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postcapitalism [2016/01/26 19:30]
will [The upswing] |
postcapitalism [2019/11/08 10:39] (current)
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| > The neoliberals sought something different: atomization. Because today's generation sees only the outcome of neoliberalism, it is easy to miss the fact that this goal -- the destruction of labour's bargaining power -- was the essence of the entire project: it was a means to all the other ends. Neoliberalism's guiding principle is not free markets, nor fiscal discipline, nor sound money, nor privatisation and offshoring -- not even globalisation. All these things were byproducts or weapons of its main endeavour: to remove organised labour from the equation.((pp91-2)) | > The neoliberals sought something different: atomization. Because today's generation sees only the outcome of neoliberalism, it is easy to miss the fact that this goal -- the destruction of labour's bargaining power -- was the essence of the entire project: it was a means to all the other ends. Neoliberalism's guiding principle is not free markets, nor fiscal discipline, nor sound money, nor privatisation and offshoring -- not even globalisation. All these things were byproducts or weapons of its main endeavour: to remove organised labour from the equation.((pp91-2)) |
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| During the 1980s, many countries adopted deliberately self-destructive policies in order to deepen the recession, in order to further undermine the working class. High interest rates destroyed many of the large industrial companies in which unions were strongest. In Japan unions were broken by "taking out the ringleaders and beating them physically every day until resistance stopped."((p92) But the true success of neoliberalism's attack on labour was at the "moral and cultural level": union membership drastically declined. "Across the Western world the wage share of GDP fell markedly."((p93)) | During the 1980s, many countries adopted deliberately self-destructive policies in order to deepen the recession, in order to further undermine the working class. High interest rates destroyed many of the large industrial companies in which unions were strongest. In Japan unions were broken by "taking out the ringleaders and beating them physically every day until resistance stopped."((p92)) But the true success of neoliberalism's attack on labour was at the "moral and cultural level": union membership drastically declined. "Across the Western world the wage share of GDP fell markedly."((p93)) |
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| Much of the remainder of the chapter goes through a series of graphical illustrations of the fourth wave. One in particular is important to resolve the common misconception that it is in a ruling class's interests to maintain healthy growth in an economy. This figure illustrates that during the upswing, 99 per cent of society enjoy steady gains in their income, but the top 1 per cent benefited little. During the downswing, this relationship is reversed: 99 per cent of society see their income flatline, but after the assault on organised labour in the early-to-mid 1980s, the income of the highest 1 per cent of earners rockets. | Much of the remainder of the chapter goes through a series of graphical illustrations of the fourth wave. One in particular is important to resolve the common misconception that it is in a ruling class's interests to maintain healthy growth in an economy. This figure illustrates that during the upswing, 99 per cent of society enjoy steady gains in their income, but the top 1 per cent benefited little. During the downswing, this relationship is reversed: 99 per cent of society see their income flatline, but after the assault on organised labour in the early-to-mid 1980s, the income of the highest 1 per cent of earners rockets. |
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| | {{ ::income_inequality.png?direct&800 |}}((Source: Piketty, Thomas, and Emmanuel Saez, 2004, Income Inequality in the United States 1913-2002, table A4, incomes expressed in 2000 US$)) |
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| Neoliberalism succeeded in destroying working-class organisation in way that has never happened before, and in the process rebalanced the entire global economy in favour of capital. Kondratieff's theory predicted that we would see downturn and depression, but by breaking labour, neoliberalism managed to convert this into | Neoliberalism succeeded in destroying working-class organisation in way that has never happened before, and in the process rebalanced the entire global economy in favour of capital. Kondratieff's theory predicted that we would see downturn and depression, but by breaking labour, neoliberalism managed to convert this into |
| - From March 1921: the market for food was restored, with peasants paid for their produce. Better off peasants benefited, and the price of food throttled industrial development. Government bureaucracy was solidified. | - From March 1921: the market for food was restored, with peasants paid for their produce. Better off peasants benefited, and the price of food throttled industrial development. Government bureaucracy was solidified. |
| - A dispute emerged: | - A dispute emerged: |
| - Trotsky and working class pushed for more democracy, less speculation and industrialisation through central planning | - Trotsky and the working class pushed for more democracy, less speculation and industrialisation through central planning |
| - Bukharin preferred greater restoration of markets, delayed industrialisation and support for a peasantry enriching itself, while | - Bukharin preferred greater restoration of markets, delayed industrialisation and support for a peasantry enriching itself, while |
| - Stalin merely defended the interests of the established bureaucracy. | - Stalin merely defended the interests of the established bureaucracy. |
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| This was resolved by Stalin expelled rivals and then adopted parts Trotsky's proposal in an extreme and violent form, destroying the wealthier peasantry through enforced collectivisation, killing 8 million people in 3 years in order to kickstart industrial development which aimed to catch up with the West in 10 years. | This was resolved when Stalin expelled rivals and then adopted parts Trotsky's proposal in an extreme and violent form, destroying the wealthier peasantry through enforced collectivisation, killing 8 million people in 3 years in order to kickstart industrial development which aimed to catch up with the West in 10 years. |
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| > The USSR did not catch up with the West in ten years. But by 1977 its GDP per head was 57 per cent of the USA's -- which put it on a par with Italy. From 1928 until the early 1980s, the average growth in the USSR, according to a CIA-commissioned survey, was 4.2 per cent. 'This clearly qualified as a sustained growth record,' concluded analysts at the RAND corporation.((pp222-3)) | > The USSR did not catch up with the West in ten years. But by 1977 its GDP per head was 57 per cent of the USA's -- which put it on a par with Italy. From 1928 until the early 1980s, the average growth in the USSR, according to a CIA-commissioned survey, was 4.2 per cent. 'This clearly qualified as a sustained growth record,' concluded analysts at the RAND corporation.((pp222-3)) |
