Yanis Varoufakis: Think Big, Think Bold – A Green New Deal

Yves here. One of the common frustrations expressed by the NC commentariat is that we spend a lot of time on diagnosis and not as much on solutions. I actually don’t think our emphasis on forensics and analysis is misplaced. Too often, people are uncomfortable with examining deep-seated problems and thus rush to devise remedies that are incomplete or worse, counterproductive.

A second frustration, which I sympathize with, is that many of the solutions recommended by economists to our current problems (income disparity, high unemployment, increasing looting of the private sector and government) is based on restoring growth, which will make redistribution and other measures less contentious. Readers correctly point out that more growth is a 20th century remedy, when the 21st century is faces with global warming (meaning an need to start containing and better yet, reducing energy consumption) and resource constraints.

Yanis Varoufakis addresses both issues in his outline of what he calls a “Green New Deal”. Yanis is far from the first to use this term; for instance, the Green party in the US has also talked about a Green New Deal, but that label has yet to get much traction here. I encourage readers to see this as a forcing device, and look for ways to improve on his version of this idea.

By Yanis Varoufakis, a professor of economics at the University of Athens. Cross posted from his blog

European capitalism was always going to become unhinged once the post-war global system, known as Bretton Woods, had run out of steam. And so it did.

After the United States had lost its surpluses, some time in the late 1960s, the system of fixed exchange rates and highly regulated capital movements, which had nurtured capitalism’s Golden Age, was condemned. Its inevitable collapse could not but push the dollar down, release the bankers from their thirty-year-old restraints, and wind back rights and services that labour had wrestled from capital since the war.

Mrs Thatcher’s 1979 electoral victory was a pivotal moment in the post-Bretton Woods era. It marked a moment of truth when the establishment proved less (small ‘c’) conservative than the working class and the Left. Feeling its grip on power weakening, Britain’s bourgeoisie reluctantly, yet consciously, gave Mrs Thatcher the green light to swing her wrecking ball through the steel industry, the car and lorry factories, the coalmines, the shipyards; though each and every work site where the “enemy within”, i.e. organised labour, congregated. The Left’s reaction was to defend livelihoods by seeking to defend a business model that business itself had no longer any interest in. It is small wonder, therefore, that the Left was mightily defeated, as the threat to strike becomes pointless when the capitalist is no longer interested in… production.

The Thatcher governments were not responsible for the tidal change that swept Britain’s industrial model overboard. The decline was evident before 1979 and, as we have witnessed in continental Europe ever since, labour and industry were on a losing streak everywhere. However, what Mrs Thatcher did do was: (a) to create the ideology necessary to present de-industrialisation as a progressive, populist political project, (b) to nurture, foster and inflate a twin bubble (real estate and finance) that drove British capitalism at a time of industrial subsidence, and (c) to export her new-fangled ideology and her twin bubble to the rest of Europe.

Of course, Mrs Thatcher’s ‘contribution’ to European history would not have been possible had it not been for some strong undercurrents, quite independent of anything on the Iron Lady’s radar screen. The United States, under the far-sighted leadership of Fed Chairman Paul Volcker, was already turning itself into a gigantic vacuum cleaner, sucking into its territory both (i) the world’s net exports and (ii) most of the world’s capital (that was generated, in the form of profits, from exporting to the United States or to other lands because of the aggregate demand the United States was whipping up globally through its trade deficit). It was this astounding global recycling mechanism that provided Mrs Thatcher the tablet on which she would spell the end of British industry.[1]

Indeed, as Mrs Thatcher was settling in 10 Downing Street, a tsunami of capital was already beginning to flow from Japan, Germany, Holland, France, the oil producing countries (later from China) etc. to Wall Street, thus closing the recycling loop and financing America’s deficits. It took next to no time for City bankers, and their Tory associates, to work out a new business model for the UK: turn the City of London banks into a half-way station, linking the world’s net exporting nations with Wall Street. And ditch Britain’s own (trades union infested) industry.

Years later, in 2008, the pyramids of private money, that Wall Street and the City of London had built on the back of this constant tsunami of capital, crashed and burned. At first, continental Europeans smiled, allowing themselves an ‘I told you so’ moment, directed at the Anglo-saxons who had spent a decade or two sneering at the Continent’s antiquated commitment to manufacturing. Alas, that moment proved very brief. Soon, they realised that their own banks were replete with toxic assets and that their bankers had been allowed to run debts (or ‘leverage’) twice as great as those in the Anglo-sphere. Put simply, Mrs Thatcher bubble had been surreptitiously exported to Frankfurt, Paris, Rome, Madrid, Brussels etc. As had the ‘model’ of building up competitiveness by squeezing wages until the local economies, behind the glitzy suburbs and the globalised jet set, were in a permanent state of slow-burning recession.

Post-2008, while the United States and Britain sought to bailout the bankers with a combination of taxpayers’ money and quantitative easing that aggressively sought to re-inflated the deflated toxic assets, Europe was making a meal of the same project. Having rid themselves of their central banks, the Eurozone’s politicians did their utmost to shift all the stressed bank assets onto the shoulders of the weakest amongst the taxpayers, thus causing a horrid recession and putting the European Union on a path leading toward certain disintegration. Nevertheless, and despite the significant differences between Britain and the Eurozone, the broad picture remains the same: The establishment responded to the financial crisis by inflating bank and real estate assets (that were best left alone) and squeezing the majority of the population with soul and income sapping austerity. In short, the Thatcher model on steroids.

The Left’s Historic Duty

When Mrs Thatcher had to fight a ruthless class war on behalf of the ruling class, she had no qualms about destroying capital in order to ‘get’ labour and its organised expression. The Left did not realise this in good time and the result is today’s never-ending crisis. In the post-2008 world, capital is even less interested in value creation that it was between 1979 and the Lehman Brothers’ moment. As these lines are being written, we are witnessing a remarkable phenomenon: While the states are scraping the bottom of the barrel to make ends meet (i.e. to finance the public sector and to re-finance public debt) nearly $3 trillion of idle corporate savings are slushing around in the UK and in Europe, too frightened by low demand to be invested in productive processes and activities. Instead of investing in machines and skilled labour, corporations throughout Europe are using the cash to buy back their own shares in a bid to push up short-term share prices and the executives’ bonuses that are linked to the company’s share price. In conjunction with the terrible architecture of the Eurozone, which is keeping eighteen nations in the clasps of permanent debt-deflation, Europe’s labour and society remain moribund and at the mercy of far Right sirens.

Britain in particular can be legitimately called the Buyback Nation for, in addition to company share buy-backs, the Bank of England has been buying back public and private debt from the banks in a concerted effort to re-inflate Mrs Thatcher’s twin bubble. Put together, the Bank of England and the corporate sector’s buyback schemes amount to a large portion of Britain’s national income. And to what effect? To the effect of inflating house prices in the South (London primarily) and causing a fresh spate of debt-driven consumption that is leading Britain straight into the bosom of the next financial, economic and social meltdown. Meanwhile, as Mr Osborne is celebrating his shadowy ‘recovery’, industry remains threadbare and investment in capital goods is at an all time low.

In short, unless the Left intervenes successfully, European societies will not recover. In 1979 Mrs Thatcher rode to victory on the back of the brilliant Saatchi and Saatchi slogan: ‘Labour isn’t working’. In 2014 we must turn the tables on the conservatives (both in Britain and in the European Union) with a similar slogan that makes people understand a simple truth: ‘Capital is no longer capable of, or interested in, value creation.’ So, it is labour’s historic duty to fill in the vacuum; to intervene politically so as to make value creation fashionable and possible again.

Toward a European Green New Deal

Growth is not the issue. The Left understands that there are many things whose growth must be stumped: toxic waste, toxic derivatives, ponzi finance, coal production, consumption that leaves the consumer unfulfilled and the planet worse for ware, etc. No, the issue is eclectic growth in the technologies and goods that contribute to a more successful life on a sustainable planet. The Left has always known that markets are terrible at providing these technologies and goods sustainably, and in a manner that sets prices at a level reflecting their value to humanity. What the Left was never very good at was in the conversion of that gut feeling into workable policy that the beneficiaries of this policy (i.e. the vast majority) would back.

To become relevant again, while Europe’s elites are sleepwalking into the next crisis, the Left must admit that we are just not ready to plug the chasm that a collapsing European capitalism will open up with a functioning socialist system; one that is capable of generating shared prosperity for the multitude. Presently, the crisis which began in 2008, and is metamorphosing into new socio-economic tensions throughout Europe, threatens to empower not the Left but the ultra Right. Exactly as the Great Depression did before. Our task should then be twofold: To present those who do not want to think of themselves as left-wing with an insightful analysis of the current state of play and to follow this sound analysis up with proposals for stabilising Europe – for ending the downward spiral that, in the end, reinforces only the bigots and incubates the serpent’s egg.

These proposals should constitute a European Green New Deal. Like the old New Deal proposed by Franklin Roosevelt in 1933, our European New Deal should include a credible plan for: (i) infrastructural investment; (ii) the notion of an across state borders (pan-European) welfare net; (iii) common public debt instruments and, last but certainly not least, (iv) a powerful manifesto threatening bankers with severe wing clipping. Unlike the old New Deal, Europe’s Green New Deal should also: (a) combine centralised funding for large scale green energy research projects with decentralised assistance to small outfits and cooperatives that create local, sustainable development in cities and in rural areas; (b) operate at a pan-European level without crushing national sovereignty; and (c) place a large part of the burden of implementation and financing on the European Investment Bank and the European Investment Fund, with substantial background support from the European Central Bank and the Bank of England.

Rehabilitating the State

One of Mrs Thatcher’s singular successes was the propagation of the belief that nothing good can ever come of democratically controlled agencies (or, more broadly, the state) while there are no limits to the wonders that the private sector is capable of. This was a remarkable achievement in the field of mischievous propaganda in a world where the computer, the transistor, space travel, the Internet, Wi-Fi, GPS, the touchscreen display of smartphones, and 75% of the most significant new drugs are the result of… publically funded research and development.

Apps and social media can be invented quickly and efficiently by the private sector only because the public sector has done the hard slog, over decades, of investing into long term innovation that requires steadfast financing that privateers would never, ever provide. As Mariana Mazzucatio has brilliantly exposed in her The Entrepreneurial State,[2] private, venture capital sits on the sidelines, while the public sector funds the basic research, and only springs into action when the breakthrough has been made, creaming the profits and sponsoring political attacks on the state’s ‘failure to innovate’, on its ‘crowding out effect’ on private investment etc.

