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

Brazil Aims For $18 Billion From Its Sale Of Key Refinery Assets — Tsvetana Paraskova

In late April, Petrobras approved the sale of eight refineries as part of its divestment plan. In May, the energy firm struck a deal with the Brazilian antitrust regulator that will allow it to sell those downstream assets in a bid, the company said, to encourage greater competition in the industry....

Oilprice
Brazil Aims For $18 Billion From Its Sale Of Key Refinery Assets
Tsvetana Paraskova

T.J. Coles — Out of Control: A Brief History of Neoliberal Deregulation in the USA

Backgrounder. Using government capture to favor special interests ("capital").

Truthout
Out of Control: A Brief History of Neoliberal Deregulation in the USA
T.J. Coles, Clairview Books | Book Excerpt

Bill Raden — Free Tuition Was Once the Norm in California

For an increasing number of education and political leaders, bringing debt-free higher education back to California is long overdue. In 2015 alone, over half of UC and CSU seniors graduated with a staggering $1.3 billion debt load. Since 2004, California’s public university students have collectively racked up student debt in excess of $12 billion. That liability has been a catastrophe, according to UC San Francisco medical professor Stanton Glantz, president of the Council of University of California Faculty Associations.

“Even if you take a fairly conservative approach, it’s had huge negative effects on the California economy,” he explains in a phone interview, “because people who graduate with this ridiculous amount of debt have to delay starting families, starting businesses, and it just becomes a weight on the whole economy. … The same people, if you look at the state as a whole, are going to end up paying for higher ed. It’s just, [with free tuition] you give it to everybody, and then the society recoups the costs over the long run by creating more wealth, [rather than] what we’re doing now, which is where you take the people who are actually getting educated and saddle them with [the cost].”...

The argument that a university degree benefits both the graduate and society has been made repeatedly over the years. For the college graduate, it means significantly increased lifetime earnings; for the state, increased tax revenue and reduced costs for social welfare programs and incarceration. A 2012 study by UC Berkeley’s Institute for the Study of Societal Issues estimated that ongoing returns to the state from UC and CSU graduates averaged $12 billion annually, “well above the general fund expenditures for the UC, CSU and CCC systems combined.”...

Education is institutionalized as a public good in the US and matriculation is required until completing secondary education or attaining majority.

Why not higher education, especially in a competitive world where the US is now trying desperately to stay on top while the emerging world (read China) is breathing down its neck. But soon enough it will also be India, and then....

 AlterNet
Free Tuition Was Once the Norm in California
Bill Raden | Capital and Main

Yves Smith — Wall Street Journal Deigns to Notice Costly Indiana Toll Road Failure, Depicts It as Isolated When Toll Roads “Consistently” Go Bust

To restate the obvious, the US has a huge amount of infrastructure catch-up it needs to do. Infrastructure spending provides an estimated $3 of economic growth for every $1 of spending. That means debt worry-warts need not fear, since deficit spending on infrastructure would lower the Federal debt to GDP ratio would fall.

But since the balanced budget types can’t get out of their own way and embrace MMT, budget hawks and ideologues who prefer private sector profiteering to government provision of services both tout the idea of “public private partnerships” as a scheme for what amounts to privatization of public services. These schemes are a transfer from local citizens, who wind up paying users’ fees, to financiers, design and construction firms, and investors, the overwhelming majority of which are not part of the community. So they are net transfers out….once you ignore political donations.

So as opposed to adding to local growth, these privatizations amount to new taxes in the form of users’ fees, but paid to private owners. Even worse, the deals are very one sided, with “gotcha” clauses like requiring payments if the public amenity is taken out of service for pressing reasons, like an emergency.

These infrastructure deals are also a lousy way to stimulate growth, since where the promoters want to do their projects is routinely not where the real economy payoff is greatest. And the process for selecting the consortium to handle the project, negotiating the deal, and for the promoters to get the funding is much more time consuming than having the government do it itself, making a mockery of the claim that the private sector is more nimble.

