Wednesday, July 29, 2020
Magpie — So, I Actually Hate the JG, Who Knew?
A real Marxist — not a Marxist or Marxian economist who also understand MMT very well — comments on the MMT JG. Magpie is not only an ordinary person (worker) but also very intelligent and well-read. In that sense he represents an important constituency that needs to be taken into account in the debate.
I understand why MMT economists have taken the tack they have strategically. They apparently want to argue narrowly what can be accomplished to change both current economic thinking, the current political narrative, and policy. But this leaves them open to criticism on the basis of what is being ignored in the bigger picture. The real problem lies not in incorrect analysis of the system but the design of the system itself. Obviously, it would be a strategic blunder to try to tackle that initially.
Those impressed by Marx's analysis and backed up by modern sociology and economic sociology will agree that MMT leaves the foundations of capitalism intact, whereas the foundation (wage labor) is the problem with captialism. Histgorically, there was a progression from slavery to serfdom to wage labor that maintains the inherent privilege of a few built into the system by design.
That needs to change for the system to progress toward freedom for all, and that is what socialism is largely about economically. It was to Marx, who correctly observed that this system based on freedom for the few and bondage to paid work is perpetuated institutionally by asymmertic power based on class structure. Contermporary economic sociologist C. Wright Mills, for example, agreed.
My view, and that of Marxian economist Chris Dillow as I recall, is that the transition to socialism will happen through the intermediary step of social democracy, leading eventually to democratic socialism. This is what the ruling elite are afraid of, and it is why they are so opposed to social democracy.
So, I Actually Hate the JG, Who Knew?
Magpie
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Or perhaps a decent social democracy will be satisfactory, and calls for socialism will be replaced with the sound of crickets.
Try whispering that happy outcome into the power elite's ears.
Tom's great hope (MMT):
Phase 1: Increased privileges for the usury cartel and, by extension, for capital owners; wage slavery for their victims.
Phase 2: ???
Phase 3: Socialism
Phase 4: Bliss for humanity
Not to mention that most people would choose to be independently well-off over dull gray socialism except as a last resort.
Tom:Those impressed by Marx's analysis and backed up by modern sociology and economic sociology will agree that MMT leaves the foundations of capitalism intact,
AAAAAAArgghh! Marx (and other major Marxists) said the opposite. I've quoted him on this often. Marx explicitly said "MMT's" Job Guarantee undermines, destroys the foundations of capitalism.
PP: Social Democracy is Socialism. Socialism is Social Democracy. It was a tremendous victory for the Snidely Whiplashes to get socialists to forget the history and much of the theory of their own movement, an essential part of their great victory in fragmenting socialism.
The reaction of these amnesia victims is often to tell those with better memories that they don't remember their history etc.
The main, and much underrated, contribution of MMT is that it solves the capital accumulation problem. Capitalists can have their mouths stuffed with as many numbers as the central bank can emit, and they can count them all day everyday. None of that need affect the rest of the economy as we can replace the missing flow.
The obsession with stuck savings that dominates much of the Left's thinking can be disregarded, and the obsession with pushing loans to offset the savings that dominates the Right's thinking can similarly be disregarded
There is a third way - accommodate.
The main, and much underrated, contribution of MMT is that it solves the capital accumulation problem. NeilW
No it doesn't:
1) MMT places no limits on real capital accumulation such as of land, e.g. Warren Buffet might buy up a big chunk of Nebraska.
2) Fiat creation by the monetary sovereign must compete with both fiat hoards AND bank credit creation for real resources - resulting in unnecessary price inflation at least in the case of government privileged deposit creators.
3) In addition to fiat created by the monetary sovereign for the general welfare, the Central Bank may also create fiat for private interests such as for the banks and by extension, for capital owners, the so-called credit worthy.
If MMT's simplistic "solution" to capital accumulation really worked, several Latin American countries would have solved it by now.
@ Calgacus
We’ve gone on about this before, but it’s important so here goes again.
True, the MMT JG would solidify the process of transition to social democracy but not create mature socialism immediately — that is, if it were to pass into law, and if it does, is not sabotaged. Big ifs. Marx thought that the capitalist class would have to be eliminated rather than re-educated. Some (Mikhail Bakunin) were concerned about "dictatorship of the proletariat," and a new ruling class did return in spite of "communization."
Social democracy leaves the class structure and cultural, social, and institutional asymmetries standing, to be dealt with eventually and gradually. It's a start, not a conclusion. In fact, there is never a conclusion because there is no "end of history."
