Posts Tagged ‘Keynsianism’

Trump and Putin Revive Nuclear Arms Race

December 24, 2016

Yesterday, Mike put up another piece commenting on statements by the American president-elect and Vladimir Putin that they want to strengthen their countries’ nuclear arsenals. Trump had made a tweet on Thursday saying “The United States must greatly strengthen and expand its nuclear capability until such time as the world comes to its senses regarding nukes.”

Trump did so the same day that Putin issued his own statement, declaring that “We need to strengthen the military potential of strategic nuclear forces, especially with missile complexes that can reliably penetrate any existing and prospective missile defence systems.”

Mike makes the point that the threat of nuclear Armageddon will not make the world more secure. It will not make rogue states like North Korea abandon their nuclear programmes. Instead, Mike urged us to listen to George Takei, whose family personally experienced the horror of the atomic bomb in Japan in World War II.

Star Trek’s Mr Sulu tweeted “Trump wants to expand our nuclear arsenal. I think of my aunt and baby cousin, found burnt in a ditch in Hiroshima. These weapons must go.”

Absolutely. I can remember the very large, and vocal demonstrations against nuclear weapons in Japan during the new Cold War of the 1980s. The Japanese had every good reason to demand the reduction and abandonment of the world’s nuclear arsenals: their country had experienced the terrible carnage produced by these horrific weapons.

Mike also reports that back in May, Trump also stated that he would support South Korea, Japan and Saudi Arabia acquiring nuclear weapons for their own protection.

See: http://voxpoliticalonline.com/2016/12/23/why-are-trump-and-putin-suddenly-keen-to-revive-the-cold-war/

Mike’s also reported that Trump has followed up his idiotic tweet by making his intentions clear in an interview with Mika Brzezinski, one of the presenters on MSNBC’s Morning Joe programme. He said, ‘Let it be an arms race. We will outmatch them at every pass and outlast them all’.

Mike makes the point that his comments risk needlessly inflaming tensions with Russia, pointing out that what is currently repeated in the western media about eastern Europe and the Middle East is propaganda designed to manipulate public opinion. He also argues that Putin could adopt the opposite approach, and concentrate on saving precious money and resources through the same policy, that has been considered by Labour Jeremy Corbyn. This means killing or otherwise neutralising terrorists’ leaders through surgical strikes, leaving them without effective military direction.

He also points out that technological weapons are also increasingly susceptible to infiltration and sabotage.

See: http://voxpoliticalonline.com/2016/12/24/while-trump-spends-all-his-money-on-nuclear-weapons-what-will-the-russians-do/

Trump’s determination to ramp up America’s nuclear arsenal is bizarre, given his previous statements during his presidential campaign in which he deliberately gave the impression that he would be scaling down America’s military intervention around the globe. However, on examination this does seem very much in line with Trump’s determination to go back on every single one of his election promises, with the exception of repealing Obamacare.

Remember the noise he was making about going to Washington to ‘drain the swamp’, and would stop the corporate domination and corruption of Congress? That’s gone. After attacking Hillary for being a fully paid-up stooge for Wall Street, Trump has himself gone and appointed Wall Street bankers – including one from Goldman Sachs – to his cabinet. In fact, if anything, he’s increased the amount of corporate corruption. He’s allowed his daughter, Ivanka, to stay with him during negotiations with heads of government in either Japan or China, despite the fact that Ivanka Trump is also a businesswoman, who could use the information from these interviews to gain a clear economic advantage. And his sons have been raising money for their father by selling tickets to the extremely and not-quite-so filthy rich for them to attend dinners with him and go on hunting trips. All Trump’s talk about tackling corporate power has been a lie. Instead, it’s very much business as usual.

And it appears to be very much the same here. Counterpunch has published several articles over the past couple of months discussing how Barack Obama has been talking to senior military staff in Washington. He has already started to expand America’s stockpiles of nuclear weapons. He has also considered the possible use of low-megaton ‘battle field’ nukes in a limited nuclear war in Europe. The American comedian Jimmy Dore has several times ripped into Obama on his internet show, bitterly attacking the false image of the soon to be ex-president as some kind of dove and peacemaker. Far from stopping wars, Obama has carried on George Dubya’s brutal military policies in the Middle East, from Iraq, Afghanistan and Syria, as well as Libya and Somalia. And so this new policy, announced by Trump, really isn’t new at all. It is, as Max Headroom used to say, merely ‘more… of the same’. The difference here is that Max was a fictional character with a satirical edge talking about pop music. The pilot for his series, 20 Minutes into the Future, showed a decaying Britain with massive poverty and homelessness, dominated by ruthless and unscrupulous media corporations. It’s a dystopian vision that is still very relevant today, even if the human brain is far too complicated to be successfully mapped and modelled electronically to produce an AI like Max.

As for the reason behind this dangerous policy, Counterpunch also published a piece describing Hillary Clinton’s vision of America’s role in the world. She seemed to be intent on expanding America’s military power to the utmost. She and the rest of the hawks talked about ‘full spectrum domination’, which means that America is the superior, dominant military superpower with the ability to bomb everyone else back into submission. At the same time, her domestic policies were aimed at keeping the working class as poor and as desperate as possible, so that she could sell American products cheaply to the emerging east Asian market.

