The problem of Capitalism

And how do you (or Bernie) plan to enforce this 'worker ownership and control'? Because you know full well that a huge percentage will reject that option. Very few of us want that much responsibility unless it comes with a management salary - even then, most of us don't want it.

 

That's funny; you just make me tired.

I've already provided them.

 

According to this definition I can still blame capitalism for the grieve of the people.
However if all countries were intelligent and fair enough like europeans and add the law of upper income taxation to this definition and actually use it to raise national welfare and not to get it disappeared in a corrupt system, then we can say capitalism can work.

 

Very informative comment. Can you please expand it on heterodox and orthodox theories and explain a bit more about how does this orthodox neoliberal system is responsible for enforced austerity.

 

I agree, but capitalism is like the wheels on a car. Without them you can't drive it - there has to be a medium of exchange. (Other than barter.) And that is the purpose of capital.

The short definition of capital is this:

As anyone who has taken EC101 will recognize that capital is the motor of any economy. Where we've gone wrong in America is to think that capital is the "be all" of our existence. The more one has the better off they are. Which is not necessarily untrue, but IS insufficient. (You will see below that Uncle Sam is not that well-off in terms of Household Disposable Income!)

We are first and foremost a nation of people who also happen to be consumers. And we have a market-economy that is governed by laws in order to both further the economy but also to protect consumers (without which there is NO MARKET-ECONOMY). And what any nation must decide collectively is "it's purpose".

Is the purpose of the US to generate as many billionaires as possible? Or is it the well-being of the most-people possible that constitutes the political priority? For me, the well-being of the most people in any market-economy is the first and foremost principle of any nation. And nowadays if one wants to adhere to that conviction in the US, then they are a member of a small minority.

Contrast that outcome with the one that exists in any Social Democracy - which is this:

And what is Social Justice? This:

How a country defines "fairness" and the "distribution of Wealth" is key to any Social Justice. And, principally, any nation that has a very heavy Income Disparity has also a low level of Social Justice. Whereupon I invite the reader to consider this classification of Income Disparity amongst the major economies as defined by the OECD here.

Note in that array of countries those at the upper-end on the right with the highest Income Disparity quotient. There is, however, another data-point worth considering. It is the Household Disposable Income Chart here. Note on that chart that the US is not amongst the highest countries. (In fact, Russians have a higher Disposable Income than do Americans!)

One might ask the question Whyzzat? Any answers ... ?

 

In the post WW2 period 1946-mid1060's, we saw rapid growth in the Western democracies (the golden age of capitalism), during which time governments followed Keynesian fiscal policy, with the emphasis on maintaining full employment via government spending on social programs and infrastructure.

But increasing competition from low wage Asian economies, combined with the ME oil embargo in the early 70's caused a period of 'stagflation' (ie stagnant growth, high inflation and high unemployment) in which increased government spending apparently failed to promote growth. During this time much industry moved to Asia, thus creating the '1st world rust belt; eg Detroit's population was decimated from 1970's on, as Asia (and Germany) conquered global vehicle markets.

So Keynesianism was superceded in favour of 'neoliberalism' in which the main focus was on ensuring low inflation by managing interest rate settings (monetary policy); unemployment was regarded as a secondary matter, and neoliberal economists invented concepts such as NAIRU to posit a level of unemployment that was necessary to avoid inflation. It is this neoliberalism that we refer to today as "orthodox" economics.

Since 1990 (with the collapse of the USSR), it's been the dominant economic system (though in different forms around the globe; ranging from less government intervention in the US to more intervention in the Scandinavian countries, and meanwhile China's state-managed capitalism featuring state-owned banks - which has its own advantages eg China has built the largest high speed rail network in the world.

But this period of neoliberal dominance (1990's on) saw increasing instability and unemployment, and completely failed to see the GFC coming. Meanwhile several "heterodox' economists, concerned with the instability and persistent unemployment, were working on new ways of examining how the economy works. MMT is part of this heterodox school of macro-economics.

Now, since the main tool available to governments - following neoliberal orthodoxy - is monetary policy (interest rates) controlled by central bankers, and NOT primarily fiscal policy (taxing and spending) which IS controlled by democratically elected governments, AND because orthodoxy insists that government deficits and debt must be minimised, the result is "austerity" ie government unable to tax and spend to implement policies the public want.

Of course the wealthy prefer lower taxation anyway, so it's difficult for governments to raise sufficient tax to fund necessary social programs (even less eliminate unemployment).

And MMT?

Well, when someone like Mario Draghi* says"we should be looking at new ideas like MMT" (as reported in a Bloomberg article recently), no doubt we should...

* the former ECB chief who struggled to keep EU economies out of recession after the GFC.
And of course all central bankers are faced with the same problems today; eg despite high public and private debt levels, we have low inflation, low interest rates, and high under-employment.

MMT tells us we can eliminate all that debt, and create real full employment*, because resources and the productive capacity of the nation, NOT money, are the limiting factors a government must face.
*not the fraudulent figure released by the statisticians who regard 1 hour of work per week as 'employed'.

 

Note, "Capital" as defined by neoliberal economists:

"Wealth in the form of money or other assets owned by a person or organization or available for a purpose such as starting a company or investing".

So the public sector is immediately denied the capacity to raise funds other than by going begging to the private sector?

