Post Brexit UK is seeing higher skilled labour entering from non-EU countries to support a range of services (public and other) – success
It's Wednesday and so before we get to the music segment we have time to…
The increasing uprising against Modern Monetary Theory (MMT) in the media is salutory because it means our ideas are now considered to be a threat to the mainstream economics (for example, Paul Krugman now buying into the carping) and to the heterodox tradition (for example, the British economists who self-identify with that tradition). The high profile debate around the Green New Deal has been associated with MMT and this has brought all sort of crazy attacks on MMT from those who think they are ‘green’ but haven’t traversed out of ‘Monetarist-type’ economics thinking. And then I note that apparently the Green New Deal is being expropriated by Europhiles to wedge those who consider Lexit and Brexit to be the only way to re-establish progressive society and politics. Apparently, the Europhiles are arguing that you cannot be both Lexit/Brexit and support the Green New Deal. Curious logic. And, of course, a desperate attempt by the Europhiles to grasp at anything to discredit both Brexit and MMT, given that there is a high proportion of MMTers who prefer Britain leave the EU and that the EU disappears in its current form. And so it goes. Wolfgang Streek recently published an interesting academic article that bears on this discussion. That is what this blog post is about.
In a recent UK Guardian Op Ed from Ann Pettifor (February 11, 2019) – The Green New Deal offers radical environmental and economic change – where readers are told that the Green New Deal framework will require:
… an ecological and economic transformation of the current system …
We also read:
The Green New Deal demands major structural (governmental and inter-governmental) changes (not just behavioural change) in our approach to the ecosystem …
The realism of the Green New Deal demand is precisely because it harks back to an era in which the global economy was transformed (almost overnight) by the revolutionary Keynesian monetary policies of an American president. These enabled his administration to deploy fiscal policy to transform both the domestic economy, but also the dust bowl …
The experience and success of the New Deal – deeply flawed in many respects – nevertheless assures us that transformation is possible …
And we know that can be done, because it was done before – by the popular will that backed Franklin D Roosevelt’s administration as it began (on the night of his inauguration in 1933) to dismantle the globalised gold standard system …
An umbrella that will hopefully unite and inspire vast numbers of green activists across the world – and in turn trigger state action to subordinate finance to the interests of society and the ecosystem – and thereby ensure a livable planet for future generations.
Note the emphasis on driving forces – governmental and inter-government.
Note the reference to “revolutionary” economics working into policy through the aegis of a democratically-elected head of a currency-issuing state.
Note the reference to the way FDR liberated his nation from international arrangements that restricted or violated the currency sovereignty of the US.
Note the reference to green activists etc working to “trigger state action”.
This is totally consistent with the Modern Monetary Theory (MMT) view and the view Thomas Fazi and I expressed in our current book – Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, September 2017).
Yet, the same Guardian author was on social media yesterday (February 13, 2019) telling the world that:
The two narratives are contradictory.
Europe (the EU) is not a state. It has no ‘fiscal’ capacity to pursue the “radical environmental and economic change” that is needed.
The Treaty that establishes the EU is pure neoliberalism that is the antithesis of the ‘radical’ economic changes that are needed.
The Eurozone is not a state. It also has no fiscal capacity and is the most developed expression of the EU’s neoliberal imperialism.
Note in the Guardian article, we are told the GND fight will come from “governmental and inter-governmental” actions.
The EU (and the Eurozone) is neither governmental or inter-governmental. It is a Treaty that subverts democratic accountability and the pigeon-holes the flexibility of the ‘state’ to operate in its own right and to enter ‘inter-governmental’ arrangements and accords.
Sure enough, the scale of climate change will require cooperation between states and inter-governmental accords.
And, in that respect, global dialogue is essential. Thomas Fazi and I outlined that approach to the problem in – Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, September 2017).
But to claim that those who want to ‘Reclaim the State’, which means nations have to exit stifling (neoliberal) arrangements such as the EU and the Eurozone and eliminate the democratic deficits that such arrangements engender, have to forfeit their claim on Green New Deal is far fetched and just reflects a confused narrative.
This is a narrative that wants to be part of the Green New Deal, which in the current period is being married with MMT (for obvious reasons), but hates the idea of Brexit/Lexit (and its association with some MMTers, such as myself).
So you get this sort of inconsistency entering the public debate.
German sociologist Wolfgang Streeck recently had published an interesting article in the Journal – Jurisprudence – entitled Reflections on political scale.