Democratic socialism remains an ideal (abstraction) since a scaled-up democratic socialist society has never existed historically. Ancient Athens, having been based on slavery to allow the male citizens to carry out informed debate, was certainly not one even though taken as the origin of democracy in the West.
A scaled-up transition from capitalism to socialism would have happened already if there were a viable model for it. There isn't. It's a work in progress, to be determined though the historical process. It's been attempted in the past but attempts to scale it up have been co-opted, that is, failed.
The problem, which Marx apparently did not recognize, is that socialism is the socio-economic system that is the natural counterpart of a society that operates at a high level of collective consciousness as evidence by culture and institutions that overcome the challenges self-interest and ego-centricity involve. Capitalism is, of course, based on self-interest, called "incentives." So capitalism's political counterpart, liberal (bourgeois) democracy. This best we done so far as a species, but even a higher type of that, the Swedish model, succumbed politically to neoliberalism, that is, was not sustainable over time.
"All for one and one for all" and "To each according to need and from each according to ability" are inspiring slogans for some, but they have been illusive. In the Sixties and Seventies I lived in experimental communities, including communes, and also studies them. I even co-founded one with professionals, and it also imploded.
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Outcome of the experiments was failure other than in a very few cases that never scaled and were based either on a common ideology or a strong leader. For example, one I participated in for a short time turned out to be quite successful for decades, but it collapsed on the death of the leader, suggesting that it was really more a cult than a viable community.
BTW, I am still involved in such projects "on the side." I still do research on it, have numerous notes about it in my files, and stay in touch with folks actively involved in it.
In my view, building a socialist system will have to wait until humanity grows into it, and I am quite confident that this will happen eventually even on the current historical path. I don't expect it overnight by passing laws, however, and a revolution based on such assumptions will fail, just like the previous ones, for similar reasons. It's not that simple getting from here to there when a shift in level of consciousness is required.
Where Marx went wrong in my view is assuming the identity of scientific naturalism and ontological materialism, when the problem of freedom, which was his starting point, is a “spiritual” issue that transcends a material solution based on rearranging stuff (“mode of production”), although the material basis for it needs to be in place if material gains that humanity has made are to persist. But even that is actually not necessary, since the bottom line of a high level of collective consciousness is being rightly guided internally and acting rightly on the basis of it, regardless of the state of material conditions.
There were “socialist” communities in the pre-agricultural age that functioned at the subsistence level. They were discovered in Stone Age tribes in modern times, which Marx also was aware of through the work of Lewis Morgan. But Marx's assumption that abolition of private property and establishment of public ownership of the means of production leads to mature socialism is wagging the dog's tail.
Much if not most of the best thinking on this is actually ancient, since the ancients considered living a good life in a good society to be one of the most important aspects of being fully human. This issue is found throughout perennial wisdom, in the testimony, teaching and example of the world's mystics and masters, saints and sages, and prophets.
This is the best of traditionalism and it needs to be integrated with modern liberalism, which stems from the Protestant tradition and was developed into bourgeois liberalism as secular "religion." US foreign policy pursues it in this quasi-religious vein and seeks to convert the world to bouregeois liberalism, by the sword if need be.
Perhaps the most ancient work on spiritual "libertarianism" is the Daodejing/Tao Te Ching (c. 4th to 6th c. BCE) attributed to Laozi/Lao Tzu, meaning "old master." It is possibly an honorific. There are many English translations, some better than others. One I especially recommend is Ellen M. Chen's translation and commentary. It's available online here. (It's archived, so it takes a bit for the page to load. But this is without the commentary, which is very useful.
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There was a time when you could land a job as long as you had a pulse. This wasn't a threat to capitalism, it was good for business. A JG might bring back those happy times...
But no worries, the owners will not allow reform to happen. Power concedes nothing. The old equation of 'socialism or barbarism' can play out as imagined.
I'm not commenting: https://youtu.be/KuGqxUO9G40
Fiorella is not only an ordinary person (worker) but also very intelligent and well-read. In that sense she represents an important constituency that needs to be taken into account in the debate.
“When I take off my Marxist and union man cap, what remains is a bloke approaching 60. The only two things I have to show for some 45 years of labour are meagre savings for retirement (a situation more common than the Grattan Institute folks want to admit) and arthritic legs that make physical labour that extra bit more taxing. A sufficiently generous UBI (in my case it doesn’t have to be particularly generous) would be a godsend to me and to those who otherwise will have to work until they drop dead,”
He’s done .... shouldn’t be made to work unless he wants to...
