Most analysis of the Greek debt crisis ignores an important reality: While Greece may be the villain du jour, every eurozone nation is profoundly short of cash. That’s because of a well-acknowledged, but not fully appreciated, flaw at the heart of eurozone financial architecture that converted a historically unprecedented number of nations from issuers of their own currency to users of a common currency.
Greece is simply the first country to experience the extreme consequences of that loss of monetary sovereignty. With no independent source of funding, no currency of its own, no central bank to guarantee its government liabilities, it has had to ask others for help. And as a condition for securing that help, Greece has until now been forced to consent to radical austerity policies.
As an analogy, consider a United States with a common currency but no Treasury to conduct macroeconomic policy, stabilization or stimulus spending. Imagine also that the Federal Reserve was banned by law from guaranteeing U.S. government debt. And imagine that one state, say, Illinois (think Germany) was the major net exporter, accumulating dollars (euros) while most other states (as is the case in the eurozone) were net importers, thereby bleeding dollars (or euros). Finally, imagine Illinois providing a loan to cash-strapped Georgia (think Greece), dictating that it implement slash-and-burn privatization of public assets and drastic cuts to state payrolls, pensions and other essential programs. This, in essence, is the situation in the eurozone today.
Al Jazeera America
Greece wants to save Europe, but can it persuade Europeans?Pavlina Tcherneva | Assistant Professor of Economics, Bard College Research Scholar, Levy Economics Institute
40 comments:
It seems to me that Georgia would say, Hell, yes! Thank you, Yankees!
I favor a parallel currency of some sort for Greece. Pavlina advocates “tax anticipation notes”. But what’s the difference between those and Drachmas? Drachmas, like any currency, are advertised by the government issuing them as being acceptable for the purposes of paying tax.
If Greece wants to stay in the EZ, my hunch is it needs to organise something like the Swiss WIR parallel currency which has been going for 70 years, so it’s tried and tested. Plus WIRs are not accepted for paying tax.
Parallel currency option is off the table if you want to comply with troika. They have made It clear that It is violation of the memorandum if Greece is going to deficit spend their palallel currency into existence, stop privatisations etc. I really don't see what Syriza sees in staying with euro. I seems inevitable to me that greece has to leave. What Syriza is asking right now really is continuation of austerity. How else would you call 1,5% government budget surplus?
K,
It seems like YV has a lot riding on his thought that with better tax enforcement, they can get deposits up in the Greek govt account and get along with the 1.5 surplus....
I have my doubts.... you hear the debt doomsday people here make the same case all the time: "if we could only get tax cheats to pay 'their fair share... blah, blah..." so this is a tip-off imo..
If there are people there not 100% complying with tax laws, it is probably not enough to make a significant difference for the magnitude of their problems... probably many of the people "cheating on taxes" actually need the EUR for adequate income of their households....
here n US there are a lot of moderate/low income folks who do side jobs "under the table" and just keep the $$$ and dont pay taxes on the income it represents for them... imo the NEED this income...
Seems like any "tax cheating" is already being reflected in the fiscal data... YV must think they can tax away the current savings of "tax cheats" and use these balances to boost govt spending... maybe he has some data on this but I would say that here in the US, the whole "tax cheat" and "welfare queen" hyperbole are way over done...
Seems like the issue is rather that too much savings are leaving
Greece and ending up in the surplus nations...
rsp
Matt, Greece is sort of a unique case with tax cheating, it's endemic corruption in there, I wouldn't compare it to other western nations. It's true a lot of tax evasion is done because middle-low class households need to cheat the system because inadequate incomes. I see this all the time in Spain where is probably even more prevalent than in the USA, but I also know how the system works (or not-works) in Greece and is outraging (you simply cannot have a functional state running things like that).
But in the end I agree with you that no matter how much tax reforms they implement is not going to be enough anyway. As Bill Mitchell says, they should be thinking about running 10% deficits, not even a 0.1% surplus. However kicking-the-can won't help impulse reforms, and the Troika are not idiots and know this (as misleading as other reforms or austerity is, it's true Greece needs some deep reforms, but YV & Tsipras knows this too).
