My new podcast episode is out

A "Wild and Dangerous" Scheme! — Sandwichman

I was hunting for the exact location of "Prince's Tavern" in Manchester in 1833 when I stumbled upon an Economist article from March 30, 1844 addressing the "practical consequences" of reducing the length of the factory working day from 12 hours to 10. I am always fascinating by the profound and enduring hostility of a faction of employers -- amplified by their mouthpieces in academia and the press -- to the reduction of working time. I'm amazed how often their bile and zeal leads them to compound the error of biased, unfounded assumptions with boneheaded accounting mistakes.

Sound like criticism of MMT today.

Econospeak
A "Wild and Dangerous" Scheme!

Sandwichman

Michael Roberts — Marx’s law of profitability at SOAS

Last week I gave a lecture in the seminar series on Marxist political economy organised by the Department of Development Studies at the School of Oriental and African Studies (SOAS). The Marxist Political Economy series is a course mainly for post-graduates and has several lecturers on different aspects of Marxian economics. Course Handbook – Marxist Political Economy 2019-20 (8)
Mine was on Marx’s law of the tendency of the rate of profit to fall. Not surprisingly, the department team has noticed that I am apparently ‘obsessed’ by this law, at least according to critics of it.
Anyway, I thought it might be useful to go through my lecture in a post, with the accompanying slides referred to. So here goes....

Michael Roberts Blog — blogging from a marxist economist
Marx’s law of profitability at SOAS
Michael Roberts

See also

Short summary of Karl Marx's view of property relations.

Most interesting:

 Karl Marx sought to further distinguish between the personal possession of (mainly) consumer goods, which he termed “personal property”, and the absentee ownership of capital goods, which he somewhat confusingly termed “private property”. Marx then went on to critique the exploitation that arises structurally when the means of production are privatised.

Hence we arrive at the first problem with private property, in that there exist two conflicting interpretations, neither of which has gained universal acceptance. That said the broader Lockean take tends to prevail in common usage, which can be somewhat problematic when discussing the abolition of exploitative arrangements arising from private property.... 

The phrase "private property" is ambiguous. In the terminology of John Locke it includes personal property. In the terminology of Karl Marx it doesn't. When Marx spoke of the need to abolish private property to put an end to capitalist expropriation of surplus value from workers, he meant changing the relations of production. He excluded personal property from the category of private property and he was not advocating collectivizing a tradesperson's tools, for example.

Here, Marx was making a connection between capitalists as absentee owners and the landlords of feudalism that either owned slaves or collected rents.

In the industrial age under capitalism, factories and machines became the dominant mode of production rather than agricultural land, which was the dominant mode of production in the agricultural age that was characterized politically by feudalism. 

Marx sought to show how surplus value was the "rent" that capitalists extracted from hired workers and not having contributed to production.

Thus, in this view both feudalism and capitalism are related forms of oligarchy that stand in opposition to liberal democracy. Under capitalism, land was simply folded in to capital.

Black Cat Workers Collective
The problem with private property

Growing attacks on socialism in Democratic presidential race — Patrick Martin

Americans debate not only economic policy but also their economic system. Is neoliberal "capitalism" fighting for its life against a rising trend toward social democracy in an increasingly unequal world? 

WSWS
Growing attacks on socialism in Democratic presidential race

Patrick Martin

The new left economics: how a network of thinkers is transforming capitalism — Andy Beckett

After decades of rightwing dominance, a transatlantic movement of leftwing economists is building a practical alternative to neoliberalism....

The new leftwing economics wants to see the redistribution of economic power, so that it is held by everyone – just as political power is held by everyone in a healthy democracy…

The new economists’ enormously ambitious project means transforming the relationship between capitalism and the state; between workers and employers; between the local and global economy; and between those with economic assets and those without. “Economic power and control must rest more equally,” declared a report last year by the New Economics Foundation (NEF), a radical London thinktank that has acted as an incubator for many of the new movement’s members and ideas....

Addressing asymmetric economic power.

