Capitalism and Inequality: What the Right and the Left Get Wrong

Jerry Z. Muller writes about Capitalism and Inequality: What the Right and the Left Get Wrong in the March/April 2013 edition of Foreign Affairs.

Muller describes what the acceptable limits of the debate about inequality are:

Recent political debate in the United States and other advanced capitalist democracies has been dominated by two issues: the rise of economic inequality and the scale of government intervention to address it.

Muller seems to be in the managed Capitalism camp.

Muller explains the reason for inequality as:

Inequality is an inevitable product of capitalist activity, and expanding equality of opportunity only increases it — because some individuals and communities are simply better able than others to exploit the opportunities for development and advancement that capitalism affords. (p.30)

So, Muller thinks that failure to achieve is the individual's fault. This is an interesting approach to take, however, because Muller admits that inequality arises naturally in the Capitalism through the inequality of opportunities which individuals are ill-equiped to take advantage of.

Muller is clearly worried that this inequality will lead to mischief caused by those who fail to understand that they are the problem, not the system:

Despite what many on the right think, however, this is a problem for everybody, not just those who are doing poorly or those who are ideologically committed to egalitarianism — because if left unaddressed, rising inequality and economic insecurity can erode social order and generate a populist backlash against the capitalist system at large. (p.30)

What Muller wants is:

Contemporary capitalist politics need to accept that inequality and insecurity will continue to be the inevitable result of market operations and find ways to shield citizens from their consequences — while somehow still preserving the dynamism that produces capitalism's vast economic and cultural benefits in the first place. (p.31)

Emphasis Mine

In Muller's view, there is no longer need to pretend that Capitalism will eventually make everyone better off. That is a myth.

What Muller fails to realise is that such government intervention requires teh exapnsion of the tax base which the rich are resisting. Since the wealth is accumulating at the top end, this means that the tax base is actually shrinking. So, we have the need to increase the tax base to avoid unrest, while those who are in danger refuse to sacrifice more of their wealth to do so.

All we need now is for some silly bitch to say: Let them cake!

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Game of Thrones and Our Scheming Elites

Yves Smith reviews Game of Thrones and Our Scheming Elites.

Smith is reading the series of books for "The Game of Thrones" by Martin:

The perspective in Martin’s books is a medieval reflection of the world envisioned by neoclassical economics, of isolated individuals working for their own self interest. There’s no real community in war-torn Westros, but even before the struggle broke out, the court was a hotbed of plots, spying, and ambition. Given the way, say, the Ptolemys plotted against each other, this isn’t necessarily that far removed from the dynamics of some pre-modern courts. But this is the through line of the series, the juice that carries readers forward. And sadly, this seems to be the juice that drives the world we live in now.

Before you get cynical and say, that’s just the way it is, that’s simply not accurate. The current level of corruption and cynicism is hardly inevitable; it’s a social construct. Look at Linux, where developers collaborated to produce code, for no money, out of pride in craft. Victor Frankl, Holocaust survivor, therapist and author of Man’s Search for Meaning, would often start out by asking patients, “Why haven’t you killed yourself?” His experience was the things that people lived for were either people they loved or creative work (Lambert’s “Do what only you can do”). Similarly, psychology professor Mihaly Csikszentmihalyi, who has made a study of happiness, has concluded it comes through a state he calls flow, where one is deeply engrossed in an activity (for instance, the famed “zone” in sports).

The books and television series are all part of the ideological reproduction of Capitalism. It is necessary to educate humans to be self-centred so as to adjust them to the rampant individualism.

Communism allows people to develop themselves.

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Gradual institutional change

Dan Little investigates Gradual institutional change.

Little considers instiutions to have a degree of plasticity in that:

The basic idea of plasticity is that institutions and organizations are the product of various kinds of structured human action, and that they can change over time. So we shouldn't think of institutions as having fixed characteristics, or as though they were equilibrium systems that tend to return to their original states after perturbances. … And this approach makes plain the high degree of path-dependency that institutions display.

In other words, history explains institutions.

Little cites studies that:

The theory they offer of gradual institutional change is an actor-centered theory. Incremental change occurs as the result of the opportunistic and strategic choices made by a range of actors within the institution.

But one thing Little leaves out is how institutions collapse. What happens when the institution is unable to provide answers to the problems that it encounters?

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The Damaging Links Between Food, Fuel and Finance: A Growing Threat to Food Security

Yves Smith is worried about The Damaging Links Between Food, Fuel and Finance: A Growing Threat to Food Security.

Timothy Wise notes that the speculators are moving out of energy and into agricultural products because of the decreased volatilty in the former and the increase for the latter.

However, Wise also notes price movements between the stock market, oil, and commodity have become correlated over the past decade as deregulation has accelerated and energy companies began investing in biofuels.

The biggest losers have been the poor who see more and more of their income eaten up by price increases in foodstuffs. This has, in turn, created great political instability throughout the Third World.