Oh ofc, they cannot run 10% deficits inside the euro straight-jacket. And the BoP problems would be solved thought a floating currency automatically and not issuing debt in other non-greek currency (ie. the euro).
Is not like Greece is China or the USA and could let build up such imbalances over time for commercial interests. And even though, who cares, the risk is passed to holders of the currency in question.
39% employment-to-population ratio - among the very lowest levels in the world.
Gross capital formation in Greece is 12% of GDP - among the very lowest levels in the world.
Greece ranks at or near the bottom among European nations in scientific and mathematical literacy.
What is Syriza's plan for addressing these deep problems? When Greece succeeds in relieving its external debt-service pressure, what is it going to do with the space for action?
Germany has a classic neoliberal reconstruction plan for Greece based on privatization, tax reform, foreign investment, labor repression etc.
To fight this plan and gather international support for the fight, Greece needs an alternative democratic socialist plan. What is it?
The problems with Greece can't be fixed juts by rehiring a few public workers and doing some generic macro "demand management."
It would be nice if Syriza accompanied their vision with a plan for economic development. If they showed the Germans how they were going to collect taxes and build some enduring economic advantage and foster some sort of industry, the Germans would bend over backwards to help. As it is, the Germans just hear more of the same economic under-performance that has plagued Greece for centuries. The finance is simple, the real prospects for Greece are what need improved and that doesn't happen magically through market forces but through hard work and planning by government and industry together. Greece has government, Germany has industry, it should be an easy match.
Ryan, Germany has never been interested in developing their consumer base. Just as they have been never interested in recycling the surplus.
Germany does NOT want competition from other European nations. They are not interested in kick-starting other European nations. The plan for southern Europe from both local and European elites have been to build nations based on tourism and non-technological service industries.
Germany just told Greece to go F itself. Since YV has telegraphed his game plan, as I noted down thread, he has virtually no leverage in negotiating favorable terms for Greece. He obviously cannot capitulate to German demands and keep Syriza in power. Given Syriza has no "grand plan" for economic reform within its country other than returning to 2010 circumstances (not a grand plan by any stretch) I imagine the unraveling of Syriza is possibly only days away. Like Bob said in another thread, Greece wants to remain in the euro pot then expect to be boiled. Boiled it shall be.
"Greece needs an alternative democratic socialist plan. What is it?"
At the moment they can't even articulate it if they have one because "They can't afford it".
Only with monetary sovereignty can the state do the money creation at the central bank that the Germans propose should be done by the private asset strippers at the commercial banks.
Greece has to bin the Euro. They should know from history that trying to appease the Germans never works. The political class there has a rules based culture that values following the rules more than anything else - even human life.
Remember you can only do something in German Law if there is a statute permitting it. That is the exact opposite of the English Law systems. It's a huge philosophical barrier that comes to the fore at times like these.
.. oh, and the recently replaced Greek oligarchs are licking their chops in anticipation of Syriza's demise and a possible oligarchical reascendancy. Syriza is boxed in 10 ways to Sunday. Ouch!
Kristjan,
Are you sure the Troika actually CAN ban parallel currencies? Where do you draw the line: I mean Lewis and Bristol, two medium size cities in the UK have their own "pounds", a bit like Worgl in Austria in the 1930s. And the Swiss WIR is entirely PRIVATELY run. Can national governments or international organisations actually stop that sort of thing?
Parallel currencies are not an ideal solution, but the Swiss have found that the WIR definitely smooths out booms and busts.
"political class there has a rules based culture"
Neil imo this 'rules based' is opposite one that is "math based"... so we see them struggling so much because of this.. one really needs a "math based" pov to figure this out imo....
This "rules based" pov imo (not to sound sexist/Larry Summerish but here goes anyway....) is FEMALE in origin... iow (to me) its like they are a bunch of females over there the lot of them... cant see the math and rely on "rules" instead .....
Wife: "We're lost!"
Husband: "No we're not we are driving south!...."
And they have an actual female in charge in Merkel...