It’s also been argued that America spends so much on the military because it is the only way that the American state can stimulate the country’s economy. Leftwing commenters and political analysts have argued that the experience of the Second World War after the Great Depression taught the American industrial and political class that America needed state intervention to create prosperity. This is, however, the Keynsian economic position, which is vehemently rejected by the Republicans and Libertarians as ‘socialism’ or even ‘Communism’. The only way the American state can effectively intervene in the American economy in a manner that is ideologically acceptable, is by doing what the Nazis and Fascists did in Germany and Italy, and invest massively in a re-armament programme. And like the Fascist states, the state has to use its armed forces to maintain its investments and public support for the rearmament programme. This was part of the reason for the outbreak of the Second World War.

As for Trump’s statement that he is prepared to allow South Korea, Japan and Saudi Arabia to acquire nuclear weapons, this is grossly irresponsible. Especially in the case of Saudi Arabia. In the case of Japan, it unacceptable for the same reason that the country has difficulty launching its own spacecraft. In the 1980s Japan developed its own rocket launcher to carry its satellites and probes into space. One of these probes was amongst the small flotilla of spacecraft that met Halley’s Comet in 1986. From what I’ve read, the country has only used its launcher a few times because of fears that it would be taken as a missile attack by the Chinese. The same would be true of South Korea. Political scientists and foreign policy analysts have argued very strongly against threatening China, as they respond by passing on nuclear technology and armaments to other nations, such as Pakistan.

And I cannot imagine anything more stupid, more calculated to result a nuclear holocaust, than giving atomic weapons to Saudi Arabia. This is a militant theocracy that has sponsored horrific terror campaigns throughout the Middle East and against America itself. Elements within the Saudi aristocracy and political elite, including its intelligence minister and possibly, if I remember correctly, the current king, sponsored al-Qaeda and ISIS. Terrorist organisations like them, who use suicide bombers and deliberately target civilians, simply cannot be allowed to acquire nuclear weapons. But that is what would happen if Trump allowed Saudi Arabia to acquire them.

Trump’s renewal of the nuclear arms race is therefore simply a continuation of Bush’s, Obama’s and Hillary’s arms policies. And it’s insane. During the Cold War of the last century, there were at least three instances where NATO and the former Warsaw Pact were on the edge of full-scale nuclear war. We escaped some of these by the skin of our teeth. This time, we may not be so lucky.

Vox Political: Real Wages Fall by Ten Per Cent Under Tories

July 30, 2016

Mike also published a piece last week on a report published on Wednesday by the TUC, which found that while wages had grown in real terms across the EU between 2007 and 2015, they had fallen in Britain by 10.4%. The average rise in wages across the EU was 6.7 per cent. In Poland, wages had risen by 23 per cent. In Germany wages rose by nearly 14 per cent, and in France by 10.5 per cent. The only countries across the OECD which suffered a fall in wages were Portugal, Britain and Greece.

Mike’s article has two illustrations – one is a graph showing the rise in real wages in various countries, while another is a meme showing the massive pay rises enjoyed by other, very privileged groups, in Britain. Like Bankers, whose pay has risen by 35%, directors of FTSE 100 companies, 14%, and MPs, whose pay has gone up by 11%.

Mike makes the point that New Labour must share some of the blame for this, as not only was Peter Mandelson and his chums very relaxed about people making money, they were also extremely relaxed about wages stagnating. He makes the point that the crash his the poorest the hardest, and the austerity launched by the Tories has been punishing and impoverishing the poor to bail out the bankers and the rich. He also makes the point that Owen Smith’s solutions are just cosmetic, and won’t do anything without concrete proposals for the redistribution of the extra money gained through the ‘wealth tax’ he proposes.

See the article: http://voxpoliticalonline.com/2016/07/27/real-wages-in-the-uk-have-fallen-by-more-than-10-per-cent-under-tories/

Mike’s right about New Labour being very relaxed about wages stagnating. In fact, wage restraint has been a major part of the neoliberal consensus ever since Maggie Thatcher took power in 1979. Keynsianism tolerated high inflation – and in the 1970s at times the inflation rate in Britain was truly eye-watering – as it was coupled to an expanding economy. Both Labour and the Tories attempted to keep pay rises within certain boundaries nevertheless. Thatcher’s Monetarism was much harder towards inflation. It saw this it as the major obstacle to economic growth, and so demanded that it be ruthlessly cut, even if this meant shedding jobs on a truly massive scale, accompanied by a fall in real wages, and the dismantlement of various welfare programmes. It also meant abandoning the Keynsian commitment, pursued over 40 years, to full employment.

Robin Ramsay in a piece on his ‘News from the Bridge’ column in Lobster, made the point that when he was studying economics at Uni in the 1970s, Monetarism as an economic theory was so poorly regarded by his lecturers that they left it to the undergrads to work out what was wrong with it. Which shows you it was known even then to be totally rubbish and useless. He argues that it was adopted by the Tory party because it gave them a rationale for doing what they wanted to do on other grounds – destroy organised labour, dismantle the welfare state, including the Health Service, and grind the working class into poverty.