Two are the charges against the state: its debt, that supposedly drags the private sector down, and its inability to innovate. Both charges are fraudulent and self-serving. Britain and the Eurozone are sporting an overbearing public debt only because the states had to clean up after the mess of private finance. And if the state’s innovative achievements have become fewer and further in between, it is because of thirty years of talking down the state, of depleting public research funding and institutions, of swinging a Thatcherite wrecking ball through the departments and institutes that could have kept Europe truly innovative.

The worst, and costliest, misconception of our era is that investment is an inverse function of taxation, wages and government involvement. While it is true that ceteris paribus investors prefer fewer taxes, lower wages and less red tape, other things are never equal and lower taxes, wages and government investment correlate strongly with unmotivated, de-skilled workers and lack of the R&D ecosystem which can uniquely nurture investment into seriously productive activities. The Left must, therefore, re-think the role that the state must place in funding the technologies of the future. Central to such a re-think must be our attitude toward banking and finance.

Putting the banking genie back in its bottle: Strategies for de-funding gambling and funding investment

A spectre is haunting Europe. It is the spectre of Bankruptocracy. A curious regime of rule by the bankrupt banks. A remarkable political arrangement in which the greatest extractive power (vis-à-vis other people’s income and achievements) lies in the hands of the bankers in control of the financial institutions with the largest ‘black holes’ on their asset books. It is a regime that quick-marches the majority of innocents into the trap of austerity-driven hardship that serves the guilty few, while Parliament and civil society are held at ransom. While 2008 was meant to raise ‘regulatory standards’, we now know that nothing of substance has been done to reform finance.

Governments in the UK and Europe are stuck in the false mindset that recovery will come through quantitative easing that reflates the value of dodgy assets (including anti-social house prices) and which fills up the banks’ coffers in the desperate hope that the bankers will then lend to innovative business. In short, Mrs Thatcher’s 1980s strategy (of squeezing labour and betting on bricks, mortar and the City) all over again. What the Left needs to do is to challenge this two-pronged fantasy in two ways: A new system of taxing and regulating banks and a renewed emphasis on public investment banking.

Taxing and regulating the banks

The current system of regulating and taxing the banks is absurdly contradictory. The state imposes minimum capitalisation and equity ratios. However, at the very same time, banks are offered tax breaks for relying on borrowed money in order to gamble. This absurdity results from taxing the banks’ profits. But when a bank borrows money to buy derivatives, its interest costs are deducted from its taxable income. As ‘bank profit’ is at best a dubious notion, the simple solution is to abolish corporate taxes on banks and replace them with a tax on their liabilities. In association with a hefty minimum equity requirement (of, say, 15% relative to their assets), the banking genie will be put back in the bottle, where it belongs.

Public green investment banking

Proper bank regulation will, whatever its other great social benefits, not reverse the dearth of investment in productive activities. International experience suggests that, to mobilise the mountains of idle savings, we need public investment banks staffed by specialists in the sectors that need to be developed.

One mistake the Left must not make again is to think that the solution lies entirely in the area of infrastructural projects. While building urban transport systems and investing in existing wave, solar and wind power generation technologies is important both for the environment and for short term job creation, the challenge must be grander: how to invest into transformative technologies. The recently departed Tony Benn once said that no general would halt a bombing raid because he was running over-budget. If that is so, it is ludicrous that our societies should not put together a new Manhattan Project, staffed with as many scientists as possible, with a brief to discover new forms of green energy, as opposed to developing the existing, primitive green technologies.

Funding such a Green Manhattan Project can only come from an ambitious vision of binding together Europe’s greatest achievement, the European Investment Bank (as well as its sister organisation the European Investment Fund, which already has a brief to fund small and medium sized firms in the area of urban renewal, technology and green energy), with our central banks (the ECB, the Bank of England, the Central Banks of Sweden, Denmark etc.). In our Modest Proposal for Resolving the Euro Crisis,[3] we have spelled out how this could happen. Put simply, why should quantitative easing be all about central bank money creation for the purposes of boosting government bond, real estate, and toxic derivative assets and not for the far more productive purpose of supporting the bond values of the European Investment Bank (EIB) and, potentially, a new British public investment bank that collaborates with the EIB? This would be Europe’s innovative answer to Brazil’s BNDS (which has recently invested more that $5 billion on clean technologies) or to China’s five year plan (2011-15) to invest $1.5 trillion (about 5% of China’s GDP) on green energy, biotechnology and zero emission cars.

Epilogue: Campaign for Democracy, Stabilise Capitalism, Re-Imagine Socialism

If Mrs Thatcher has a lesson for those of us on the Left, it is that progressive radicalism is the only antidote to regressive radicalism. For decades now we have allowed our ‘reasonableness’ to become the passive accomplice of a wholesale assault on rationality, development and propriety. During the 1976 Labour Party Conference, Tony Benn had warned: “We are paying a heavy political price for 20 years in which, as a party, we have played down our criticism of capitalism and soft-peddled our advocacy of socialism.” Tragically, in the following 20 years, since Benn’s prescient speech, European socialists lost the capacity even to distinguish capitalism from some, supposedly, neutral ‘market system’. Meanwhile, capitalism was busily at work undermining itself and paving the path to its own implosion in 2008. The time has now come for the Left to revive its critical perspective on capitalism and to plan for a future beyond it.

This is not to say that we are anywhere near ready to replace capitalism. Indeed, realism commands us to recognise that, if anything, Bankruptocracy is well and truly in command of the European continent and the only political forces on the march are those of the bigoted, ultra Right. The Left must not err again, as it did in the 1930s, thinking that capitalism’s great crisis will naturally lead to something better. It may very well bring about the most hideous dystopia. This is why it is of the essence to stabilise capitalism (through banking regulation, a link between central banks and public investment, and a wider social safety net) while struggling to revive democracy at the local, national and European levels. Our success in this limited but crucial goal is a prerequisite for forging a sustainable future in which most people are gainfully employed in innovative enterprises of which they are the sole shareholders.

[1] For a complete account of this global recycling mechanism, see Y. Varoufakis (2013). The Global Minotaur: America, Europe and the Future of the World Economy, London and New York: Zed Books

[2] Mariana Mazzucato (2011). The Entrepreneurial State: Debunking public vs private sector myths, London: Athem Press

[3] Yanis Varoufakis, Stuart Holland and James K. Galbraith (2013). ‘A Modest Proposal for Resolving the Euro Crisis, Version 4

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  1. Clive

    This is a good piece of analysis which shows that that past carries a warning for us today. Namely, that — just like in the 1980’s — labour should not be trying to variously either preserve or rail against the current state of this- or that- industry, x- or y- jobs, paying “good” or “bad” wages.

    Thatcher wanted de-unionisation. The battles were well chosen. I’ll stick my neck out here and come on right out and say it: deep mined coal was not and never will be (nor should it have ever been) anything which anyone tried to “save”. Ditto sub-scale steel production without embedded value-add such as milling. Ditto shipbuilding in dry docks which were simply too small. The Left tried to pickle these things in aspic. It was a loosing argument. And they lost it.

    A smarter thing to have done — and we still need to do it now — is to have simply asked “Okay, people won’t be doing so much of that sort of thing in the future. But what do you want them to do ? in what geographical locations ? At what price ? Trained by to do it by whom ?”

    I’m as guilty as anyone as being allowed to have the argument moved onto narrow issues which are symptomatic rather than underlying. CEO pay. Fraud and corruption. Captured regulators. Bought politicians. It is good to debate such things and call them out as rotten when we see them. Fixing these things though — even if we could conclusively do so — would not fix the main issue. How big is the pie ? What’s it made of ? Can it be sustained ? Who gets what pieces ? On what basis ?

    For me, I think the left should concentrate on a single issue which is like a lightning rod for the whole debate: A Guaranteed Income. Who is “for” it ? Who is “against” it? Why should we have one ? Why not ? The purpose the debate would serve is to drag all the festering problems out into the open with a solution right there for adoption — if society wants to adopt it. By going through the debate, we’d learn a lot about what it means to have a society, whether we as a whole even want to belong to one. Because we would then have to stand there in the light and ‘fess up to all our neurosis about “our” “hard” “work” benefiting others and we want compensating for it, unless we “know” that “others” “work” “benefits” us. We — at present — either don’t or can’t trust each other so we want $’s, £’s, Euros or Bitcoins swirling around in lieu of trusting. Which is why we have the problems we have…

    It’s going to be a long hard road out of here.

    1. allcoppedout

      Clive – I hate you for the first part – because you are probably right! Truth is sometimes tough to be reminded of. I was a shipyard manager and the problems were deep. The real issue to me was why we just scrapped the people so easily. The issues go way back – all these industries were struggling for profitability around 1900 as were British textiles. We did deals with countries like Argentina to take our manufactures at high prices. This deal was with their landed class and suppressed the Argentine working class. Manufacturing profit margins crashed from 50% to about 7% from about 1930 to 1975 (I’d have to look up the actual dates).

      I was sent to Sweden, Japan and Korea to discover the secret of successful shipbuilding. The broad secret was subsidy, though all sorts of twaddle on management method was peddled at me. One Japanese foreman, surprised to see a white guy in a suit could weld, took me aside for a cigarette and told me the very thought of transferring the dreadful management practices he and his mates suffered should fill me with shame. They were as daft as ours. The Koreans had leap-frogged us all in mass production techniques and factory rather than outdoor builds. This is what we needed to do here, but dross like quality circles were cheaper. I’d guess only one in five jobs would have remained.

      1. Clive

        Yes, and sorry, I did think about adding that the closure of heavy industry, mining, manufacturing, was all incurring human cost, no matter how inevitable. It seemed too trite to say it (I started but deleted the offending sentences because they looked to me way too schmaltzy), but it does need saying.

        I think that’s what leaves the — understandable — bitterness even now: how people were treated, economically and psychologically as an entire world was dismantled in front of them. It is this disregard for how a changing world affects the people in it that I reckon is behind the undying hatred of Thatcher and the derision of Regan. If they cared, which I doubt, they certainly didn’t show it and did even less to prove it.

        And you’re absolutely right. Subsidy was the secret that dare not speak its name of success for Japan, later Korea and now China. And no-one can produce grade-A management gobbledegook like the Japanese ! Most if the time, as you say, the rank and file worker didn’t believe a word of it but, again, the Japanese are world-class experts in playing along convincingly with the party line. They realy know how to fake it. It’s not even actually faking it. At one level they believe it, but this level is, from what I can gather, a “public face” sort of level, the Japanese have a much more guarded inner core which is rarely shared with anyone. Once in a while, the management of the corporations concerned do actually start to really believe their own propaganda (case in point: Toyota, the auto maker that came within a whisker of leaning itself to death).