Its like navigating via waypoints rather than dead reckoning.... they are a bunch of feminine "waypoints" people involved in this to this point... cant get out of it...
rsp,
With no independent source of funding, no currency of its own, no central bank to guarantee its government liabilities, it has had to ask others for help.
Well, in practice, since Mario Draghi´s "whatever it takes" speech of 2012 and even more so after the recent QE decision, the ECB has been sort of guaranteeing the Public Debt of eurozone member states.
Of course, the ECB demands that "strutural reforms" be implemented as a quid pro quo, but these are much softer than the brutal austerity that has been imposed on Greece since the 2010 rescue - an austerity that will increase in the next couple of years, as a consequence of the demand that Greece raise its primary surplus target to 4.5% of GDP.
So, in a sense, Greece´s predicament is a result of bad luck in timing. Had Draghi been in charge in 2010 - instead of that lame duck, Trichet - Greece would probably have escaped some 80 or 90% of the crushing austerity policies that it was forced to implement - with catastrophic consequences on its standard of living.
I am not sure they can ban the parallel currency per se Ralph. But what good does the parallel currency do to you if you are not using It to advance your economy? And you cannot do that under current conditions attached to the bailout. The bailouts make It so much more restrictive for any eurozone country.
Syriza already crossed red lines by asking extending the bailout.
Mosler says parallel currency is off table 8:00
https://www.youtube.com/watch?v=0wELlwFdsEY
Other member states can do the parallel currency.
I am getting tired of hearing how smart economist Varoufakis is and how charming and smart politician Tsipras is. Let's face the facts, they bluffed themselves into power by promising the voters euro and end of austerity. They obviously cannot deliver and are not able to come up with an alternative.
It's time to dump the fuckers and Greek people will do that soon. Next time you vote for leftist dreamers you have to consider this. Let the intellectual left eat their caviar in some luxury yachts and talk about the European workers and the poor. Oh yeah and how Europe needs to be changed and reformed. Let them do all that talk just make sure you don't vote for them. This has happened so many times before, Pasok comes to mind. The European left are in tears when they cut government budgets, they say: we have to do this for our children. UKIP and Le Pen can handle thses matters better I believe
Trains running on time was a symbol of the restoration of order. In the end order trumps freedom when disorder is rampant.
Hitler saw the job and did the job. So did Mussolini. So did Franco. So did the Shah of Iran. So did Pinochet.
The EZ periphery is approaching that state through years of depression with no visible way out within the current political framework.
It is also emerging in Ukriane, where the Right Sector is already threatening Maidan 3. Same in Russia, where if there would be regime change it is much more likely to be a nationalistic one than a liberal one.
As the socio-economic situation deteriorates and the standard of living begin falling, desperation arises, social unrest grows, and political opposition grows to the status quo, and along with it the potential for nationalistic, xenophobic, and authoritarian forces to make hay. Been there, done that.
"At the moment they can't even articulate it if they have one because "They can't afford it"."
I understand Neil. But I think they need to lead with the vision, and then talk about how to implement it. Greece needs to show the world that it has an ambitious vision that is a real alternative to the German vision. That would help them pick up stronger external support.
Yes Tom and It seems there is no alternative. There is something deeply wrong with our power structure. Gramsci hegemony theory is describing it the best perhaps.
Tom, the failure of the left to articulate a credible strategy and solution, and claim the hearts of the people, is what drives the people to the right.
You are watching it now in Greece! The corrupt elitists in charge of the left and their clueless intellectuals are failing the people, so naturally we will seek solution elsewhere. Specially when many of the left voters are aligned with many far-right values (including tighter control of immigration, anti-globalization, etc.).
Is how it is, corrupt politicians or intellectually bankrupt leave us little other option.
And this is how democracy and rationalisms dies. Because there are not sane people left in the asylum.
I agree that the appalling failure of the left throughout the developed world in our day is a massive and dangerous problem. The absence of mature, well-informed ideas for social transformation in line with traditionally left values - that is, the values of democracy, solidarity, work, mutual commitment and equality - and the absence of any kind of strategic plan for actualizing such ideas at the level of real political power is very distressing, and is leaving a giant opening for an exclusive struggle between the nationalistic far right and the neoliberal technocratic center.