Now a number of economists are pointing out that, despite the emphasis by the Tories on wage restraint and very low inflation rates, the economy is not growing. I think Han Joon Chang is one of these in his 23 Things They Don’t Tell You About Capitalism.

The comparison with Greece is particularly chilling. Greece has been ruthlessly punished by the Troika with very harsh austerity policies, partly because the Greeks dared to defy the Eurozone authorities and elected Syriza, a radical anti-austerity party. Counterpunch has attacked the economic despoliation of the country by mainly German banks as a form of economic warfare. Greece was one of the countries that suffered from the effective collapse of the Eurozone. The result has been grinding mass poverty for its people. One recent programme on the country’s plight showed children picking rubbish off dumps to sale, just as they do in Developing Nations. The presenter looked on, aghast, and made the point that he had never seen this before in what was supposed to be a developed, European country.

Is this what New Labour and the Tories have in store for us? One of the books I found in one of the secondhand bookshops in Cheltenham yesterday was about how Britain would have a ‘third world’ economy by 2014. Clearly the book was written a little while ago, and the timing’s out, but nevertheless, the appearance of third world conditions in Britain is a real possibility. There are already 3.7 million people living in ‘food poverty’, and hundreds of thousands facing off poverty only because of food banks. I also remember how this was predicted on a BBC Horizon programme, entitled, ‘Icon Earth’, twenty years ago. The programme was about how the image of the Earth in space, taken from the Moon by the Apollo astronauts, had affected global religious, political and economic perspectives. That image had stimulated people around the world to realise that everyone on Earth shared a common home. One result of this, so the programme claimed, was globalisation. It discussed the growing campaigns against migration from the developing world with an Indian anti-racism activist. She predicted that as globalisation progressed, pockets of the third world would appear in the first.

She’s right. This has happened with Greece, and it is occurring in Britain, thanks to the Tories and New Labour. But unlike Greece, we cannot blame the EU. We never joined the Eurozone, and the deterioration in wages and conditions will occur because of Brexit. The cause of this stagnation ultimately is three and half decades and more of Thatcherism.

Chunky Mark: Stop Trident

July 19, 2016

This is yet another rant from the Chunky, Taxi Driving Artist. It’s his considered thoughts on yesterday’s vote about Trident. I should have put it up then, but I’m just getting over a cold, and frankly, was just too drained of energy to do very much. So here it is today, one day late. My apologies.

He begins by quoting Caroline Lucas of the Green Party, who said that today Britain could join the multitude of other countries in rejecting Trident in favour of peace, or could spend hundreds of millions of pounds on a missile system that could never be used. He describes Trident as ‘a cold war relic’, and states that it sends a message to the world that security is only possible through the acquisition of weapons of mass destruction. MPs, he argues, should be making a stand against Trident, especially in view of austerity, and the destruction of our welfare infrastructure and communities. He notes that Jeremy Corbyn has said he’d vote against Trident, and in favour of unilateralism. He asks how it is that Britain can sign up to the non-proliferation agreements, and yet support Trident. This is, he says, an opportunity to show leadership in the world. He states that the Chicken Coup – Owen Smith, Angela Eagle, Hilary Benn, Chuka Ummunna and Liz Kendall will all be voting for Trident. It’s why the media, the Tories and New Labour are all out to get Jeremy Corbyn. But it’s not about him. It’s about his political ideology – anti-war, anti-Trident, anti-Armageddon. He notes that the guid folk of Scotland oppose Trident. 57 out of 59 Scottish Nationalist MSPs are against it. The Scots are against it because of the way nuclear vehicles were passing through Glasgow on their way to the base at Faslane at night. And Trident’s sheer cost is unjustifiable. He also goes off on a rant about our supposedly highly educated MPs voting in parliament today, and apparently seeing nothing wrong in giving the nuclear codes to Donald Trump, as required by law if that maniac wins the US election. He talks about the absolute destruction wreaked on both sides if nuclear missiles are used, and says that this is supposed to be a deterrent. It’s only a deterrent, because it hasn’t happened yet. But if it does happen, we won’t be around to know the argument was lost, as it only needs to happen once. He states that the movement against Trident is a real movement for change, and a progressive alliance between peoples, who believe that another world is possible.

There’s a lot that can be said about this piece, and again, the Chunky One is right. Trident’s cost in an age of austerity is unsupportable. It will be born, not by the rich, who are having their taxes cut, but by ordinary people, and especially the very poorest at the sharp end of the benefit cuts. Lobster has published a number of pieces of the years, one of which I blogged about, on the way the arms industry and Cold War is a massive scam to channel funds into the weapons manufacturers as a way of covert government spending to boost the economy. I say covert, because the government’s real intention is to boost the general economy. America is anti-Keynsian in it’s economics, and so this can’t be done through direct spending on infrastructure or welfare, as in other nations, but through Cold War expenditure on an already bloated armaments industry. One of the characters, Ostrander, accurately summed up the situation in an episode of the X-Files twenty years ago: ‘The business of America, Mr Mulder, isn’t business; it’s war.’

