Magpie — Getting all Tied Up (4)

Mag[ie continues to fisk Paul Mason on Marxism and MMT.

Magpie's Asymmetric Warfare
Getting all Tied Up (4)

Magpie

Magpie — Getting all Tied Up (2)

Magpie critiques Paul Mason's criticism of MMT from the POV of a Marxist.

Magpie's Asymmetric Warfare
Getting all Tied Up (2)

Magpie

Peter May — Paul Mason demonstrates all too clearly why much of Labour don’t ‘get’ money

I confess I expected better. Paul Mason misses the fact that it is not ‘hit and hope’ it is actually the way money IS created – the neoliberal deceit is the ‘fact’ that we tax and spend.

The Treasury has after all, admitted as much as, indeed, have the Bank of England in September 2017: “Regarding whether taxation is necessarily required to finance government spending the answer is no, it is not. Along with raising money by taxation, governments can borrow money and they can create money outright.”…

Actually, money is created outright as credit. Banks extend loans that create deposits by crediting deposit accounts. Governments that are currency issuers create tax credits denominated in the currency as the unit of account and use them to credit nongovernment accounts, nowadays usually through the central bank as the government's fiscal agent.

According to the "law of reflux" money returns to its source. Credits that banks create through lending are used to pay down loans, which destroys the funds created by the deposit. Payment of tax credits to the government in payment of tax obligations destroys the funds created by the initial issuance. Of course, this is in aggregate, taking flows over time into account.

Spending and taxing are separate different fiscal operations for a currency issuer. Spending must logically precede taxation. Taxation, as well as payment of fees, fines and tariffs, destroy funds created through issuance, which occurs through government spending including transfers.

Spending is therefore offset by taxation and, in terms of "funds" spending with respect to sources and uses, but taxation is not used operationally to "pay for" spending. Spending and taxation are a separate fiscal operations, and tax policy is separate from spending policy. Taxes don't "pay for" spending — ever — under any circumstances.

Hence, it makes no sense to say that taxes are needed to "afford" spending, or that spending without offsetting taxes is "living beyond our means," or that liabilities are "unfunded." In terms of accounting statements, funding is simply a matter of accounting entries ("keystrokes on spreadsheets") that balance the books.

For a full explanation of the MMT POV on money and banking and finance, see Eric Tymoigne's book draft, The Financial System and the Economy.

Progressive Pulse
Paul Mason demonstrates all too clearly why much of Labour don’t ‘get’ money

Peter May

Louis Allday — Social Imperialism in the 21st century

Owen Jones, Paul Mason & the problem with the UK left

 Owen Jones and Paul Mason are widely considered to be the UK’s pre-eminent left-wing commentators; both appear frequently on television and radio, write regularly for mainstream publications like The Guardian and The New Statesman, have had books published (and subsequently translated into multiple languages) and attract enormous followings on social media: as of August 2018, their Twitter accounts have 742,000 and 597,000 followers, respectively. By many of their detractors on the right, Jones and Mason are depicted as socialists and radicals, members of what is referred to dismissively in the UK as the “looney left.” Indeed, both men claim to be socialists and Marxists of some kind themselves. However, what becomes clear upon a sober analysis of their positions on a wide range of issues is that they are in fact distinctly un-radical, frequently opportunist in nature, and particularly in Mason’s case, openly reactionary and imperialist.…

MR Online
Social Imperialism in the 21st century

Louis Allday

Andrew Jackson — Is “Postcapitalism” On the Horizon?

Review of Paul Mason's Post Capitalism.

Paul Mason is a leading British economic journalist, currently a columnist for The Guardian. He is also a long time left political activist. His new book, Postcapitalism: A Guide to Our Future (Farrar, Strauss and Giroux. New York, 2015) is a challenging, sometimes obscure, sometimes brilliant, eminently worthwhile read, and an optimistic take that the left might, once again, be marching in tune with the forces of history.…

The Bullet
Is “Postcapitalism” On the Horizon?
Andrew Jackson

Nick Johnson — Postcapitalism: Paul Mason’s ‘guide to our future’?