The whole left movement in Europe and the Anglo world has been permeated and enfeebled by juvenile anarchist idiocy, by superficial crankery, and by escapist quick fix schemes hatched by people who seem to have no real idea how their current world is put together, or about the vast everyday effort on which it depends, and so aren't even close to having an adult plan for transforming that world.
Scratch a "leftist" today and you are likely to find some wanking man-boy whose vision consists in little more than legal dope; free benefits; no work; no police; no government; no obligations and no plans. In other words, narcissistic and pain-free adolescent escapism as politics. Oh, and maybe they believe in camping out in tents, chanting slogans, or lighting things on fire in public squares.
Most of these self-identified leftists are woefully uneducated about the real material and institutional factors of production, exchange and social organization. Every so often, they blather a bit about some kind of "revolution", but they can't string two coherent thoughts together about what that revolution would involve; at least, not any ideas that move beyond the realm of ivory tower, pseudo-scientific, ideological wankery.
This anarcho-dilletante left seems unwilling to think seriously about how to:
- Redistribute, reallocate and reorganize real factors of production.
- Create the kinds of democratic state capacity that will be needed for reigning in private capital and advancing the common good.
- Impose the kinds of work and organizational burdens upon themselves that will be needed for overhauling our economies and social systems and saving and transforming the planet.
The ancestors of today's garbage, kiddie left were organized laborers who had a serious work ethic. Now they have economically illiterate fools like David Graeber and the anarcho-libertarians telling them that everything out there in the world of work is a "bullshit job", and that they should set their sights on a future of sitting around, smoking spliffs and writing poetry while a robot gives them a hand job. I don't think Graeber could tell the difference between a bullshit job and an important job if his life depended on it. Others think we can get all the change we need with a little bit of no-pain Keynesian "stimulus."
We have big, urgent, structural-systemic problems facing us. The developed world is doing too little work right now, not too much!
Mike Norman was dead on when he said the day Syriza was elected, it's time for Greece to get the hell out of the euro. All this half stepping and irrational fear of the right does is prolong the needless suffering in Greece. The monetary union is a F-ing joke and abysmal failure to boot. Those claiming a 1930's redux is axiomatic with an end of the monetary union IMO are reaching at best. Sure, the left might lose some of its hegemony in Europe, but that doesn't mean a rightward shift will be the ushering in of Hitler 2.0 That's unrealistic fear porn. Unless a fiscal union can accompany the monetary component (which it won't) just deep six this failed experiment once and for all, and give democracy back to the people even if it does reside in much narrower (nationalistic) borders.
Europe, Theft of Democracy
https://www.youtube.com/watch?feature=player_detailpage&v=DV3nOAg87R8
Back and behind all of these problems in the world are individual human beings. There are no excuses! The issue is: how do you get human beings to behave – ahhh – humanely?
You can change the systems all you like, and improvements are improvements and set-backs are set-backs. But unless the human being changes then things go around and around.
Why? Mind – the monkey on our back. You can't fix problems with the same tool that creates all of the problems. You need something to change so that when the human being picks up the tool, (s)he does so consciously, creatively and kindly.
Don't wait for the world. The problems were here long before you arrived, and will be here long after you are gone.
People that fight for systems only do so because they are either fighting for space for their (and others) humanity to breathe; or out of self-interest. For me, this is the true 'front-line' in our world. In the end, both are self-interest, but the former has wider benefits while the latter ends in fire and chaos.
If you want to be successful, you have to have the thirst and focus. On the outside - greedy people are very focused. Human beings need to focus on the inside to stay in touch with their humanity – it is that simple!
Excellent, Kristjan. Impassioned plea to vote for UKIPs as the only way to take democracy and national sovereignty back.
The choice in the UK boils down to either UKIP or else Russell Brand's don't bother voting as the only ways to send a message to the politicians that we are fed up.