These missiles aren’t going to keep us safe, and by their presence are encouraging more countries to acquire nuclear weapons themselves. This is also partly because of the different fates of Saddam Hussein’s Iraq and North Korea. Hussein didn’t have nuclear weapons, despite all the allegations and ‘dodgy dossier’. He was invaded and overthrown. North Korea does, and hasn’t.

Way back in the 1980s Margaret Thatcher ran a series of simulations to see what would happen if the country suffered a nuclear attack from the Soviet Union. The simulations showed that the country would be destroyed, especially its major cities. Thatcher didn’t want to hear that. She wanted the British public to be reassured that Blighty would still remain safe and sound, and so started interfering with the simulations to get the results she wanted. Eventually they were abandoned, as the amount of distortion they suffered in order to give the results Maggie wanted to sell increased nuclear spending to the British public made them useless.

And there have already been three times, when the world teetered on the edge of thermonuclear Armageddon. That’s three time too many. We need desperately to get rid of Trident, and take the first step in encouraging other nations to do the same. We need to stop this new arms race, before it’s too late.

John Strachey on Using Welfare Spending to Break Capital’s Control of Working People

July 12, 2016

Strachey Socialism pic

Yesterday I put up John Strachey’s six point programme for a radical Socialist reform of the economy from his 1940 book, A Programme for Progress (London: Victor Gollancz). In the same book, Strachey makes the point that spending money on welfare services and public works is, contra to the Tories and classical economists, not wasteful. He then goes on to make the point that the state, by giving welfare provision to workers in the form of pensions and unemployment benefits, breaks the absolute grip of the employers over them. He writes

Welfare Spending Is Not Wasteful

Before going on to the underlying theory of the function of money in such a society as ours, it is necessary to establish that this is no less true of our third, last, and most startling plank – the proposal of giving people newly created money as a remedy for unemployment. For there is a very strong prejudice in our minds which almost compels us to suppose that giving away money for nothing in this way (by way, say, of old age pensions or children’s allowances) is a wild proceeding; that a government which did that would be for instance, far more profligate than on which spent a like sum on public works; that to give money away is sheer waste; that such a government would “get nothing for its money”. But this is not the case. The truth is that a decision to give people money is a decision to have more consumers’ goods and services produced, while the expenditure of money on a public works programme is a decision to have more means of production produced. That is the difference.

All talk of it being waste and squandering to give otherwise destitute or severely straitened people money with which to buy consumers’ goods is nonsense. The money will circulate through the system at least as well if it is put in at this point as it will if it is put in at the means of production end. If it is given to the ultimate consumers, it will flow first into the hands of the producers of consumers’ good, next to the producers of producers’ goods, next to the banks, and finally back to the Government itself, just as surely as if it were spent on building new factories in the most orthodox manner. It is necessary to insist up this point, for our minds have been so condition that we almost all tend to believe that money given, say, to the unemployed, or the old, is spent and gone, used up once and for all-if not actually wasted-in a sense in which money invested (a much more respectable word than spent)in a new factory, or in public works, especially if they are of an income-producing type, is not.

But there is not a word of truth in it. The one sum of money is spent on consumers’ goods, the other and producers’ goods. And that is all the difference there. (pp. 93-4).

This is a point which the Keynsian economists cited by Mike over at Vox Political, and by the Angry Yorkshireman, have been making time and again. It’s entirely correct, and was one of the reasons Roosevelt’s New Deal was so successful.

Breaking the Employers’ Grip

Of the effect of welfare spending breaking the stranglehold employers have over working people, Strachey writes

Is it, then, mere intellectual error which makes the dominant, ruling, financial section of the capitalist class so vehemently oppose all policies of this sort for re-employing the factors of production? We shall find, on the contrary, there is quite a rational explanation of their opposition. We have seen that private enterprise knows no way of getting extra money into the hands of the ultimate consumers except by employing them on the production of producers’ goods, or of durable goods such as houses. But now look at the proposition from another standpoint. From the point of view of the ultimate consumers, this means that they cannot live until they can get some private entrepreneur to employ them. It expresses, in a word, the dependence of the people of a capitalist society upon those who own the means of production. It expresses the monopoly of economic power which rests in the hands of these owners. It is precisely because all those who do not own, and have no independent access to the means of production cannot get money into their hands in any other way than by selling their ability to labour, that the owners are enabled to dictate the terms of sale of labour power. it is this which enables them to reap for themselves a rich harvest of the fruits of the labour of others. But what if a new channel is dug by which money can come into the hands of the mass of the population without their having to sell their ability to labour to the employers? To the extent that this is done the employer’s hold over the population is weakened; his power to dictate the terms of employment, rates of wages, hours of work, etc., is qualified. For the worker can now live without him. Nor is there the least doubt of the immediate, strong and practical effect which the provision of decent scales of old age pensions, children’s allowances, and any other distributions of purchasing power will have upon the bargaining power of the wage-earners. The real reason, then, which the great capitalists, and those who consciously or unconsciously speak for them, will always feel that direct distributions of money to the ultimate consumers are a grossly unsound measure, is that it weakens the absolute character of their control over the working population. The capitalists are bound to object that if you give the workers money for anything except work in private profit-making industry, they will get “out of hand”. And so they will; they will get out of their employer’s hand. Surely no democrat will deplore this? But if the employer’s capacity to impose dictatorially the obligation to work upon the rest of the population is ended, it will ultimately be necessary for society to devise a democratic form of self-discipline by which the natural obligation to labour is enforced by society itself.