Defend Democracy Press
The new left economics: how a network of thinkers is transforming capitalism

Andy Beckett

Why There Is No “Crisis of Capitalism” — Branko Milanovic

Western dissatisfaction with globalization is wrongly diagnosed as dissatisfaction with capitalism, when in fact it is the product of the uneven distribution of the gains from globalization....

ProMarket — The blog of the Stigler Center at the University of Chicago Booth School of Business

Why There Is No “Crisis of Capitalism”

Branko Milanovic | Visiting Presidential Professor at City University of New York Graduate Center and senior scholar at the Stone Center on Socio-economic Inequality, 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

Transcending capitalism: three different ways? — Branko Milanovic

After the crisis of 2007-8, capitalism has entered among some parts of the public opinion into an ideological crisis. (I have written elsewhere why I think that this is not a general crisis of capitalism but a limited response to the decline of western economic and political power.) However, the question of durability or of non-permanency of capitalism has, unlike in the years after the fall of communism, reentered the public discourse. In many ways, in the West, the situation is returning to the 1970s or earlier when the ideas of alternative socio-economic systems were hotly debated. This is something that had disappeared in the next several decades driven away by neoliberalism in economics, the collapse of Soviet socialism, and the imposition of the pensée unique.

Now, things are changing, and understandably many people bring their own ideas about how capitalism can be “transcended”, that is replaced by a different socio-economic system. I want here to highlight three different ways in which this subject has recently been addressed....

Here is the nut of it.

In a new paper ”What is socialism today: Conceptions of a cooperative economy”, John Roemer starts with three essential pillars of all economic systems: an ethos of economic behavior, an ethic of distributive justice, and a set of property relations. In capitalism the three pillars are (1) individualistic ethos, (2) laissez-faire (no redistribution), and (3) privately owned means of production with profit accruing to capitalists. Until now, Roemer argues, all attempts to transcend capitalism focused on element No. 3, replacing privately owned capital with state or socially (collectively) owned capital. They have all failed.... 

Arguably, social democracy is based on 1) a communal ethos instead of an individualistic or collectivist ethos,  2) social justice based consideration of social value in addition to economic value, and 3) public control of the commanding heights of the society including the economy to organize public purpose in terms of the common good and general welfare instead of maximization of individuals' utility.

Democratic socialism would be based on 1 and 2, and three would include workers' cooperative ownership of the means of production.

Note: Branko Milanovic seemingly uses the term "transcend" as an allusion to Hegel's use of the German term aufheben as the driver of dialectic, both logical and historical.

Global Inequality

Transcending capitalism: three different ways?
Branko Milanovic | Visiting Presidential Professor at City University of New York Graduate Center and senior scholar at the Stone Center on Socio-economic Inequality, 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

Media, Democratic Establishment Panics as Sanders Predicted to Sweep All 50 States — Alan Macleod

Has socialism's time come? Capitalists freak out at the prospect of a Bernie administration.

Interestingly, what this shows is that an economic system is a policy variable in a social system.

Mint Press News
Media, Democratic Establishment Panics as Sanders Predicted to Sweep All 50 States

Alan Macleod

Is Falling Investment Spending The Last Nail In The Coffin? — John T. Harvey

I have been reporting for months that the indicator we should all be monitoring is Real Gross Private Domestic Investment....

Forbes — Pragmatic Economics
Is Falling Investment Spending The Last Nail In The Coffin?
John T. Harvey | Professor of Economics, Texas Christian University

Karl Marx’s Law of Value in the Twilight of Capitalism — Murray Smith

Global capitalism, with humanity in tow, is now facing a triple crisis: a deepening structural contradiction of the capitalist mode of production, one manifested as a multi-dimensional crisis of ‘valorisation’ – that is to say, a crisis in the production of ‘surplus-value’, the very lifeblood of the profit system; an acute crisis in international relations stemming from the fact that the global productive forces are bursting the confines of the nation-state system, whose individual units continue to address their gravest problems in primarily ‘national’ ways; and a growing ‘metabolic rift’ between human civilisation and the ‘natural conditions of production’ – the ecological foundations of human sustainability. Together, these interrelated crises suggest that we have now entered a ‘twilight era’ of capitalism – one in which humanity will either find the means to create a higher and more rational order of social and economic organisation, or in which decaying capitalism will bring about the destruction of human civilisation....