It was distilled from his Adam Smith Lecture in Jurisprudence delivered at the University of Glasgow on May 30 2018.
One needs a library subscription to get the original. So I will try to present his view in a balanced way.
Wolfgang Streeck is an interesting character. He provided an endorsement on the cover of our book – Reclaiming the State – after being approached by the publisher.
He wrote: “Important… An essential building-block for a constructive debate on a post-Brexit democratic politics”.
So obviously our views have a strong mutual resonance.
He also gave an interesting interview to the Jacobin magazine (August 20, 2018) – Germany’s European Empire – where he argued that “politicians laud ‘Europe’ – while quietly using EU structures to advance German national interests”.
In the Jurisprudence article, he asks whether:
Europe as a whole ‘is still threatened with a repetition of those calamities which formerly oppressed the arms and institutions of Rome’.
His article probes the concept of “political scale” – “What is better for a political society, to be big or to be small, and better in what respects? How best to draw the borders between states that separate domestic from international political structures … Which problems should be internalised and dealt with in domestic politics, and which should be externalised and left to foreign policy?”
He reminds us of history and the work of Edward Gibbon who was “an English historian, writer and Member of Parliament” in the late C18th and wrote extensively about the challenges that are inherent in operationalising the concept of political scale.
His analysis of Europe and the role of the individual state (“powerful, though unequal kingdoms, three respectable commonwealths, and a variety of small, though independent, states”).
Edward Gibbon ultimately concluded that “functional decentralisations and territorial subdivision” (quote from Wolfgang Streeck) was preferable to alternative governmental structures.
Wolfgang Streeck tells us that:
230 years later, in by and large the same geographical space that Gibbon wrote about, among the collection of political jurisdictions that now exist in what was once the Western Roman Empire, we observe a deep crisis of a project of economic and political ‘integration’ that is fundamentally contrary to Gibbon’s plea for a Europe of distributed rather than centralised sovereignty.
In the Jacobin interview, he makes a good point that “In the language of the established centrist parties, everyone who could be dangerous to them is a “populist,” from Corbyn to AfD.”
In the Jurisprudence article, he considers the “‘populist’ revolt is about:
… the architecture of national and international governance in a global economy, including the place in it of less-than-universalistic social solidarity, political sovereignty, and cultural identity …
Fuelling these conflicts is an often passionate resentment by diverse social groups against what they perceive as hostile attempts to restructure their traditional communities and solidarities from the outside in order to fit them into an economistic system of political rule, moral identity and, importantly, international competition.
He quotes Jurgen Habermas who described Europe as a “technocracy that is working hard to make national societies ready for global capitalism.”
And that technocracy is hardly people-friendly. Its purpose, design and implementation is core neoliberal. That ideology is embedded in the Treaty that creates the administrative and policy infrastructure.
The Europhiles seem to think that a bit of tinkering here, and a reform there will alter the show and push it in a progressive direction.
They are dreaming.
The whole concept has to be abandoned, national sovereignty restored and a new intergovernmental dialogue opened to work out what a ‘European’ cooperation might look like to ensure there is political action at a scale commensurate with the problem.
The operations of a currency in a region that is differentiated by historical enmities, major cultural and language differences, and differences in infrastructure needs and demographic structure, is not of a scale that a ‘global’ or ‘Pan European’ is required.
Wolfgang Streeck recognises the conflict between “demands for a decentralised, distributed architecture of political rule, is related to global economic integration is a claim that is very much present in the economic literature on state size.”
Those claims for “global economic integration” of which the ‘Single Market’ is the European expression is justified by the assertion that the benefits exceed those where borders are relevant to regulate labour and capital movements.
Wolfgang Streeck, importantly, notes that the movement towards globalisation (supply chains etc) “came together with a neoliberal turn of postwar democracies”.
We examine the conjunction of those events in detail in ‘Reclaiming the State’. The point is that the progressive Left conflates the two developments – as if they are inevitably linked. They are not.
Please see this blog post – The Left confuses globalisation with neo-liberalism and gets lost (April 27, 2016).
The conflation meant that “governments withdrew from protecting their societies from foreign competition” and this, in turn, not only increased inequality, but also resulted in a conflict among the progressive movements, who, increasingly, became obsessed with identity issues and articulated, in the confusion, a belief that only pan-international movements could save the workers.