If the Dems run HRC in 2016, then whoever the GOP picks, there is no real choice and voting for either is not only a waste of time but sends the message that the status quo is fine.
There already is no democracy in Europe, so the only choice is to vote for a rightist party that might actually eave the corrupt anti-democratic neoliberal union, or sit out the elections to send a message that way.
If Syriza grows some balls, tells the technocrats to stick it, and pulls out, then there would be an option on the left. But without a workable plan that would succeed enough to be credible, the government would fail, and Greece would end up with another non-leftist government, perhaps a rightist one, and the left would be discredited for a long, long time.
However, I cannot emphasize enough that this is not essentially and economic issue, even though economics is fundamental. It is basically a social and political issue that grows out of class and and power asymmetries. Therefore, addressing the economic issue along or even primarily cannot produce a lasting fix.
The social and political issues must be overcome for the economic issues to be overcome. This is nothing short of a "turning" in the sense that Strauss and Howe use the terms wrt to a spiritual awakening that has profound social, political and economic consequences.
In short, liberalism cannot be reformed successfully in a way that is lasting. It must be replaced constitutionally by either social democracy or some form of socialism that limits the ability of a plutocratic minority to capture the apparatus of the state and impose its will "legally" under the guise of democracy.
LIberal "democracy" is a failure because it result in the condition that John Jay, the firsts chief justice of the US favored — those who own the country should govern the country. It must be replaced by social democracy broadly speaking as government of the people, by the people and for the people in a context that will not perish from this earth. Or they'll be baaaack!
The question is whether collective consciousness is advanced enough for this to take place. Otherwise, the solution is either to drop out or become a defector in place and create the kind of alternative society in which one wishes to live with like minds that desire something similar.
@ jrbarch
Right. And the "technology" for developing individual and collective consciousness is older than recorded history, and it is found in virtually every civilization with enough records to find it. Even surviving Stone Age have exhibited it.
Speaking generally, modern human beings are materially advanced but spiritually puny for a variety of reasons. A fundamental reason and one of the most difficult to overcome is that modern cultures are fundamentally materialistic and focused outward thought the senses.
"The developed world is doing too little work right now,"
It's doing an awful lot of work, just not the right sort.
Far too much technology and brainpower employed in a desperate attempt to move numbers from one spreadsheet to another in the fastest time possible.
And we have the cheek to criticise ancient cultures for some of their madder pointless activities - building elaborate tombs and human sacrifice.
Ours is no better in some respects.
Was about to say something like Neil has.
We work more than ever (even if the work is mostly non-physical), we need the double the people working in the average household to have the same sort of purchasing power than a single member of a family could generate 50 years ago.
All while we have the biggest productivity in the history of mankind, have spare output capacity that is not being employed and a terrible distribution of wealth and income, with a oversized parasitic FIRE sector and welfare for the rich in the form of applied-MMT for banksters and military complexes.
In a nutshell, a full neoliberal scam in the last 40 years that has been exhausting the last decade and imploded in 2008 but we haven't yet realized it and we are still digesting it in an agonizing slow motion while our feudal overlord neoliberal elites are killing it year after year.
We need to do a lot of work, right. But we need to do it smartly, and actually destroy a lot of 'negative work' in the form of trash-tier jobs based on FIRE and fast-food model retail business. That is the answer (or the dynamic) of 'the market' to a decaying economy (and civilization form), unless we gain control again of our institutions the falling into a new feudal order will continue in the west and probably elsewhere (but maybe not because there is a rise against the west order which is now crashing in slow-motion).
That we have thousands of physics and mathematicians phd's employed at hedge funds or investment banks doing nothing useful to advance humanity progress is a paradox of how low has this, once productive, civilization fallen.
We got huge surplus, which will last we don't know how long, and instead of working to make the whole thing sustainable and improving we are playing kid games shuffling paper from one place to an other or investing useless crap with expiry dates of months or days everywhere.
I tell you, it stinks of Fermi paradox and the return of Darwin everywhere nowadays. So insubstantial...
