@Rory O'F,Many thanks for highlighting this. This goes to the core of current problems.The beast that is capitalism simply mutates, but its essential feature remains unchanged. And that is to permit the few with access to power and resources to squeeze the maximum out of the vast majority whose only resource is their labour and skills.JK Galbraith, as always, hit the nail on the head."Let's begin with capitalism, a word that has gone largely out of fashion. The approved reference now is to the market system. This shift minimizes-indeed, deletes-the role of wealth in the economic and social system. And it sheds the adverse connotation going back to Marx. Instead of the owners of capital or their attendants in control, we have the admirably impersonal role of market forces. It would be hard to think of a change in terminology more in the interest of those to whom money accords power. They have now a functional anonymity."
How about that! Analysis from the IMF that supports the raison d’être for TASC!It is widely recognised that global income and wealth inequality has increased dramatically over the last thirty years, both inside and between countries. If we act on the report's conclusions we can expect to reduce the probability of another global financial crisis by restoring the bargaining power of poor and middle income households.The present unprecedented levels of inequality reflect both the economic and political bargaining power of the wealthy. Many governments, the IMF, the EU and other global institutions act primarily in the interests of the wealthy. At present none of these institutions will countenance policies that would reduce the power of the wealthy. Indeed, behind the mask of neoliberal ideology, they are pursuing policies that further reduce the wages, conditions and benefits of workers, thereby increasing the probability of future financial crises. The balance of power will change when sound argument based on principles of equity and democracy also has the weight of numbers. Organisations like TASC must increase and broaden their membership and forge strong links with similar organisations in Europe and worldwide if we are to achieve a more equitable society.
didn't anyone see the disclaimers at the start of the report, that it didn't represent IMF policy. That aside, the findings are interesting. However, the conundrum of how to level income distribution without limiting investment, which creates jobs remains. Remember the market is an instrument of trade. We can get rid of the market system if we cease trading. Would that make Tasc happy? Then we can all be equally poor.
More equal would be very helpful though Brendan; and as should now be clear global initiatives are the only currency now days. A Tobin Tax like instrument that is applied universally and distributed universally (per capita) would provide massive income redistribution possibilities. So on all financial transactions there is a tax paid and some effort is found to redistribute. It needs no explanation the implications of this if a tax rate of 20% were applied. Will people still invest (of course) will markets resist (certainly) would it take massive political will (yes) could it only work with all of the main markets on board (and yes).Of course, much of this, instinctively, sounds like pie in the sky type material but with internet communities there is now the potential for global democratic petitioning that should add to the strength of the many.And so emanating from these progressive and concerned groups ideas 'go viral' reachin levels like the cat in the bin or crystal swing - where it becomes hard to ignore!. And the new politican appreciates the significance and will as always do anything for your vote (just the anything has the potential to change - somewhat)
@BrendanAs I suggested, the analysis that is the subject of this thread will NOT be used to form IMF policy in present circumstances.Though I am not an expert I am not aware of any theoretical or empirical basis for the proposition that reducing inequality limits investment. What I can say is that the most egalitarian of the advanced capitalist economies, the Scandinavian economies, have growth records over the past eighty years or so that should be the envy of their less egalitarian rivals.I also think the relationship between investment and jobs may be more complex than you imply. In America, one of the most unequal societies in the developed world, many complain that investment has created jobs in China and abroad and too few at home. And in another unequal society – Ireland – we are experiencing the consequences of property investment decisions made between 1997 and 2006.You seem also to suggest that any economic system without markets must lead to poverty. This is unfounded. I refer you to ‘The Political Economy of Participatory Economics’, by Albert and Hahnel (Princeton University Press). While the economic system proposed has its critics no one has suggested it must result in poverty.
There are calls to redistribute - as with national taxation – international market trading (Tobin Tax and currency exchange as example). These measures are often proposed as methods of increasing control over markets and limiting some of their more speculative and dangerous activities – however, there is also the potential to provide a really strong mode of global wealth redistribution (say the 1% or 5% or whatever charge is placed globally is pooled globally and then redistributed on a per capita basis – this would not be massively significant (though it would not be negligible) for leading economies – however, for poorer economies it could be hugely important as a reinforcement of Oversees Development Aid etc. (It is ultimately a way of acting on the fact that the world has the capability to improve the lot of its inhabitants (many of whom by drastic levels))While this rings of ‘pie in the sky’ stuff it is this type of thing – which would most likely gain the support of the overwhelming majority of the planet’s population that can be pushed by our new social technologies. Ideas like this (or better developed versions) can be promoted from arenas like TASC until like the cat in the bin and crystal swing; they go ‘Viral’.Ultimately politicians (who will always do anything to get elected) will see that the ‘anything’ that affects today’s public is of this empathic and global nature in many cases and so we can hope they will move to shift these types of initiatives.
The system is utterly complex. Investment and jobs. Well speculative investment doesn't create jobs. Capital & productive investment does create jobs somewhere in the world. I agree inequality is bad for everyone. It leads to all kinds of problems. How to prevent it? No silver bullet. Why doesn't Kenya etc replicate what Malaysia did from 1950's. Brian/Martin do you advocate basic income? Martin overseas aid has achieved very little in 50 years. Would more of same achieve anything self sustaining in next 50 years? If Europeans never went into Africa, the world would be a different place! Back to the report. Essentially, the 95% were given too much credit and we are where we are. Would like to come back in 1000 years to see how it all worked out!
@ BrianIts true that this isn't official policy, but it is positive that the IMF are being more open minded.I think they (and the bond markets) took seriously the critique of Stiglitz, and the managing director of the IMF (Strauss Kahn) is a senior French Socialist. All this I think allows for more open discussion rather than dogmatically following pro-market policies. I once heard a former IMF guy saying that before when the IMF arrived on the scene bond rates dropped, but this doesn't happen anymore. I think people in general have copped on that pro-market policies are not a panacea. Politicians tend to be behind the curve on the latest economic ideas however.That said, the IMF is still a conservative institution. A previous post I made shows how they are still fairly dogmatic in their policy prescriptions. I think some in the organisation see the serious problems with those prescriptions however.
@RoryI am not persuaded that the IMF’s policies will change because its head is a former socialist and some of its analysts are at odds with its prescriptions or because of critiques by Stiglitz and others. Stiglitz was Chairman of President Clinton’s Council of Economic Advisors and was Chief Economist at the World Bank without effecting any change in institutional policies favouring the wealthy. And it is not credible that right- wing governments would approve the appointment of Strauss Kahn to the IMF if it was thought likely he would undermine the interests these governments serve.The IMF, EU and other governments will pursue their policies until their political and economic costs begin to outweigh their benefits to the wealthy. I suspect that a prolonged period of relative stagnation, high unemployment and the attendant risk of serious social unrest might weigh more heavily in policy decisions than sound, principled argument alone.
@RoryAnd I should have added that governments are subject to their electorates as well!
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