Monday, 30 January 2012

Alternatives to Current Austerity Policy

Nat O'Connor: A wide range of Irish and international economists and commentators were interviewed for an article in last Saturday's Irish Times, including Nobel Prize winner, Joseph Stiglitz who warned about the historical evidence, which shows "There have been almost no instances of successful austerity. ... The prospect of austerity working in Ireland is very bleak. ... the probability of failure is huge."

Yet as Professor Karl Whelan from UCD argues in the same article, those proposing alternatives are "duty-bound to say where we would get the money."

Well, there is no magic solution, but there are increasingly detailed alternative economic policies being developed here and internationally.

I want to deal with three things in this post: (1) what I mean by 'austerity'; (2) what is needed at European level; and (3) alternative economic policies suggested in the UK and Germany.

(1) Austerity is unfortunately a loaded word. Technically, a policy of reducing the deficit through a package of measures to increase revenue and reduce public spending is 'austerity'. But the word is emotion-laden; cuts to education or welfare tend to be more often labelled austerity than measures to cut waste or increase taxes on higher earners, yet the latter measures are also potentially part of austerity measures.

So, to be clear, I am critical of current austerity policies because they have unfairly targetted lower earners and the services upon which they rely; and because the austerity measures are strangling the economy due to insufficient measures to sustain and increase demand to boost economic activity. An alternative economic policy must still deal with the deficit and the national debt. As such, this will involve some 'austerity'. However, any cuts should be balanced by higher public spending in other areas. And increased taxes should target people who can better afford to pay. What would also be different is measures to boost demand, foster sustainable jobs and protect people who are vulnerable.

(2) The Government's reported involvement with an initiative to boost trade and growth in Europe is welcome, but this should not overshadow more profound changes needed at European level that have - to date - been absent from the crisis talks and treaty proposals. For example, the European Central Bank should have a mandate to boost sustainable economic output and maximise employment, similar to the US Federal Reserve. This, among other effects, would allow for inflation targets to vary from the current two per cent to higher levels (maybe four or even six per cent) when this serves Europe's economies better. Controlled higher inflation would help reduce the extent of national and private debt across Europe. Other elements of possible enhanced European co-operation that seem to be missing from the proposed treaty are Eurobonds and a Europe-wide financial transactions tax.

When the final text of the proposals is revealed it will be possible to say more about what exactly they imply.

(3) I recently noted that President Obama's state of the union address echoes some of what has been called for by opponents of Irish austerity policies. The above-mentioned Irish Times article opened by reference to our call for a Plan B.

In a similar vein, Compass in the UK are promoting their own Plan B (published in October 2011), subtitled "A Good Economy for a Good Society".

In summary, Compass is calling for:
- A halt to public spending cuts;
- Quantitative easing to invest in a Green New Deal;
- Tax reform to curb avoidance and increase progressivity;
- Strategic Government support to business (such as a state investment bank);
- Better regulation of banks (including the full separation of retail banking from financial investment banking);
- Social investment, with a focus on prevention;
- A move to shorter paid work time;
- Raising the minimum wage;
- Tackling high pay;
- More employee participation in corporate governance;
- Public service reforms.

In their words, "Plan B shows there is an alternative, not just to cuts, austerity and stagnation, but to a return to business as usual and all that means for growing inequality, climate change and people's well-being."

Another report on similar lines is from the German Friedich Ebert Stiftung. They released a policy paper in January 2012 entitled "Social Growth - Model of a Progressive Economic Policy".

This includes a ten-point programme:
1. Guarantee a stable supply of credit with effective financial market regulation;
2. Use education policy to boost the forces of growth and expand opportunities for all;
3. Open up new areas of growth with industrial policy;
4. Strengthen the position of employees by means of minimum wages and codetermination;
5. Fund public tasks properly and fairly by reforming tax policy;
6. Stablilise the economy and the debt situation by means of an anti-cyclical fiscal policy;
7. Strengthen forces for growth in Europe by means of a robust public financial architecture;
8. Provide for more stability in the Eurozone by means of economic policy co-ordination;
9. Ensure decent work for all by means of European and global standards;
10. Manage globalisation by means of a new economic and monetary order.

Both the Compass Plan B and Friedrich Ebert Stiftung's Social Growth documents articulate in more detail the social democratic critique of current orthodox economics and the dead-end austerity policies it proposes. The alternative policies are not being presented as a panacea, but are suggestions for wide-ranging economic policy reform, built on extensive research and evidence. They represent a viable set of economic policies that governments can pursue to improve people's wellbeing, while restoring sustainable economic output and jobs.