Experience tends to show, however, that this necessity is far more remote than might be supposed. the conservative’s nightmare that if, for instance, the Government paid really adequate relief to all the unemployed, no one would come to work the next day, is grotesquely incorrect- though no doubt the strengthening of the bargaining position of the workers which would result would be remarkable. Moreover, it is perfectly possible to arrange the giving of money to the ultimate cons8umers in such a way that any tendency to enable the slacker to live without working is reduced to a minimum. For the money can be given to sections of the population who are not required to work in any case. The obvious sections are the old or the very young. Really adequate old age pensions, or children’s allowances, paid out of newly created money, are a most valuable part of a programme for re-employing the factors of production in the conditions of economic stagnation which have recently obtained in contemporary Britain and America. (pp. 98-100).

And this is what the Tories do indeed fear, and have done. One of the first things Thatcher did was to cut the entitlement of striking workers to social security benefit. It’s why they have been so hard on the unemployed, and replaced unemployment benefit with ‘Jobseekers allowance’. And it underpins the whole of workfare and the sanctions system. It is part of keeping a cowed, powerless workforce desperate to accept any job, no matter how tenuous and poorly paid. And it needs to stop. Now.

Blair Wants Troops in Syria, Despite al-Qaeda Leader Stating this Will Unite Jihadis

May 24, 2016

Mike over at Vox Political has put up a piece today reporting that Tony Bliar has finally crawled out of whatever hole he’s been hiding in for the past few months or years, and has made a speech demanding that the West launch a ground war against ISIS in Syria and Iraq. Not content with his role in destroying an entire nation and turning the region into the mass charnel house it is now, Blair wants to increase the violence and mayhem.

Mike also reminds people about the cycle of commercialised violence he put up earlier to describe the current situation in the Middle East. We launch an attack on the peoples of these countries. Many of the survivors become radicalised. We then sell them arms so that they can launch further attacks on us, for which we retaliate, and the cycle begins again.

Mike cynically – and accurately – concludes that either Bliar doesn’t think we’ve sold enough arms to the Islamist butchers, or he just wants to kill more people in the Middle East. Either way, this won’t defeat ISIS.

See: http://voxpoliticalonline.com/2016/05/24/tony-blair-return-of-the-warmonger/

Mike’s analysis about the central importance of war and the arms trade, at least to the British and American economies, is actually correct. A few years ago Lobster ran a piece on the importance of arms sales as a deliberate government stimulus to the economy. After the Second World War, Washington and various corporate thinktanks realised that in order to maintain production and stimulate the economy, state intervention was necessary. However, the stimulus provided by Keynsianism and the welfare state in European economies was politically unacceptable in the Land of Free Enterprise. The only alternative was to go on with what the American state had done during the Second World War, and continue creating wars and promoting arms sales around the world in order to boost corporate profits and create jobs. And the result has been the blood stained history of the post-War American Empire.

Blair’s comments also contradict what Ayman al-Zawahiri, the leader of al-Qaeda, has said in a recent message that b*stard released to his legions of fanatics and butchers. In it, al-Zawahiri denounced ISIS as ‘extremists and renegades’, and frankly admitted that keeping the jihadis united against the West was ‘a matter of life and death for you’. In the video from Secular Talk below, Kyle Kulinski states that al-Zawahiri has just admitted that the Jihadis need the threat of the West to keep them united. If the West isn’t there, that unity collapses and the different jihadist factions start killing each other. So it should be clear, as other journos like Bill Marr have done in his show, that to defeat al-Qaeda and the rest of the nutters we should simply get out of their way. Kulinski recommends we continue giving humanitarian aid to the Kurds and other groups, but otherwise the West should leave the area alone, let al-Qaeda, ISIS and the rest of the thugs and butchers wipe each other off the face of the Earth. The last thing we should do is take the advice of General Petraeus, who wants the US to fund al-Qaeda in Syria as a block on ISIS. As Kulinski said, it’s not as though al-Qaeda haven’t launched an attack on America, is it? (Sarcasm).

Kulinski also makes a good point by asking how really sick and depraved a jihadist group has to be when even the leader of al-Qaeda thinks they’re too extreme.

Here’s the video:

Despite the fact that it’s come from the horse’s mouth, the head of al-Qaeda himself, that if they don’t fight Western troops, they’ll fall to fighting each other, Bliar still thinks the opposite, that sending in troops won’t produce a radical backlash against us, and will have the opposite effect of strengthening the jihadis. Either he’s still locked in the Neocon attitude that if we just bomb somebody long and hard enough, they’ll cave in, or arms sales are slack this quarter and he needs another war to give his shares a boost.

Vox Political on the Basic Income Guarantee

May 21, 2016

Also on Thursday Mike put up another fascinating piece about the growing support for the Basic Income Guarantee. A non-party thinktank, Reform Scotland, has recommended replacing the current system of in-work benefits with a guaranteed basic income, in other words, a citizen wage. The report Mike quotes states that it would combat wage-slavery, by releasing employees from having to work for their living. Instead,

employers would find it difficult to exploit workers, and would be pushed to offer decent wages, good terms and employment conditions in order to attract workers. People would have greater freedom to pursue meaningful, suitable and appropriate employment rather than having to take any job to avoid poverty and destitution.