Tom:We’ve gone on about this before, but it’s important so here goes again.
I'll keep on saying what I say because it is more logical, founded in history and socialist theory and bleeding common sense - and respects the people who are being cited rather better than my opponents in this argument. I'm patient. I expect people will change and then pedantically instruct me about what I've been saying for years - a frequent experience for me that I have come to welcome.
My first objection is about putting words in Marx's mouth that he said the exact opposite of.
Many "socialists" believe such nonsense. In making a holy "fetish of REVOLUTION" (Lenin's words), against anything that ever happens or could happen in the real world.
Marx thought that the capitalist class would have to be eliminated rather than re-educated.
No he didn't. To quote him when he is speaking of the bourgeoisie and the proletariat as dialectical opposites - basically after the revolution: "There may still be a bourgeoisie and a proletariat. But the bourgeoisie is no longer the bourgeoisie and the proletariat is no longer the proletariat." (Incidentally, showing that in Marx, aufheben means aufheben - NOT abolish without a trace, eliminate.) This is in one of the small books that Chris Arthur edited. I can dig it up if anyone is interested in what Marx actually said rather than fantasizing what he should have said to be more consistent with his "followers".
The point is neither to eliminate nor re-educate, but to defeat. It's been done, y'know. Marx saw his chum Abe do it in the USA, and had high hopes about it happening in Russia - even learnt Russian because of that. Would have happened in more places if not for the proclivity of the Left to commit (reactionary, not revolutionary) suicide once it gets power. There are plenty of working models. The main thing is to not commit suicide by doing things any one off the street can see are insane. The path to that is at least trying to understand what you are saying and doing, rather than mouth slogans to look good. For with enemies like those, Snidely Whiplash doesn't need any friends.
Social democracy leaves the class structure and cultural, social, and institutional asymmetries standing,
But this is our disagreement. I'm saying it most certainly doesn't leave things the same. You cannot prove what you are saying by repeating it and assuming that I agree with the same thing in different words.. Kalecki says the exact opposite in his paper- that it is a "fundamental change". As I commented at Brian's blog, and at Magpie's - Dillow, Romanchuk, Bill Mitchell and he misrepresent him.
PP:There was a time when you could land a job as long as you had a pulse. This wasn't a threat to capitalism, it was good for business. A JG might bring back those happy times...
Capitalists know it is and was a major threat to them. They've said so all the time - for centuries! So did Marx. So do others like Bill Mitchell & the other MMTers, as did Kalecki, whose entire paper is AGAINST that comatose "no threat" belief. Marx, Kalecki, and the Captains of Industry were and are right. What is the basis of the insistent assertion that they were wrong? And absurdly - Even about their own beliefs! :-)
On the other hand, I would say that some "radical" beliefs that you and Tom and others sadly share are no threat at all to the Snidely Whiplash capitalists, but rather function to support them. Their proven effect is to counsel passivity and self-destruction. People with those ideas have consciousness that is in need of raising by those whose consciousness they seek to raise, not vice versa.
He’s done .... shouldn’t be made to work unless he wants to...
Agreed, Matt, but what he's asking for is not called a UBI, but a pension. Civilized nations have them albeit in defective and incomplete forms, for the forces of barbarism endlessly try to steal them. The imaginary carrot called UBI is one of their niftiest burglar tools.
"A sufficiently generous UBI "
That's not a UBI, that's a retirement pension. The Covid crisis has given the perfect excuse to call for a state retirement option at 60, and that is justified. You have spent a career maintaining and improving the inherited capital and you have handed it onto the next generation and trained them to use it.
The "distributive justice" UBI fans call upon to justify their payment is already spoken for with the retirement pension. You can then justifiably ask that next generation to work additional time to maintain you as thanks for undertaking that task. It works. It is self-perpetuating and people consider it fair.
Believing you can retire at 18 because you are just that awesome and thinking you can call upon "inheritance" to justify that is just the banter of a selfish teenager who needs to grow up.
"Their proven effect is to counsel passivity and self-destruction"
The Job Guarantee hands production capaicity to those on the Job Guaranteee and the sergeants running the scheme. That is, or can be, a credible threat to private production.
It is like having a standing army rather than trying to raise an army amongst the out of shape unemployed.
Take away from Bill's post today
"The fact is that once you go down the UBI route you are diluting the inflation anchor provided by the Job Guarantee – which is a central proposition within MMT, and, is one of the features, that sets it apart from mainstream macroeconomics.
