Branko Milanovic — Marx for me (and hopefully for others too)

Branko Milanovic explains why Marx's historical analysis of socio-economic phenomena remains not only relevant but also preeminent, based on a few key insights. While he does not identify as a Marxist or even a Marxian, he credits the important influence of Marx on his thinking.

There are no non-trivial economic phenomena that are not socio-economic, and Marx is the analyst that put his finger on the how and why. While it would be a mistake to dogmatize Marx, it would also be a great mistake to dismiss his analysis, or even to underestimate it. Milanovic discovered this empirically through his work on inequality. Class structure and power counts, and their foundation is economic.

This is also where the work on inequality parts ways with one of the scourges of modern micro- and macro-economics, the representative agent. The role of the representative agent was to obliterate all meaningful distinctions between large groups of people whose social positions differ, by focusing on the observation that everybody is an “agent” who tries to maximize income under a set of constraints. This is indeed trivially true. And by being trivially true it disregards the multitude of features that make these “agents” truly different: their wealth, background, power, ability to save, gender, race, ownership of capital or the need to sell labor, access to the state etc. I would thus say that any serious work on inequality must reject the use of representative agent as a way to approach reality. I am very optimistic that this will happen because the representative agent itself was the product of two developments, both currently on the wane: an ideological desire, especially strong in the United States because of the McCarthy-like pressures to deny the existence of social classes, and the lack of heterogeneous data. For example, median income or income by decile was hard to calculate but GDP per capita was easy to get hold of.

That means the jettisoning of marginalism aka "conventional economics" as it is currently practiced and taught in the academy. It would require revisiting classical economics, institutionalism as a competitor of marginalism, and integrating sociological economics, anthropological economics and political economy. The heterodox have already been engaged in this and much of this work has already been accomplished. What is needed is not so much new knowledge and reframing economics based on priorities. Much of what now passes for economic theory is rather irrelevant for current and future needs, since the scope and scale of the models limits them to the trivial.

This post covers a lot of ground in a few paragraphs, but it requires some background in Marx to appreciate in depth.

1. The most important of Marx’s influences on people working in social sciences is, I think, his economic interpretation of history.…
2. The second Marx’s insight which I think is absolutely indispensable in the work on income and wealth inequality is to see that economic forces that influence historical developments do that through “large groups of people who differ in their position in the process of production”, namely through social classes.…
3. The third extremely important Marx’s methodological contribution is the realization that economic categories are dependent on social formations.…
4. The last among Marx’s contribution that I would like to single out—perhaps the most important and grandiose—is that the succession of socio-economic formations (or more restrictively, of the modes of production) is itself “regulated” by economic forces, including the struggle for the distribution of the economic surplus....

Global Inequality
Marx for me (and hopefully for others too)
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

Jonathan Cook — Long Read: The neoliberal order is dying. Time to wake up

Analysis from the left mostly about British politics but inclusive of all aspects of neoliberalism as the policy, strategy and tactics of elite power.

Says "long read," but it is not that long. Worth a read even if you are not British since it is also an analysis of elite power as it relates to national politics and neoliberal globalization.

Let's hope Cook is correct in seeing the wave cresting. The question then becomes will the breaking of the wave result in world war as the elite desperately tries to hang on to its waning power and control.

True Publica
Long Read: The neoliberal order is dying. Time to wake up

Jonathan Cook, award-winning British journalist based in Nazareth, Israel; author, and public intellectual as a voice of conscience

David Ruccio and Jamie Morgan — Capital and class: inequality after the crash

The premise and promise of capitalism, going back to Adam Smith, have been that global wealth would increase and serve as a benefit to all of humanity.2 However, the experience of recent decades has challenged those claims: while global wealth has indeed grown, most of the increase has been captured by a small group at the top. This has continued into the“recovery” in the United States and globally. The result is that an obscenely unequal distribution of the world’s wealth has become even more unequal.

Those in the small group at the top have long been able to put distance between themselves and everyone else preciselybecause they’ve been able to capture the surplus and then convert their share of the surplus into ownership of wealth. And the returns on their wealth allow them to capture even more of the surplus produced within global capitalism. This is accompanied by growing income inequality.

However, although people are aware of inequality, they are typically unaware of its real extent, and mainstream economics and the popular press contribute to this situation, which in turn leads to the reproduction of the system that produces ever-more-grotesque levels of inequality.