In Ireland's case, we will still no doubt hear voices claiming that such policies wouldn't work here. Well, no doubt they would have be tailored for Irish circumstances. But there is still much of interest in what is being proposed, not least because the proposals see equality and sustainability as core attributes of economic reform, not 'side issues' to be addressed once some kind of mythical 'rising tide' is restored.

And Ireland has some resources that could be immediately mobilised, without altering the IMF/EU agreement. This includes using the remaing NPRF (c. €5 billion) for targetted, productive investment and likewise ring-fencing for investment any money saved from delaying payment of the Anglo promissory notes, which could be one or two billion euro a year for several years. Crucially, it is not just about substituting spending for austerity. There remains a need to reform Ireland's tax system, regulate banking, move public spending to where it is most needed, and a host of other things. While some of such measures may, technically, quality as 'austerity', they differ crucially from current policy in that they would maintain incomes and living standards, promote jobs and sustainable development and lead, ultimately, to a socially just and sustainable recovery.



Global Debt Crisis

The greatest private fraud of human history.

Who are the great fraudsters who are becoming the murderers of the human kind?

How does the economy "illness" threaten Democracy and the freedom of people?


By knowing what happened in indebted Greece, where loan sharks created “bubbles” and the current inhuman debt, one can understand the inhuman plan in total ...understand where this plan started just to bring all states at the same end ...understand how this type of plans are established...


Anonymous said...

In fairness to Karl Whelan whom you highlight, he is arguing against those who do not want to close the gap between income and expenditure. They are a tiny minority and in that sense he is perhaps setting up a Straw Man to knock over.

Most of us favour less austerity and over a longer time... so that we can get sustainable economic growth.
It increasingly looks like this view is becoming more accepted here in Ireland. In the UK the debate is far more balanced and now we are getting more balance and debate in this wee country. For example, look at the questions here in the Irish Times, till now a staunchly uncritical supporter of the excruciatingly destructive level of austerity imposed (as it was during the boom of pro-cyclical policies).

Nat O`Connor said...

@ Anonymous

I referenced Karl Whelan because I agree with him that we do have to identify plausible sources of finance. I think his call is more than a straw man, as alongside the "tiny minority" who don't want to close the deficit, there seems to be a larger group who deny that it is possible for the Government to do this through productive investment. That is why I want to stress that there are options - both in terms of sources of money (NPRF) and areas of investment where both 'leakage' and current investment are low and therefore where state-led investment will do most to boost the economy's productive capacity.

Padraig Henry said...

Isn't it quite extraordinary for any economist (or banker or finance capitalist) to ask "where can we get more money from" after hundreds of years of clear and insightful analyses of the nature of money, by political economists, metaphysicians, scientists, and psychoanalytic theorists? Are today's mainstream economists that infected by ideology that they've completely, fatalistically, given up, resigned themselves to the capitalist ideological machine?

You mention Stiglitz, but it should be clear that his main contribution is that he more convincingly demonstrated - to the economic mainstream - by means of an analysis of underlying information asymmetries something that's already been known since the 19th century: the entirely fictional and supernaturalist nature of the irrational belief in "efficient markets" and the "invisible hand" ...

But let's return to the economic coalface here, and the fundamentally abstract-materialist nature of Capital, and how this relates to Ireland's current crisis:

"Capital is born by representing in writing – in a title, a security, a contract, and other such records – the most economically and socially useful qualities [associated with a given asset]. The moment you focus your attention on the title of a house, for example, and not on the house itself, you have automatically stepped from the material world into the conceptual universe where capital lives."---Hernando De Soto , The Mystery of Capital.

"All sorts of things can be money, but there has to be some physical realization, some brute fact – even if it is only a bit of paper or a blip on a computer disk – on which we can impose our institutional form of status function. Thus there are no institutional facts without brute facts."---John Searle, The Construction of Social Reality.

"Money plays two different roles, as structure of financing, as a quantity that I called power of x, and as means of payment as quantity of power of y. It is not the same money that is cash and that is capital. All the economists know this, for the great economic question since the crash has been: how is one to build capital with only a little cash, or at the limit, without cash at all ... [ ... ] ... The bourgeois sets the example, he absorbs surplus value for ends that ... have nothing to do with his own enjoyment: more utterly enslaved than the lowest of slaves, he is the first servant of the ravenous machine, the beast of the reproduction of capital. 'I too am a slave'- these are the new words spoken by the master."---Gilles Deleuze and Felix Guattari, Anti-Oedipus.

