I was just at a conference that looked at the importance of Piketty’s most recent book for the future of capitalism. In talking about it, several participants mentioned the VoC literature. The acronym (which I thought at first referred to the Dutch West Indies Company) refers to the literature dealing with the “varieties of capitalism”. That made me think of the fact (which I discuss in my forthcoming book “Global inequality…”) that for the first time in history the entire globe is capitalist. In effect, for the first time in history, capitalism, defined as a system of the private ownership of the means of production, free wage labor, and rational pursuit of profit, does not have to share the globe with the “varieties of feudalism” or “varieties of socialism”. It has won.Global Inequality
But it also made me think of a project that I had in mind for some time and which I do not think I would manage ever to do, namely a reassessment of socialism. I think that the project would have to deal with two issues. First, to explain the rise and fall of socialism within a Marxist framework of successive modes of production. And second, to look at the legacies of socialism. Let me briefly go over both.…
A reassessment of socialism: many questions
Branko Milanovic | Visiting Presidential Professor at City University of New York Graduate Center and senior scholar at the Luxembourg Income Study (LIS), and formerly lead economist in the World Bank's research department and senior associate at Carnegie Endowment for International Peace
Here is my comment, which Blogger would not let me put up there.
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It seems to me that you have overlooked perhaps the dominant force in the so-called failure of socialism as result of the triumph of capitalism globally. That was the combined political and military force directed against socialist countries from the time of the Russian Revolution. This opposition persists to the present and it is as virulent as ever.
Socialism did not develop in a vacuum but instead in an intensely hostile context. It is hardly surprising under the circumstances that an authoritarian hierarchical military-based organizational approach was adopted and resources committed heavily to countering the persistent and accelerating threat rather than to developing a managed social welfare state in contrast to a "liberal" market state that is also managed by class structure and class power.
Even though capitalism has triumphed at this stage, the socialist experiment did not fail. Rather, it was distracted and ultimately defeated (Russia) or blunted (China) politically and economically by a stronger opponent. While the outcome was thankfully not decided militarily, copious blood was spilt through clandestine operations.
And the game is not over yet. The nuclear standoff persists and is increasing rather than decreasing.
As a result no conclusion can yet be drawn about the inherent superiority of capitalism to socialism from the capitulation of socialist countries to the strongest in the global economic context at this time.
The idea and ideal of socialism are not dead by any means, and the capitalist world has not let down its guard against it either.
Therefore, that capitulation to an accord with capitalism may be temporary. There seems to be little doubt the Chinese leadership sees it that way with China poised to the dominant economy eventually.
The CCP has no plans to turn the reins of power over to the ownership class and self-destruct. The US leadership knows this, of course, and it committed to doing to China what it believes it did to Russia, with a new arms race heating up through development of new military technology.
The present moment is just another stage of the dialectic and not "the end of history." The world has not heard the last gasp of socialism yet and its capitalism that now is under duress from its own internal contractions as dialecticians foresaw.
Actually, neither socialism nor capitalism have actually been tried. Feudalism shifted from one form to another, away from one ruling class based on control of land wealth to another based on control of industrial and financial wealth as well. This is amply demonstrated in the focus on inequality of income and wealth at present.
Even if capitalism does manage to carry the day globally, the historical dialectic does not cease however long a moment in the march of time lasts.
Some socialists would welcome this as the sign that the time is ripe for socialism to rise and replace it as the next phase of historical unfolding of ideas. See Sukomal Sen, Marx and the Cataclysmic Crisis of Global Capitalism
24 comments:
"Actually, neither socialism nor capitalism have actually been tried. "
Well then why do you keep saying it has?
I dont understand the whole capitalism vs socialism thing. As there is no such thing as pure capitalism nor pure socialism. Some types of products and services are "better" to produce within a private ownership market and some things are "better" to produce collectively. Its not surprising that every country has a mixed economy. Humans in large societies need private ownership to innovate and produce. Many humans will not excel producing for the "good of society" as many humans are nasty, selfish animals (I.E. libertarians). So whats the big deal?