De-commodifying labor by decoupling work from income liberates people from the “tyranny of wage slavery” and leaves a space for innovation, creativitity and rebalances power relationships between wealthy, profit-motivated employers and employees.”

Mike in his comment on the piece states that if this was carried through, it could destroy 40 years of Tory employment policies. These are, after all, about getting the maximum amount of work from a cowed and impoverished workforce.

See Mike’s article at: http://voxpoliticalonline.com/2016/05/19/the-basic-income-guarantee-and-why-it-would-destroy-40-years-of-conservative-policy/

Something like it has already been done in a town in Canada. Even Sarah Palin when she was governor of Alaska did something very similar. She used the profits from the rights the oil industry had to pay to the Alaskan state to give a portion of them to Alaskan voters.

In fact, this is merely a modern form of a very, very old idea. The Utopian quasi-Socialist, Thomas Spence, in the early 19th century recommended breaking Britain up into a federation of autonomous parishes. These parishes would own the land around them, the rents from which would be used to give each man, woman and child a basic income. If you like, a citizen wage.

A similar idea was advocated in the 1920s by Major C.H. Douglas and his Social Credit Movement. This was before the Keynsian revolution supposedly made his ideas obsolete. Douglas noted that plenty of goods were available; it was just that the workers were unable to afford them. He therefore recommended that the government should issue a system of voucher so that people could purchase the items they needed.

A friend of mine with a background in economics also told me that there has been support for similar ideas for a citizen wage by the Social Democrats in Germany and elsewhere on the continent. Part of the argument here is that although relatively few people are employed in the manufacturing sector, nevertheless it is still extremely important to the economy. In order to stimulate consumption, and thus production, people should be given the means to purchase more consumer goods. And so the unemployed and working people should be given greater benefits, so they can buy the articles on which the economy depends.

You can imagine the screaming from the Tories and the Daily Heil from here, if this ever was proposed down here in England. There would be more bluster and ranting about the ‘squeezed’ middle classes, and punishing hard-working people in order to subsidize the lifestyle of welfare scroungers and chavs. Which doesn’t mean it should be done by any means. In fact, our economy and social welfare as an industrial and civilised nation may depend on it.

Do We Need to Return to the 70’s Prices and Incomes Policy?

March 22, 2016

One of the features of the Post-War political consensus was the government’s prices and incomes policy. Roughly speaking, the government kept careful – or not so careful – watch on the economy, and tried to make sure that wages matched the prices of goods available in the shops. This was, of course, in the period when governments of all parties were ostensibly committed to full employment, and the economy was actually growing due to Keynsian economic policies.

Amazing. Who’d have thought it!

The policy was abandoned when Mrs Thatcher got into No. 10, and the Tories decided to abandon economic planning. And besides, privatisation and Friedman’s grubby Monetarism was going to make us all so affluent that we wouldn’t have to worry about issues like whether we were earning enough to eat.

Except now poverty has returned. And millions of us aren’t earning enough to eat. 4.7 million people, apparently, live in ‘food poverty’ in the UK. That’s truly disgraceful in this country, one of the richest in the world. Or at least, it is if you’re one of the 1%. If you aren’t, you can easily end up like those millions wondering if this week you’re going to be faced with a choice of either heating your home, or having enough to feed yourself and your family. But you can’t have both.

And if we do need a prices and incomes policy – which I think we do, one way or another, it shows that the Thatcherite Revolution is finally revealed to be what it always was: a busted flush, a mirage with nothing of substance behind it whatsoever.

And just thinking about that, I can almost hear the howls of rage from the Tory party and the right-wing press, if they were forced to face up to the facts that the policies of their great molten idol were a fraud.

Milton Friedman on the Ignorance of Economists

March 5, 2016

Economic Fortune Telling Cartoon

Cartoon from Private Eye for the 5th-18th September 2008. The caption reads ‘I also read palms’.

I found this confession by Milton Friedman that economists simply don’t know enough to make effective decisions on economic problems in Peter Clarke’s piece, ‘The Keynsian Consensus and Its Enemies in: The Arguments over Macroeconomic Policy in Britain since the Second World’ in David Marquand’s and Anthony Seldon’s The Ideas that Shaped Post-War Britain (London: Fontana 1996), published by the New Statesman.

We simply do not know enough to be able to recognise minor disturbances when they occur or to be able to predict either what their effects will be with any precision or what monetary policy is required to offset their effects. We do not know enough to be able to achieve stated objectives by delicate, or even fairly coarse, changes in the mix of monetary and fiscal policy. (p. 86).

This follows the book’s general line that Keynsianism has fallen and is discredited. See Clarke’s previous chapter in the book, ‘The Keynesian Consensus and its Enemies: The Argument over Macroeconomic Policy in Britain since the Second World War’. I’m not convinced. I’ve been told by friends of mine that Thatcher was forced to abandon her precious Monetarism and go back to Keynsianism because, put simply, Monetarism wasn’t working. And neither have much of the British workforce since Thatcher took power, largely because of Friedman’s and Hayek’s ideas. I can also remember the Daily Mail splashing over one of its pages the announcement by Friedman that he was absolutely wrong. And then, of course, devoting another half-page to someone trying to argue that he was right.