Book review.

The Political Economy of Development
Postcapitalism: Paul Mason’s ‘guide to our future’?
Nick Johnson

Andrew Lainton — The Definition of Capitalism – Need for an Accurate Account

Andrew Lainton responds to Ben Chu responding to Paul Mason on "capitalism," holding that the way to resolve the issue is through double-entry accounting. Short and to the point on history of economics and the meaning of "capital."

The framework for doing economics and finance is double-entry accounting. The deficiencies and failures of conventional economics generally result from failure to realize the centrality of DEB and therefore SFC modeling.

Decisions, Decisions, Decisions
The Definition of Capitalism – Need for an Accurate Account
Andrew Lainton

Ann Pettifor — Is capitalism “mutating” into an infotech utopia? [book review]

I was privileged to be invited by the St. Paul’s Institute to discuss (on the 3rd November, 2015) the thesis in Paul Mason’s recent book PostCapitalism: A Guide to Our Future with a keynote speech from the author.

Mason’s book is both a riveting and intellectually exhilarating read. It challenged me at a range of levels, and has added considerably to my list of must-read books. However, I have strong disagreements with Mason, and these are outlined in my review, published here as a PRIME e-publication.

I disagree primarily with his assumption that capitalism is subject to Kondratieff waves or “mutations”. The implication is that these waves are “natural” and unavoidable – beyond human agency. I strongly disagree. We have subordinated capitalism to the interests of society before – during the Golden Age of Economics from 1945 – 1971 – and can do so again.

Second, Mason is preoccupied by profits. I consider profits to be an out-of-date account of the rise in capitalist wealth, which is now accumulated as capital gains by the new, expanded and more ruthless rentier capitalism.

Third, Mason is optimistic about technology’s ability to eliminate pricing, to free up knowledge and to empower society to act collaboratively and with a “general intellect”. While I share some of that optimism, I see new technology as intensifying exploitation – by barring access to society’s collective public goods, and by transferring all risk on to today’s increasingly insecure working class – the precariat. Above all Mason’s optimism about technology’s role in our future means that he never fully grasps the nettle of ecological limits.

To download the review in full, click here

Debtonation
Is capitalism “mutating” into an infotech utopia?
Ann Pettifor

Chris Dillow — Back to pre-capitalism?

Will postcapitalism resemble pre-capitalism?

Stumbling and Mumbling
Back to pre-capitalism?
Chris Dillow | Investors Chronicle

Lord Keynes— Paul Mason on “Is Capitalism Dead?”

In my opinion, the whole debate cannot proceed until one has defined “capitalism” carefully. What is the essence of capitalism?

I think these are the core and essential attributes of capitalism:

(1) where there are strong (if often limited or circumscribed) private property rights;

(2) where most capital goods are privately owned and where most investment decisions are made privately. Defined in this sense, it is obvious that capitalism can come in many forms.

Here is just a small set of possible capitalist systems:

(1) a Rothbardian capitalist system where no government exists and where everything is privatised including justice;

(2) a Misesian or Hayekian Classical liberal capitalist system, where there is a minimal night-watchman state with basic public infrastructure (under Hayek’s system it might have some minimal social and economic interventions);

(3) a neoliberal capitalist system where governments attempt to control macroeconomics by monetary policy and varying degrees of government intervention (such as public infrastructure spending, regulation, social security, basic social services, and welfare), but where labour markets are deregulated, governments try to balance budgets, and involuntary unemployment is often a serious problem;

(4) a capitalist system where a Keynesian state maintains full employment by fiscal policy, strongly regulates businesses, and provides extensive social services (such as health care, education, and unemployment benefits) and welfare, strong public infrastructure spending, but where nationalisation of certain industries/services is minimal or non-existent;

(5) a capitalist system where a Keynesian state maintains full employment by fiscal policy, strongly regulates businesses, has strong public infrastructure, provides generous social services (such as health care, education, and unemployment benefits) and generous welfare, and where some industries are nationalised (e.g., the commanding heights of the economy).

I do not see any substantive problem with capitalism when it comes in form (4) or (5). (4) and (5) are what we would call the social democratic mixed economies of the post-WWII era.