"Cash is depotentiated capital: an enterprise cannot realise its capital, only a'private' individual can, but this is effectively a translation from one kind of currency (fluid finance capital) to another (purchasing capital). In the process of translation, money is severed from time-reference, whereas, in capital proper, time and money implex into each other. You can buy time, and in that time you can accumulate more capital, with which you can buy more time, in which...

It's important to note that, in the humanist-Marxist-socialist-workerist model, the process of cashing out capital into labour also, supposedly, dispenses with fiction. At the moment when labour-time reasserts its rights, the fictional will be unmasked, its power dissipated. Yet, as Jameson rightly insists, we are amidst "the emergence of a new realm of image reality that is both fictional ... and factual." "----Mark Fisher, SF Capital.

[Continued in next post/comment below ...]

Padraig Henry said...

Someone suggested: "What I mean is, imagine an island with only ten people. A hundred dollars is issued to each person, but is issued at interest such that they each have to pay a hundred and ten dollars. So you have 100 x 10 dollars in the system, but a debt of 100 x 10 + 100. Everyone has the same bill. They all owe the same thing. For a person to fully pay off their loan and interest, money must be either borrowed from outside the system, exasperating the debt, or come from within the system, from somebody else's loan principal. So for a person X to owe 0, someone else must have X's 110 debt, plus their own original 110 debt. From here on, every dollar of profit X makes, someone must owe a further dollar of debt, which to me seems like a violent thing. The neoclassical argument that this doesn't happen is that money has a certain circulation velocity. That the person 110 dollars in debt can hold on to that 110 that is not his long enough to make money which allows him to shift the debt along. So theoretically, everybody and nobody is in debt."

Isn't this the (immanent) internal contradictions of capitalist accumulation that Marx mapped out long ago, or what today economists and bankers (without understanding the nature of this inherent contradiction) euphemistically term "systemic risk", the buzz term of the past few years, especially since the financial meltdown?

About such an island with ten people, though, first we'd have to examine what the mode of production there actually is, that is, the combination, the meshwork, between the means of production (all the resources of the island, including the ten people) and the relations of production (the social structures, the rules, regulations, and laws that they live by ie the social-symbolic order that applies, and how they relate to the means of production). In other words, is it, say, a feudal economy, a proto-capitalist economy, a late-capitalist economy? Is it a "gift economy", a 'barter economy', or a 'monetary economy'? Is the island "owned" by anyone (is it 'real estate') or is it a Commons? Is there a 'central' bank, a monetary authority that issues and controls the money supply? And is that bank a cooperative or controlled by one or two of the population? Are its advances of money in the form of loans or in the form of asset exchanges (eg mortgages, liens, etc)? Or are they in the form of investments, whether equity or 'free'?

Though the quotes at the beginning of this post distinguish between money or cash and Capital, money is nevertheless the ENGINE of capital and of economies, the motor or lubricant by means of which economic behaviour and activity is initiated and Capital is accumulated. You can have a monetary economy without capitalism, but you can't have capitalism without money ...

[Continued in next post/comment below ...]

Padraig Henry said...

[Continued from previous two posts above] ...