Counterpunch
Karl Marx’s Law of Value in the Twilight of Capitalism
Murray Smith | Professor of Sociology at Brock University, St. Catharines, Canada

Three Economic Ideas Threatening to Defenders of the Status Quo — Peter Cooper

1. Profit as surplus labor or as a property-based claim

One idea threatening to the defenders of the status quo is the recognition that profit income reflects capitalist property relations rather than productive contribution.…

 2. Capitalist economies are demand constrained 

 The Keynesian or Kaleckian principle of effective demand may not seem quite such a hindrance to defenders of the status quo as knowledge of the nature of profit, but the motivation for its denial – at least in the long run – is easy enough to perceive.…

3. Money matters, including in the long run

Also threatening to defenders of the status quo is any analysis that subjects the monetary system to scrutiny, whether it be the endogeneity of money or the implications, applicable to modern monetary systems, of currency sovereignty. (Money as Taboo for Economists illustrates this sociological dynamic in operation.)...

heteconomist
Three Economic Ideas Threatening to Defenders of the Status Quo
Peter Cooper

Politically Motivated Attempts to Own or Disown China as “Capitalist” — Peter Cooper

There are often attempts in the west to depict China as capitalist rather than socialist. After decades of China going from strength to strength on macroeconomic criteria – and in view of its undeniable achievement in reducing poverty at a rate unmatched in recorded human history – some on the right wish to deny that this could have been accomplished through socialism and so instead claim China to be capitalist. At the same time, there are those on the left who wish to distance notions of socialism from China’s economic system and especially its record on human rights....

Heteconomist
Politically Motivated Attempts to Own or Disown China as “Capitalist”

Peter Cooper

Michael Roberts Blog: blogging from a marxist economist — Minsky and socialism

Minsky’s journey from socialism to stability for capitalist profitability comes about because he and the post-Keynesians deny and/or ignore Marx’s law of value, just as the ‘market socialists’, Lange and Lerner, did. The post-Keynesians and MMTers deny/ignore that profit comes from surplus value extracted by exploitation in the capitalist production process and it is this that is the driving force for investment and employment. They ignore the origin and role of profit, except as a residual of investment and consumer spending.Instead they all have a money fetish. With the money fetish, money replaces value, rather than representing it. They all see money (finance) as both causing crises and, also as solving them by creating value!

In my view, far from Minsky providing the “necessary ingredients to a to a rethinking of Marxian theory of capitalist dynamics and crises”, as Bellofiore argues, Minsky’s theory of crises, like all those emanating from the post-Keynesian think tank of the Levy Institute, falls well short of delivering a comprehensive causal explanation of regular and recurring booms and slumps in capitalist production. By limiting the searchlight of analysis to money, finance and debt, Minsky and the P-Ks ignore the exploitation of labour by capital (terms not even used). They fail to recognise that financial fragility and collapse are triggered by the recurring insufficiency of value creation in capitalist accumulation and production.

Moreover, by claiming that capitalism’s problem lies in the finance sector, the policy solutions offered are the regulation and control of that sector, rather than the replacement of the capitalist mode of production. Indeed, that is the very path that Minsky took: from his socialism and ‘’socialisation of investment’’ in the 1970s to ‘stabilising finance’ in the 1990s.

Michael Roberts Blog — blogging from a marxist economist
Minsky and socialism
Michael Roberts

Nina Montgomery — Does capitalism need a radical redesign to become more inclusive?