The problem with capitalism is when it comes in forms (1), (2), or (3) (or anything in between).

Some would agree with this five-fold structure but others would deny that social democracy (# 4 and #5) in any of its forms constitute capitalism. Rather, they are forms of a mixed economy that combines features of capitalism and socialism. The argument is that self-ownership, self-autonomy, and ownership of property are the only basic natural rights, and other rights are constructed rather than natural.

Some would strongly contest the claim that neoliberalism with central banking cannot be a genuine form of capitalism, since a central bank setting interest rates, for example, is a technocratic command system.

I don't have any issue with the two assumptions of capitalism that Lord Keynes lists, in that I think they are generally agreed upon. However, I would define capitalism somewhat differently as that form of social, political and economic organization that favors "capital" (consolidating ownership of capital goods and land) over "labor," using the terminology of the traditional factors.

However, "capital," like "money," is a weasel word that is probably best avoided unless it is defined operationally (recalling the Cambridge capital controversy). "Labor" is also a weasel word because it includes all employees, workers, management and top management. I would rename the traditional factors, technology, the environment and the people as a matter of rectification of names in the traditional Chinese sense of social structure.

The Rectification of Names (Chinese: 正名; pinyin: Zhèngmíng; Wade–Giles: Cheng-ming) is the Confucian doctrine that to know and use the proper designations of things in the web of relationships that creates meaning, a community, and then behaving accordingly so as to ensure social harmony is The Good.[1] Since social harmony is of utmost importance, without the proper rectification of names, society would essentially crumble and "undertakings [would] not [be] completed." [2]

Then it becomes a question of whether favoring technological innovation to promote growth is a reasonable strategy based on assuming trickle down to the people based on a rising tide lifting all boats, and ignoring externalities that adversely affect people and the environment.

If people and the environment are prioritized socially, politically and economically over technology, is that still capitalism?

Social Democracy For The 21St Century: A Post Keynesian Perspective
Paul Mason on “Is Capitalism Dead?”
Lord Keynes

David F. Ruccio — What comes next?

Technological innovation increases possibilities. Technology alone does not bring any of those possibilities into actuality on its own. This involves people making choices, and that involves many often competing and conflicting factors — the interests of ownership, the interest of the environment, and the common interest.

…we do need to be aware of the ways the existing set of relations—the relations of capitalist commodity production—not only create capitalist subjects, but also noncapitalist subjectivities.
The way I’ve put it in my own writing, capitalist commodity production both presumes and constitutes particular kinds of individual subjects (which Marx referred to as “commodity fetishism”). But it also brings into existence new collective subjectivities—new ways of “being in common”—that can transcend capitalism.…

That alternative subjectivity—that “being in common” in relation to healthcare—can serve as the basis of a noncommodified, noncapitalist form of healthcare. And, pace Mason, new kinds of information technologies might even be useful for connecting producers and consumers in postcapitalist ways. There’s nothing automatic about it, of course. Still, both signal the possibility of ways of moving beyond capitalism.
The key is to find ways to combine emerging information technologies and ethical concerns in a political movement that is inspired by a fundamental critique: both what is wrong with the existing order and an imagining of a concrete alternative.

 The issue become much more obvious when the traditional factors of production — capital, alnd, and labor — are called what they really are — technology, the environment, and people.

The Rectification of Names (Chinese: 正名; pinyin: Zhèngmíng; Wade–Giles: Cheng-ming) is the Confucian doctrine that to know and use the proper designations of things in the web of relationships that creates meaning, a community, and then behaving accordingly so as to ensure social harmony is The Good.[1] Since social harmony is of utmost importance, without the proper rectification of names, society would essentially crumble and "undertakings [would] not [be] completed." — <a href="https://en.wikipedia.org/wiki/Rectification_of_names"> Wikipedia </a>

Then we might have a meaningful debate on what constitutes a good life ethically in a good society socially.

Occasional Links & Commentary
What comes next?
David F. Ruccio | Professor of Economics University of Notre Dame Notre Dame

Kate Aronoff — Have reports of the death of capitalism been greatly exaggerated?