And even when Monetarism was in fashion, not everyone was convinced of its effectiveness. The book, Keynsianism and After is an effect reformulation and defence of Keynes’ economic insights. In my view, that comment from Friedman may be a frank admission that economists and politicians can’t plan the economy, as asserted by Tory Libertarians, but more importantly, it’s an admission from one of the key free market thinkers that he didn’t have answers either. He didn’t. But the country’s still suffering from politicians, who believe he did.

Meme on Capitalism and Low Wages

December 31, 2015

I found this meme over at 1000 Natural Shocks (over 18s only), explaining the real reason why capitalism will collapse.

Low Wage Capitalism Cartoon

This was actually one of the contradictions realised by the critics of orthodox economic theory, such as Major C.H. Douglas, the inventor of the Social Credit movement. He argued that Britain was suffering from ‘poverty amidst plenty’, where goods and services were available. It was just that ordinary people couldn’t afford them. He therefore recommended giving people vouchers as well as money so they could purchase food and other necessities.

Social Credit never took on, except in Western Canada where it’s another far-right, Nazi movement by any other name. The problem Douglas identified is real, and is getting worse. It was supposed to have been solved by Keynesianism and the welfare state, but as that was ostentatiously junked by Thatcher in favour of monetarism – though she did surreptitiously return to Keynesian economics later in her regime – the problem has got worse. It’s why a town in Canada and now Finland have tried to eradicate poverty by giving all their citizens a guaranteed income, and why similar schemes are being backed by parts of the German Social Democrats.

Lloyd George, Keynsianism, Mosley and the Tory Privatisation of Government Job Creation

April 19, 2014

David_Lloyd_George

British Liberal Prime Minister Lloyd George, used government work creation schemes to combat unemployment.

A few weeks ago, Alittleecon on his blog suggested that unemployment could be combatted through a government programme of public works. The unemployed could be retrained as the workers and professionals the economy needs, and the scheme would itself stimulate further economic growth. The money spent by the government would thus pay for itself several times over. See his post, ‘If the Private Sector’s Not Doing It, Doesn’t Mean Its Not Worth Doing’ at http://alittleecon.wordpress.com/2014/04/10/if-the-private-sectors-not-doing-it-doesnt-mean-its-not-worth-doing/

Alittleecon is very definitely a person of the left, and governments across the political spectrum under the influence of Keynsian economic have adopted similar public works programmes to stimulate the economy. The Japanese government, for example, has embarked on a massive campaign of road construction, as well as building airports and other parts of the transport infrastructure in order to counter the massive depression their economy experienced in the late 1990s and noughties.

Oswald Mosley and Government Public Works for Creating Employment

The British would-be Fascist dictator, Oswald Mosley, also recommended using a programme of public works and employee retraining to tackle unemployment in his 1968 autobiography, My Life (London: Thomas Nelson). He wrote:

The other sphere in which the government must give a decisive lead is in the organisation of public works on a great scale. In an island or even a continental economy overheating, with the result of inflation, can occur in a condition of full employment. On the other hand, to maintain a large pool of unemployment is inhuman and disastrous to the general morale. The answer to this dilemma of the present system is to avoid overheating and inflation by the restraints of credit policy, while taking up the consequent slack of unemployment in public works. No man should be unemployed, and work should be available to all on a reasonable standard of life in a large public works programme, but there should be sufficient differential to provide incentive to return as soon as possible to normal employment; re-training and re-deployment of labour schemes should always accompany of public works system.

Public works should now be in active preparation in all Western countries to replace in due time the distortions of the economy of the Western world, which are initially caused by the semi-wartime basis of America. When peace finally breaks out, we should be ready with the constructive works of peace to replace the destructive works of America’s small wars and the concomitant arms race. The inflationary movement, resting largely on America’s deficit financing of its wars and arms, can at any time come abruptly to an end, either through peace of the objections of other nations to this financial process. So far, armament race and minor wars have taken up the slack of unemployment which would normally represent the difference between modern industrial potential and effective market demand. This has only been done by distorting the economy and aggravating the eventual problem of peace. To maintain full employment in a real period of peace only two methods are available – inflation, or public works on a great scale. We have already seen the results of inflation in an overheated economy leading to over-full employment, and wages chasing prices in a vicious spiral whose end must be a crash.

The only alternative is a stable price level maintained by a strong credit policy, with the resultant unemployment taken up in public works. The economic effect of public works in dealing with unemployment can be the same as the armament boom, without the disastrous exaggeration of deficit financing. Yet the difference in national, or I hope continental, well-being can be vital. The public works of peace can be integrated in general economic policy and can serve it rather than distort it. State action can prepare the way in works too large for private enterprise, and can thus assist rather than impede it. Such public works of peace in terms of unemployment policy can replace abnormal armament demand, can build rather than damage the economy, can benefit the nation and reduce the menace to mankind. (pp. 493-4).