There is a distinction between work and leisure that generally misunderstood and working and not working, that is producers and takers. Rentiers of course fit into category of takers.
But that is a simplistic way to look at it from the historical point of view. Historically, workers did the producing under the direction of the ownership classes while the owners were "at leisure." But they didn't just do nothing either.
Leisure is the basis for civilization and developed culture. Education requires leisure to pursue, for example. Until quite recently in human history, workers did not receive education.
Education is the gateway to advance contribution. Almost all innovation beyond the more rudimentary was a result of education.
The classes that received education were the technocrats and specialists, at first the temple priests that developed mathematics and astronomy, which were essential to the development of agriculture, which in turn was needed for population growth and urbanization.
The warrior class provided governance and management along with defense, since warriors are organized hierarchically and have knowledge of operations involving large numbers of people that are objective-oriented.
Merchants became the shop owners that ran the distribution system, and from this class came the leaders of commerce, who understood risk and risk-taking financially and commercially.
So far, ordinary workers have only be more or less liberated from their chains in developed societies, since TPTB have figured out that bread and circuses is more effective at keeping them docile and compliant than force and the treat of force, although that too is in the background ready to be used when needed.
Everyone doesn't have to "work" to be productive. Leisure that is channeled intelligently can result in greater innovation than so-called work, and innovation can increase productivity to the degree that more leisure is made available if society chooses to distribute it.
Bucky Fuller pointed out in suggesting creation of "Bell labs" is many disciplines on the assumption that the innovation resulting from discoveries of even a few would more than justify the use of resources and financial expense. Create resource-rich environments in which people can "play" and they will naturally pursue their inherent creativity and developed talents.
Maslow's theories of self-actualization, self-transcendence, and of Eupsychean management also fit into this.
There is much more that has been developed on this from the Sixties onward. The list goes on.
This is what we need to be looking at instead of reacting to reactionary thinking and behavior.
No time to write more, but if you want to find Syriza's plans - google is your friend. Awful lot of impatience going around. Haven't seen anything that conflicts with Syriza sticking to its game plan, with a timetable of a few months to get to an agreement, which they know and say is unlikely.
The only thing to worry about is Varoufakis scaring himself and others with nonsense about the fate of Europe & Greece after a separation from the Eurozone.
If Greece just sticks to its guns against TPTB - The putrefying troika blob - I kinda feel sorry for it. It is so outnumbered by little Greece.
"However, I cannot emphasize enough that this is not essentially and economic issue, even though economics is fundamental. It is basically a social and political issue that grows out of class and and power asymmetries. Therefore, addressing the economic issue along or even primarily cannot produce a lasting fix."
I agree, It is not like we are talking about wealth and prosperity in absolute terms. So it is always political. Haves versus havenots.
I tend to agree with rest of Tom's comment but in a way It seems to me we already had that, Golden Age of Capitalism and all that. Still the elites were able to corrupt all of it. There is almost nothing left of Social Democracy in Europe, majority of them are hard core neoliberals now. During the crises in Europe you haven't heard about them at all.
All this has almost nothing to do with "how things are" but rather how these events are perceived by us. When I was younger I used to be really amazed how such hihgly developed nation as Germans became nazies. Not anymore.
This is the only blog where I have seen so many times "Comment deleted
This comment has been removed by the author", yet I don't see any way to delete my comments here? Not that I want to :)
I have been around long enough to see and hear enough to convince me that that the hidden agenda is what counts. And it isn't really all that hidden when arrogance and boldness increase along with naked power.
Context is everything. Only in the hard sciences is context is largely fixed so that invariant universal patterns can be discovered that enable construction and empirically testable general theories of the behavior of matter (space/time-mass/energy). There are no such general theories possible in the social sciences thus far, and speculating that there may be when further discoveries are made is just that, speculation. We ain't there yet.
That does not mean, however, that individual and collective behavior that manifests as culture and institutions are are not determinative. It just means that context is variable. While there have been and will likely always be cultural and institutional influences on context, culture and institutions change historically and with them so does context.