But that view is now being countered by the ‘populist’ uprising – “a communitarian response to the neoliberal competition regime that has neutralised the postwar welfare state” – which has “has become the most effective opponent of the ‘European project’, as embodied in the European Union and, in particular, its common currency.”
The problem for progressives, who have become lost in a Europhile cloud of confusion, is that the ‘communitarianism’ is being led by the Right.
The Right is leading the charge against the neoliberalism of Europe, which then introduces other undesirable elements (anti-migrant, social conservatism, etc).
The Right has filled the leadership void in the struggle against neoliberalism.
Wolfgang Streeck provides a brief history of how the ‘European Project’ emerged after the Second World War and emphasises the problems that will always preclude the creation of a true European nation (a United States of Europe):
No EU member country will voluntarily transfer its national state sovereignty to Brussels …
Moreover, dreams of integrated democratic European statehood forget that large political size comes with high political heterogeneity and must therefore be paid for, in order to be sustainable, with decentralisation – the larger a state, the more so.
The problem that the democratic legitimacy of a “cooperative international order” has:
… to allow democratic nation-states states to defend their societies and their politics against ‘unfair’, meaning socially disruptive, economic competition, with tools of their own rather than depending on the benevolence of lead nations or supranational bureaucracies.
Which is the anathema of the way the Treaties have constructed the EU. Its rigidity defies progressive reform.
Wolfgang Streeck concludes that:
Promises of a restoration of the democratic class compromise at supranational or international, let alone global level are illusory.
The obvious conclusion is that:
… the benefits of large size political rule tend to be oversold while its costs, including the political capital that has to be spent on instituting encompassing and centralised institutions of governance in the first place, are typically downplayed.
Small scale political organisation (for example, at the Member State level) have benefits:
1. “more homogeneous societies”.
2. “more democratic: problems of consensus-building under social heterogeneity are avoided, decision times are likely to be shorter, so is the distance between citizens and governments, and the results of political participation are more immediately felt”.
3. “Cultural homogeneity and high political responsiveness support egalitarian values and social cohesion, and citizens experience the national polity as a community- of-fate seeking survival in an environment it cannot hope to control.”
4. “Economically, small states are more likely than large states to forge cooperative alli- ances between domestic capital and labour”.
5. “may support industrial niche-building by providing for an infrastructure particularly suited to the sectors in which their economies, assisted by national industrial policy, choose to specialise.”
By way of conclusion, we understand that “political scale is not a matter or rational design”, which is why the one-size-fits-all European Project has missed the boat.
History, culture and language all dictate what acceptable political scale is for a group of people.
Progressives should support small scale democracy – where the polity is closer to the people and depoliticisation is less possible.
Trying to achieve the opposite – a “European superstate” – which not only “will never come to pass” but in the process “the attempt to get there must have disastrous consequences, for both democracy within participating countries and the relations between them.”
That is the point the Europhile Left cannot get their head around.
They speak of reforms – and a new idea pops up on a regular basis to much fanfare – but meanwhile, the neoliberal project continues and further undermines the democratic desires of the citizens.
And when the citizens protest, the state brings out the troops and breaks heads!
Wolfgang Streeck finishes on an eloquent note:
In conditions like these, the German saying applies according to which a sparrow in hand is better than a pigeon on the roof, and we may add: especially if that pigeon may turn out to be a starving imperial eagle.
That is enough for today!
(c) Copyright 2019 William Mitchell. All Rights Reserved.
This Post Has 27 Comments
So the people who voted for Brexit racists(77% of pro-Brexit voters first reason for voting Brexit was “brown” people) and those who voted for a “rising sun on a new empire” are going to elect governments that support MMT style and New Green Deal style solutions?
In MMT I have found explanation for many of those questions I have had about economics.
Politically I feel that the ideas presented are just not going happen. The economic and social disruption of Brexit is at too high a cost. Jacob Rees-Mogg says 50 years from now the problems will have worked themselves out. Sure the Germans are impoverishing themselves and impoverishing millions of European but small nation states are going to change the face of global capitalism?
I think the idea is that the EU/ECU is irreformable and if you just have one shot at something better, you might as well take it.
The rationale is that it is more likely that a Labour government gets elected, reverses austerity measures and engages in significant deficit spending than it is for all in the european establishment and institutions (and in all member states as well) to suddenly see the light and heavily reform european fiscal and trade policy through the proper bureaucratic channels. That is without even going into whether the electorate of the paymaster-countries would tolerate what they would most likely perceive as an undeserved reward for the less afluent countries.
