Archive for June 10th, 2015

By JC

Today’s read is an interview by the Saker of Michael Hudson, who the Saker refers to as “the best economist in the West”. We can quibble about politics and the economic fallout designed and approved of by the rentier class as they prepare their August meeting, but how often is it that we look to history and economic theory when trying to understand the present, and plan for the future?

Hudson’s voice in the debate rising about how to structure economies, in the face of the failure of the Soviet-style communism and the failure of “free market” capitalism to meet the needs of any but the elite, is a welcome respite to the usual left-right and neolibertarian-socialist views on economy. Throw in the debates over the so-called “free trade” agreements, and we have a global economy swirling down the drain into a 21st century economic version of the dark ages.

Enjoy!

The missing item in today’s economic reforms is what classical economics focused on, from the French Physiocrats through Adam Smith, John Stuart Mill to Marx and his contemporaries: freeing industrial economies from the rentier carry-overs of European feudalism. The focus of classical value and price theory was to free economies from economic rent, defined as unearned income simply resulting from privilege: absentee land rent, mineral and natural resource rent, monopoly rent, and financial interest. The aim should be to prevent rent-extracting activities – defined as purely predatory transfer payments, an economically unproductive zero-sum activity.

The classical labor theory of value aimed at isolating those forms of income (land rent, monopoly rent and interest) that were socially unnecessary, and simply were legacies of past privilege. The halfway alternative was to tax land rent and monopoly rent (Henry George, et al.). The socialist alternative was to take natural rent-producing sectors into the public domain.

Europe did this with the major public utilities – transportation, communications, the post office, and also education, public health and pensions. The United States privatized these sectors, but created regulatory commissions to keep prices in line with basic cost-value. (To be sure, regulatory capture always was a problem, especially when it came to railroad charges…

Classical economics was a doctrine of how to industrialize and become more competitive – and at the same time, more fair – by bringing prices in line with actual, socially necessary costs of production. The resulting doctrine (with Marx and Thorstein Veblen being the last great classical economists) was largely a guide to what to avoid: special privilege, unearned income, unproductive overhead.

The aim was to create a circular flow model of national income distinguishing real wealth from mere overhead. The idea was to strip away what was unnecessary – what Marx called the “excrescences” of post-feudal society that remained embedded in the industrial economies of his day. When the great classical economists spoke of a “free market,” they meant a market free from rentier classes, free from monopolies and above all free from predatory bank credit.

Of course, we know now that Marx was too optimistic. He described the destiny of industrial capitalism as being to liberate economies from the rentiers. But World War I changed the momentum of Western civilization. The rentiers fought back – the Austrian School, von Mises and Hayek, fascism and the University of Chicago’s ideologues redefined “free markets” to mean markets free for rentiers, free from government taxation of land and natural resources, free from public price regulation and oversight. The Reform Era was called “the road to serfdom” – and in its place, the post-classical neoliberals promoted today’s road to debt peonage.

Today’s Cold War may be viewed in its intellectual aspects as an attempt to prevent countries outside of the United States from realizing that (contra Thatcher) there is an alternative, and acting on it. The struggle is for the economy’s brain and understanding on the part of governments. Only a strong government has the power to achieve the reforms at which 19th century reformers failed to achieve.

The alternative is what happened as Rome collapsed into serfdom and feudalism.

 

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by William Skink

In a few flurries of tweets between myself and former Blackbird blogger, Jay Stevens, I’ve witnessed the ease in which progressives are manipulated. It started with his tweets about the FIFA scandal. I, of course, tried to point to the geopolitical implications, which obviously makes me a Putin fanboy. Here is one tweet from Stevens:

Can’t wait to see how @madpoet19 spins the Fifa-arms-for-votes story…

The story referenced in the above tweet is about arms deals being traded for World Cup votes, which the Guardian covered a few days ago. From the link:

The shockwaves from the corruption scandal that brought down Sepp Blatter continue to reverberate, with claims in Germany that the 2006 World Cup vote was influenced by a shipment of rocket-propelled grenades and allegations in Egypt that a Fifa executive solicited bribes during the 2010 bidding race.

As seven Fifa officials continued to fight extradition to the US over claims they were involved in a “World Cup of fraud”, Blatter’s right-hand man Jérôme Valcke remained at the centre of speculation over what he knew about a $10m payment to the disgraced former Fifa vice-president Jack Warner. And pressure on the Football Association of Ireland also grew amid the fallout from its admission that it agreed a secret €5m (£3.6m) payment after threatening legal action in the wake of Thierry Henry’s handball that led to the goal that ended their chances of qualifying for the 2010 World Cup.

Instead of looking at a geopolitical contrast to this latest iteration of FIFA corruption, we have no further to look than the cesspool of corruption the State Department became under Hillary’s tutelage. If Jay thinks the FIFA arms-for-votes story is bad, I wonder what he thinks about chemical weapons deals for Clinton Foundation donations:

The approval of American chemical weapons sales to Egypt as Mubarak’s associates were stocking Clinton family interests with cash is but one example of a dynamic that prevailed though Hillary Clinton’s tenure as secretary of state. During the roughly two years of Arab Spring protests that confronted authoritarian governments with popular uprisings, Clinton’s State Department approved $66 million worth of so-called Category 14 exports — defined as “toxicological agents, including chemical agents, biological agents and associated equipment” — to nine Middle Eastern governments that either donated to the Clinton Foundation or whose affiliated groups paid Bill Clinton speaking fees.

That represented a 50 percent overall increase in such export approvals to the same countries over the two years prior to the Arab Spring, according to an International Business Times review of State Department documents. In the same time period, Arab countries that did not donate to the Clinton Foundation saw an overall decrease in their State Department approvals to purchase chemical and biological materials. The increase in chemical, biological and related exports to Clinton Foundation donors was part of a larger jump in overall arms sales authorized by Hillary Clinton’s State Department to foreign governments that gave her family’s foundation at least $54 million, according to a previous IBTimes analysis.

The State Department, the Clinton campaign and the Clinton Foundation did not respond to questions about the deals.

I don’t know if this constitutes me “spinning” the FIFA corruption, but it certainly provides an example of domestic corruption that a Democrat supporter like Jay Stevens may want to take into consideration as the inevitable Clinton campaign chugs along.

I can anticipate Jay’s response because in an earlier spat he distanced himself from supporting Clinton by stating he’s a Bernie supporter. Well, allow me to spin that as well, because there is more going on with Bernie Sanders campaign than meets the eye. Michael Arria asks a good question in a Counterpunch piece today, titled Why is the DNC Sending Out Pro-Bernie emails? Good question. And the answer may be found in Sanders’ promise not to run as an independent when he inevitably folds to the Clinton Juggernaut:

Ironically, it seems that the DNC and left-critics of the Sanders campaign agree on a very important fact: they believe Sanders will attract a number of young voters and activists, then dutifully tell them to vote for Hillary when he drops out. The DNC sees that outcome as a win and leftists see it as a loss, but both perceive his dropout as inevitable. “Hillary Clinton certainly doesn’t regard Sanders as a threat,” writes Ashley Smith at Jacobin, “She knows that the national election business follows the golden rule: whoever has more gold, wins.

The early disclosures of Hillary Clinton’s disgusting use of the State Department won’t negatively impact her candidacy because they are coming out at a time when progressives like Jay Stevens will default to his Bernie support. Bernie provides the progressive cover by getting attention for his progressive positions, then, when smashed by Clinton cash, he will bow out and tout the pragmatic lesser evilism support of the sociopath, Hillary Clinton.

Well played, DNC.




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