I’ve saved the best for last. Here is Michael Merrill’s third guest post on MMT, labor, and especially public sector workers. This piece is made all the more important as Economic Terrorists in Washington hold our government hostage. These terrorists do not care that government is largely shut down. In their warped view of the world, government does nothing useful. They raise a cheer that so many federal government employees have at least temporarily lost their livelihood. These economic terrorists would love to get rid of most public employees altogether.Economonitor — Great Leap Forward
Michael offers an alternative vision, one anchored in reality. We need government. A democratic government of the people. A democratic government run by the people. A democratic government that operates for the people.
We need workers whose mission is to serve the public interest. We need to counter all the damage done to our economy by economic terrorists in Washington, bought and paid for by those pursuing only selfish, private interests. We need public sector workers to help repair the damage done by Wall Street, as rapacious banking interests destroyed jobs in both the private and the public sectors. We need a government willing to tackle the Vampire Squids that suck the blood out of the economy, the society, and the environment. Our public sector workers are on the front line in that struggle.
MMT and a Government for the People
L. Randall Wray | Professor of Economics, UMKC
Capitalism and democracy are incompatible and cannot exist together. In a true democracy one factor cannot be privileged over labor as capital is in capitalism as the name itself indicates.
7 comments:
"Capitalism and democracy are incompatible and cannot exist together. In a true democracy one factor cannot be privileged over labor as capital is in capitalism as the name itself indicates."
Amen, Randy.
Randy didn't say that, Mike, I did. It's obvious.
The whole push of austerity, balanced budget, fix the debt, etc., is about privileging capital even more over labor.
Capitalism and democracy have been compatible in some countries, right? Denmark and Sweden come to mind. This suggests that the problem may not be capitalism, but greed.
Randy Wray sent me this comment via email to post here:
Randy: Tom thanks for straightening that out. I wouldn't agree. There are "57 varieties of capitalism". I would agree that some of those are not consistent with democracy. The one we've got now, Money Manager Capitalism, is not democratic. The 1% control almost everything--politics, the economy, the distribution of income, wealth, and output. However, we do not have to accept this version.
Oh, sorry, Tom. Sorry Randy.
Amen, Tom!
While I agree with Randy on this about the many varieties of "capitalism," I would add that any form of "capitalism" that privileges capital over labor is anti-democratic. And any form of "capitalism' that doesn't privilege capital over labor shouldn't be called "capitalism,' because calling something "capitalism" at least implicitly suggests that capital stands in first place and other factors are subordinate to it. In fact, the very term "capitalism" explicitly states this.
Capitalism presupposes that the chief purpose of economic activity is capital formation, so capital must be privileged at all costs. This is why financiers and key corporations have to be rescued from their mistakes and misdeeds, even if the remedy grinds workers into poverty in the process just because.
There are three fundamental economic forms — market, managed, and command. "Capitalism" implies a market-driven economy. In a perfectly competitive economy, which is institutionally impossible in a modern state, all factors are rewarded iaw their marginal contribution, so there is no surplus to distribute as profit in excess of the cost of capital.
However, power relationships and power structure result in "market imperfections" to use the neoclassical terminology — a poor choice of terms in that organization always results in asymmetrical power. These asymmetries of power, information, wealth, etc, result in artificial scarcity that distorts price discovery in supposedly competitive markets.
The so-called law of supply and demand does not function as advertised to produce general equilibrium, as most conventional economists holds. Many if not most commonly held economic assumptions are unrealistic without taking power relationships and institutional power structure into account. Conventional economists ignore this stark reality, which clearly described in sociology and economic sociology, which conventional economists also ignore or consider irrelevant.
A fundamental principle of democracy is, as Abraham Lincoln famously stated in the Gettysburg Address, is that it is government "of the people, by the people and for the people." The key fundamental is absence of privilege. The basis of political liberalism as enunciated in the Enlightenment is that all are created equal. The fundamental principle of conservatism is that some are better than others and deserve social, political an economic privilege.
The market state is fundamentally conservative and it's basis is the privilege that wealth and power buy through the corrupt political process of cronyism, ensuring the continued dominance of the privilege elite. The result is that the privileged elite is rewarded in excess of the cost of capital and labor receives less than its cost, as shown in the policy of permanent unemployment to "control inflation" by limiting labor bargaining power, as well as a minimum wage below a living wage.
As long as "capitalism" is associated with a market-dominant economy, privilege will continue to exist and distort the market, making a mockery of economics based on perfectly competitive markets. But a capitalism is that is not based on a market-dominant economy is either a command economy or a managed economy.
Actually, virtually all modern economies are now managed economies, but they are being poorly managed in that they are being managed based on privilege rather than the fundamental principle of management declared in the work of Peter F. Drucker — efficiency is doing things right and effectiveness is doing the right things. The right things are serving all member of society rather than chiefly the privilege, which is what privilege is all about.
Capitalism and democracy have been compatible in some countries, right? Denmark and Sweden come to mind. This suggests that the problem may not be capitalism, but greed.
The Scandinavian economies have been highly managed economies and have been criticized by conservatives as socialistic. recently, there has been a push to "liberalize" them, and Lars Syll reports that outcomes are declining as a result.
Side story. I have a friend that married a man from Norway and moved there. She was visiting here a couple of years ago and spent a half hour waxing about how great life Norway was in comparison with life in the US. No struggle, no hassle and just about everything one would want wrt distributed prosperity. Then she said in conclusion, But we are thinking of moving to the US because taxes are so high in Norway.
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