Bill Mitchell — Central bank politicians who evade democratic scrutiny and election

Last month, the Schweizerische Nationalbank (SNB), the nation’s central bank recorded some large ‘book’ losses after it had abandoned its attempt to stop the Swiss franc (CHF) from appreciating against the euro. It started trying … as a way of protecting its manufacturing sector but abandoned the strategy on January 15, 2015. It had been buying euro in large quantities with francs and on April 30, 2015 the SNB released the – Interim results of the Swiss National Bank as at 31 March 2015 – which showed that its first-quarter 2015 losses were 30 billion CHF or around 29 billion euros. They lost CHF 29.3 billion on its “foreign currency positions” and CHF 1 billion on its gold holdings. This has raised the question, once again, whether central bank losses matter. The answer is always that they do not matter at all given the central bank can never become illiquid as it issues the currency (under some arrangement or another). So the commentators who whip up a lather about impending doom arising from central bank bankruptcies are to be ignored. But central bank officials also publicly express concern about their capital holdings. Why would they introduce that concern into the public domain when they know full well that they cannot go broke. The answer is that they are politicians themselves except they evade democratic scrutiny and election.....

Bill Mitchell – billy blog
Central bank politicians who evade democratic scrutiny and election
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Neal Lawson — "Surfers Without Waves – Is Social Democracy Dead In The Water?"

…The 20th century underpinnings of social democracy have not just evaporated, but have been replaced by other hostile forces. Globalisation and individualisation act as pincers to further restrict the possibilities of any social democratic renewal. Globalisation – the flight of capital and the downward pressure on taxes and regulation it engenders – signals the death knell of socialism in one county. Meanwhile, individualism and the culture of turbo-consumption make social solidarity difficult to say the least. 

In such a world, not only have we thankfully lost the sense of deference that made much of the paternalistic social democracy of the last century possible, but the good life has become something to be purchased by the lone consumer and not collectively created by the citizen. The endless formation and reformation of our identities through competitive consumption destroys the very social fabric that social democracy needs to take root. Today, it would seem, there is no alternative.…

This existential crisis of social democracy finds its ultimate expression in the continuing crisis of capitalism. If the historic goal of social democracy is to humanise capitalism, then the way in which public finances have been used to bail out the banks at the expense of the people who are capitalism’s victims, proves the paucity of the social democrat position.… 

So what is to be done? Social democrats are going to have to be brave – really brave – or face irrelevance at best, extinction at worse. There are three key challenges. 

The first challenge is to redefine the meaning of the good society. Social democracy has focussed for too long on the material. Yes we want greater equality, but does that mean just more and more consumption in a race that can never be won?… 

The second challenge is a radical shift in terms of internationalism. If capitalism has gone beyond the nation, then social democracy has no option but to follow. It needs to regulate and control markets wherever they do damage to people or the planet. Yes this is difficult, and yes it means surrendering sovereignty. But power is empty if wielded at the national level when economic decisions are being made in other countries and on other continents.…

The third challenge is cultural. Social democrats are going to have to let go. There is no place for elected vanguards, who do things to people and for them. Social democrats are going to have to know their new place as just one source of empowerment for citizens. Instead of pulling policy levers, the job is to create the platforms so that people can collectively change things for themselves. This is a more humble role, but essential and entirely possible in a networked society in which the internet has become the main nexus for human culture. Parties need to open up and out. They need to see themselves as simply part of much wider alliances for change, and not the sole repository of all wisdom and action. Parties are going to have to become really democratic, localising power and building platforms for collaboration around things like energy, loans and new media.…

Social Europe Journal
"Surfers Without Waves – Is Social Democracy Dead In The Water?"
Neal Lawson

David Ellerman — Does Classical Liberalism Imply Democracy?

There is a fault line running through classical liberalism as to whether or not democratic self-governance is a necessary part of a liberal social order. The democratic and non-democratic strains of classical liberalism are both present today—particularly in America. Many contemporary libertarians and neo-Austrian economists represent the non-democratic strain. We will take the late James M. Buchanan as a representative of democratic classical liberalism (with assists from the earlier democratic classical liberal philosophers, John Stuart Mill and John Dewey). Unpacking the implications of classical liberalism for any socio-organizational structures requires a tour through the intellectual history of the voluntary slavery contract and the voluntary non-democratic constitution (or pactum subjectionis) and it requires the recovery of the theory of inalienable rights that descends from the Reformation doctrine of the inalienability of conscience through the Enlightenment in the abolitionist and democratic movements. The argument concludes in agreement with Buchanan that the classical liberal endorsement of sovereign individuals acting in the marketplace generalizes to the joint action of individuals as the principals in their own organizations.…

Contains an excellent summary of classical liberalism. Here is the conclusion.

Re-constitutionalizing the corporation

Today the structure of most companies of any size—namely, the employment relation with the "employer" being the corporation with absentee "owners" on the stock market— institutionalizes irresponsibility by disconnecting the far-flung shareholders from the social and environmental impact of their "corporate governance."21

There have been a few social commentators who have pointed out the institutionalized irresponsibility of the absentee-owned joint stock corporation. In his 1961 book aptly entitled The Responsible Company, George Goyder quoted a striking passage from Lord Eustace Percy's Riddell Lectures in 1944:

Here is the most urgent challenge to political invention ever offered to the jurist and the statesman. The human association which in fact produces and distributes wealth, the association of workmen, managers, technicians and directors, is not an association recognised by the law. The association which the law does recognise—the association of shareholders, creditors and directors—is incapable of production and is not expected by the law to perform these functions. [Percy 1944, 38; quoted in Goyder 1961, 57]

This modest proposal re-constitutionalizes the corporation so that the "human association which in fact produces and distributes wealth" is recognized in law as the legal corporation where the ownership/membership in the company would be assigned to the "workmen, managers, technicians and directors" who work in the company. If the modest proposal were accepted that the contract for the renting of human beings be recognized as invalid and be abolished, then production could only be organized on the basis of the people working in production (jointly) hiring or already owning the capital and other inputs they use in production. The legal members of the firm as a legal party would be the people working in the firm. Such a firm is a democratic firm and the private property market economy of such firms is an economic democracy.22

Conclusion

When firms are organized as workplace democracies, then that is the natural generalization of sovereign individuals acting in the marketplace so ably described in the classical liberal free- market vision—to associated individuals acting as the principals only delegating decision- making authority in their own organizations.

I would call this a must-read for those interested in the intersection of economics, political science and philosophy. This is becoming a defining issue of our times.

Does Classical Liberalism Imply Democracy?
David Ellerman

David P. Ellerman (PhD in Mathematics) is a philosopher and author who works in the fields of economics and political economy, social theory and philosophy, and in mathematics. He has written extensively on workplace democracy based on a modern treatment of the labor theory of property and the theory of inalienable rights as rights based on de facto inalienable capacities. (Wikipedia)

Randy Wray — MMT and a Government for the People

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.
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.

Economonitor — Great Leap Forward
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.