IMHO this type of thing is much more of a religious contest than reflecting anything useful about reality. "christianity is better than islam" blah blah blah.
Its human nature to want to own things and to improve your livelihood over time. Thats not going away anytime soon. And its human nature to screw each other over and to hoard surplus and power and thats not going to change any time soon.
Therefore, we need both private and collective methods for organizing society. Why would that be surprising.
Auburn assessing that trade-off would be a good thing for competent economists to work on...
A lot if not most 'privatizations' occur because the govt people think "we're out of money!".... so their solution is to turn it over to Carlyle Group or whoever because "they have the money!" then Carlyle puts a meter on it and kicks some back to the remaining govt morons...
It's a waste of time, discussing ideologies. They "haven't been tried", maybe because is not practical?!?
We have to drop the obsession over pure world-view systems and start thinking on how things are instead, not on how we want them to be. The ideological baggage and agendas of the control freaks are setting us back, most of our current social diseases can be traced back to ideologically loaded policy makers or some individuals using ideology to control the masses to hoard power and wealth.
Until we drop the bullshit and instead try to focus on how to maximize our collective well-being using whatever means necessary ("socialism" or "capitalism"), as we build up bigger surplus, as long as we take care to maintain our social structures and that produce to be distributed evenly, everything else will "fall into place" (probably with growing space for public enterprise and institutions to act, towards a more 'socialistic' society).
But that won't be possible until we are freed from the spells of monetarism, neoliberalis and in general bad-economic thought.
No doubt Matt. The greatest irony is that privatizing services doesnt even save the Govt any money in the longer term, groups like carlyle or halliburton simply pay their workers less and suck up most of the money to the executive class.
Its interesting to think about how different the analysis of policy becomes once you recognize that Govt spending potential is infinite. Its not that knowing MMT makes micro policy design any simpler, its just that you get to focus on different aspects.
Is climate change a problem? If yes, then given an infinite supply of money, how do we best organize policy to efficiently solve this problem?
Is more education better for your society? If yes, then given an infinite supply of money, how do we best organize policy to maximize our society's education level efficiently?
Just because money is the easy part doesnt make the solutions any less complex. If you just turn on the money spigots, then capitalists will jack up the prices and hoover all these growing profits. After all, how the hell do people think university costs have gone up 100's of percent in the last decade and a half? Only because the Govt effectively said we are giving you an unlimited supply of money (albeit via loans to students) to work with. We need systems design people to come in and create the proper incentive and feedback structure to balance spending and income levels with the supply chain and competition to create an efficient education system. All of this stuff is complicated and needs competent planning and execution, but we cant even get to this point in the analysis because of the money issue.
So economists focus on the thing that is irrelevant from the Govt POV (the money) and ignore the application of policy. Instead of ignoring the money and focusing on the execution.
Or maybe economists are so blinded by their religious ideology that they really do believe that if you just focus on the money, then "markets" will take care of the complicated execution and systems stuff.
Its all really bizarre and tragic.
Yeah and then what happens is eventually they are faced with a long term maintenance/depreciation expense they havent properly planned for (robbed out all the USDs over the years...) bankrupt it and end up giving it back to the govt in the end anyways...
"Just because money is the easy part doesnt make the solutions any less complex."
right! there is still a s-load of work to do... cant even get there though with these munnie morons jamming everything up....
Or maybe economists are so blinded by their religious ideology that they really do believe that if you just focus on the money, then "markets" will take care of the complicated execution and systems stuff.
This, in a nutshell. Is the current ideological pure world-system view driven policy. The "Free" (lol) Market uber alles!
Bill Mitchell is working on a book on this topic, narrating from when it started in the 70's and 80's and is posting relevant info for this issue. It could very well be the most important book he has written so far, as what we need is not more "MMT theory" but more ideological political and ideological warring against the current crackpot mainstream ideas.