        Agree too that these issues have had a long, long gestations. It’s about time we started really trying to work them through.

        1. diptherio

          Very insightful comments, Clive. Real needs and real constraints are what we need to be discussing. Jobs (and lack thereof) are not the real problem: plenty of people live very comfortable lives with no job at all (we call them “trustifarians” where I’m from). Lack of money is not an issue either, as the Federal Reserve showed conclusively in 2008 when it created trillions of dollars with a few key-strokes. And let’s be honest, most people don’t actually want a job; they want to be able to afford a comfortable lifestyle, and inheritance or lotto winnings work just as well (better) for that purpose as a job.

          I would summarize the issues by asking “what is an economy for? what do we want it to do?” We’ve become so brainwashed that a majority of us think people should serve the economy and not the other way around.

          1. James Levy

            The alternative was always reinvestment and retraining and phase-outs that didn’t destroy the economies of whole town and regions. New product lines could have been developed. The problem was always fear of government investment and making mistakes. When companies make poor investment decisions, they write off the loss and move on. When government makes a mistake its a national scandal and the business interests always scream for an end to such wasteful meddling (and too many people nod their heads and vote to end government investment).

            I don’t believe for a second that British industry was “doomed.” It was mismanaged, underfunded, then run out of town. Everything was blamed on the unions and the real history forgotten or misremembered. I refuse to concede that what Margaret Hilda Fucking Thatcher did was in any way positive or inevitable.

        2. PaulArt

          At the end of the day we come back always to that truth that will always stare us in our face, viz, it is great leaders who make great societies and not anything else. The Unions were ALWAYS and will ALWAYS be handicapped in this area because how much enlightenment are you expecting from a blue collar worker? How much enlightenment next are you expecting from the Union leader? Union leaders and their flock were simply ill equipped to deal with the changes that accompanied the demise of Bretton Woods and the increasing globalization of markets as Yanis very correctly points out. One cannot escape the fact that rule by the elites has no alternative. Yes you can have Democracy but expecting an intelligent electorate to do the homework, ponder, sift, analyze, weigh the evidence and vote the right man into office, monkeys will fly out of people’s bottoms before that can happen. The election of impostors like Carter, Reagan, Clinton and Obama if it proved anything, proved unequivocally the inability of the populace to make fine distinctions. Let’s admit it, its a bunch of hard work. I for example had to go through about 10 years of hardship in the world of technology, outsourcing, lost jobs and TONS of reading books and sites like NC to really understand what is going on and here is the kicker, my edification has only made me cynical. We need good leaders. I always think of India as providing irrefutable anecdotal evidence of what good leadership can do to a nation state. India after independence from the British in 1947 could have easily gone the way of Africa or Pakistan – a never ending parade of Tin Pot Dictatorships. The reason it did not was because of a phalanx of selfless leaders like Nehru, Gandhi, Vallabhai Patel and others who were reared on notions of integrity, honesty, selfless public service. It is hard to think of anyone of this stature in America besides Ralph Nader or Chomsky today and yet how many in this country really know them or pay attention to them? These people pride themselves on their disdain for wealth. It seems they mostly live to do good for society and the common man. Once we recreate that kind of leadership again then we can pronounce victory. Look to the colleges and schools because that is where great leaders are created and that is what gives birth or sustains good societies. A hundred different blue prints can be assembled by really clever thinkers and sociologists but without good leadership they will remain plans without action. When the Left lost the business and economic departments to the Koch brothers and Right Wing money, it was all bye bye from then on. The hacker group ‘Anonymous’ is a perfect personification of the effect of Right Wing money that went into college departments. One reads that Anonymous harbors a Right Wing, a Left Wing, a Progressive Wing, a Libertarian Wing. I mean, is that depressing or what? All these talented hackers, man, are they confused about what the hell to do and today they are mounting attacks on Russia for annexing Crimea. Yes they took on Mastercard and VIsa in support of Assange but one wonders how long a debate they had to conduct among themselves between their various ‘wings’ before letting that missile fly. Truly, there is a great hope for the future with a bunch of brainwashed morons like this.

        3. psychohistorian

          The other ugly part of this story was that the subsidies to outsource all these industries were and still are being funded by the US and UK through loans from the IMF and World Bank (i.e. the public that is getting screwed….both ways).

          Gives new meaning to the term bootstraps, doesn’t it?

          Totally neuter inheritance and the incentives will change!

    2. Banger

      We must remember that Thatcher wasn’t just against unions, she believed that there was no such thing as society. I believe her vision was a feudal one and I believe that vision is shared by much of the ruling elite around the world, i.e., that people ought to “belong” at least in part to private institutions who in turn regulate citizens and the state. To put it yet another way, corporate forces should be the state.

      As for guaranteed annual incomes that might work in Britain as an issue but would not work in the U.S. because Americans tend to believe that the poor ought to suffer a lot.

      1. digi_owl

        Been saying for some time now that the financial world looks virtually neo-feudal, except that the lord of the land is on permanent hiatus. Meaning that the world is pretty much running on a permanent “prince John” leadership. I just wonder when and where the Robin Hoods will start popping up.

    3. Dan Kervick

      I agree. The focus should never be on protecting work, but protecting workers and protecting communities. Life changes, economies change, industries come and go. But people are always there. The question is how to facilitate the movement of people form job to job as society evolves, and how to do it in a way that preserves income security, health security, retirement security, community integrity and political participation.

      We can’t do this simply by relying entirely on market forces, since those forces are inherently disruptive, destabilizing and punishing, and are always ruthlessly segregating human beings into economic winners and economic losers.

      1. digi_owl

        Sounds like the message David Harvey has been pushing for a few years now. A “community union” more than a “workers union”. In particular as more and more work is shifting towards services and temps.

  2. allcoppedout

    “I actually don’t think our emphasis on forensics and analysis is misplaced. Too often, people are uncomfortable with examining deep-seated problems and thus rush to devise remedies that are incomplete or worse, counterproductive.” Hear, hear. The rush to knowledge is generally not a good thing. At the same time, polishing methodological spectacles can’t go on forever. I think the frustration we have (certainly mine) is the way “economics” suckers us into the prepared battleground of the opposition and its well-prepared defences. I’d hope what separates us from the opposition is tolerance for the critical voice, respect for evidence ahead of rhetoric, not doing selective referencing and some aspiration towards ‘scientific morality’ that accepts values, spirit and diversity.

    Economics is not the only discipline with deep problems in its structure. I have been know to pop up at the end of modules in, say, personality psychology and ask if personality is real. Critical psychology thinks not. Sociology worked out long ago that most of it is functionalist and about the regulation of society, and that many other ‘paradigmatic’ approaches are possible. I’m also long in the tooth and have seen many of the arguments advanced here before and seen them fail – not in the sense that one might accept that an experiment has failed once one has done it, but because we could not get practical take-up. Most Greek rulers from Alexander tended to say they were Stoic, yet slavery persisted sort of thing. We can find many of the current arguments in Knapp, Weber, Veblen, Soddy and even a number of crusty industrialists before WW2 on the way finance was destroying British industry. Complaints from economists on money being focused into property were legion in the mid-70s. Britain’s major welfare spend was on mortgage tax relief, something even the Duke of Edinburgh found offensive.

    On people being uncomfortable examining deep seated problems, Yves doesn’t go far enough. Many get terrified and hostile. The general Freudian view is we push reality away. And we probably have to confront something like Nietzsche’s molten furnace as reality and the near impossibility of being allowed to explain what we find there after dipping in – hopefully not his dross, childish fetish with Attic tragedy. It’s relatively easy to look at the institutional numbers of economics and see such as the dire constraint on wages, the fiddling of inflation numbers to promote GDP growth and the vile theft of wealth by the 1% or 0.1% (actually I’d guess all the managerial-owner-professional class). I could get a bit of kudos, for instance, by writing and academic demolition of the judge from yesterday. Even the CLR might publish. What I suspect is none of us are getting in deep enough to recognise the manner society we have is the problem (sort of Norbert Elias 1938). It makes our critique part of the game. We don’t understand we are writing as functionaries. And let’s face it, the street-rebels of 1968 are now some of the most chronic bureaucrats ever. One can even think that voting for Yves would turn her from the star she is now into Hilary Clinton. The same might happen to me. Clown fish change sex on assuming leadership!

    Yanis has some good points. I’m out of breath and haven’t even started!

    1. Banger

      I’ve often said that there has to be a solid base to build anything solid from here on out. The modernist project has been to explore new worlds and let the old one decay or be deconstructed. I believe fear of the unknown–and we are, from a historical point of view, entering into utter mystery. Could anyone have imagined a century ago the concept of the Singularity (when cyber intelligence can out think collective human intelligence)? This world is several quantum leaps away from whatever existed pre-1940.

      Thus we have no choice but to think in radically new ways as many of us understood intuitively in 1968 but were utterly unable to formulate in the face of universal hostility and opposition by the rest of society. Now, by radically new I don’t mean a total departure from the career of Modernism and the 18th century Enlightenment. What I mean is to use reason and, just as important, dialectic to build the foundations for the New Deal Yannis is stumbling towards. How can we argue against the right and the centrists when we lack a moral philosophy from which to argue from? How do you argue that we ought to take care of our fellow humans regardless of their ability to perform tasks when large numbers of people don’t share that morality?

  3. John Merryman

    Foundational Questions Institute has an essay contest each year and this year, instead of the usual physics based questions, it is ; How Should Humanity Steer the Future. While the usual contestants are science oriented, it does draw a fairly broad spectrum, including quite a few on the fringe. That said, some interesting ones are starting to come in, as it gets down to the last few weeks. Is is my basic contention that if you really want to understand society, basic physics is the place to start, because, in mass, all the talk and good/bad intentions start to cancel out and you have basic flows of energy, generally convective and thermodynamic.
    My entry; http://fqxi.org/community/forum/topic/1981
    John Merryman

      1. allcoppedout

        I did try these guys out on Deutsch’s constructor theory. No takers. Thermodynamics is a load of hot air here.

        1. John Merryman

          Mass contracts, energy expands. While I find that you need to tailor your points to fit the audience, you still need a larger model to work from. Otherwise it’s all marketing and gibberish, mostly intended to put the energy/currency in your own pocket.
          Even hot air is thermal.