But on top of these issues is that certain types of projects, most notably toll roads, have a record of consistent failure that the press chooses to ignore.…

Naked Capitalism
Wall Street Journal Deigns to Notice Costly Indiana Toll Road Failure, Depicts It as Isolated When Toll Roads “Consistently” Go Bust

Yves Smith 

Andrew Batson — How long was China Communist?

The theme of this blog is the length of time under communist rule and it's effects on liberalization.

The most interesting aspect is the comparison of Russia and China. Russia was a strictly communistic regime for almost 75 years, while China was communistic strictly speaking for a much shorter period.

Russia collective farmer resist attempts at privatization of land and farming, while China has enforced an urbanization policy and is replacing the traditional farming with industrial mechanized farming and relocating displaced workers to cities built for the purpose. This has resulted in a significant degree of social disruption in the hinterlands.

Russian farmers are generally satisfied with their situation with is running more or less cooperatively and they do not wish the land divided into privately owned plot. Whether they realize it, the trend is toward mechanized farming that obviates the competitiveness of small farms. What would happen is that the farms would be turned into privately own industrial farms, and the former workers would be displaced. They would rather continue to be part of a cooperative farm.

The big challenge in the Global South is the industrialization of agriculture that not only displaces millions of agricultural workers but also disrupts cultural traditions.

Andrew Batson's Blog
How long was China Communist?

Andrew Batson

Speaking of China, see also

I am the odd bird who prefers Beijing to Shanghai. The food is more representative of China as a whole, the faces show more drama, you are more likely to see “weird random ****” driving around in a cab, and the core culture is less chi-chi. It’s the most important city in the world. Let’s hope Washington does nothing to reclaim that mantle, New York never will.

Marginal Revolution
Beijing notes
Tyler Cowen | Holbert C. Harris Chair of Economics at George Mason University and serves as chairman and general director of the Mercatus Center

Nafeez Ahmed — Age of Empire

In early December 2016, the British government published its new Annual Report on the UK National Security Strategy adopted in 2015. The document was, in many ways, a blueprint for a new form of empire. In the name of defending national security, it unveiled Britain’s plan to build a “permanent” military presence in the Gulf to defend its access to “the flows of energy and trade in the region”; deploy more troops into Eastern Europe, near Russia’s border; and promote the sale of “defence equipment and services from UK-based suppliers to overseas partners and allies”.

But perhaps the most Orwellian element of the document was its celebration of Britain’s role in delivering economic aid to developing countries, to lift them from poverty. It announced that the government had set up a new £1.3 billion Prosperity Fund to enable the UK “to deepen relationships with countries across the globe”. The fund uses Official Development Assistance resources to promote “reforms” in support of “economic growth in development countries”. This will reduce poverty by creating “opportunities for international business, including UK companies”.

Critics point out that this is really just a euphemism for making the world safe for British corporations. The reforms tied to British aid fit well with neoliberal capitalist orthodoxy: privatisation, deregulation, and liberalisation of the economy to open it up to foreign investment, while lowering taxes and decreasing state spending.

As British historian and development expert Mark Curtis has shown in an extensive report for the NGO War on Want, such British overseas aid policies have done little to resolve poverty, but instead have carefully cultivated corporate power. To date, 101 mostly-British companies — like Shell, Glencore and Tullow Oil — now control over $1 trillion worth of Africa’s oil, gold, diamond, coal, and platinum....

Same primitive accumulation, expropriation and enclosure, and exploitation.

The emergence of capitalism in England, for instance, was an inherently violent and repressive process. Over 400 years ago the seeds of English capitalism were sown amidst mass evictions of peasants from public lands. Formerly landed peasants, who were compelled by threat of force to paytribute to local lords, now found themselves a landless proletariat, with no choice but to sell their labour power for wages to the same people who had robbed them. This process of enclosure gradually enforced a new social condition — the dispossession of people from access to the sources, means, and technologies of production. This was, and still is, the fundamental basis of modern capitalism.