I, the timing Bill exposes there is interesting where we finally threw the yoke of the metals in 1971 and THEN started this monetarist backlash...
so it seems there was some satisfaction with a status quo as long as the metals were still being held over our laws, but then when we overthrew the metals, it started this current monetarist shit-storm that still continues...
I shouldnt say "status quo" I should say 'social progress'... iow seems like there was no problem with a plodding along social progress THEN we thru off the metals completely in 1971 and all of a sudden social progress became a problem for what THEN became newly minted (pardon the pun) monetarists...
(These people are pretty f-ed up...)
Well then why do you keep saying it has?
Because this is the no true Scotsman escape from the failures of what passes for "socialism" and "capitalism" in the public mindset and universe of discourse.
The pure ideas of socialism and capitalism as socio-economic systems have never been put into practice for a variety of reasons, social, political, and economic, mostly hinging on persistence of class structure. It is doubtful that that sufficient transformation will take place in the foreseeable future because the stage of the historical dialect at present is still heavily influenced by feudalism. The class power structure in most areas of the world is feudal, based on property relationships and fealty in social networks. For example, the dominant feature is political networks such as parties is loyalty. This is obvious to anyone that has rudimentary knowledge of sociology and poli sci.
Experiments with capitalism (markets based on perfect competition) and socialism (public ownership of the means of production) have not worked out as expected because the projects were either designed to tilt the board, or hijacked out of the gate by either an autocrat like Stalin or Mao, some of which then morphed into bureaucratic oligarchies, or a plutocracy like the Establishments of the Western republics. Even a well-designed project that is implemented by talented, committed people of principle cannot succeed for long on any significant scale because of the overall context in which he has to operate. It will be opposed by TPTB, and if threatens to be too successful, it will be shut down.
"Capitalism" and "socialism" as ideals have never been tried outside of hot house conditions, just as Christianity has never been tried seriously outside of monasteries. And if one talks with monks or former monks they will testify how difficult it is to walk the talk even in a hot house environment.
Maybe it is just my imagination but it surely can not be a coincidence that the US setup social security retirement and disability, universal medical coverage, free compulsory education, free county hospitals, social subsidized housing, food-assistance and all those other social means of distribution, all of which were done very well and would rival some of the best that socialist nations offered, as capitalism raised productivity and increased inequality.
While socialist nations have used markets reforms for distribution and bringing efficiency and technological adaptation to certain industries that were lacking and resources that were limited.
The end result is what matters, not the purity of the ideas that motivated the results.
The end result is what matters, not the purity of the ideas that motivated the results.
The central issue from the outset of the rise of civilization and technology has been division of the surplus over subsistence living characteristic of primitive societies.
This gave rise to the issues involving social structures characterized by asymmetric status, power, and possession, as well as the distribution of work and leisure.
The issue is how to reduce those asymmetries and create a more symmetrical society in the face of tradeoffs.
There are many approaches to this and success is largely context-dependent rather than ideational.
What's amusing is that we actually know how to make the basics of capitalism work.
You make excess accumulation financial based - because we can create that in infinite quantities. That means any physical hoarding of anything actually useful or valuable must be taxed heavily to discourage it. Anything pointless like Gold or Diamonds can be excluded from this.
You make the accumulation temporary by massive inheritance tax on death - to avoid dynasty issues and trustafarian problems (the kids of rich people are useless problem).
And you make the accumulation vacuous - by insulating the political class from the wealthy class. And that largely means making the politicians wealthy too - on pain of losing it all if they are found to be corrupt.
The devil of course is in the detail.
Golden handcuffs are wonderful. Use them.
The problem is that as an idea, capitalism is based on individualism and perfect competition among individuals — no privilege, no rents.
Privilege and rents are feudalistic.
What about meritocracy? Isn't that what we want?