And once you dilute the inflation anchor, then you are effectively back in a NAIRU world where unemployment is used as a policy tool to discipline any inflationary processes.
You cannot have it both ways as an MMTer.
If you support a UBI then you should not hold yourself out as a proponent of MMT.
Simple as that"
“And once you dilute the inflation anchor,”
None of these people can even define what ‘inflation’ is.., Janet Yellen just admitted it...
Re the always popular "inflation anchor" to which NeilW refers, I was glad to see Simon Wren-Lewis (former Oxford economics prof) attack that idea recently. I've always regarded the idea as basically nonsense.
Given grossly excess demand, there is just no way JG would stop prices rising, though clearly it COULD HAVE a modest inflation curbing effect, e.g. it maintains people's work habits and skills, i.e. it might cut the so called "scarring" effect of unemployment.
On the other hand there's a study done by someone called David Webster which claims the scarring effect is negligible.
Ralph, these people are going all around all over the place saying we have “inflation!” meanwhile gasoline was $4 now it is $2...
“Inflation!” is a figure of speech created by unqualified monetarists... that is all it is.. They call it “inflation!” conditions if their other figure of speech “money supply!” is rising...
If you want people to have continuous access to employment opportunities as a policy just say that and leave the monetarist BS out of it...
Capitalists know it is and was a major threat to them. They've said so all the time - for centuries! So did Marx. So do others like Bill Mitchell & the other MMTers, as did Kalecki, whose entire paper is AGAINST that comatose "no threat" belief. Marx, Kalecki, and the Captains of Industry were and are right. What is the basis of the insistent assertion that they were wrong? And absurdly - Even about their own beliefs! :-)
It was good for business. It was good for workers. Some refer to it as the Golden Age. True, it was a racist and sexist age. Yet apart from those upset with the war in Vietnam, there was no specter of revolution. To see that as a threat was irrational.
Marxists get it backward. The owners are the revolutionaries, and it is their behavior that forces workers to restore stability and sanity. At the cost of blood.
The only consciousness raising taking place here is among ivory towers. Demands must come from below.
“ Marxists get it backward. The owners are the revolutionaries,”
They call it “creative destruction” where we see the commies out there today in cities just doing “destruction”...
They are mostly young white men practicing what they believe is anarchism.
" I was glad to see Simon Wren-Lewis (former Oxford economics prof)"
Excellent. Good to see that the neoliberal shill has gone from Oxford. He should never have been there in the first place given the ideology he espouses.
He attacked the idea because, like you, he doesn't understand how the inflation anchor works.
The inflating sector *fails due to fiscal drag from tax policy*, and all the people on it end up on the Job Guarantee - eliminating the failing firm and the overpaid wages.
"Given grossly excess demand,"
That isn't a given. That is a process. How do you get to grossly excess demand from here? When you do that you find, like light speed, you can never get there.
Given your premise is impossible, so is your conclusion.
Communist Manifesto, Chapter II. Proletarians and Communists
Contrast with “euthanasia” of the rentier.
Chapter 24. Concluding Notes on the Social Philosophy towards which the General Theory might Lead in John Maynard Keynes, The General Theory of Employment, Interest and Money
Keynes is obviously using “euthanasia” metaphorically. Marx and Engels may have been using “aufheben,” which colloquially means “abolish,” in the same way, e.g., as did Hegel. And, of course, recall the so-called hard sayings of Jesus.
But its clear that what M&E meant at least was preventing the former ruling class from rising to power and control again by abolishing the source of their ability to do so, namely, class structure an its attendant power and privilege, by radically changing the design of the socio-economic system and its political institutional arrangements.
Marx and Engels most certainly envisioned a new system that would eliminate the haute bourgeoisie as the owners of the means of production (not the petite bourgeoisie, consisting of shopkeepers and tradespeople) in a way that would prevent them from rising to power and control again. Keynes, not so much.
Keynes thought that implementation of the principles of the General Theory could lead to the end of rentierism, not that it would.
Where does MMT stand on this issue. I don't know, since I have never heard the issue raised and answered.
But based on the New Deal and the campaign to reverse it that is still underway, the ruling class will never, ever give up as long as they can hope to cling to power based on institutional arrangements. If they regarded an MMT JG as a genuine threat, that is, if they could not end or neuter in the bill, then they would not rest until they did, which would be in their power, since existing class structure and power relations would remain, as they did after the New Deal.