He also recommended that the government public works programme should be used to replenish and upgrade the housing stock in a campaign of slum clearance and house building to provide homes for young people unable to get on the property ladder.

There is no such waste of wealth and the human spirit as unemployment. It is avoidable, and in a continental economy easily avoidable; it is simply a question of the mechanics of economics which mind and will can master. When demand flags, the market falters and unemployment follows, but we should remember there is no ‘natural’ limit to demand; the only limitation is the failure of our intelligence and will. It sounded fantastic long ago in the House of Commons when a wise Labour leader of clear mind and calm character, J.R. Clynes, said there is no limit to real demand until every street in our cities looks like the front of the Doge’s Palace at Venice; and not even then. He was quite right, there is no limit to demand, only to our power to produce, and then to organise distribution. Certainly, there is no limit to demand while the slums disgrace our main cities and young married couples have to live with their parents for lack of accommodation. for years I have urged a national housing programme like an operation of war; the phrase was picked up and used long after as what is called a gimmick in contemporary politics; yet nothing was done about it. I meant it, and it can be done. (p. 495).

There is nothing uniquely Fascist about this programme. Mosley was an early convert to Keynsianism, and took his idea of using public works to combat unemployment from Lloyd George. In the ‘Mosley Memorandum’ he issued in 1929 when he was a member of the Labour party, he recommended using a mixture of public works and purchasing credits issued to the population as a means of stimulating the economy. Economists looking at this policy since then have given their approval, and believed that it would have worked. This does not, of course, justify anything else Mosley advocated, such as the megalomania that saw him as the future British dictator, the hatred of democracy and liberal British institutions, the violence, the bizarre ideas of using evolution to create a new, higher human type, and the poisonous and vicious racism and anti-Semitism that would have led Mosley in power to create an apartheid state. Despite Mosley’s claims to the contrary, his biographer, Stephen Dorril, has stated that if he had come to power and allied with Nazi Germany, then he would have become an accomplice in Hitler’s genocide of the Jews.

louis_blanc_1878

Louis Blanc and 19th Century National Workshops in France

In fact, the use of public works as a means of lowering unemployment was used as early as 1848 in France. The pioneering French Socialist, Louis Blanc, had recommended setting up a system of ‘National Workshops’ to provide jobs for unemployed workers, who would be paid at the rate of two Francs a day. The profits made from these jobs would be used to purchase more workshops until the economy was completely socialised. This met with very strong opposition from the French government, including the minister charged with implementing the policy. Blanc was not included on the five-man Executive Commission which replaced the provisional government. the Comte de Falloux, the leading spokesman for the Conservative right, attacked the Workshops because he believed they constituted the threat of working class, Socialist revolution. The jobs created were thus pointless, miserably paid tasks like digging ditches, only to fill them in at the end of the day and the Workshops themselves were later closed down in June 1848.

A proper policy today of creating new jobs through public works and retraining, such as that recommended by Mosley, would almost certainly be strongly opposed by the current political class. It contradicts Neoliberal dogma that private enterprise is always better for the economy and society, and that state interference should be as limited as possible. Obama’s bail-out of the American banks and his policies designed to combat the recession that followed, have been strongly attacked by Libertarians. Following von Hayek and Mises, they see government policies as making the crisis worse and prolonging it. It would also be attacked for contradicting the government’s austerity programme, and the automatic assumption that the only fiscally responsible course of action to adopt in a recession is to cut public expenditure. I also have no doubt that some of the arguments used against such a policy would be that it was recommended and used by Fascist dictators and leaders like Mussolini, Hitler and Mosley.

workfare-isnt-working

Workfare Not Programme to Create Jobs, but Supply Cheap Labour to Industry

Nevertheless, there is the expectation that the government should act positively to combat unemployment, rather than leave the economy to correct itself automatically. The various job creation schemes like the Youth Opportunities Programme in the 1980s, and the Work Programme, as well as various internships and trainee schemes launched by private industry in partnership with the government are proof of this. So also are the various retraining schemes that have also been launched by successive administrations, like the computer courses Blair set up for the unemployed. The Coalition has, however, tried to avoid actually creating any real jobs directly through the use of private contractors. Instead of unemployment being created through the economy and the structure of society, the Tories and Tory Democrats instead have adopted the old Victorian view that it is caused by the idleness or moral weakness of the jobless themselves. Hence the bullying and humiliation by jobcentre staff and the system of sanctions, ostensibly intended to motivate the unemployed to look harder for work. Neoliberal economics recommends a constant unemployment rate of 6 per cent to keep wages low, and the Work Programme, internships and trainee schemes, as well as various apprenticeship programmes are structured not to create work, but to keep the contracting business supplied with cheap labour. They are intended to present the illusion that the government is seriously tackling the problem of unemployment, while really doing as little as possible to tackle it seriously.

These highly exploitative schemes should be discontinued, and the government instead should embark on a genuine programme of state job creation following the interventionist ideas of Louis Blanc, Lloyd George and Keynes. But I doubt this will ever occur. It would contradict decades-old Thatcherite notions of what constitutes government expenditure, as well as outrage the Conservatives and big business with the prospect of a revived, working class, which would not have to depend on private industry for the privilege of obtaining unpaid or low paid jobs.