The fundamental 'internal contradiction' underlying money relates to its status as a Sign without referent (a Master Signifier, a signifier without deterministic signification, a polymorphic void of negativity that nevertheless initiates the need for meaning and significance): cash is NOT a representation of money-value but is "self-referential", it is 'the thing itself', it does the work of money, it is operational, and so, once accepted, engineers economic reality. The belief that money is 'just' a representation of wealth, assets, resources, etc, is the mistake, the symbolic fiction, made by near everyone, including the priests of capital, from economists to bankers [ and central bankers] to entrepreneurs. Money is NEVER 'backed' by anything ... but once money is created (by the issuing institution, whether central bank or otherwise) it thereafter is a generalized medium of exchange, it can be exchanged for - potentially - anything, commoditiies, other currencies, etc. Indeed, it's the superstition (this is why capitalism is pseudo-religious, is religio-genic) that money needs to be 'backed' by Real Money (eg gold, land, property) that causes all the problems, that money must have some irreducible, unchanging, "inner essence", some mystical intrinsic Value that is the source of all real value (for Marx, of course, the source was labour power). No, once it's created and accepted (such acceptance determined by the big Other, the belief that someone else believes in it as money, as a legitimate medium of exchange) it's automatically exchangeable into anything. The problem (or rather, horror) of the Gold Standard was that people 'really believed' that money was 'really', essentially gold, and not entirely separate, an abstract materiality (forgetting that it was money that enabled the purchase of gold, or anything else). The notion of organizing and basing a whole economy, not on the actual needs of that economy (food, clothing, health, housing, education, transport-communications), but on the gratuitous, arbitrary supply of a totally useless, merely decorative, commodity (gold), is extraordinary in its sheer irrationality and bizarre superstition. And such a system caused - despite its imagined stability [stability for a tiny wealthy elite]; for the majority, it was a stability of poverty - untold havoc during its operation, right up to the 1920s/1930s. What we've had since then is merely the substitution of a gold standard for a 'debt' standard (claims on, usually financial, assets or obligations to pay). So consider, then, what's happening now in the Euro-Zone, the crisis, of how - for the European Central Bank (which is a central-distributed network, with each member country also having their own mini subsidiary central bank), the IMF, and other monetary institutions - it is being dealt with, managed, on the old anachronistic, superstitious assumption that 'money' has still to be 'backed' by some real intrinsic property, leading to the demented current policy where the European Central Bank is LITERALLY burning, terminating money (fantasies, fears of the hyperinflation of the early-1920s recurring; but the comparison should be with the late-1920s/early-1930s, of collapse after a credit expansion/boom, with deflation and austerity, not inflation; and we all know what that led to, a fact of history that the unconscious compulsion to repeat it is currently in the process of repressing).

Padraig Henry said...

[Continued from previous three posts above] ...

Ireland is the obvious case where this is happening, where money has been newly created (both by the European Central Bank and Ireland's national Central Bank) to the tune of around 190 Billion Euro (138 billion from the ECB and 51 billion by the ICB); this money - obscurely called Emergency Liquidity Assistance, specially created to bail out all the insolvent zombie banks (they're 'zombie' banks because they are dead but do not yet know that they are dead) - is now circulating in the Euro System and beyond, and there's no inflation, no mass hysteria, no desire to retreat from money into commodities. Yet, these unreasoning institutions are demanding full repayment of these amounts ... and from the Irish state, the Irish government. Hence the savage, imposed austerity measures by the agents of capital - sociopathic cutbacks in essential social services, tax increases, unprecedented unemployment, economic regression and collapse, etc - but all of these measures are simply, ultimately, for purposes of raising money from the mass of Ireland's working population that will then be paid back to the central banks which will then ... wait for it, it's too crazy - DESTROY the money, terminate it, write it all off, remove it all from circulation, contract the money supply, by means of a simple accounting entry in their constitutiively contradictory balance sheets (the concept of 'assets' and 'liabilities' is of course entirely redundant and superfluous in the case of a monetary-symbolic issuing institution, as it's entire role is as a Symbolic guarantee of the monetary system, not a 'physical-empirical' one). So we can more clearly see what's really happening here: capitalist power is reasserting itself, class structure is being reinforced: whole economies are being devastated via unnecessary cutbacks in order to preserve elite class structures, not to really solve economic problems and needs. All that money already exists (ie all the debts can be simply written off and nobody - no one whatsoever - would lose anything). Central banks can never 'lose' money, as they are the institutions with the sole authority to create it ab nihilo. Yet here, having created it, they now want to destroy it again, a move which, again, is based on a destructive and irrational superstition about the actual symbolic nature of money ...

Should this economic pathology proceed, be allowed to proceed, Ireland's population seemingly pacified into passive-aggressive consent, then Irish people seriously need to consider establishing LOCAL new currencies to initiate and facilitate economic activity and development among or in the most depressed sectors and regions of the economy. Otherwise, it's reflexive impotence, long-term poverty and psychoanalytic depression, or emigration.

Nat O`Connor said...

@ Padraig Henry

Thanks for your contribution.

If I understand you correctly, your main point is that because money can be printed or created at the touch of a butten in a Central Bank that it is merely 'symbolic'.

You are right that money can be created (and destroyed) in this way, and is not backed by gold or anything else.

However, there are two other crucial characteristics of money that help explain the current situation: trust and distribution.