Those arrangement that allow this zombie reversal by would have to be changed, and I have heard no cogent argument as to how to do this without redesigning the system, such as Marx and Engels suggested, but that cannot claim to be either the only way or the best way.
Marx held that the mode of production was the basis of the relations of production as the infrastructure upon which and in terms of which the superstructure of a society is built.
This could change gradually in an evolutionary way in a complex adaptive system (although M & E did not have those words at the time) or suddenly through either spontaneous revolution like the French Revolution, or through political activism as M&E advocated.
I view the MMT JG as an iteration in the gradual shift way from "capitalism" as economic liberalism dominating social and political liberalism toward "socialism" as public control of the commanding heights. This would happen by moving through "social democracy" as mixed economy. “Mixed economy” is an abstraction for a broad range between economic liberalism based on individualism, moderated by social and political liberalism, and mature communitarianism. One extreme of the range would be anarcho-capitalism and the other, totalitarian collectivism. Often the choice is presented between these two rather than acknowledging a range of possibilities. That is a Hobson’s choice, guilty of the excluded middle.
Or a revolution could occur through political activism, but that route is fraught with danger and the outcome could veer in many directions, some extremely undesirable, like Nazism, Fascism, or Stalinism.
Economics as thought-reading and motive-imputation
Comment on Magpie on ‘So, I Actually Hate the JG, Who Knew?’
Tom Hickey summarizes, “My view, and that of Marxian economist Chris Dillow as I recall, is that the transition to socialism will happen through the intermediary step of social democracy, leading eventually to democratic socialism. This is what the ruling elite are afraid of, and it is why they are so opposed to social democracy.”
This summary encapsulates the humongous idiocy of the representative economist. He does not know how the economy works but knows “what the ruling elite are afraid of”. He cannot get the elementary algebra of national accounting right, but he can read the thoughts of an unknown number of unknown people called the elite. Is this elite composed of the descendants of old European aristocracy or the members of organized crime or random folks on the payroll of the Oligarchy? Is Mr. Trump member of the elite or merely the fall guy for the breakdown of the USA? We don't really know. And these ignoramuses tell us how history will eventually lead to democratic socialism.
How can they know this? Because Marx and Engels said so. The simple fact of the matter is that the two political agenda pusher never understood how the monetary economy works.#1 Neither did their mentally retarded followers to this very day.
Here are the basics. The elementary production-consumption economy is defined with this set of macroeconomic axioms: (A0) The economy consists of the household and the business sector which, in turn, consists initially of one giant fully integrated firm. (A1) Yw=WL wage income Yw is equal to wage rate W times working hours. L, (A2) O=RL output O is equal to productivity R times working hours L, (A3) C=PX consumption expenditure C is equal to price P times quantity bought/sold X.
Under the conditions of market-clearing X=O and budget-balancing C=Yw in each period, the price as the dependent variable is given by P=W/R (1a). The price is determined by the wage rate W, which takes the role of the nominal numéraire, and the productivity R.
The macroeconomic Law of Supply and Demand (1a) implies W/P=R (1b), i.e. the real wage is always equal to the productivity no matter how the wage rate W is set or how long the individual or aggregate working time L is. Full employment is possible, the workers always get the whole product O. The workers' living standard/freedom depends ultimately on the productivity.
The condition of budget balancing, i.e. C=Yw, is now skipped. The monetary saving/dissaving of the household sector is defined as S≡Yw−C. The monetary profit/loss of the business sector is defined as Q≡C−Yw. Ergo Q=−S.
The mirror image of household sector dissaving (-S) is business sector profit Q. The workers as a group still get the whole product. There is, however, a redistribution of output O between the workers.
The Profit Law holds for the monetary economy as given by the macroeconomic axiom set, that is, for Capitalism and Communism and everything in-between. Macroeconomic profit does NOT depend on the ownership of the means of production.
Profit depends on the deficit-spending of the household sector and the state sector.#2 In late capitalism, the business sector fully depends on the state for its survival. What the Oligarchy must fear most is NOT the proletariat but a balanced budget of the state sector. To postpone this calamity is the task of the MMT troll army.
Dear left/center/right economists, time to learn economics.#3
Egmont Kakarot-Handtke
#1 Links on Karl Marx
https://axecorg.blogspot.com/2019/09/links-on-karl-marx.html
#2 Profit
https://axecorg.blogspot.com/2020/06/profit-axiomatic-economics.html
#3 Sovereign Economics
https://www.bod.de/buchshop/sovereign-economics-egmont-kakarot-handtke-9783751946490
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