          1. John Merryman

            Since it doesn’t look like anyone is going to follow this, I’ll post an economic observation;
            ” Currently the financial system has increasingly lost sight of its public role and has become functionally predatory on the larger economy. There are broad social forces at work here though and this societal equivalent of coronary disease, with all its clogs, leaks, and inefficiencies, is only the more visible symptom.
            Since money is a notational form of value and can enable one access to many of our basic needs and desires, there is a very strong attraction towards acquiring it on the part of the vast number of people. Given it is a simple fact that it is much easier to make promises, than fulfill them, the impulse to create more notional value than the economy can sustain is overwhelming. So there is this tendency to treat money as a commodity that can be manufactured, rather than the contract which it is and has to be honored. This creates the effect of treating money as a form which is divorced from its context. In financial terms, this is called a bubble.
            There is a much larger problem developing in humanity’s relation with the planet though, as we continue to expand and get ever more efficient at using up ultimately finite resources. Currently the financial system only magnifies this problem. As it pulls ever more monetary value out of society, society must in turn pull value out of the environment. Now the banking system appears to be reaching limits of how much value it can continue to extract. As ever more of the other forces in society feel threatened by it and its system requires the production of ever more debt to support the vast leverage currently built into the system by the increasingly thoughtless desire for infinite wealth, it looks likely to suffer another massive heart attack and one for which the prior methods of resuscitation will not be used.
            Rather than allow civilization to crumble, possibly there is a way to better construct our system of exchange. If people simply understood that money is not actual value, but a bookkeeping entry, where one persons asset is another’s debt and those running it will necessarily extract their income off the top and there are no magical fairies waiting to make all promises good, then possibly people will be more reluctant to extract value from their social relations and environmental resources, in order to entrust it to this system. Then social relations and the environment will be more clearly viewed as the fundamental stores of value that enable a truly healthy society and environment. It would also make for a smaller, healthier and more stable monetary system, that would be focused on the efficient transfer of value around the economy, as the integrated economic circulatory system it is supposed to be.”

            1. John Merryman

              While there are lots of societal ills, etc, the big problem at the moment is a financial system which has become a large tumor on the rest of society and the economy. My argument is this isn’t just the fault of a bunch of corrupt bankers and the politicians they buy, but is the end result of the fact we, as capitalists, treat money as a commodity, rather than a contract and thus invest it with far more power than it can effectively use. Much as religions, monarchies, Nazi Germany, etc. were not just the fault of those at the top, but grew out of feedback loops with their adherents, which created vortices of power and then even efforts to resist them only further fed them, as resistance proved futile and the successful efforts only slowed their momentum.

              1. allcoppedout

                I did follow the links John. Interesting stuff, but then I’m a scientist. With a few exceptions like Thatcher, we tend to go left without any bildung or political education (PEW poll 2009).

              2. Dan Kervick

                It’s not just the financial system. Far too many people from all walks of life have succumbed to the idea that all we need to work on guaranteeing is personal liberty, and that society takes care of itself and “emerges” from there. This has been one of the pervasive intellectual tropes and conceits of the neoliberal era, and it is incredibly destructive. It promotes an indolent fatalism about the future, telling us that the future can’t be planned in any degree, but is something that will just happen to us. We have all manner of self-identified progressives these days who flail randomly around the edges of the economic system, taking up one trendy cause after another, but who have no capacity at all for coordinated strategic action on behalf of some comprehensive vision of social change. If the very idea of building an alternative future is intellectually disparaged, who will attempt to do it?

                I suspect this is all a hangover from the historically momentous collapse of the Soviet Union, probably the most important event in my lifetime. A lot of Americans took as a lesson from that collapse the idea that social planning of any kind is impossible, despite the pervasive importance of planning throughout the history of organized and advancing human societies. The extreme counter-reaction to planning and organization, and extreme flowering of the cult of unlimited personal liberty has resulted in a civil society that consists mainly of just one long raging, angry argument with no socioeconomic progress outside the realm of personal consumption, and political action consisting of nothing but opportunistic spasms.

            2. Banger

              This is excellent and should be a kind of “foundational” idea. Money needs to be de-mystified and removed from its throne as a quasi-religious concept.

              1. psychohistorian

                To demystify money, IMO, make it so it cannot be accumulated via unfettered inheritance.

                To me, the core belief that we need to deprecate is that any of us should be viewed as better than another such that we be endowed with some predisposed value because of our heritage….inherited value.

                Another point I want to make in response to allcoppedout above is that, IMO, us humans need to place ultimate value of ourselves in our bodies instead of the things around us that we accumulate. What I have learned of myself about my personality from my SUV/bicycle crash is that much, if not all, of my personality if created and maintained by the trauma, hurt and pain I have suffered throughout my lifetime. I am experiencing a true rebirth of myself as I heal my body, which is also rebirthing my personality.

            3. susan the other

              Wow, JohnMerryman – this was great. Money is certainly a contract with consideration on both sides of the transaction. We’ll take the money and you can take the shaft really isn’t very considerate.

              1. allcoppedout

                Very welcome is John. Of course, Aristotle comes before with the same view and Soddy more recently. In fact, we scientists have long been very miffed by irrational economists and accountants. Standardly, we believe they should get long prison sentences and then be hung. As most of us are tree-huggers and peaceniks, this demonstrates just how bad we think they are.

  4. William

    Interesting analysis, but the solutions proposed are disappointing. Nothing revolutionary here. Varoufakis’s thinking seems to be completely boxed in by 19th and 20th century ideas, including–disturbingly–the notion that all our problems can be solved by (discovering another source of) cheap energy (to keep the current system going).

    1. allcoppedout

      I’m no fan of capitalism, state or otherwise. I want Yanis to be right, but rather agree with William. I begin to suspect even left economists don’t understand that technology has changed and the amount of work needed to be done by humans is fairly small. We have to abandon the left and create something different to challenge neo-liberalism. It’s far more difficult than this analysis. I doubt any economic analysis can achieve this. We’re so dumb as a populace only technology can save us.

      We lack intellectual honesty and should be stating what we want as a big picture of the world. This sounds straight-forward. Let’s go for world peace. Here most people don’t seem to grip we need to police such peace, let alone the problems of keeping the policing democratic. At lower levels we still associate jobs as a good thing, yet 70% of Americans admit to not liking or being pissed-off with their jobs – http://www.cbsnews.com/news/study-most-americans-unhappy-at-work/

      Say we could do the deep work Yves suggests. Maybe we could demonstrate we only need to do a 3 -day week (whatever), that we could all get equal shares of wealth (whatever) and whatever else. Maybe in the analysis we could identify as fact the reasons why we can’t build a green world and world peace. Perhaps we could then put that in front of an electorate together with an economics so different from the current spreadsheets we’d hardly recognise it? One idea I fancy is a democratic (in current terms) trading block big enough for self-sufficiency to rid us of global competition excuses on wages and a lot more.

      Anyway, teachers on strike here. I’m old left enough to walk the dog down to a picket line to show some solidarity.

      1. susan the other

        +100… yes we do need the peace police – if we spank the war mongers (people by any other name) when they first start to create conflict we will save ourselves/the world much time, waste, devastation and pollution. And when the inevitable day comes that the peace police need policing we should be able to transition to controlling them too, so write that into a new constitution. The evolution of greed and how to control it.

    2. Jim Haygood

      ‘[The Left’s] proposals should constitute a European Green New Deal.’

      The Left … the New Deal … oh yes, these century-old memes should really get the remaining contingent of silver-haired William Jennings Bryan voters to tapping enthusiastically with their canes.

      Actually it wasn’t the New Deal that lifted labor’s fortunes, but world war (with both debt-financed production and a marked culling of the young adult labor force).

      By adding a third anachronism to its manifesto — a strong NATO — the Green New Deal can doubtless succeed in doing what Europe does best: large-scale regional bloodletting. Onward to the Ukraine, comrades!

      1. susan the other

        Very dark of you JimHaywood. Are we cannibals then? We are faced with complex facts and we can’t just say that free-market-capitalism will take care of it. Not the least because free market capitalism does not exist – but nevermind. Any progress forward comes from people. That part of the model that has been air-brushed almost to oblivion.

  5. Hugh

    I guess the real question is if capitalism can be stabilized. Or perhaps even before this I would ask if what is currently going on is capitalism. What I see is kleptocracy, a concept Varoufakis continues to dance around. Bankruptocracy really doesn’t cut it. Whether you equate capitalism with kleptocracy or not, the problem with kleptocracy is that it can not be stabilized, or reformed. It can only be overthrown.

    While Varoufakis does mention class war, he ignores the raison d’être of kleptocracy, which is wealth and power concentration into the hands of the few (the rich) and their minions (the elites). Before we can do anything, we must break, not stabilize, these concentrations (thefts) of what are society’s resources.

    What Varoufakis proposes is a fairly technocratic solution. A green society is something many would want, but Varoufakis is getting ahead of himself here. The more fundamental question to ask is what kind of a society we want not just for ourselves but for each other. That is a society which does not just take our needs and aspirations into account but those of everyone else as well. Increased R and D and a green society can certainly be part of that, but the issue is much, much larger than these. And while the progressive left should have a program it can sell to the 99%, it really, really needs to listen to the hopes and aspirations of the 99%, to respect and encourage the participation of the 99% in its decision making. A technocratic, top-down approach is the kiss of death to popular movements.

    1. financial matters

      That seems to be the thrust of the occupy movement/s.

      David Graeber who wrote ‘Debt: The First 5000 Years’ pretty much started the Occupy movement. A lot of people think it fizzled out but it is still simmering along. He is credited with coming up with the saying ‘the 99% against the 1%’. His style was to not have strong top down leadership but to have more of a diffused bottom up type structure. This was a major criticism of the occupy movement but probably also one of its strengths…

      1. Carla

        Actually, it has been the 1 percent against the 99 percent, not the other way around. What we need is for the 99 percent to be FOR the 99 percent. That would really help a lot.

    2. Banger

      Good comments–top down approaches aren’t going to work for one very simple reason–the top is already occupied by people who are imposing top-down approaches and the left is clueless about how to overthrow these oligarchs. The only alternative is bottom-up emergent networks utterly unlike old-fashioned organizations–social media, for all its faults and traps, is the method to further this as it matures.

      But give Yannis a break. He’s making a genuine attempt–personally, I believe he is stumbling towards something and we need to encourage him to continue. If we really want to find a way out of the dilemma Yves articulated.

      1. financial matters

        Yes, I think Yanis gave us a good challenge here..