FYI, sovereign currency issuing governments* face productive capacity restraints and real resource restraints, NOT purely/primarily financial constraints..

* which is a problem for EU members eg France, because you cannot issue your own currency, that ability is monopolised by Brussels. And so we have France rioting with a disgraceful 10% official unemployment rate (it's much worse than that in reality)

Conclusion: the EU must become a monetary union like the USA, or perish.

(That's why the populist Right in nearly all EU nations want out of the EU).

btw, in my previous post the last sentence in the penultimate paragraph should read:

......even though we have high public and private debt levels, we have low inflation, low interest rates, and high under-employment.

 

The idea that workers do not want the value of their labour is quite laughable. You right wingers really aren't too clued up are you?

 

that's an appalling attempt at dodge. Gosh, its like you can't provide an answer. Try again:

Refer me to an economic analysis that rejects the efficiency wage hypothesis. Next refer me to an economic analysis that concludes the wage-productivity gap reflects land ownership.

I'd prefer the DOIs, but copy and paste from the Beano if that's all you have

 

1) Income disparity in a First World democracy is not at all the same thing as income disparity in a corrupt oligarchy (ie, much of the Third World). Our is very much a personal choice, since there are no institutional, legal, or political barriers to wealth building, or wealth holding.

2) Whyzzat? Americans (and increasingly, English, Australians, Canadian, etc) have grown fat and lazy on too much wealth and too much safety.

 

I'll ask again. How will Bernie (or you, or the other guy) compel people do a job involving management level responsibility, for non-management wages? Because you know full well that people will not do that voluntarily. Very few people want to do it NOW, when managers are paid big bucks.

 

What a clueless comment! Its not for any of us to decide how the firm is managed. However, democracy within the company will ensure a management structure is maintained. It just won't be hierarchy to exaggerate economic rent (i.e. theft from the worker).

Your right wing questioning is pretty shoddy!

 

So there will be managers and workers, just like now. Except that the managers won't be rewarded for all that extra responsibility, unlike now. And you actually think people will volunteer for that. LOLs.

If this was any more Disneyesque it would need closing credits.

 

I gave you my analysis; you ignored it and claimed it said something else. The efficiency wage hypothesis is not really relevant, as it is only about conditions that "can happen."

I gave you mine. You ignored it and tried to change the subject, just as you are doing here.

I have facts and logic. You wouldn't know about those.

 

I can't get on board with your proposition that it is legitimate for person(s) to initiate violence in order to get the "economy" they want.

 

Your level of understanding only confirms why you adopt right wing attitudes

Once we have worker ownership, it's a tad obvious that division of labour is likely to occur. That is quite consistent with productivity enhancement. Given democracy repercussions we would, however, also expect better diffusion of knowledge and a board which isnt geared at maintaining inefficient rent seeking outcome.

We know that these outcomes have empirical support, with cooperatives achieving higher productivity levels. So we would have workers receiving the value of their labour. We would also have higher productivity. Indeed, we would break the hierarchy conditions necessarily associated with Hayekian information problems (ask your right wing chums )

 

So let's get this straight. You think your views on efficiency wages and the wage productivity gap are so logical and factual that you cant actually refer to an economic analysis that supports your conclusions? Wowsers!

 

Worker owned firms exist now. You know this right? If you want to be a worker owner, you simply need to find one of these firms.

 

Yadda yadda. Doesn't matter how complex the theory is, when implemented in the real world of HUMAN NATURE, it will be dust in instant. No one will behave the way you think they'll behave. You don't seem to have any idea of what we're capable of (and not capable of).

More importantly, democracy and "equality of outcome" are mutually exclusive propositions. As long as democracy exists, human nature means we will always vote for the freedoms and opportunities of capitalism. Always.

 

They like to ignore that. And also ignore the fact that they're free to start such an enterprise any time they like.

 

This is utter drivel and only confirms the source of your right wing attitudes. You don't understand economics.

First, let's consider the usual 'its human nature' right wing grunt. We know the rejection of free market economics is based on revealing the ludicrously simplistic treatment of decision-making. From Keynes' animal spirits to behavioural analysis into asset price bubbles, 'its human nature' really is territory for the left. Indeed, your standard supply side economics ramble is reliant on treating people in the exact same way as inanimate objects. Perhaps it's a doll fetish?

Second, let's consider your democracy grunt. First, we have numerous examples around the world where democratic socialism has won through. You haven't even managed to misrepresent my point with any integrity. And of course I referred to democracy within the firm. We already know what happens in those circumstances. We see better decision-making and increased productivity.

 

Again you pander to the right wing peanut gallery! There is a difference between productivity and profitability. This really isnt difficult to comprehend. Its documented in the empirical analysis into union effects. It's also shown by the failure of the invisible hand to eliminate discrimination in the labour market. The profit motive feeds economic inefficiency as much of the profit is economic rent.

The only way you can deliver market socialism is to protect property rights. That means labour receives the value of their labour, eliminating rent. It's a shame that you support theft like your right wing buddies...

 

I have provided the analysis, so I don't need to "refer" to it.

 

You have not provided any analysis. You have dodged. Why is it that you cannot refer to one economic study backing up your rant over efficiency wages and the wage productivity gap? Have a think now!

 

You and all attentive readers know that is false.

Because neoclassical bull$#!+ has captured the field. Obviously.