The dispossession of land inside England accelerated in tandem with the expansion of the British Empire along similar lines. Britain’s seizure of India began with the conquest of Bengal in 1757 and continued under the East India Company for more than five decades. Once the company was displaced by the British state, expansion continued, especially into Northwest India — soon followed by the scramble for Africa, and penetration of the Middle East....

Corporate and government land grabbing from indigenous communities is now at an all time high. A study by the Washington DC-based Rights and Resources Initiative (RRI) finds that despite using and inhabiting up to 65% of the world’s land with a population of around 1.5 billion, indigenous peoples and local communities only have legal rights to 18% of it....

Weapons of Reason
Age of Empire
Nafeez Ahmed

Steven Hail — Private super: Paul Keating’s innocent fraud

What can we do?

Scrap tax concessions on retirement savings. End compulsory private superannuation. Meantime, require employers to start paying out the 9.5 per cent that is currently going into super as wages and salaries, and tax it as such.

Introduce a job guarantee scheme for those of working age and pay those of retirement age the job guarantee wage.

Conduct a national audit of the skills and the infrastructure that Australia will require in the decades to come to provide for its ageing population, and put in place the plans needed to ensure those skills and that infrastructure exists when it is needed.

Because the problem is not the money — it is the real goods and services, as it always was.

Independent Australia

Private super: Paul Keating’s innocent fraud

Steven Hail | Lecturer in Economics, University of Adelaide

Why Deficits Hurt Banking Profits — Sharmini Peries interviews Michael Hudson

The post is actually about the establishment push to establish a market state through privatization and deregulation in order to extract rents by replacing what is left of the FDR New Deal welfare state that publicly provides social benefits through the government's policy space as a currency sovereign.

While Hudson doesn't go into the history prior to Bill Clinton, this push was initiated by Jimmy Carter's fiscal conservatism, accelerated under Reaganomics, was amplified by Bill Clinton under the aegis of Robert Rubin, cemented in place by Alan Greenspan, and continued by Bush and Obama. Now Trump is setting about advancing the job dismantling the remnants of New Deal.

The aim of neoliberals is to prevent governments from spending money to revive growth by running deficits. Their argument is: “If a government can’t run a deficit, then it can’t spend money on roads, schools and other infrastructure. They’ll have to privatize these assets – and banks can create their own credit to let investors buy these assets and run them as rent-extracting monopolies.”

The bank strategy continues: “If we can privatize the economy, we can turn the whole public sector into a monopoly. We can treat what used to be the government sector as a financial monopoly. Instead of providing free or subsidized schooling, we can make people pay $50,000 to get a college education, or $50,000 just to get a grade school education if families choose to if you go to New York private schools. We can turn the roads into toll roads. We can charge people for water, and we can charge for what used to be given for free under the old style of Roosevelt capitalism and social democracy.”

This idea that governments should not create money implies that they shouldn’t act like governments. Instead, the de facto government should be Wall Street. Instead of governments allocating resources to help the economy grow, Wall Street should be the allocator of resources – and should starve the government to “save taxpayers” (or at least the wealthy). Tea Party promoters want to starve the government to a point where it can be “drowned in the bathtub.”

But if you don’t have a government that can fund itself, then who is going to govern, and on whose terms? The obvious answer is, the class with the money: Wall Street and the corporate sector. They clamor for a balanced budget, saying, “We don’t want the government to fund public infrastructure. We want it to be privatized in a way that will generate profits for the new owners, along with interest for the bondholders and the banks that fund it; and also, management fees. Most of all, the privatized enterprises should generate capital gains for the stockholders as they jack up prices for hitherto public services.”...

Michael Hudson
Why Deficits Hurt Banking Profits

Sharmini Peries interviews Michael Hudson

Michael Hudson — Alluring Infrastructure Income

Well, everybody is in favor of infrastructure. Since the beginning of civilization – starting with the Pyramids, temples and city walls – most of the capital investment in every country of the world, even today, is in infrastructure. That’s why banks, corporations and wealthy investors want to privatize it, because privatizing it is like conquering a new country and being able to take its income.