Many of those “racists” traditionally vote/voted labour (e.g. the Liverpool or Durham areas), so yes, I would expect many of them to do so again if a non-New-Labour alternative presents itself. Especially if it tunes the identity politics down a little and focuses instead on economic relief.
Right now, I think, Corbyn is doing right in pretending to do everything to stop the incompetent and divided Tories. Afterwards he’d probably start “lengthy” and “earnest” negotiations to rejoin. In the short term though, he could then engage in the program I described above and vicariously watch the whole house burn from the outside.
Cheers from inside the burning house!
There is a Polish saying stating exactly the same as the German one but we may think about different birds. For me the sparrow is the current imperfect, but stable, order. I think that the main concern of a lot of the so-called progressive people in the Eastern part of the Realm is that the undemocratic, neoliberal and bureaucratic Third Holy Roman Empire is nevertheless better than “democratic in a different way” nation-states competing against each other, ruled by outright fascists or just puppets of whatever spy agency is at the top capacity at any given time. Let’s think for example about the thriving democracy in Ukraine. How many people paid the highest price to get rid of the corrupt regime of Yanukovich? About 100 were shot by the so-called “unknown” snipers in 2014. There is a little doubt that thousands of people who congregated at Maidan square wanted freedom (and the European integration, not more dependency from Russia). What did they get? First a visit from John McCain. Then an undoubtedly still corrupt (but “democratic”) regime of Poroshenko, plus a war. A real one. About 13000 people dead so far. And what about the economy? I know that I should not write this but people who grew up in Australia may have an unscientific tendency to believe in progress and democracy. Unscientific because it has not been validated by recent historic events. Maybe we should try this great idea here first and only if it works, preach it to the others. Let’s democratically get rid of the people in power who cynically lock up refugees in concentration camps and tell everyone that burning coal is great for the human civilisation… the racists who lock up Aboriginals for minor infringements but get away with scamming billions of dollars (as shown by the Banking Commission). But we can’t even accomplish this but we still have a temptation to say: “let’s unshackle the nations of Europe from the neoliberal chains of the EU and the enlightened progressives will democratically steer the peoples of Europe towards the shiny future”. How many times did I have heard this one about removing the shackles? You have correctly stated that “The problem for progressives, who have become lost in a Europhile cloud of confusion, is that the ‘communitarianism’ is being led by the Right.” I would add that these right-wing people whom you have mentioned are ready to pounce and seize the power. They have even been given some good advice by Steve Bannon. Do we want a local Viktor Orban to emerge in every country East of Elbe and an equivalent of Marine Le Pen in every country West of Elbe? As a consequence, what about an armed conflict between Hungary and Romania or Hungary and Slovakia. Or in Northern Ireland. Or in South Tirol. Unthinkable? So was the war in Donbass 30 years ago… If 20 or 30% of the adult population of the UK understood the MMT and wanted to use the sovereign fiscal capacity to finance progressive and environmentally sound projects and policies (including the “green deal”) then advocating the “Brexit now” would make sense to me. Have we reached the 20% threshold? No? So let’s be patient and work on the economic education rather than play with the political fire. Please notice that I am 100% convinced by the economic arguments against the EU. I am not convinced by the political ones. If the total number of people who know what to do with the newly found fiscal capacity is less than a few thousand, what is the point of helping getting another inbreed lord to steer the United Kingdom towards the same neoliberal destiny but without the “enlightened supervision” from Brussels? I don’t believe that Corbyn will make any difference with the friends and enemies he has (and the intellectual capacities of his advisers). What is the chance that the Brexit and the possible collapse of the EU some people wish for will unleash the democratic forces of progress, not the usual processes of self-destruction and infighting? Let’s not be naive that the so-called progressives who are confused and divided will gain anything if the current BAD system is dismantled. If the progressives were ready to govern and had a good program then maybe it would be worthy to take a risk. My prediction is that what is going to replace the EU is even WORSE, that the fascists or in the best case, “garden variety” dodgy and corrupt politicians will seize power at least in some countries. One may disagree but it is not my fault that I watched these things which happened in Eastern and Central Europe in 1989-1991 not from the distance of 16000 km but 50 cm (as a student organiser). I would therefore be very careful and I would abstain from attacking personally the so-called “Europhiles” as naive and confused. I am not an Europhile and for the record I did not vote for joining the EU (in 2003 – I was still living in Poland then). These people who clearly see the danger of what could happen after the disintegration of the EU are not naive, they are just concerned. I agree that the people who believe that the EU can be easily reformed may be well-wishers and they don’t understand that the primacy of capital over the interests of at least some human beings has been cast in reinforced concrete of the Lisbon Treaty. These people need to be educated not spurned. But I also think that we should be extremely careful in what we are wishing for. Again, if we can “Reclaim the State”, let’s go for it. But if we can’t, “primum non nocere”. I am convinced that a meaningful Brexit, if it actually happens, will be “We wanted the best, but it turned out like always.” (V. Chernomyrdin). That’s why I respectfully disagree with the thesis that the idea of Brexit in the current form is worth supporting. I would at least stay clear from this controversy unless this is just an opportunity to present contrarian views and draw attention to MMT in a “Trumpian” way – but if it is about presenting contrarian views, I would not be surprised if the controversy allows the opponents to divert the attention from the main topic that is the understanding how the fiscal capacity of a sovereign government can be used for the good of the people. This controversy may also be alienating some people who are intrinsically not evil.