You touch on trust. People need to have confidence that if they are given paper (or an electronic balance in a bank account) today, this will be widely accepted for a known quantity of goods and services in the days to come.

If banks creates massive amounts of money, people would be concerned that prices would rise and their pay and/or savings will be devalued.

Which brings us on to the second point. In general, when looking at the economy, I am concerned about the morality of how money is distributed. When it comes to banks creating money, this is considered to be a form of taxation because the increased supply of money decreases the purchasing power of people's pay and savings.

With all this in mind, the Irish situation can be explained differently. Yes, the ECB and ICB created a lot of money to plug the hole in Ireland's banking system, and yes, when we pay back that money they will destroy it. But if they do not destroy it, it would represent taxation on the rest of the people of the Euro zone. The EU does not (currently) permit fiscal transfers between member states. So, therefore we are under pressure to pay the money back. (Although, it seems likely that the timing of this is may be stretched into the future).

There is merit in the idea of a co-ordinated decision by Euro member state governments to have the ECB engage in some quantitative easing (i.e. creating money electronically) to get us out of the hole we have dug for ourselves. After all, the UK and USA have done it - partially because their independent central banks are concerned with more than inflation.

However, QE would have a distributional effect on non-Euro countries holding Euros on deposit - including developing countries. The purchasing power of their deposits would decrease and their trust in the Euro as a rival global currency to the US dollar would be decreased. So, QE is not a cost-free solution to our problems.

As for local currencies, and local exchange trading systems (LETS), they could certainly play a role in boosting local economies and a minor rule change that caused the ECB to turn a blind eye would probably be a good thing. (Currently, rival currencies are illegal in the Euro zone).

Paul Hunt said...

@Padraig Henry,

Many thanks for your lengthy contribution. It is eloquent testimony to the deep-seated (and valid) desire of many here and on the left generally to suppress or supplant capitalism. Nat O'Connor has played in blinder in trying to restrict, downplay and re-channel the thrust of your magnificent critique - and I am intrigued about his references to the 'morality' of the distribution of money and to the ECB turning a 'blind eye' to local currencies.

But, while this critique and desire to supplant and suppress capitalism seems to animate so many on the left and while a majority of voters, rightly or wrongly, perceive this to be the core agenda of the left, the left will struggle to muster the popular support that will propel it in to government in Ireland or anywhere else.

mikehall said...

Nat O'Connor says:

"....When it comes to banks creating money, this is considered to be a form of taxation because the increased supply of money decreases the purchasing power of people's pay and savings."

This is complete rubbish Nat - you should burn your macro textbook & study how banking actually works & the empirical evidence.

Start here:

The likes of Steve Keen & MMT economists have called the economy correctly for at least the last decade, yet you and other so called 'progressives' continue to ignore reality. Why?

Padraig Henry said...

Nat, many thanks for your considered response.

A few of the arguments I presented perhaps need further elaboration. You write:

"If I understand you correctly, your main point is that because money can be printed or created at the touch of a butten in a Central Bank that it is merely 'symbolic'."

It isn't the case that money is 'merely' symbolic, merely a representation of something; it is that it acquires the status of money by means of it becoming symbolically inscribed (just as any social-symbolic institution does, including a central bank.

The symbolic is fictional, yes, but this doesn't mean it isn't true. On the contrary, what ordinary commonsense terms 'reality' is in fact a symbolic fiction, the social-symbolic order, everyday quotidian reality. If you remove from reality (as disdinct from the elusive Real) the underlying symbolic inscriptions and fictions that support it, reality itself collapses.

Signs, and money is such a Sign, do not 'depict' an object, do not represent reality: they actively engineer it. Whereas a representation just stands in for an object, a Sign (what Baudrillard termed a 'simulation') Does Its Work. Postmodern capital (the ultimate sign without a referent) would be the classic example.

What makes money operational is a discrepancy upon which all ideology depends for its effectiveness: the discrepancy between what we know and what we do, between Knowledge and Belief, between the epistemological and the ontological.