        “The good news is that it can. The bad news is that for citizenship to be simultaneouly widespread and valuable, the political sphere must claw back much of the authority that it has lost to the economic sphere; first at the time of the Enclosures and, more recently, after the 2008 debacle. None of that ‘clawing back’ will result automatically from our splendid connectivity through Twitter, Facebook and various other Apps and Internet resources. They may give us voice but they will not grant us isegoria. To create isegoria, and thus to empower citizens broadly, our ‘connected’ social economy must not only allow rulers and citizens to communicate but should also feature multiple networks enabling consumers, labourers and innovators to form units of production which create and distribute value in a participatory manner; in a manner such that no one employs anyone and everyone contributes labour and ideas while being rewarded according to contribution but also need.

        Of course this requires nothing short of a revolution in the foundations of capitalist production. It will not happen through idle chatter in the social media. If it happens, it will occur as the Internet undermines the currently dominant corporate model which relies on the segregation between non-labouring shareholders and labouring non-owners. Only when the capitalist type of firm loses its ‘evolutionary fitness’, due to technological Internet-based innovations, and gives its place to a new type of participatory production model, will the political and the economic sphere become integrated again in a manner consistent with democratic principles. Then e’democracy may be born as our e’Demos reclaims control of the economic sphere.”


        1. John Merryman

          The biggest enemy of the current structure is themselves. They are blowing up their own monetary system, in order to keep the party going and save a few hollowed out banks. Remember the old comment that it was the job of the central bank to take away the punch bowl when the party really got going? This time, they just poured more vodka and orange juice in it, every time it got low. That the markets keep going up is not so much a sign of the strength of the markets, but the weakness of the currency. It’s another form of inflation. There is no conscious grand conspiracy at the top anymore, just unbridled and blind greed. What we should be preparing for is after it does blow up, have a reasonably well thought out public model to replace it. Government used to be private. It was called monarchy. Now it’s a public trust because they proved incompetent and blew up their own model. The bankers are now doing it with the economic circulation system.

          1. Banger

            While I agree that the current political economy is noxious I don’t agree that it merely driven by blind greed. If it was it would lack the robust quality it has. I have very good reason to believe that both at the corporate and governmental, NGO, and international org level that people are trying to shore up the system and are becoming adept at handling and defusing crises that emerge. There are people thinking strategically and not just tactically. They are aided in this by sophisticated computer-aided systems analysis that are light years beyond anything the early cybernetic proponents imagined in the 1940s. This revolution in systemic control is, very specifically, kept us from complete disaster after 2008. Since all the major stuff is done with small groups and through sophisticated hardware and software and in secret I can say that, globally, we are ruled by a virtual Imperial administration that even those that make up most the of that emergent virtual network have no idea what is going on.

            Greed is just a carrot used to manipulate degenerate parts of the population to follow the general orders of the virtual Imperial Court. Where they are leading us, I hard to tell. But I think, increasingly the power is moving towards Google and their ilk rather than Goldman Sachs.

            1. John Merryman

              “make up most the of that emergent virtual network have no idea what is going on.”
              Yes and frequently the right hand doesn’t know what the left hand is doing. They are expanding on autopilot and while the tactics of that process might manifest individual sparks of genius, there is also a lot of heavy handed stupidity, like pushing Putin into a counter, when they are already over extended in Asia. One of the reasons they have to keep expanding is the system is not stable otherwise. They are riding the wave, not steering it.

        2. Banger

          The internet is ready to help us to create networks of like-minded people if and only if we can disassociate from mainstream culture–by which I mean the political narrative provided to us by all mainstream media from Fox to Comedy Central. These new networks must be based on mutual pragmatic interests. Human beings do not thrive under conditions of constant stress and alienation–when we “drop out” of that model for life with all its attendant insecurities (what about my retirement, what about my job?) then progress can be made. In some ways all we need is a little bit of courage.

        3. washunate

          I agree this is a good-natured and thought-provoking stab at moving discussion.

          But it’s still headed in the wrong direction, as Hugh describes, getting ahead of itself.

          “…the political sphere must claw back much of the authority that it has lost to the economic sphere…”

          This has it exactly backwards. To the extent one may separate the two components of political economy, the political sphere exerts much more power today than a century or two ago. Every aspect of even the most trivial economic exchanges are now influenced by the state (or at least, the state claims authority to influence them). This is from trivial things like I-9 forms and the E-Verify system to massive, direct public interference in private markets, like bankster bailouts and the assumption of private liabilities. There are so many massive yet quiet programs, from home mortgage interest tax deductions to FDIC insurance to absurd stretching of IP law, that it is hard to keep track of them all, yet if any of them were removed, there would be enormous consequences.

          The criminal justice system alone at the turn of the 21st century claims more authority over activity in the US than the entire government did at the turn of the 20th century. The US has been in a continuous state of national emergency for longer now than the declared wars of WWII and WWI. And the Civil War. Combined. Etc.

      2. susan the other

        I’d like to know why some things are so sacrosanct that we cannot even discuss them. Like the concept of “profit.” That would be an interesting ongoing discussion.

      3. Dan Kervick

        A better future isn’t just going to emerge from random, local action, and from hierarchy-free networked groping and intellectual fuzziness.

        Could we finally trash these bohemian hippie fantasies that have dominated the thought of the left since the 60’s, have surged forth once again in the Occupy movement, and have given us nothing but five decades now of advancing economic inequality and corporate domination?

        The global corporate and financial elite are organized. They think strategically. They act boldly and aggressively. They understand power and how to achieve it. They are buying up and dividing up the world. They are capturing its communication systems, its policing systems, entire political systems. They are subjugating the people who do most of the work in the world. They are discarding and warehousing the rest. They are stripping democratic systems of all effective power. This is happening now. If there is a real left left, it needs to recognize this is war, and organize to fight the war. They can’t win it by building friendly food coops in some corner of the manorial spread where the landlords are content to let the serfs pretend they run their own lives.

        There is an opportunity at this moment in time, because capitalists often overplay their hands, and concentrate wealth and power in groups that are so small that they can even lose the support of the toady professional middle classes who usually support them in their fight against the workers, the poor, the wretched, the serfs. There is an opening. Even some of the comfy economics professors who man the scholastic bulwarks of obtuse dogma against the forces of clear thinking are starting to be miffed by the inequality (in part because they see boomer-era academic gravy train, with its proliferation of pretty campuses and charmed tweed-and-ivy existences, coming to an end.)

        The forces of decency, democratic equality, democratic self-determination, and social justice are in a fatal war for the future against the forces of concentrated corporate power and private wealth, no matter how many escapist stratagems they devise for avoiding these unpleasant facts. Are they going to fight it, or keep fantasizing about pastoral alternatives and noble savage gifting economies in some long-vanished corner of an ancient rainforest?

        1. EconCCX

          Dan, the global Money Reform movement needs your eloquent voice.

          But you’ve thus far aligned yourself with a branch of neochartalism that maintains against all evidence that Federal Reserve Banks are an arm of government rather than a consortium of its creditor-owners, that the US Dollar is a sovereign currency, that the government borrows from itself, that taxes destroy money, and that the inability of deficit spending and money creation to support production and exchange stems from the insufficiency of their dollar amounts.

          I’m hoping you’ll make a clean and public break from the Kansas City school. But if you’ll begin by determining whether documentary evidence — laws, financial statements, court rulings and operating manuals — supports or contradicts each viewpoint you consider, you will not go wrong.

          1. Calgacus

            But if you’ll begin by determining whether documentary evidence — laws, financial statements, court rulings and operating manuals — supports or contradicts each viewpoint you consider, you will not go wrong.

            It is easy to go wrong that way ( or any other way :-) ). The problem is that what matters is not what the judges or legislators or bureaucrats say they are doing, or even think they are doing – but what they are actually doing. There could be a law saying that the Fed is the property of the 6 armed purple aliens of Pluto, but that does not make it so, or make it have real world meaning. Mitchell-Innes makes this point on the “gold standard” – people might think, laws might say gold was money. But they could no more make it money than a law could make a gold wedding ring be a marriage.

            MMT, the UMKC does not assume that the Central Bank and the Treasury are consolidated for their analysis. What they do is prove that to all practical intents and purposes, based on extremely weak assumptions always satisfied in practice, one can consolidate them; that nothing changes if you do, that everything works just like it must – the government creates money when it spends, destroys it when it taxes. And the Fed & Treasury collaborate on overcomplicated BS to maintain interest rates at some level. That’s all.

            Another point that the MMTers don’t bring up often enough is that theirs is the traditional, or at least traditional Keynesian view – that relations between the Central Bank & the Treasury is “one pocket owing another pocket”. (Lerner) MMT is an old theory. “Everybody” understood it in the 1940s. Looking at old books, I learnt the “spending creates money, taxes destroy money” process in the 1970s. (And forgot it thereafter. :-)) But tragically the “meta” understanding was slightly defective. People didn’t understand what was important and central well enough, what was inessential, antiquated or just BS. So the history of economics since 1950 was a gradual process of throwing out the baby and keeping the bathwater.

          2. Dan Kervick

            Court rulings don’t necessarily determine economic reality. They have the more narrow aim of accommodating the decision of cases within existing statutory frameworks, which themselves reflect conventional wisdom.

            I think it’s frankly ridiculous to see a massive organizations whose entire board of governors is appointed by the President of the United States as a non-government entity.

            I have offered some suggestions in the past in some of my blogs for monetary and financial system reform, including the possibility of turning the entire Federal Reserve system into a not-for-profit public utility, and also mechanisms for introducing dollars into the economy via federal spending in ways that don’t involve the issuance of treasury debt. I am open to other approaches as well that preserve a larger for-profit private sector role. My thinking on this is always based on achieving the best practical consequences, not ideological rigor. Some people are motivated by the ideological conviction that it’s just wrong to permit private enterprises a role in the creation of our money. Since money is just a tool, I see nothing inherently wrong in that, no more than I see anything wrong with the private creation of hammers, so am only concerned about what would be the practical consequences of the various proposals people put on the table for reform.

            These days I try to do somewhat less thinking about the monetary system and focus more on other matters. In my opinion, the intense focus in the blogosphere on the monetary system, whether it’s the monetarists and other mainstream defenders of textbook monetary policy techniques, the Chicago Plan folks, the Bitcoiners, some MMTers, the P2P local currency folks, the positive money folks, the goldbugs, or many others, is excessive and often a distraction. I think the problems with our economy and society are much deeper than those that can be fixed via monetary reforms or tools, and involve basic questions about the organization of production, the accumulation and distribution of capital, the distribution of annual income and the strategic path we are on as a society in building a sustainable and fully human future.