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| However, this study((Which may not be the most unbiased view of the Soviet economy.)) concluded that only a quarter of this growth had come from productivity increases, the rest coming from increased inputs. For this reason, this growth was not sustainable -- exponential growth is not typically considered possible simply by amassing ever greater quantities of capital in this way (according to mainstream economic theory). | However, the RAND study((Which may not be the most unbiased view of the Soviet economy.)) concluded that only a quarter of this growth had come from productivity increases, the rest coming from increased inputs. For this reason, this growth was not sustainable -- exponential growth is not typically considered possible simply by amassing ever greater quantities of capital in this way (according to mainstream economic theory). |
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| At this point the book contains an incongruous attack on state planning, which is odd for two reasons. First, it seems unlikely that many readers need convincing that in 2015 a new system of state planning will rescue the global economy. Second, the entire thing is a straw man, attacking laughably weak examples of state planning (namely pre-war Soviet attempts and an academic political science project run by a couple of guys in Europe), pretending that a single failed example proves all attempts impossible and studiously avoiding credible alternatives.((More obvious examples might have been (1) economists such as Galbraith who documented how the American and British economies rapidly adopted massive state planning in response to the outbreak of the Second World War, who testified that it had turned out to be fairly straightforward in practice so long as there was a large government system in place to do the work, (2) evidence of economic planning by transnational corporations in the current global economy that is of a similar scale and similar type to that of small modern national economies, or (3) the heavy involvement of political planning in the financial systems of a wide range of modern economies ranging from China to Germany via many small developing countries, and the arguably more favourable long-term success of some of these systems compared to the "apolitical" or "unplanned" financial systems in the US or UK that make short-term profits by annihilating long-term viable industrial enterprises.)) | At this point the book contains an incongruous attack on state planning, which is odd for two reasons. First, it seems unlikely that many readers need convincing that in 2015 a new system of state planning will rescue the global economy. Second, the entire thing is a straw man, attacking laughably weak examples of state planning (namely pre-war Soviet attempts and an academic political science project run by a couple of guys in Europe), pretending that a single failed example proves all attempts impossible and studiously avoiding credible alternatives.((More obvious examples might have been (1) economists such as Galbraith who documented how the American and British economies rapidly adopted massive state planning in response to the outbreak of the Second World War, who testified that it had turned out to be fairly straightforward in practice so long as there was a large government system in place to do the work, (2) evidence of economic planning by transnational corporations in the current global economy that is of a similar scale and similar type to that of small modern national economies, or (3) the heavy involvement of political planning in the financial systems of a wide range of modern economies ranging from China to Germany via many small developing countries, and the arguably more favourable long-term success of some of these systems compared to the "apolitical" or "unplanned" financial systems in the US or UK that make short-term profits by annihilating long-term viable industrial enterprises.)) |
| * Continue to permit complex financial activities under heavy regulation, with the aim of allocating investment between sectors to support innovation. | * Continue to permit complex financial activities under heavy regulation, with the aim of allocating investment between sectors to support innovation. |
| * Use criminal law to enforce the basic principles of professional ethics within financial professions, to replace complex regulation. | * Use criminal law to enforce the basic principles of professional ethics within financial professions, to replace complex regulation. |
| * Address the burgeoning debt overhang by running moderate inflation to make real interest rates negative and persecute or isolate attempts to offshore wealth.((To be brutally clear, this would reduce the value of assets in pension funds, and thus the material wealth of the middle classes and the old; and by imposing capital controls you would be partially deglobalising finance. But this is only a controlled way of doing what the market will do via chaos if, as S&P predicts, 60 per cent of all countries see their debt reduced to junk by 2050. [p275])) | * Address the burgeoning debt overhang by running moderate inflation to make real interest rates negative and persecute or isolate attempts to offshore wealth.(("To be brutally clear, this would reduce the value of assets in pension funds, and thus the material wealth of the middle classes and the old; and by imposing capital controls you would be partially deglobalising finance. But this is only a controlled way of doing what the market will do via chaos if, as S&P predicts, 60 per cent of all countries see their debt reduced to junk by 2050." [p275])) |
| * In the much longer term, use carbon trading as the model for new frameworks for the state to incentivise behaviour without directly relying on money or fractional reserve banking. "The objective is to maintain complex, liquid markets in tradable instruments, while removing the possibility that there will ever be payback in monetary form".((p283)) | * In the much longer term, use carbon trading as the model for new frameworks for the state to incentivise behaviour without directly relying on money or fractional reserve banking. "The objective is to maintain complex, liquid markets in tradable instruments, while removing the possibility that there will ever be payback in monetary form".((p283)) |
| * Pay everybody a basic (citizen's) income in order to provide space for people to engage in more non-market work and to give them the power to demand high paid, creative employment. The basic income is "an antidote to... 'bullshit jobs': the low-paid service jobs capitalism has managed to create over the past twenty-five years that pay little, demean the worker and probably don't need to exist."((p285. A figure of £6,000 per year is suggested, based on the state pension, with a minimum wage of £18,000. This would diminish over time as the cost of living fell.)) | * Pay everybody a basic (citizen's) income in order to provide space for people to engage in more non-market work and to give them the power to demand high paid, creative employment. The basic income is "an antidote to... 'bullshit jobs': the low-paid service jobs capitalism has managed to create over the past twenty-five years that pay little, demean the worker and probably don't need to exist."((p285. A figure of £6,000 per year is suggested, based on the state pension, with a minimum wage of £18,000. This would diminish over time as the cost of living fell.)) |