Late last week, economic journalist Paul Mason, whose Channel 4 blog has been one of the best English-language sources for making sense of the ongoing Greek crisis, published an excerpt from his forthcoming book in The Guardian. It announces that the end of capitalism has begun and that (spoiler) it doesn’t look how we thought it might. The 20th century old/new leftist dream of some crisis-sparked proletarian revolt, he argues, has been battered by neo-liberalism and, now, is being replaced by a steady trickle of viable, largely technology-fuelled alternatives to the current economy. “Capitalism, it turns out, will not be abolished by forced-march techniques,” Mason writes. “It will be abolished by creating something more dynamic that exists, at first, almost unseen within the old system, but which will break through, reshaping the economy around new values and behaviors.”…

But as Leah Hunt-Hendrix and Astra Taylor noted recently for The Nation, there’s no ready-made path from information to liberation. “Our high-tech tools are constrained by market incentives and government surveillance interests that are often intertwined,” they wrote. “We cannot think about surveillance without paying keen attention to the corporations that benefit from it and the deep inequities that result.” Not only is there a barely-hidden world of workers making the digital revolution possible, but tech itself is already being used to serve the interests of those driving our current, vastly unequal economy. It deserves noting that some of the biggest fans of decentralization — technological or otherwise — are right-wing libertarians, who would be as happy to see workplace protections stripped as they would to see a new start-up food co-op take root….

Mason’s call to “direct all actions towards the transition — not the defense of random elements of the old system,” to focus solely on building alternatives, is a false dichotomy. If Syriza’s project in Greece has shown anything, it’s that combining a broad-based solidarity economy with political power is deeply threatening to neo-liberalism, the top brass of which will risk self-implosion to stamp it out. Acting alone, Solidarity for All didn’t provoke a sadistic backlash from Greece’s creditors. Syriza’s victory at the polls, its leadership’s presence at the negotiating table in Brussels, and the egalitarian populist parties grasping at state power across the Mediterranean did — but neither the challenge nor the solution could exist without the other.

 If the early 20th century labor heroine Lucy Parsons were alive now, she might add an addendum on to the statement she’s best remembered by: “Never be deceived that the rich will permit you to innovate away their wealth.” Today’s movements will need to be at least as creative as the forces they’re taking on, and be building solutions that are even more so. Post-capitalism is coming, but a new and even more disruptive tradition of organizing will have to clear the way first.

Open Democracy
Have reports of the death of capitalism been greatly exaggerated?
Kate Aronoff

David F. Ruccio — This is the end of capitalism?

Response to Paul Mason, The end of capitalism has begun.

I give Mason's argument more credence that Professor Ruccio does, but I agree that technology is not enough.

Nevertheless, technology is highly significant in Marx's analysis, which is based on historical materialism and economic infrastructure as foundational. Feudalism was chiefly agricultural and capitalism was mainly industrial. In fact, in time agriculture itself was mechanized and became agribusiness.

I harbor little doubt that the transition from the Industrial Age to the Information Age will be as transformational as the transition from the Agricultural Age to the Industrial Age. This implies an economic realignment as well.

How that will manifest is remains unclear, since the world is still operating largely in terms of capitalism and industry.

We are witnessing emerging opportunities and challenges and how these are met will determine the next moment in the historical dialectic. What's coming will be different from capitalism but what it will look like is too early to tell.

However, the basics of information suggest that it will be distributed and networked, which implies a new approach to politics, economics and political economy. There is at last the potential for scaling up popular participatory democracy based on an informed electorate.

I suggest this is the takeaway.

As with the end of feudalism 500 years ago, capitalism’s replacement by postcapitalism will be accelerated by external shocks and shaped by the emergence of a new kind of human being. And it has started.

We don't know yet what that new kind of human being will be like, although we can get a sense of it by observing the difference between those who grew up in the analog age and those who have grown up in the digital age. It's a different "head."

Occasional Links & Commentary
This is the end?
David F. Ruccio | Professor of Economics University of Notre Dame Notre Dame