Everyone behaves and acts as if money and commodities are magical. It is never enough to simply say that "money is just worthless paper" or digits in cyberspace" or that "commodities are just things" etc, as if people don't already KNOW this. Everyone does know this already, from a four-year-old child up to some finance capitalist in Goldman Sachs. The problem is that everyone engages in a fetishistic disavowal, everyone acts as if they didn't know this, acts in spite of their knowledge. They disavow the knowledge, because behaviour is determined by disavowed beliefs and symbolic identifications. Nobody 'really believes' in Santa Claus either - not adults, nor young children - yet there's a Christmas Tree in every home in the West every Christmas, and Santa is everywhere. Similarly with the Environment, which everyone already knows is in serious trouble, yet we have the [cynical] hilarity of the biggest polluters, like oil companies etc, lecturing us all about the 'green economics', about the importance of conservation, recycling, etc, as they continue or even expand their destruction of resources and the environment). Because the "big Other" believes. We all implicitly assume that there is SOMEONE who believes, even though this someone is entirely imaginary and virtual, doesn't exist. This someone believes FOR US, in our place, and so we act accordingly. We all assume that SOMEONE ("THEM" perhaps) believes that money and commodities have magical qualities, that someone knows and believes and understands that money has real intrinsic value, such imagined other and their belief guaranteeing that value. And as long as such superstitions continue, as long as people continue to (disavowedly) believe, then economic systems based on money and capital and commodities will continue. This is also why the notion that simply 'informing' the public of the illusory nature of money and the economy, that everything could be rectified if only people were properly informed, educated, 'given all the facts', is equally magical thinking, as if information itself has magical transformative qualities. No, in these metaphysical matters information and knowledge counts for nothing, is NOTHING. What is crucial is social structure, libidinal investments (inscriptions of desire and identifications), in short, ontology (ideological beliefs and practices).

Padraig Henry said...

[Continued from above ...]

"If banks creates massive amounts of money, people would be concerned that prices would rise and their pay and/or savings will be devalued."

But the money has ALREADY been created and is now in circulation (indeed, over 110 billion in 'deposit flight' from the affected Irish banks has occurred in the last year alone), and not just the 190 billion euro, but now being gradually added to by the Troika's further 85 billion in loans. Furthermore, these amounts are a mere trickle when compared to the vast amounts of new money created by the world's four leading central banks over the past 3 years. In the past 2-3 years, the Fed, ECB, BofE, and Bank of Japan, have been 'buying' up government or national debt in vast, unprecedented quantities, particularly the Fed (using the esoteric, mystical euphemisms "quantitative easing", and, more recently, "qualitative easing" [ie buying longer-term government debt and bonds]). Over Five Trillion Dollars of debt and new money. Of course it's doing this in a round-about or indirect way to convey the illusion that everything is just "business as usual", that there's nothing to worry about really.

"In general, when looking at the economy, I am concerned about the morality of how money is distributed. When it comes to banks creating money, this is considered to be a form of taxation because the increased supply of money decreases the purchasing power of people's pay and savings."

But the opposite has happened, the bailouts have further guaranteed their savings.

As for 'morality', capitalism entails the collapse of the Ethical. Surely, after the past few years, and the collapse of neoliberal ideology, it would be ridiculous to claim that wealth and corruption can still be parsed?

Isn't that what neoliberal capitalism is, what it does, what it systemically produces? Corruption. It isn't that supposedly 'free individuals' somehow 'individually' become corrupt - the bad apple argument or fallacy - because that reduces a structural problem to the level of individual or personal morality. And this is what happens under liberal capitalism - just look at party politics everywhere in the West, conducted entirely at the level of the ad hominem. But such a system based entirely on ad hominem attacks is completely unworthy, and serves as a deflection from actual capitalist dynamics, so abjectly serving to produce and reproduce them. They bespeak a mix of implicit cynicism and smug complacency often to be found lurking beneath most Right wing positions: a sense that everyone is a Hobbesian, the vulgar 'hermeneutics of suspician' that everyone always acts according to base motives, why expect or pretend anything else? ("You too are as selfish/ miserably compromised as the rest of us." etc)

Strange at this time (after bailouts, financial meltdowns, and insane austerity measures, still worsening) for the apologists of capital to accuse capitalism's critics of a lack of probity. The mantra is that all the people exposed in these scandals were just bad apples, anomalous, not at all typical. But the bad apples, the scapegoats, are quickly replaced by new ones, because the structures are unchanged, just different empirical individuals occupying the same positions in a (symbolic) structure that quickly infects and overdetermines their behaviour, their beliefs, their 'values'.

A century and a half ago, Marx exposed the complicity of Socialist moralism with a Christian ontology of individual guilt and responsibility. Capitalism, he showed, should not be critiqued on this basis, but as an IMPERSONAL SYSTEM, with its own ineluctable laws and tendencies.