Both class and ideology underpin this worsening situation. The tiny group at the top, both nationally and globally, have both an interest and the means to maintain the economic and social rules and institutions that allow them to capture the surplus, and thus create more distance between themselves and everyone else. Meantime, mainstream economic and political discourses, inside and outside the academy, tend to ignore the class conditions and consequences of inequality – and to undermine the possibility of a real debate about the kinds of changes that are necessary to give the majority of people a say in how the surplus is utilized....

Real-World Economics Review

Capital and class: inequality after the crash
David Ruccio and Jamie Morgan

Chris Dillow — On class separation

"Out of sight, out of mind."

Stumbling and Mumbling

On class separation

Chris Dillow | Investors Chronicle

Daniel Margrain — Class Matters

The prevailing orthodoxy in terms of class identification over the last few decades has been through the nexus of lifestyle choices and job roles. Indeed, this understanding of class in the subjective sense has, since the emergence of neoliberalism four decades ago, been in the ascendancy while conversely, the recognition that class is an objective category measured in terms of ones relationship to the means of production, has been in retreat....

Renegade Inc.
Class Matters
Daniel Margrain

Raúl Ilargi Meijer — Austerity, Bloodletting and Incompetence

Punxsutawney Phil Hammond, the UK chancellor, presented his Budget yesterday and declared five more years of austerity for Britain. As was to be expected. One doesn’t even have to go into the details of the Budget to understand that it is a dead end street for both the country and for Theresa May’s Tory party.

So why the persistent focus on austerity while it becomes clearer every day that it is suffocating the British economy? There are many answers to that. Sheer incompetence is a major one, a lack of empathy with the poorer another. Conservative Britain is a class society full of people who dream of empire, and deem their class a higher form of life than those who work low-paid jobs.

When you see that the British Parliament has even voted that animals don’t feel pain or emotions, you’d be tempted to think it’s a throwback all the way back to the Middle Ages, not just the British Empire. They’re as lost in time as Bill Murray is in Groundhog Day. Only worse.

But perhaps incompetence is the big one here. The inability to understand that if your economy is not doing well, you need to stimulate it, not drain even more of what’s left out of it. The people in government don’t understand economics, and therefore rely on economic theory for guidance. And the prevailing theories of the day prescribe bloodletting as the cure, so they bloodlet (let blood?). Let it bleed.

This is not a British problem, it’s pan-European if not global. Neither is the UK Tory party the only one being killed by it, all Conservative parties share that faith. They’re just lucky that their left wing opponents have all committed hara kiri, and joined their ranks when it comes to economics. All of Europe’s poorer have lost the voices that were supposed to speak for them, to economic incompetence.

Obviously, the US democrats did their own hara kiri years ago. One might label -some of- Bernie Sanders’ views left-wing, but he’s trapped in a system that won’t let him breathe.
All of this leads me to question the following:

The Automatic Earth
Austerity, Bloodletting and Incompetence
Raúl Ilargi Meijer

Eric Zuesse — What America’s Aristocracy Want

The American aristocracy want inequality of rights, with two basic polar-opposite classes: the ‘elite’, with themselves at the top of everything, and everybody else below them, as subjects to be ruled by them, in such ways as they (themselves, and their fellow ‘elite’) can agree to do. They are convinced that they have earned their high status, in one way or another, and they compete ferociously amongst themselves, to rise even higher within the aristocracy.

This is the essence of conservatism in political liberalism. Liberalism was essentially about ending the privilege of monarchies and aristocracies, a project that was largely completed at the end of World War I.

However, this is did not end a privilege ruling elite. "Bourgeois liberalism" simply replace the feudal ruling class with a capitalistic one.

This involves overreach and just as the feudal oligarchy was terminated so too will the bourgeois oligarchy.

This is what Donald trump ran on. But he plays the curious part of being a member of the oligarchy and the supposed champion confronting it. This suggest that the end game has not yet begun in earnest.

Barack Obama had the chance of becoming the next FDR, but he or his party were real for it. Bernie could have also, but the party was not yet ready for it either.

The question is who will seize the opportunity of a wave that has crested and when will that wave have actually crested and begun breaking.

Strategic Culture Foundation
What America’s Aristocracy Want

Eric Zuesse

George Carlin summed it up:

Chris Dillow — The Social Mobility Lie

Class again. It affects everything.

Stumbling and Mumbling

The Social Mobility Lie

Chris Dillow | Investors Chronicle

Cameron K. Murray — Economic bandits

In the US, the expression "game of mates" is "old boy network."

The traditional concept of class pretty much signifies networks of different degrees of privilege — the social, political and economic pecking order.