        2. Mike Hall

          Oh I feel this Dan, the story of countless so called ‘alternative’ or ‘green’ social movements. I blame (most) John fucking Seymour & ‘Self Sufficiency’ this side of the pond (lol).

          The Irish Green Party still believe they can achieve it all whilst totally ignoring the neo liberal economics juggernaut of 3 decades that expelled them ignominiously from office 4 yrs ago. They have learnt exactly nothing. (I doubt any of them read this blog, but if you do, please post up & delight me!)

          Thanks for articulating Dan & better than I ever could :)

  6. William

    Yes, allcoppedout, we need to drop the left/right duality. As for neoliberal ideology, it is sustained primarily by a popular corporate media who all cheerlead it with lies, so the problem of corporate media needs to be addressed foremost. It can be overcome in a flash as soon as people are shown the truth and freed of media brainwashing.

    As Hugh says, people should be able to have a say in any societal paradigm shift, and visions for new ways to live ought to be openly discussed–once we have a free media. Compelling visions and new ways of living happily and sustainably are out there and being adopted, but reportage is not front-page material.

    The solution I believe is simple: Replace the current “extractive” paradigm with one that reflects respect for the land, air, water, and all living things–such as what many, if not most, indigenous cultures have practiced. To ensure a benevolent society, knowledge and critical thinking would need to be greatly elevated as universal ideals in which everyone participates at all levels of learning (Varoufakis’s cultural roots can be tapped!).

    Everything we desire to live well will naturally follow. Personal hoarding of resources would be repugnant behavior. Within two or three generations, most ideologies of today would be unimaginable.

  7. Eeyores enigma

    There is a lot thats good about this post and just to be discussing this is fantastic but…

    I have been focused on this issue intensively for many years and even initiated many localization efforts in my community. The problem is all of the solutions cause more problems.

    “growth must be stumped: toxic waste, toxic derivatives, ponzi finance, coal production, consumption that leaves the consumer unfulfilled and the planet worse for ware, etc.”

    All of this is true and much more and would effectively strip the economy, such as it is, of MOST of its profit, crash the economy, impoverish MOST of the population.

    This combined with the fact that re-localizing production means forcing the consumer to spend
    more at a time when due to the above mentioned realities of “no growth or even de-growth” forcing people to pinch pennies. I actually got the State USDA representative to admit that this is what they know to be true also particularly wrt food production.

    Basically all it accomplishes is a speeding up of the global game of musical chairs to the death.

    I know what needs to happen and I’m in the process of getting it down on paper. I am calling it;

    “We need to shoot down all hope in order to have any REAL hope for the future.”

    1. William

      People (please, not “consumers”) are forced to pinch pennies for reasons nothing to do with slow growth or no-growth. Such reasons I won’t expound on because they are daily fare here at NC–including the article on which you are commenting, Eeyore.

    2. Banger

      I agree with shooting down all hope–in fact it is part of some esoteric spiritual practices to help focus us on the moment–the only place that actually exists and the only place anything can be created. I will give an example of that from when I played competitive basketball. At some point you have to forget the score, when you are behind, and just focus on what you are doing in the moment–when I’ve done that magic happened.

      We carry with us way to many assumptions and dispensing with hope tends to limit mental clutter. It is, paradoxically, also important to cultivate a sense of the whole while we struggle in the underbrush with this we can sense (rather than try to figure out analytically) the direction we ought to move in. In the case of what Yannis projects in his posting, I think he is pointing to something and we shouldn’t be particularly focused specifics at this time but rather engaging in a process while we write our comments. Something can emerge if we just relax and let it happen spontaneously–besides, we have no choice, all the traditional avenues for change are closed.

    3. susan the other

      I’m not sure… I think that if “profit” were redefined as a social/environmental good, the money (which is based on social good) would keep flowing generously.

  8. MikeNY

    Great post and great comments so far. A have a few observations:

    1. ITA x 1000 about growth. Very often, people trumpet growth as the solution because they think it is the ALTERNATIVE to redistribution. No. We need redistribution first, on moral grounds, and on political grounds. Then, sustainable (i.e., green) growth.

    2. We need to tame the beast of corporatocracy. That means reform of the tax code, and one way or another diverting some of the ever-increasing corporate cash flow to workers until such time as a living wage requirement is recognized nationwide.

    3. Pace dip, whose opinion I value, I think many, even most people want to work. What they want is dignified work that pays a living wage.

    4. Since I may as well ask for the pony, we need to continue to downsize the military, and to redeploy those resources in environmental remediation, urban redevelopment, and clean energy.

    1. MyLessThanPrimeBeef

      I think we should be wary of people bearing gifts of growth.

      Going for growth is like drinking from the river Lethe – it will make you forget redistribution.

      1. MikeNY

        ITA. The moment I hear anyone lead off with “growing our economy”, I feel a plutocrat hand in my pocket…

        1. MyLessThanPrimeBeef

          I like that.

          I may have to borrow* that from time to time.

          * Thus debt is unavoidable. There will always be some debt of gratitude somewhere.

    2. Katie B.

      “Green growth” is an oxymoron. There is no way to decouple economic growth from growth in consumption of resources and energy and it is absolutely 100% impossible to grow resource and energy consumption beyond certain points. Renewable resources are limited by their rates of reproduction and energy is limited by the materials (like metals, which are nonrenewable) needed to harness it. I challenge you to name one thing that requires zero resource or energy inputs, because that would be the only way for growth to be sustainable. The only thing in nature that grows without bounds is cancer and the eventual outcome with cancer is that it kills its host.

      1. Yves Smith Post author

        Your comment is not well informed. There are numerous cases where companies changed their behavior and reduced the use of environmentally costly production/distribution/packaging methods and DID NOT increase costs. Go look at the McDonald’s styrofoam clamshell case, or BP (yes, that BP’s) experience with trying to lower its carbon footprint. They set a target in IIRC 2000 to get their carbon footprint down to 1990 levels in 10 years. They did it in three. They spent $30 million and realized savings of $650 million. We similarly have absolutely massive waste of water in municipal systems due to leaks, most of which would not be hard or costly to fix.

        The problem is that managers are lazy and don’t like being told what to do, not the number of opportunities to reduce resource use NOW. I’m not saying it is a panacea, but your denial that large scale opportunities exist is flat out incorrect.

  9. Gabriel

    I don’t know much about the Green New Deal as an alternative to capitalism. However, I’m not optimistic.

    I take a broad view of economics, say going back to the 1800s. Since then we’ve had a few big solutions to the question of poverty and wealth.

    1. capitalism – premised on ever higher revenues and profits; these are obtained by developing new products, and getting new markets, especially foreign; there’s no rest here from more, more of everything
    The 1930s attempted to fix US financial capitalism but the reform was around the edges and not to its core; more generally, capitalism seems to have big, inherent problems
    2. technology – capitalism eagerly grabbed technology as the major way to get new products and better processes; however, technology is not the end but merely a tool of capitalism
    3. socialism –contradicts the US tradition of individualism and capitalism; socialism also requires individual and collective trust that doesn’t exist in US capitalism; and so what if it works in a few Scandinavian countries; besides, the US has no history with socialism, unlike Europe
    4. colonialism – frowned upon as a way of getting cheap natural resources and new markets; however, a new form of colonialism is pretty active; that’s next
    5. economic colonialism – colonialism without boots on foreign soil; use trade agreements to assure a cheap and dependable sources of natural resources and foreign markets.

    I’ve deliberately cast each of these problematically. Each has a problem. And unfortunately, I don’t see any good alternatives around the corner — or even on paper.

  10. Gabriel

    Here are some major problems I see with capitalism.

    1. First is the problem of waste – massive waste of non-renewables to make unnecessary and shoddy products and services. With growing GDPs around the world, demand for non-renewables and renewables is growing. This growing demand will lead to increasing global competition for resources and this in turn could lead to some uncomfortable foreign relations.

    2. Increasing use of hydrocarbons and manufacturing, in number one above, create problems for the planet – i.e.,storing garbage, pollution, and global warming. Nuff said.

    3. Second, the jobs problem – the US economy can produce more with fewer workers. This will get worse as more automation kicks in, especially artificial intelligence [AI]. AI will allow creation of large factories making mass and custom products with very few workers. GDP will keep increasing with fewer workers.

    4. Third, the “lock-in” problem – most of us have a stake in the current economy. That’s pretty clear if you are upper class. If you are middle class, you are also tied in through your securities-selling employer and your securities-holding pension plan . So most of us have an interest in seeing the current scheme continue and prosper.

    5. Lastly, we have few if any good alternatives to the problem of capitalism – on paper or in 3D. We like technology – but that’s only a tool that can be good or bad, depending. We don’t like socialism on moral grounds. Economic colonialism is okay since it’s done out of sight. Any new ideas?

    Additionally, a green solution would create social and job problems – it would mean a much lower GDP so as to conserve non-renewables with the added challenge of assuring an unchanged standard and quality of living – no small job.

    Also, an economic welfare net would solve many problems but is poison to individualistic Americans.

    1. JTFaraday

      “Also, an economic welfare net would solve many problems but is poison to individualistic Americans.”

      Individualistic Americans who seek spaces of freedom in their lives like that fine.

      Brainwashed Americans, that’s another story.

  11. Banger

    As I’ve said many times, our current political economy and its discontents, contradictions, and toxic tendencies is a matter or morality. The current crony/predatory stage of capitalism is deeply immoral. But what do we mean by morality? That is the problem we need to address before we address anything else.

    My particular answer to morality starts with the notion of connection. Does any course of action lead to connections or fragmentation? If I pursue my self-interest at the expense of my neighbor I will be separating myself form him or her. Thus the culture of narcissism we have created is immoral because the pursuit of self-interest destroys any possibility of a convivial society. At this time we are still operating on the accumulated social capital of generations past and, gradually, that is beginning to dissipate such that a the world depicted by The Road Warrior is possible and inherent should any combination of disasters currently brewing hit us.

    The “Green” idea is critical here. It connects us directly with a larger world we call “nature” but actually connects with “nature” inside of each of us which we have vigorously pushed way and the reconstituted as a fantasy. A Green New Deal is a critically important notion. It places the environment we live in as our communal home–nurturing and sustaining the Earth is nurturing and sustaining our home now littered with empty beer bottles, pizza boxes and strange things growing in the bathroom.