Paul Hunt said...

@Padraig Henry,

Once again, absolutely magnificent. This is an essential purgative of the wishy-washy, moralistic, relativist, self-serving clap-trap that we get here most of the time. Your conclusion is the clincher:
"A century and a half ago, Marx exposed the complicity of Socialist moralism with a Christian ontology of individual guilt and responsibility. Capitalism, he showed, should not be critiqued on this basis, but as an IMPERSONAL SYSTEM, with its own ineluctable laws and tendencies."

But do you know what, capitalists no longer fear the state; they have suborned it and bent it to their will. They no longer fear trades unions as effective representatives of the labour interest; they have either used the state to crush them or bought them off with a 'mess of potage'. But what they do fear are efficient functioning markets. They will only use markets when it serves their narrow interests. If they are forced to use markets they will do everything in their power to subvery rig or distort them. But what they fear most of all is collective action by consumers. And they will use every power and resource at their disposal to individualise, isolate and disenfranchise consumers - and in doing so they can rely on the support of the representatives of labour, as useful idiots, advancing labour's interests as producers.

eamonnmoran said...

- Quantitative easing to invest in a Green New Deal;
- Tax reform to curb avoidance and increase progressivity;

Why not just combine these 2 points.
Tax reform to invest in a Green New Deal.

That way we can avoid the need for QE which is not within the power of our government.

Padraig Henry said...

Paul, cheers for you interesting and encouraging remarks.

"But do you know what, capitalists no longer fear the state; they have suborned it and bent it to their will. They no longer fear trades unions as effective representatives of the labour interest; they have either used the state to crush them or bought them off with a 'mess of potage'. But what they do fear are efficient functioning markets."

Yes, deregulation further accelerates the centralization of economic power to an elite multinationals and global banking/finance conglomerates, their agents of control, Management, the postmodern bourgeoisie, their (since the financial meltdown in 2008, much fewer banks now control global finance). Perhaps Fernand Braudel and Manuel de Landa's analyses of capitalism as anti-markets is relevant here. The world is not moving towards 'free markets', but in the opposite direction. The power of Fernand Braudel's position - and that of people influenced by him, such as Manuel de Landa - is that it articulates an anti-capitalist but pro-markets stance. A situation in which markets are dominated by big multinationals is no different - is in many important respects worse - than the old socialist command economy model.

"Capitalism was, from its beginnings in the Italy of the thirteenth century, always monopolistic and oligopolistic. That is to say, the power of capitalism has always been associated with large enterprises, large that is, relative to the size of the markets where they operate. Also, it has always been associated with the ability to plan economic strategies and to control market dynamics, and therefore, with a certain degree of centralization and hierarchy.

If capitalism has always relied on non-competitive practices, if the prices for its commodities have never been objectively set by demand/supply dynamics, but imposed from above by powerful economic decision-makers, then capitalism and the markets have always been different entities."----Manuel de Landa

How do we know about what a market would be like in a situation without government? We can only get glimpses, because government is everywhere (if only in some imploded form) - and increasingly so. That's where the free market=capitalism line falls down; capitalism has not threatened or decreased state power at all. On the contrary; capitalism depends upon States, whose function is to regulate/de-regulate markets.

Paul Hunt said...


Thank you. It looks like we are very close to being on the same 'hymn-sheet', but this is a very different 'hymn' from the one that is usually sung here. The Left attacks markets with a view to extending the boundaries of the state, when they should be focousing on shackling capitalism and capitalists to ensure they generate eceonomically and socially useful outocmes.

There is no such thing as a 'free market'. A market is either governed by the state, via democratically enacted laws and regulations, to shackle capitalists or it is subverted, rigged or distorted by capitalists in their own narrow - with capitalists suborning the state to minimise its governance and to facilitate their subversion of the market. That is why we hear the continuous beating of the drums for 'de-regulation', 'cutting red tape', 'self-regulation', 'goveernment getting out of the way of business', etc.

Empowering consumers collectively, both as citizen voters and as consumers is the most effective means of putting the 'fear of god' into capitalists.

But I fear we are two voices 'crying in the wilderness' because the Left remains wedded to the belief in the efficacy of the state as a provider superior to any market mechanisms and is in thrall to some producer interests regardless of the impact on the vast majority of citizens.