You can take into your own hands, for your own profit, the largest capital investment there is – what used to be in the public domain. The roads, railroads, airline companies, water and sewer systems and everything that people need, including now the schools can be privatized and instead of providing them to the economy, to make the economy operate at a lower cost, you can make people pay two or three times as much as they were doing. 

Operating this infrastructure for profit (with high-interest credit) will vastly increase the cost of the economy, without increasing wages or the ability to pay for these privatized services. This will squeeze the living standards while sucking up more and more money to the top of the economic pyramid....

Privatization of public assets is a pillar of neoliberalism along with deregulation of finance and business. This is called "liberalization of the economy" in the name of "increasing freedom" by reducing government control of the private sector, which is "socialism."

This was first imposed on Third World countries and then Second World countries after the fall of the Berlin Wall and the subsequent collapse of the USSR. Now it is being applied with a vengeance to the First World.

Michael Hudson
Alluring Infrastructure Income
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

Lars P. Syll — For-profit schools — a total disaster

John Quiggin quote that is relevant in light of Donald Trump's appointment of pro-voucher pro-privatization Betsy DeVoss as US Secretary of Education. It's a concept that has been tried and failed.

Lars P. Syll’s Blog
For-profit schools — a total disaster
Lars P. Syll | Professor, Malmo University

See also

Public Goods

Albert R. Hunt — Republicans Prepare Extravaganza of Tax and Spending Cuts

Republican congress versus Donald Trump. Who wins?

Bloomberg View
Republicans Prepare Extravaganza of Tax and Spending Cuts
Albert R. Hunt

Sam Ben-Meir — The Failed Dogma of Neoliberalism

During her political prime in the 1980s, Thatcher said she was out to change the soul, to change the conceptual universe in which people live, and her idea that “there is no alternative” (TINA) became so deeply embedded in our psyches and in our consciousness that it seems we could no longer imagine that there is an alternative to capitalism.

The neoliberalism of Thatcher was characterized by deregulation (especially in the financial sector), the suppression of labor, attacks on trade unions, and the privatization of state-owned corporations. Both Thatcher and Ronald Reagan oversaw the shift toward a more laissez-faire version of capitalism, which in effect reversed the post-1929 movement towards increased state-intervention and social-democratic capitalism.

It is long overdue that we lay this TINA concept to rest.…

Consortium News
The Failed Dogma of Neoliberalism
Sam Ben-Meir | Professor of Philosophy, Eastern International College

Cameron K. Murray — A private land titles office is bull$hit

WTF. It's a ridiculous idea on the face of it but after what just happened in the US with mortgage fraud, it's insane. The next item up for sale the tax office?

Fresh Economic Thinking
A private land titles office is bull$hit
Cameron K. Murray

Defend Democracy — EU Starves Greece To Force Sell Off Of Public Assets

EU FINANCE ministers are threatening to withhold a €2.8 billion (£2.4bn) wad of bailout cash from Greece for not selling off public assets fast enough....

Conditions demanded by the EU include cutting public spending, deregulating the energy market, raising the price of medicines and putting key assets into a “privatisation fund” outside government control, which would be responsible for selling them.

The fund is due to contain an estimated 70,000 real estate properties, urban transport companies and the water supply, among other assets.

Colonizing Greece. The European periphery is next in line.

Defend Democracy

EU Starves Greece To Force Sell Off

Defend Democracy Press — Nestle CEO: Water Is Not A Human Right, Should Be Privatized

More neoliberal psychopathy and sociopathy.

Defend Democracy Press
Nestle CEO: Water Is Not A Human Right, Should Be Privatized

Sputnik International — Why Russia's Sketchy 90s-Style Privatization Will Never Be Repeated

Independent Russian journalist Dmitri Pskezin explains why the Russian government's plans to privatize several major state assets have absolutely nothing in common with the robber baron privatization of the 1990s. In the early- to mid-1990s, immediately after the collapse of the Soviet Union, the Russian government began a vast campaign to privatize state-owned assets. The fire sale included major industrial, energy and financial enterprises, and resulted in massive economic turmoil, a dramatic growth in poverty and inequality, and the political rise of Russia's oligarchs. In the 2000s, after succeeding Boris Yeltsin, Vladimir Putin managed to partially reverse the results of the privatization, regaining several strategic assets, including in the defense and energy sectors, and to reign in the oligarchs, virtually eliminating their open attempts to influence Russian politics.

