjects should simply support capitalism and corporate power. Ultimately humanities (a) cannot be justified in terms of profit; criticism (b) should simply be stopped as its wrong; and everyone knows how to speak (c) so all are vulnerable in corporatised universities.

    Neoliberals control universities, as they control most things in our societies. They like building, restructuring and making money, more than thinking. Money goes into CEO and star performer salaries, not to the academic staff in general or student services. Making money is the only mark of value. The idea that a university exists as a space for independent thought, or for learning how to think is, in neoliberal terms, a pointless waste of money. If there is no job at the end of it, and no profit then subjects should go. Consequently, academics should teach paying students what they want to hear, or do research which is profitable and brings in money. I recently read of computer science academics who were not interested in supervising PhD’s that would not lead to a start up company; this may not be true of course.

    If work ends up criticising the contemporary establishment, then it is usually treated as drivel by that establishment. Scientists have started to learn this point as well. We all know how climate scientists have been attacked for speaking unwanted truth to power. Nowadays pure science that is of no corporate interest, or which shows corporate ‘science’ is faulty, is unwelcome. It is seen as political, rather than as part of a search for greater accuracy. Humanities and social studies are automatically considered political, because they are about people and how people behave, and all politics makes assumptions about humans. Even historical research which challenges clichés about socially foundational events, such as Athenian democracy, the American Revolution, or the invasion of Australia, or the beneficence of capitalism, is inherently political, and therefore either to be ignored or persecuted.

    Humanities and social studies are useful, if useful is worthwhile considering. Writers and media people, might find courses on poetry, literature, language and rhetoric useful, as might other people who want to gain some cultural depth and independence of thought, or who might want to persuade people of something. People who want to go into governance, management or journalism had better know something about social studies, if they don’t want to mess things up in normal ways. If values or ethics are important, then having an idea of the range of possible values and how they tend to function is useful as well – although again it will seem pointless to neoliberals as it conflicts with their decided understanding. In neoliberalism, ethics is always about making money, and that is pretty obvious and may need no complex thinking.

    Finally, in neoliberalism there is no such thing as ‘community’, the only class positions that are allowed to exist should be marked by wealth, and human connection should be financial – everything else is simply false. The idea of a community of scholars of intellectuals has no meaning in modern politics. If neoliberals want thought they will set up a think tank, and know what they are going to get in advance; that’s value for money.

    Basically the struggle everywhere is between life and neoliberalism. The more the neoliberal ‘free market’ mob win, the less there is to live for. And conservatives should know this as well; they used to.