    How we get there is to come to a fuller understanding of how nature operates and the easiest way to do that is to come to and understanding of how we operate–because our culture discourages such an inquiry in order to keep us weak and vulnerable to the systematic lies that make up most of what the culture throw at us to keep us under the control of the oligarchs. We must rebel and rebel in a major way against the current cultural milieu at the most basic level. First we decide whether we personally believe that the highest virtue is to pursue your self-interest because if that’s the case in your personal life then your political position must align with Ayn Rand and her Satanic philosophy. If you believe there is something beyond your self-interest then we can work together through a dialectical process as opposed to the usual pissing contests that make up most internet “dialogue.”

    Almost everyone that posts here has unique and valuable things to offer–imagine if we all put our head together with a minimum of ego! In the mid-nineties on a listserv I was a part of there was an attempt to create a matrix in which we could take diverse ideas and through some rather ingenious data analysis tools arrive at a method to “map” out these differences and unite them in a dynamic classification system. The project came to naught because it erupted into academic flame wars that caused the breakup of the whole thing. Lesson learned for me was that nothing can change unless participants are secure enough in their own being to build something then nothing will be done without the usual carrots and sticks provided by the contemporary capitalist ethic. However, years later I saw how the open-source software movement changed the paradigm and that could work for us. The open-source movement may not work so well with broader issues but it points in a direction. BTW, that movement has been somewhat perverted in recent years but that’s another story.

  12. washunate

    “One of the common frustrations expressed by the NC commentariat is that we spend a lot of time on diagnosis and not as much on solutions. I actually don’t think our emphasis on forensics and analysis is misplaced.”

    Fantastic insight Yves. I’m a big believer that the most important step of problem solving is understanding the problem.

    The situation is what Hugh describes. The matter is not to stabilize the current system of kleptocracy. It is what kind of society we want to have instead. There is an inherent conflict between what we currently have and Constitutional governance.


    “One of Mrs Thatcher’s singular successes was the propagation of the belief that nothing good can ever come of democratically controlled agencies (or, more broadly, the state) while there are no limits to the wonders that the private sector is capable of.”

    It is interesting to hear a European perspective on this, because that doesn’t seem to fit the facts.

    NHS is popular. The Tube is practically a national symbol. In the US, no generation has grown up desiring better government than the Millennials who saw firsthand the consequences of the Reagan/Thatcher/neolib revolution. Etc.

    The problem is not public opinion. Rather, it is that our leaders do not represent the will of the people. That is a fundamentally different issue.

  13. MikeNY

    Banger, I agree with you on the moral aspect. I has to do with respecting others as we do ourselves. John Rawls wrote a landmark book on this from a secular perspective, which is excellent, but I try to keep it simple:

    We all deserve equal opportunity. This is supposed to be a foundational principle of the United States of America. But equality of opportunity is impossible where there is gross inequality of wealth. This is not only intuitively obvious, but there are scores of studies that demonstrate it.

    Hence, we have a moral obligation to reduce the huge disparity of wealth in the US. We are in arrant, unconscionable breach of our founding ideals until we do so.

    1. Banger

      But I suggest to you that while a majority may believe in equal opportunity in the abstract in actuality they believer their children should have a leg up. If we value wealth and consider the competition for that wealth as trumping all other values then what chance does equal opportunity have?

      We must come to a consensus that there is a key philosophic and pragmatic necessity for compassionate public policies and personal behavior. I don’t think the population agrees on that. If we can contribute to articulating that necessity then we will be really contributing to changing society.

      1. MikeNY

        This is the issue Dostoyevksy was wrestling with, right? And we know how he answered that question. I’m afraid if we have to wait for the personal religious conversion of everyone, it will be a long wait. I could be wrong. Actually, I hope I’m wrong.

        I suggest we start with a ‘secular’ argument, but one which will resonate as increasing numbers of people find themselves far from the 1%: America does NOT believe in equality of opportunity so long as we tolerate gross inequality of wealth. We are hypocrites. What we really believe in is oligarchy for a few, and serfdom for the many.

        Of course, that argument still may fail. Then, we will simply have to wait for the inevitable revolution. “Those who make peaceful revolution impossible make violent revolution inevitable.” — JFK

        1. Banger

          I believe an understanding of spirituality (along the lines of Huxley’s perennial philosophy) is a requirement because our view is way too narrow to deal with the challenges that we face. Having said that there is “secular”, rational and pragmatic argument for compassion rooted in neuro-science.

          1. MikeNY

            I am hugely sympathetic to your views; alas, I think I am less optimistic about human nature than you are.

            I sincerely hope you are right, and I am wrong.

            1. Banger

              I love paradox–so I think we are both right. To put it another way, it is the spirit of our honesty and courage to face the truth that outweighs being “right” or “wrong” about such things. I often teeter on the edge of despair–and like the edge of chaos I believe that edge is where life can thrive.

      2. susan the other

        The main thing I disagree with Varoufakis on is his acceptance of the globalist vision and his view of nationalists as vicious nazis – of course the ultra Right in Ukraine is a bunch of vicious thugs and maybe Golden Dawn is too; I don’t thing the National Front is a bunch of skin heads but I’m sure they have some in their ranks. The point is, these people are reactionaries. But they are not reacting to nothing. They are reacting to being disenfranchised from their own country’s wealth; from the hyped global wealth trickle down which never makes it to the bottom, which never accrued to them – on the contrary, it impoverished them; etc. Nazism and localism is a good reaction to the felonies, all sanctioned by globalists, that steal from grassroots populations without a twinge of guilt. And in the meantime devastate and pollute the environment with voracious abandon, all in the name of profit. And so on.

        1. susan the other

          And also then, if we are going to talk profit, we must talk capitalism because capital is based on profit. If capitalism rejects profit, it rejects the very mechanism that keeps it going – no matter where.

  14. allcoppedout

    It’s good to see people who share the nausea of business-as-usual. I’m rather like William on wanting to shift of extractive-exploitive to “huggy-green”. I’ve been fool enough in my time to teach economists Wittgenstein’s deconstruction, actual field equations and how they were discovered, paraconsistent and informal logics and modern argumentative theory. The idea was to try to shift people away from “sums” and into the resolution of intractable situations like left-right politics and paradigm-trapped thinking generally. Wittgenstein’s basic trick was basically a kind of set theory thingy in which you try to find what might be very similar foundations in apparently contradictory positions. If you put the question marks in deep enough you may find a resolution that dissolves all the arguments, asks new questions, suggests different directions.

    I have to say here that social science generally doesn’t know real science well and tends to abstract stuff from ‘intelligent lay man’ versions, doing the same with the philosophy of science. Glib terms like ‘paradigm’ survive the transition long after sell-by date. Tough work like, say, that of Sneed and Ludwig, especially if written in an inaccessible modern language like German. We could apply such work on structuralism in physics to the root metaphors and theory formation in economics. I can see how this work could be done I’m also fairly sure it hasn’t been done because economics is such an obvious crock to anyone who escapes selfish adolescence and smugness.

    I could probably get funding to do ‘structuralism in economics’. It looks esoteric and harmless enough. Yet in deeper, I think even stuff like this is caught up in ideology – in this case the idea of the intellectual philosopher’s stone. I’m not sure at all that we need intellectual (always approximate) certainty. This is probably ideological itself. The logical positivists eventually realised their quest to rid us of metaphysics was, in fact, ‘metaphysical’. In postmodernism, incredulity towards metanarratives has the problem of incredulity becoming a metanarrative on must (and can’t) have incredulity towards.

    Quite a few people I meet seem to recognise they are being stiffed by clever people whatever the clever people are saying. Most shows of rationality are just show. Much as I have intellectual pretension, I’m sure we are actually subject to some very simple (at least in origin) cons. When you look at stuff like Ponzi-accounting (share buy-backs, asset value inflation, derivatives, QE), it’s pretty clear accountants are being told ‘piss off and come back with the results we need’. Yet in the world at large, we seem to have no equivalent – which would be ‘we’re going to have an egalitarian, decent society – now design an economiics and accounting system to make it work’. Instead, arses like Judge Shite from yesterday and City gawps with red braces get up and do some kind of spirit-dance-mystery-play warning the sky will fall.

    We could look in depth at some very simple stuff. Why do most people think ‘working hard is a good thing’? We should all be able to take part in such a discussion. Yet even in here, I’ll suggest most won’t engage. And in the West it’s tough to find many who have ever done any hard work. When I offer ‘jack tuna contracts’ (maybe 6 months aboard a small ship, sleeping cheek by jowl by fart for what might buy a week’s groceries here), students begin to understand they approve of hard work for others. There are no takers. Some long way into such debate, we might discover that the ideology of hard work is deeply suspect. But we won’t have such debate. One needs very false situations like classrooms to do stuff like this.

    Makes me wonder when technology might provide us with non-time dependent verbal discussion a bit like video conferencing in which we could say more to each other than in formats like this. As Wittgenstein had it, we need therapy to work out what ‘they’ have done to us. My guess is this is so bad most people live in fear of remembering the trauma. Capitalism is telling us something like ‘behave or no food’ as though this is an appropriate way to bring up children. We have something like a PTSD neurosis. We’re so traumatised we can’t even use what previous generations have built for free.

    1. William

      That, allcoppedout, has got to be about the most deeply insightful, idea-rich, honest, reality-based six paragraphs that I have ever read in a comments section. Or anywhere–surpassed only by Walter Wink in his Engaging the Powers, which if you have not read I think you would find the ideas and analysis there breathtaking.

    2. William

      That, allcoppedout, is about the most honest, deeply insightful, idea-rich, reality-based six paragraphs I have ever read in a comments section. Or anywhere, if it were not for Walter Wink’s Engaging the Powers (which I am sure you would find extremely illuminating and fascinating).

    3. Banger

      I don’t buy the that “real” science is somehow more true or real than social science.

  15. Jim

    My guess is the type of technocratic policy suggestions made by Yanis are no longer capable of generating the emotional motivation necessary to mobilize a meaningful proportion of citizens in any of the major advanced industrial societies to actively support such initiatives.

    It now seems imperative to lead with the cultural (in which the left/progressive factions have no coherent analysis—for example, linking predominant individual impulses/habits to corrupt institutional structures) and then calling for individual effort to understand the possible social foundations of such impulses.

    The next step that may be necessary is to link such a cultural critique/message to the political structure.