Still clueless, but not as clueless as when they were being advised by the US. They still think that they need to get money and apparently buy in to the neoliberal scam of "efficiency."

Sputnik International
Why Russia's Sketchy 90s-Style Privatization Will Never Be Repeated

Bill Mitchell — The case for re-nationalisation – Part 2

In the first part of this blog (July 13, 2016) – Brexit signals that a new policy paradigm is required including re-nationalisation – I suggested that re-nationalisation of certain sectors has to return as a key industry policy plank for any aspiring progressive political party.

Bill Mitchell – billy blog
The case for re-nationalisation – Part 2
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Martin Pigeon — Brazil’s new government imposes Rio water privatisation to pay for Olympic Games

A few weeks after the May coup against Dilma Rousseff by conservative parties backed by the country's largest corporations, Brazil's “interim” government, led by Michel Temer, signed an emergency loan to the State of Rio de Janeiro to help finance infrastructure for the 2016 Olympics – in particular for a subway line connecting the sports venues. The bailout was conditional to selling off the State's public water supply and sanitation company, the Companhia Estadual de Águas e Esgotos (Cedae).…

Corporate Europe Observatory
Brazil’s new government imposes Rio water privatisation to pay for Olympic Games

Martin Pigeon

James Petras — The Left: Business Accommodation and Social Debacle [Brazil]

Prologue: In 2004 I wrote Brazil and Lula: Year Zero (Edifurb: Blumenau, Sao Paolo 2005), in which I presented my analysis of the Lula-Workers Party (PT) regime in Brazil undergoing a Grand Transformation with the first stage represented by the PT’s incorporation into a government apparatus led by of bankers and exporters (the agro-mineral elite).

Two year earlier, my colleague, Henry Veltmeyer, and I had published Cardoso’s Brazil: A Land for Sale (Rowman and Littlefield, Lanham MD 2003) where we described how President Cardoso had sold off the major public resources, banks, petroleum and iron resources to foreign capital for rock bottom prices. The 2002 election of President Lula DaSilva of the Workers’ Party did not reverse Cardoso’s sell-out. Indeed, Lula accepted his predecessor’s neo-liberal policies - embellished them - and set about forging an alliance between the Workers’ Party and the economic elites, replacing Cardoso’s Party! For the next few years, we were attacked by the Left academic and pundit world for having dared to advance such a critique on their ‘worker president’! The consequences of what we had described as the PT’s pact with the Right are clear to everyone today: Brazil is enmeshed in swindles, scandals and coups.…

Excellent analysis of why and how the Left failed after taking power based on huge public support.

Conclusion:

The Left believed in the myth of democratic capitalism. They had faith that their negotiations with the business elites would increase social welfare. They operated on a platform of gradual accommodation of class interests leading to multi-class alliances and strategic conciliation between business and labor.

The historical lesson has proven otherwise - again. Business and the capitalist elite make clear, tactical short-term agreements in order to prepare a strategic counter-offensive. Their patient long-term strategy was to mobilize their class allies and overturn the electoral process - at the ripe moment.…

Victorious capital and empire neatly ended this charade of ‘market democracy’. The retreating Left parties begged for a reprieve via parliamentary vote and ended with a decisive defeat… bleating their last whimper as the door slammed shut…

Capitalists have never and will never recognize weak popular opposition. The capitalist political elite will always choose power and wealth over social democracy. The Left, in retreat, isolated and expelled from the corridors of power, now face retribution from the most corrupt and treacherous of their ‘former allies’.

They usher in a lost generation.

Never trust a snake not to bite you.

James Petras Website
The Left: Business Accommodation and Social Debacle
James Petras | Professor (Emeritus) of Sociology at Binghamton University in Binghamton, New York and adjunct professor at Saint Mary's University, Halifax, Nova Scotia