The crisis in Capitalism has arisen because the profits can be more readily realised through speculation rather than through productive investment.

There are not that many technologies that are ready for investment. Green energy could be the exception.

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Margaret Thatcher is Dead, but Thatcherism Lives On

Baroness Thatcher is dead.

The heroine of the class war against the British working class is dead.

The brutalisation of British politics in a new age of Imperialism is her legacy.

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Mexico: Can worker-owners make a big factory run?

Jane Slaughter investigates Mexico: Can worker-owners make a big factory run?

Slaughter asks:

How does a workers' cooperative with 1050 members function? It’s hard enough for workers' ownership to succeed at any size, because any company that competes in a market is subject to the same cost-cutting rat race as a capitalist firm. Workers are impelled to hammer themselves and cut their own pay or be driven out of business. And most workers here have just a middle-school education.

Yet the TRADOC co-op translation: Democratic Workers of the West—is thriving. Enthusiastic worker-owners have modernised their plant, increasing productivity and quality through their skilled work. Those factors together with their admittedly low prices have made it possible for them to compete on the world market.

The workers have done away with foremen because they supervise themselves. The management of the plant is at three (3) levels:

1. “TRADOC holds a general assembly only twice a year, but that assembly holds veto power over important decisions such as selling assets, making investments and buying machinery.”
2. The day-to-day running is handled by an administrative council consisting of:
• Cooper Tyre of Findlay Ohio has four (4) members;
• TRADOC Co-op has three (3) members
3. A general manager who is not a member of the co-op.

Despite what Slaughter portrays, TRADOC is not really a worker-owned factory. The co-op is a minority shareholder with a capitalist firm as the majority shareholder.

Slaughter concludes that:

But once the co-op started: it’s a pleasure to relate that workers really do run a factory better than the bosses. Not only do they control the plant floor, with no need for overseers, they come up with ideas to improve production in both senses: more and better tyres, less scrap — but also fewer backbreaking jobs.

This the same experience as the FASINPAT Zanon plant in Argentina as reported in Argentine Factory Wins Legal Battle. However, the Mexican experience has not exposed the workers to the same political battles as seen in Argentina.

The Argentine experience is more interesting politically because the workers expropriated the property of the Capitalists. They had to be more politically conscious to do this. They were assisted in their struggle with the Capitalists by the local government. So, a true workers' movement has not been born yet. But the workers can reflect upon this experience.

It would be interesting to see how Pope Francis I interprets this Argentine experiences in his teachings.

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The Death of Peak Oil

The Oil Drum considers The Death of Peak Oil.

Although world-wide production was flat for several years leading to the news that "peak-oil" had been reached, changes in technology and inclusion of natural gas into production figures has changed that some what:

Let's start by taking a look at what happened to global oil production in the years since those two very different views were offered. Total world liquids production as reported by the EIA had reached 85.2 million barrels a day at the time Pickens issued his pronouncement. It briefly passed that level again in June 2006 and June 2008, though mostly was flat or down over 2005-2009 before resuming a modest and erratic climb since then. The most recent number (December 2012) was 89.3 million barrels a day, 4 mb/d higher than where it had been in May 2005, and 12 mb/d below the levels that Yergin had expected we'd be capable of by 2010.

But more than half of that 4 mb/d increase has come in the form of natural gas liquids-- which can't be used to make gasoline for your car-- and biofuels-- which require a significant energy input themselves to produce. If you look at just field production and lease condensate, the increase since May 2005 has only been 1.7 mb/d.

The biggest technological change has been using horizontal fracking:

The rush to judgment seems to be based on the remarkable recent success from using horizontal fracturing to extract oil from tighter rock formations. Here for example is a graph of production from the state of Texas, one of the areas experiencing the most dramatic growth in tight oil production. In 2012, Texas produced almost 2 million barrels each day, up 800,000 barrels a day from 2010.

I wonder if the horizontal fracturing used in the extraction of oil is as damaging as CSG fracking. The same concerns over earthquakes and contaimination of aquifiers would seem to be the same.

Farida Iqbal reveals in White paper reveals gas industry scared of global protests that enivornmental action is effective in stopping such practices.

The white paper accurately describes the methods that have made the movement so successful. It lists the four effective campaign strategies as “grassroots mobilisation, online and social media, direct action, and networking”.

…

The white paper describes the global diversity of the movement. Anti-fracking movements are driven by such varied concerns as the need to protect farmland, climate change, and a desire to protect local jobs.

Water, however, is a global issue. Around the world, anti-fracking movements are united by their concern for the amount of water extracted and the risk of water contamination.

We face a critical juncture in world history. Our industrial civilization is heavily dependent on oil for farming, transportation, and manufacturing. Yet, to continue economic growth, we must contaiminate our water supply and imperil the climate. The question is no longer about standards of living but of human survival.

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