Fresh Economic Thinking
Economic bandits
Cameron K. Murray

Lars P. Syll — Marx and the Matthew effect

If you are unfamiliar with the Matthew effect (Wikipedia).

Lars P. Syll’s Blog

Marx and the Matthew effect

Lars P. Syll | Professor, Malmo University

Cameron K. Murray — Game Of Mates: Nepotism Is Costing The Economy Billions

"Old boy" networks more than nepotism. This is integral to class structure and class power. It's not just economics but also politics. Wealth gives power and power increases wealth. It's a self-augmenting system and it is the basis of capitalism and plutonomy from the sociological standpoint.

Fresh Economic Thinking
Game Of Mates: Nepotism Is Costing The Economy Billions
Cameron K. Murray

Michael Hudson — Are Students a Class?

Debtor class.

Hudson shows how debt is a key element of the strategy of finance capitalism.

...the financial class views the role industry and the economy at large as being to pay its employees enough so that they can take on an exponentially rising volume of debt....

Although money and banking textbooks say that all interest (and fees) are a compensation for risk, any banker who actually takes a risk is quickly fired. Banks don’t take risks. That’s what the governments are for. (Socializing the risk, privatizing the profits.)...

...banks insisted that the government guarantee all student debt. They also insisted that the government guarantees the financial gold-mine buried in such indebtedness: the late fees that accumulate. So whether students actually succeed in becoming wage-earners or not, the banks will receive payments in today’s emerging fictitious “as if” economy. The government will pay the banks “as if” there is actually a recovery.…

This is simply a replay of what banks have negotiated for real estate mortgage lending....

In view of the fact that a college education is a precondition for joining the working class (except for billionaire dropouts), the middle class is a debtor class – so deep in debt that once they manage to get a job, they have no leeway to go on strike, much less to protest against bad working conditions. This is what Alan Greenspan described as the “traumatized worker effect” of debt.…

In today’s world a school can charge as much for an education as banks are willing to lend students – and banks are willing to lend as much as governments will guarantee to cover, no questions asked. So the bankers on the school boards endorse bloated costs of education, knowing that however much more universities make, the bankers will receive just as much in interest and penalties....

For half a century Americans imagined themselves getting richer and richer by going into debt to buy their own homes and educate their children. Their riches have turned out to be riches for the banks, bondholders and other creditors, not for the debtors. What used to be applauded as “the middle class” turns out to be simply an indebted working class....

Michael Hudson
Are Students a Class?

Michael Hudson | President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City, and Guest Professor at Peking University

Daniella Medina— Class Interests & Discordant Politics: Brexit & the Trump Campaign

Levy Institute grad students' blog that is unabashedly leftist.

The ascent of conservative capitalism- in the US under Reagan and George Bush Sr. and in the UK under Thatcher- meant tax cuts, the erosion of labor unions, and new regulations imposed on the economy. These economic regime changes were based on the mainstream theoretical presupposition that what we really needed to do was create an economic environment conducive to unbarred corporate innovation and investment and eagerly accept international policy which, together, opened the proverbial floodgates allowing neoliberalism to leak all over the globe. What a mess.

I would take issue with the phase, "allowing neoliberalism to leak all over the globe." The reality is that this was the intention, and it was imposed internationally by the Anglo-American interests, that is to say, the international finance and translational corporatism the rule the US and UK, along with the deep state bent on global hegemony.

"Allow neoliberalism to leak all over the globe" is not correct way to characterize this. This suggests the natural order that is supposed to arise spontaneously with liberalization, deregulation and privatization, whereas the reality is that neoliberalism was imposed domestically and internationally through oligarchic, plutocratic and militaristic rule masquerading as democracy and government of, by and for the people, in which the elected government acts in the interest of all and spreads the benefits of liberty internationally.

The Minskys
Class Interests & Discordant Politics: Brexit & the Trump Campaign

Daniella Medina

Ron Baiman — On the Neglect of Class in Neoclassical Macroeconomics

A lack of awareness of the importance of changes in class structure (via income distribution) is another important distinction between mainstream Neoclassical (NC) Keynesian macroeconomics and the Keynesian-Kaldor PK macroeconomic tradition that Friedman is working out of. Left PK heterodox economists incorporate class analysis as a fundamental driver of macroeconomic outcomes, whereas it is largely absent in mainstream NC macroeconomics as a fundamental driver of economic growth.…

The D & S Blog
On the Neglect of Class in Neoclassical Macroeconomics
Ron Baiman, Chicago Political Economy Group

Must read — Joel Kotkin: We Now Join the U.S. Class War Already in Progress

Must read. Demographics is the real basis of political economy as well as politics.