Moreover, while history shows that change is possible, it is non-linear and convoluted rather than progressively linear as the myth goes. Surprises occur. There is continuity owing to hysteresis and path dependence, too, that gives the past forward momentum, but this is not determinative in the way that the laws of nature in the hard sciences are owing to differences in the type of context.
In addition, the iron law of institutions implies that institutional change is difficult to achieve since there is considerable personal investment in the status quo:
"The people who control institutions care first and foremost about their power within the institution rather than the power of the institution itself. Thus, they would rather the institution "fail" while they remain in power within the institution than for the institution to "succeed" if that requires them to lose power within the institution." — rationalwiki.org
Basically, history is the tale of power struggles. Early on, humans realized that power grows not only from personal characteristics but also from the ability to organize.
This resulted in groups and societies exhibiting class structure with a power elite at the top who monopolized the command and control apparatus. Those power elites also attempt to perpetuate themselves across generations through dynastic succession and nepotism, as well as non-kinship "adoption" through mentoring and cronyism.
This has gone through innumerable permutations and iterations but the same fundamental outline remains in place. It was supposed to be qualified by liberal democracy, but that was coopted by a power elite, too. IN fact, the founders of liberal democracy never intended to be popular and participatory in the first place.
continued
continuation
The classical economists understood this quite well, and their liberalism was aimed at the feudal order that was breaking down at the time, but which was still in place in Britain and even more so in Continental Europe, to say nothing of the rest of the world, which was in the process of being colonized by Europeans. This accounts for the liberal aversion to strong government. It was a reaction to the institutions of late feudalism.
But once that transition away from feudalism had taken place, then a new economics was needed to justify the rule of a bourgeois power elite and to ensure the perpetuation of that rule. This is where the developed world finds itself now, and the emerging world is still trying to shake colonialism. That economics still eschewed government "intrusion" but made room for elite control of government disguised as liberal democracy and created the myth of "free markets" in which natural market forces would be determinative rather than all-too-human institutions.
But Marx's claims about economic infrastructure being foundational is largely true, along with the observation that economic infrastructure is determined by the social and political structures, specifically social class and political power. This implies, "follow the money."
Both the economic infrastructure (laws, for example) and the superstructure that rests on it (day to day finance and commerce) are institutional and conventional in the sense that institutions are culturally determinative and influence the general mindset. The US Constitution, for example, is bourgeois document and history shows that populists were excluded from the deliberations (excepting Tom Paine). A populist revolt (Whisky Rebellion) was quickly put down militarily by Washington himself on the instigation of Hamilton.
In the neoclassical economic view and neoliberal political view, the context in which economic activity takes place is natural. Therefore, the outcomes are also natural, purportedly the consequence of natural forces and the laws of nature that govern these forces.
This justifies the way things are — the status quo — as natural and therefore incapable of being improved on by human artifice, which will just get in the way of the law of least action that results in efficiency, for instance.
This is obvious bullshit that anyone with eyes and half a brain is able to discern. A power elite based on class and privilege establishes and governs the institutions that provide the context for social behavior. They not only have the power to do this but to design these institutions for their advantage and to run them on a double standard, too, in order to suit themselves.
And it will continue to be so as long as people put up with it.
This is the only blog where I have seen so many times "Comment deleted
This comment has been removed by the author", yet I don't see any way to delete my comments here? Not that I want to :)
It may be the browser you are using. There should be a little trashcan at the bottom.
It's there for me in Safari, but not in Chrome or Firefox.
I have it in Firefox.
"Far too much technology and brainpower employed in a desperate attempt to move numbers from one spreadsheet to another in the fastest time possible."
Agreed Neil. Too much labor power is being allocated to rackets.
The consumer society is wasting too many resources on manufactured wants that are trivial and unnecessary in light of global needs and possibilities.
Add to this the huge waste of resources on militaries worldwide, since what one country does elicits responses from others.
It's beyond stupid.
As Bucky Fuller pointed out long ago, there is enough knowledge and ample resources to create global utopia if the will were there. This view is perpetuated in the World Game and the Buckminster Fuller Institute.
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