    Again the modern Left needs to tame both Big Capital and Big State and the public/private surveillance network which increasingly manages both sectors. Since progressives have always seen Big State as an instrument of liberation they have never bothered to develop/examine alternative theories of the State(never examined the possible framework of a genuine federalism or some type federal populism—which appears to be developing spontaneously now in countries such a Italy –with Venice recently calling for its independence in the form of a modern city state.) Just think of the potential for democratization/ mobilization of individuals and regions if a coherent model of federalism could be articulated.

    Once the cultural/emotional has been recognized and a new political structure suggested than you have a political/cultural context for dealing directly with economic policy and structures of finance.

    But the key is that people have already been drawn in on an emotional/political level to the allure of serious self-reflection in a political structure of decentralization and potential democratic participation.

    1. RanDomino

      Many people HAVE expressed skepticism of the State from a progressive perspective… it’s just that nobody likes us because we criticize the rampant sycophantic careerism that seems to usually be the true motivation behind large-scale top-down ‘solutions’, which impinges on the ability of careerist sycophants to feel good about themselves.

      1. William

        Plus it took five years for the majority of the Left to remove the blinders and rose-colored Obama glasses and see him for what he really is. Many still have on the blinders.

  16. allcoppedout

    I’m not sure Yanis gets Thatcher right in this. She never looked more than a deluded puppet to me. Her Tory predecessor, Heath-the-sailor-boy, had to promise to cut prices at a stroke to get elected. ‘The Grocer’, as he was known, failed entirely. So did the next Labour government, going cap-in-hand to the IMF on dire economic figures that, as we now know, were not that bad. Thatcher was also failing entirely until the Falklands. We still have little idea why we went to war over this set of wind and rain swept sheep farms when the most devastating consequence for the few inhabitants would have been exile to New Zealand, Australia or Wales. USUK had, in fact, been degrading Argentine military power, mostly directed at its own civilians, for years. The Argies had 5 or 6 Exocets, whereas Iraq is supposed to have popped 600 off in the Iran-Iraq war. We were ramped to believe our lads were up against massively superior numbers and a highly professional outfit.

    My own guess on the Falklands is it was set up as a propaganda exercise and planned long in advance. Thatcher took the role of Elizabeth I or Winston Churchill. Neither of these characters were understood other than through Attic tragedy as heroes. Journalists not prepared to do the jingo-tango were soon excluded and came up with WW2 propanganda lines like ‘I counted them all out and I counted them all back’. Most Britons waited for us to nuke Rio to teach the Argies their place in the world. Since then, all war reporting has been “embedded”. Even my brother-in-law. a really decent bloke, told me our victory made him feel like a man again. Fray Bentos corned beef, by then made in Brazil, has not been seen here as a brand since.

    Most Britons have no idea on what has happened to us since. We have had Blair doing Thatcher in drag. We almost voted Liberal Democrat, but have now discovered these guys and gals are just like all the rest. Labour would be no home for Yanis and his dangerous revolutionary speak. Anyone who wants to speak the truth is in Tony Benn’s position. Questions are all caught in the propaganda bias and so you have to try to shift the problematic first – this is seen as evasiveness.

    There a few Nazis in Britain. We do have UKIP and they are a bit like the French National Front without onions and striped T-shirts. Like the FN the UKIP appeal is quite broad across social strata, though really the ‘cunning plan’ is to exploit anti-EU and anti-immigration. Add to this a personable leader seen drinking pints and who wants to undo the smoking ban in pubs and you have a much more powerful appeal than Yanis’ leftism (sadly).

    The polis everywhere is now a docile body. Telling it that is hardly likely to produce a majority vote; more likely a black eye. We might start to wonder whether economics has anything to offer and that what advances we had in the West came about because we had a generation that experienced war and this beat something into our heads that education fails to do. I think I now go for a structured jubilee as policy. Now there’s a vote non-starter.

  17. RanDomino

    “And if the state’s innovative achievements have become fewer and further in between, it is because of thirty years of talking down the state, of depleting public research funding and institutions, of swinging a Thatcherite wrecking ball through the departments and institutes that could have kept Europe truly innovative.”
    Look, the State is not a positive, or even neutral, agent. All governments have always been hostile to the public, excepting rare moments when the people have been able to recognize this and the government of the day starts making concessions in a desperate attempt to maintain its existence, which usually works. Therefore let’s give up this talk about making the state stronger, as if it in any way makes sense to strengthen an institution controlled by our enemies, and instead work on ‘routing around the damage’ by organizing and building economic projects outside the State as much as possible.
    I keep on seeing and hearing posts and statements and speeches wherein people point out how everything is fucked and we need some major changes, and then when it gets to the point where they express WHAT we can actually do, it’s always, “Ummm call your representative?” and it’s BULLSHIT. We need to stop fucking doing it, NOW! It’s not fucking going to happen, get it?? They don’t give a fuck about you and they NEVER WILL and the only way you can force them to IS BY THREATENING TO DESTROY THEM! What the hell is wrong with people when it’s such a fucking commonly held position that all politicians are scum that you can’t go a day without hearing a joke with that as the punch line, but whenever someone says, “Okay, so if everyone hates them, why don’t we get rid of them?”, then WE’RE somehow the crazy ones!

    1. allcoppedout

      I think the above is true. We need a new constitution and I think this needs to extend over the democratic trading block.

  18. The Dork of Cork

    Beginning to recognize bankers reps pleading for more capital goods overprodiction………………………..no thanks.

    I have been traveling around this new Ireland in a ford transit recently and it is no longer Ireland as far as I am concerned.
    Its a non place of sodium lights blocking out the stars in even the most rural (now sub rural) areas.

    All euro champions are suspect in my book as they have brought the pox to this land which now lacks all aesthetic appeal both of the external visual kind and the more subtle if Psychotic Gaelic inner life which is now a materialistic and devastating blandness of utter contempt for all humanity be it some dumb polish euro roboten or the other lost former Irish people who remain in the dark shadow of this monster.

    I need to find a smaller island to live in.
    Thanks to the euro experiment my country of birth has no soul.
    The rot started in 1973………….

    Ireland is now a place of bypassed towns.

    The great question in my head is where do people go when all areas have been bypassed.????????

    Its far too late of course but could these euro boys and girls please get the f%$k out of this bog..
    Just to repeat I blame the european banking petri dish for pretty much everything.

    Don’t save it.
    Kill this horrid predator.

    If it bleeds, we can kill it.

    “somethingsssssssssss outtttttttttttt there waiting for us “

  19. allcoppedout

    I spend a lot of my time with my dog in a country park alongside a reclaimed brook. What Dork says of actual landscape is also true of our intellectual landscape, taverns and work. I actually favour a bigger trading block, but only so we could go back to being local and stop competing ourselves to uniformity and poverty.

  20. allcoppedout

    We could look at some thing like big green projects in a big trading block to take up unemployment in terms of the problems we can spot such a practice causing and potential benefits. I think I’d mean something different from cost benefit analysis and we should proceed as a thought experiment.

    On the money side I’m sick of us not being able to do decent things because of sky will fall monetary policy. Dan has said some pertinent things above. The tail is somehow wagging the dog.

    My idea is to start with something that might be a sound green project, but this can be speculative, just put up to see what would shoot it down. My favourite is Scottish power from wind and sea. I’m pretty sure my old country has plentiful resource in this area, but even this could shot down. And we could think, say river Congo or a patch of Saudi desert as big as Austria,

    Assuming Scotland has the energy and unemployment resource I’d want to proceed until the big objections are raised such as:
    1. We can’t afford it.
    2. The energy would not be competitively priced.
    3. Full employment in Scotland would produce rampant price inflation.

    The point, at least initially, would not be to establish the case, but to see what the objections are to something as apparently sensible as green, renewable energy and full employment.

    One obvious objection is this energy would cost so much that no one could afford to use it. Yet would that be a real objection in a self-sufficient trading block that could render energy costs out of the competitive equation? We are already subsidising heavy industry energy. How would we get Saudi to leave its oil in the ground etc?

    I’ve done some of the argument and though it gets complex, it’s not really intellectually complex. The idea is to see if we can come up with something that doesn’t just lie down in front of the neo-liberal power-elite knows best bus.

    No attempt at full argument here. Indeed one wonders if we don’t now have the technology to go collective with the argument itself rather than the usual intellectual property jazz. Even Austrian cracker-barrel on turning soldiers into productive workers has some relevance here.The soldiers being the unemployed.

    My guess is the needed argument is book length. Scotland can’t do this on its own. Yet (democracies (such as we have them) probably have similar resources available. We might reach some very nasty conclusions, such as needing to blockade vile oil runners. But we might also bring a lot of currently dark argument to light, demonstrate just how much trauma prevents sensible action, calling it pie-in-the-sky ‘because we can’t afford it’ (because we can ‘afford’ to burn the planet socially disable billions through poverty when we have real affluence)?

    If we made this kind of argument, we could also say to the establishment, come on then how are you going to deal with these problems?.

    1. William

      I like that phrase–trauma prevents sensible action. Reason why the 99% are kept traumatized?

      “Full employment” sounds like an academic construct. When everyone is working together on a vital project, I don’t see that academic constructs such as “full employment” and “inflation” need to be considered. If “inflation” did occur, what or who would it threaten or harm, and to what extent? Everybody has meaningful work who wants or needs it, what’s the problem? If “employment” were divorced from the current ways of thinking, I think there would be none.

  21. Katie B.

    Yves – you have thoroughly confused me here. You introduced this piece by saying:

    “Readers correctly point out that more growth is a 20th century remedy, when the 21st century is faces with global warming (meaning an need to start containing and better yet, reducing energy consumption) and resource constraints.”

    And you claim that the following piece will address that, but all he says on the subject is this:

    “Growth is not the issue….the issue is eclectic growth in the technologies and goods that contribute to a more successful life on a sustainable planet.”

    How can you claim that someone is “addressing” the issue of growth when he says it’s not the problem and doesn’t even back that statement up with an explanation? THIS is the problem. It’s called cognitive dissonance. If you acknowledge that continued growth is at odds with constraints on natural resources and biocapacity (climate change, pollution, etc.), how can you go on to support the idea of green-washed version of more growth? “Green growth” is still growth. It still has natural resource and energy inputs. Do you seriously not even realize this?

    1. Yves Smith Post author

      I don’t see the problem here. Growth is defined by economists at GDP growth. Yanis is saying certain types of growth (consumption of more goods and services) are good for the environment or at least can be neutral (think, for instance, environmental remediation services, or products that help people measure energy use so as to encourage conservation and more efficiency). And what about growth in low energy consumption services like day care centers at workplaces (kids would come in with parents, so virtually no incremental energy use).

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