New Geography
We Now Join the U.S. Class War Already in Progress

Joel Kotkin | executive editor of NewGeography.com, the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University, and executive director of the Houston-based Center for Opportunity Urbanism

Yanis Varoufakis — How Do the Economic Elites Get the Idea That They ‘Deserve’ More? Lessons from Game Theory

The ‘haves’ of the world are always convinced that they deserve their wealth. That their gargantuan income reflects their ingenuity, ‘human capital’, the risks they (or their parents) took, their work ethic, their acumen, their application, their good luck even. The economists (especially members of the so-called Chicago School. e.g. Gary Becker) aid and abet the self-serving beliefs of the powerful by arguing that arbitrary discrimination in the distribution of wealth and social roles cannot survive for long the pressures of competition (i.e. that, sooner or later, people will be rewarded in proportion to their contribution to society). Most of the rest of us suspect that this is plainly false. That the distribution of power and wealth can be, and usually is, highly arbitrary and independent of ‘marginal productivity’, ‘risk taking’ or, indeed, any personal characteristic of those who rise to the top. In this post I present a body of experimental work that argues the latter point: Arbitrary distributions of roles and wealth are not only sustainable in competitive environments but, indeed, they are unavoidable until and unless there are political interventions to keep them in check.…

Evonomics
How Do the Economic Elites Get the Idea That They ‘Deserve’ More? Lessons from Game Theory
Yanis Varoufakis

Brad DeLong — Must-Read: Miriam Ronzoni: Where Are the Power Relations in Piketty’s Capital?

The extremely-sharp Miriam Ronzoni excellently puts her finger on a substantial hole in Thomas Piketty’s Capital in the Twenty-First Century…

WCEG — The Equitablog
Must-Read: Miriam Ronzoni: Where Are the Power Relations in Piketty’s Capital?
Brad DeLong

David F. Ruccio — What’s class got to do with it?

The other day, I recommended the first two installments in the TPM series on “the road to inequality”—albeit with the caution that there was too little discussion of capitalism as a system.

Now, the third installment is in. Jared Bernstein’s “digging around in the data weeds” yields a first-rate introduction to the various measures of inequality in the United States (with which regular readers of this blog will be familiar), all of which point in the same direction: “toward greater economic distance between people and households in their economic outcomes.”

Unfortunately, Bernstein—by his own admission—focuses on the size (individual or household) distribution but shies away from any kind of extended discussion of the class distribution of income….

Here’s the problem: it’s not just that wages are more equally distributed than profits, thus leading to more inequality. As I see it, the opposing movements of the wage and profit shares signal a fundamental change within capitalism that puts more and more value in the hands of capitalists—to do with it what they will—and less in the pockets of workers. 

It thus makes workers (and society as a whole) even more dependent on capitalists, who are able to not only capture the surplus created by those workers, but also to use the surplus to rig the system to get even more of the surplus now and for the foreseeable future.… 

Occasional Links & Commentary
What’s class got to do with it?
David F. Ruccio | Professor of Economics, University of Notre Dame

Bill Mitchell — Parents are advance secret agents for the class society

Dutch economist Jan Pen wrote in his 1971 book – Income Distribution – that “Parents are advanced secret agents of the class society”, which told us emphatically that it was crucial that public policy target disadvantaged children in low-income neighbourhoods at an early age if we were going to change the patterns of social and income mobility. The message from Pen was that the damage was done by the time the child reached their teenage years. While the later stages of Capitalism has found new ways to reinforce the elites which support the continuation of its exploitation and surplus labour appropriation (for example, deregulation, suppression of trade unions, real wage suppression, fiscal austerity), it remains that class differentials, which have always restricted upward mobility and ensured income inequality and access to political influence persist, are still well defined and functional. This was highlighted in a new report published by the the American Economic Policy Institute (EPI) – Early Education Gaps by Social Class and Race Start U.S. Children Out on Unequal Footing (June 17, 2015). Not much has changed it seems for decades.

Bill Mitchell – billy blog
Parents are advance secret agents for the class society
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Charles Hugh-Smith — The Changing World Of Work I: America's Nine Classes

The new and improved caste system.

Zero Hedge
The Changing World Of Work I: America's Nine Classes
Charles Hugh-Smith | OfTwoMinds blog