Earlier this year, I worked on two books—featuring insights from 40 executives—exploring corporate purpose and impact. A clear theme emerged: To ensure that new capitalism doesn’t look a lot like old capitalism, we need more than just good intentions. We need a radical redesign of business at the structural level. Here are three big design questions that I encourage all leaders to ask themselves if they’re serious about inclusive capitalism:

I don't think that use of highly abstract terms like "capitalism" and "socialism" are helpful without careful definition that involves articulation of the fundamentals of social, political and economic systems, in particular in relation to contemporary living and emergent opportunities/challenges.

This is about revisiting the design of a life-support system that developed organically but not naturally in the sense of not being influenced by human intervention.

Assumption that "natural laws" comparable to natural systems studied by the natural science also govern complex adaptive systems has not played well so far, especially in the case of social systems and the social systems, including economics.

The organic approach has not worked out satisfactorily either, as humanity now faces several existential crises of its own making — climate change, epidemics and technological poisoning, and nuclear winter.

There are three major issues to face. The first is analyzing the design problem correctly, the second is developing a satisfactory solution, and the third is scaling it up. This latter involves two major issues, the first being technological, scaling at this level is a huge challenge, and the second being political, getting global concerted action from governments of nations with diverse interests has been elusive.

Fast Company

Does capitalism need a radical redesign to become more inclusive?
Nina Montgomery, designer at IDEO and a PhD candidate at the University of Oxford where she studies business and systems change

What Xi Jinping thinks about development economics — Andrew Batson

Must-read.

Note: Xi Jinping was trained as a chemical engineer.

Andrew Batson's Blog
What Xi Jinping thinks about development economics

Andrew Batson

Franz Oppenheimer — The Law of Transformation and Social Market Economy Oleg Komlik

Oppenheimer’s Law of Transformation can be read as the paradox of cooperative economics and it refers to macro-social dynamics: the beginning of a cooperative group endeavor will end up in a capitalist calculation enterprise or cease to exist as long as the macro-social conditions are based on capitalist monetization and accounting. Knowledge is about predictability and wisdom is about outcome: the later Kibbutzim were from the Oppenheimer viewpoint a survival mechanism which will be inevitably followed by economic means of privatization.

This is another must-read. It's hardly an accident that this knowledge is again coming to a head after having been known at least since Marx & Engels as conditions that led to the previous two world wars are being recreated. I already said some time ago that WWIII has already begun. It just hasn't gone viral yet.

The problem is institutional, and it goes back 5000 years as the post describes. There seems to be no way out as long as money is used to produce commodities in order to make more money (Marx's M-C-M'). The problem is that money not only buys commodities but also result in asymmetric power through asymmetric control of the means of production. Oppenheimer’s nLaw of Transformation suggests that this cannot be remedied in a monetary production economy through co-ops.

Is there another alternative? Our resident Libertarian-Austrian commentator keeps reminding us of the economic calculation problem and socialist calculation debate that suggests not. Socialist experiments to date have not scaled. Franz Oppenheimer suggests that that even limited-scale attempts have ultimately transmogrified into capitalism.

I have suggested that two things are needed for a genuine transformation. The first is an observation that Karl Marx made in Preface to A Contribution to the Critique of Political Economy:

Just as one does not judge an individual by what he thinks about himself, so one cannot judge such a period of transformation by its consciousness, but, on the contrary, this consciousness must be explained from the contradictions of material life, from the conflict existing between the social forces of production and the relations of production. No social order is ever destroyed before all the productive forces for which it is sufficient have been developed, and new superior relations of production never replace older ones before the material conditions for their existence have matured within the framework of the old society.
Mankind thus inevitably sets itself only such tasks as it is able to solve, since closer examination will always show that the problem itself arises only when the material conditions for its solution are already present or at least in the course of formation.

While I agree with the highlighted text, I would dispute the assertion of materialism. Materialism is the ontological underpinning of naturalism as the methodology of science as "true knowledge vs. opinion" in the ancient Greek sense of episteme vs. doxa that underlies the Western intellectual tradition.

As R. Buckminster Fuller pointed out, the wealth of humankind includes not only material wealth but also "metaphysical" wealth in the form of knowledge. While the former is finite, the latter is potentially infinite. In addition, to this there is also "spiritual" wealth in the form of everything that distinguishes humans. Fundamental to this is the ability to know and appreciate universality, where worldly knowledge is only a part of the story and not the greater part either. In addition to the cognitive faculties are the affective faculties, linked by the volitional faculty.

