The “Fixing Capitalism” Headfake — Yves Smith

Must -read. This places economic power front and center and shows how without addressing social, political, and economic the result of captialism is neo-feudalism.

Surprisingly, or may not so much, Yves Smith leaves out a major contribution of the universal employment guarantee by government, in which government guarantees to match a job with a person who is otherwise idle and wants to work. This removes the onerous aspect of capitalism that uses unemployment to discipline labor through the necessity to accept work on the terms of employers or starve. Thus, the market state is set against the welfare state in order to generate capitalist power.

Yves Smith at one time thought that the MMT JG was a policy recommendation that is optional. Bill Mitchell quickly set here straight that the JG is integral to MMT in that MMT is the only macroeconomic explanation that reconciles growth, employment and price stability, showing that it is possible to attain the holy grail of macro, optimal growth (full use of available resources), full employment less transitional, and moderate inflation.

The problem with the market state is asymmetric power that class networking, political power through the ability to capture the state, and asymmetry in market competition owing to market power and asymmetrical information are essential to capitalism as a system in order to support the profit rate.

Capitalism grows itself based on investment and investment is dependent on the profit rate to attract capital to productive investment instead of financial rent. The so-called savings glut is about preference for rent income over risk-taking through productive investment. The great gains have been in technology largely owing to very generous intellectual property rights granted by a captured government and enforced by that government's legal institutions.

There is no fixing capitalism without addressing asymmetric power that gives capital (property ownership) control over labor (people) and land (the environment).

Naked Capitalism
The “Fixing Capitalism” Headfake
Yves Smith

See also at NC

Capitalism is based on expropriation of the commons through negative externality by capitalizing the gains and socializing the losses. Asking capital to deal with negative externality is like asking a 2-year old to clean itself up after eating.

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