Ryan yes there has been that progress but I think it is fair to say that those things are under a pretty serious current assault...
You could go all the way back to original GOPer Lincoln and thru T. Roosevelt, Eisenhower, Nixon.... consistent social progress... THEN something changed...
I think this is what Bill is positing in the theme of his new book..
iow there WAS progress but something happened to turn that around... it was incubated in the 70's...
Cheney said a long time ago "deficits dont matter politically" BUT NOW I'd assert they DO matter...
Something CHANGED soon after Nixon axed the Bretton Woods and thus repudiated the metals... to me it looks like it activated all the metal psychos among us who were previously placated .... they all went f-ing nuts when we left the metals behind for what looks like the first time in 1600 or 1700 years...
China people's congress is filled with billionaire monopolists and rent extractors. Capitalism doesn't have a monopoly on inequality and corruption.
I think there needs to be a delineation between companies that help the government achieve it's policy objectives (Costco?) and those that work against government (Walmart?). Both are import companies that use labor and regulatory arbitrage to bypass environmental and labor laws in the country, but at least one tries domestically to make lives of customers AND employees better. I'm okay with Boeing making a big profit if they develop airplanes for the air force. If they are transferring technology and manufacturing to an enemy and setting up plants there instead, they aren't helping government. Obama said anyone was free to invest and set up a coal plant, but he would bankrupt them before he was out of office. 25 coal projects have filed bankruptcy since he came into office with a policy to eliminate coal use. I'd prefer more carrot and less stick, but people that help the public, it is okay to reward, those who hurt the public, should be penalized. The Dems run the joint, take ownership, make changes, form government into what they want it to be. Repubs do.
Matt, Maybe When Keynesian ideas were thrown out and replaced with New Keynesian and Chicago school stuff?
Well yes Ryan that was what part of what happened but what caused that?
Seems like things were going along pretty well post WW2 then all of a sudden we do a 180 after Nixon flushed the Bretton Woods down the toilet bowl....
You could go back and see the incremental change over the decades you point out but then what was the straw that broke the camels back and then we swung around the other way?
As you point out nobody ever was able to hold back the slow social progress (Tom often points out "history has a liberal bias...") now all of a sudden we see some pretty serious hits to previous progress imo... not just here look at Europe too its probably more pronounced there....
THEN something changed...
It's all related to the inflation crisis and oil shocks from the late 70's and the upraise of neoliberalism (like tatcherism).
"There is no such thing as society"
This Ayn Rand level of libertarianism and was said by one of the persons who was in charge of the government back then. All power was given to "the markets" (financiers and bankers) because politicians fell useless to placate the inflation of the period.
Maybe we should have erased all the Middle East by now, it's a focus of infection who has contributed to the current policy in the West. IMO this all will be done as soon as we cannot negate any more the impact of the excess surplus capacity, ageing population and the fade of the oil era with access to cheap energy.
When we can't keep denying reality any more the monetarist backlash won't make any sense any more and we will have to apply functional finance or risk civilization collapse. The morons are focusing on non-existing problems while denying reality because they conflate the real with the financial terms. Is a worldwide disgrace.
"Varieties of feudalism" aren't we technically still feudal until we socialise land rents.
And other rents...
aren't we technically still feudal until we socialise land rents.
And other rents...
Yes, and also end privilege, especially double standards.
How could they conflate the imposition of monopoly rent by the oil cartels for "inflation"???
iow, OPEC embargoes oil into the US and the price of remaining domestic oil goes up as the domestic producers get the upper hand and raise their prices BUT this is then considered some sort of abstract "inflation" ?
Just like today with the price drop in oil this should be considered "deflation" to these people? I dont see the munnie morons going all around today saying "they're purifying the currency!!!" as gas is now less that $2 gal here...
"Just like today with the price drop in oil this should be considered "deflation" to these people?"
They do, about any CB and financial institution does.
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