Thus, the second factor that comes into play in social transformation is the "spiritual" dimension, which can be considered either metaphysically or humanistically. For present purposes, the distinction can be disregarded, important as it may be otherwise. The important factor is that humans can not only know universally but also feel universally.

The level of collective conscious is revealed by the level of universality that the members of a society exhibit in behavior, culture and institutions. The present day level of collective consciousness is based on self-interest and this is reflected socially, political, and economically. Meher Baba elaborates on this in "The New Humanity." Some argue that this is just human nature, so get used to it. Others assert that the level of consciousness is malleable. Bucky Fuller showed that increasing electricity use has a profound effect, on one hand. On the other hand, raising the general level of education also affects the collective consciousness positively.

At a deeper level, the wisdom traditions of the world have asserted that consciousness can be transformed directly and have provided instructions on now to do so. These are being adopted increasingly.

For a transition away from predatory capitalism, two factors are needed. The first is a shift in the mode of production, which may be happening with the transition from the industrial age to the knowledge age. Dealing with climate change is also going to be a game-changer. The second is a transformation of the level of consciousness through a "spiritual awakening" such as has been suggested as coming in The Fourth Turing, for example.

Anyway, there is a lot to chew on in this post.

Economic Sociology and Political Economy
Franz Oppenheimer — The Law of Transformation and Social Market Economy
Oleg Komlik | founder and editor-in-chief of the ES/PE, Chairman of the Junior Sociologists Network at the International Sociological Association, a PhD Candidate in Economic Sociology in the Department of Sociology and Anthropology at Ben-Gurion University, and a Lecturer in the School of Behavioral Sciences at the College of Management Academic Studies

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.

To Resolve the Economic & Environmental Crisis, Do Not Bank On the Private Sector

The debt delusion — Michael Roberts [book review]

Michael Roberts reviews and critiques The Debt Delusion by John Weeks.

Michael Roberts Blog — blogging from a marxist economist
The debt delusion
Michael Roberts

Capitalism(s), Alone — Branko Milanović

One economic system dominates the world. But there’s more than one kind of capitalism.

Excerpt from Branko Milanović forthcoming book.

Evonomics
Capitalism(s), Alone

Branko Milanovic | Visiting Presidential Professor at City University of New York Graduate Center and senior scholar at the Stone Center on Socio-economic Inequality, 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

The New Anti-Capitalism — Harold James

Interesting form the point of view of the changing nature of the mode of production from industrial to digital. 

This suggests that an economic system more appropriate to emerging conditions is in the making — and in the interregnum it will be somewhat messy, especially given the accumulated challenges arising from negative externalities such as climate change 

This further suggests a new phase on the historical dialectic where opposing forces hammer out the response to systemic shifts in social, political and economic terms. 

The result is a period of uncertainty and conflict before the dominant trends emerge from the fog of change in a complex adaptive system comprising nearly ten billion people.

I think that terms like "capitalism" and "socialism" may be becoming less appropriate as the world is more and more enmeshed in a "'paradigm shift," as Ray Dalio has observed. Just as agriculture was not foreseeable in the hunter-gatherer stage of humanity's development, or industry in the pre-technological age of feudalism' so too, it may not yet be possible to discern the outlines of what is emerging and what kinds of conditions will accompany this. 

I am old enough to remember when Dick Tracy's wrist radio was far-out, and saw the distribution of technology over the 20th century — the electric light, automobiles, radios, aircraft travel, television, and the computer. What will people coming along now see — robotics, AI, bio-medicine, space travel....

Thinking chiefly in terms of existing categories like "capitalism" and "socialism" as presently conceived is looking backward to see the future.

Project Syndicate
The New Anti-Capitalism

Harold James | Professor of History and International Affairs at Princeton University and a senior fellow at the Center for International Governance Innovation