The truth is the EU is the biggest obstacle to a Green New Deal. There is constant talk about the investments necessary to achieve the Paris goals after which follows immediately that it will blow up the public debt ratio. So the reforms are small to please the European Commission’s budget review.
Meanwhile green investments need to have enough return. So there’s one windmill park after another being built which is nice when there’s wind, but needs fossil combustion when idle, cause renewables don’t pair well with nuclear fission reactors evidently, as these have constant output.
And although less nuclear brings more CO2 from burning gas and coal, the government also wants everyone driving electric cars so the limited budget is also spent on subsidising Teslas which will drive on some of the most dirty energies available if we import German coal power.
If they would invest as much as they did in WWII, we would have nuclear fusion tomorrow.
@ Adam K
I strongly empathize with your emotional description of the afliction of Eastern Europe, encroached between a global capitalist hegemon with promises of democracy and the entitled economical and territorial claims of an erstwhile military super power. I understand how one could come to the conclusion, that the EU is the “lesser evil”. However, I think the Brexit scenario is significantly different.
I fear the post Brexit scenario as much as the next Remainer, but I dont’t think fear of uncertainty cuts it as a decisive argument. Right now, the EU is a gargantuan roadblock to any significant progressive agenda. Also, I used to think of the UK as the perfect agent for a “revolution from within” due to its own currency/central bank and non-compliance with the Maastricht treaty. But here is the thing:
“Again, if we can “Reclaim the State”, let’s go for it.”
Turns out I underestimated the reach of European trade treaties that make it very much impossible to reclaim the state. I’m pretty sure Bill wrote a post about it. For example, finance-watch.org has an article with the title “Financial Regulation challenged by European Trade Policy” that is worth reading. That was the tipping point for me. All the layers of bureaucracy regarding its institutions and their interactions with eachother and with member states make significant reforms almost impossible. At the same time, legally binding and destructive treaties like the one above are swiftly and silently enacted. Treaties, whose effects would take significant… you guessed it… reform to undo. At this point it takes very good intentions not to believe the reform-resistance in European bureaucracy is not by design.
Ultimately, Bill’s case rests on whether one thinks the EU capable of reform or not. Clearly, Bill thinks it is not and, as I portrayed above, I tend to agree.
Hopefully, the Brexit lesson is learned and a more solidary and prosperous Europe can begin to flourish. I’m not holding my breath, though.
Very eloquently put, and I sympathise with your analysis.
If you haven’t read it, I recommend the recent article by Perry Anderson in the LRB, Bolsonaro’s Brazil. It compares the different approaches chosen by Lula (realist) and Dilma (more idealistic) in their role as president, in a democratic country in which justice and equity are nevertheless impossible to acheive due to entrenched interests, and their consequent ability to effect any progressive policies. I thought the article was illuminating. It is clear that the situation in Europe could be far worse than it is now.
I agree that the EU cannot be easily reformed but not because of the rigid “rules”. Because these groups who control it have no real interest in reforming it. I think that if the UK leaves the EU, precisely the same groups will be still in control in the UK. Who will get rid of the influence of the bankers from the City of London? Will Corbyn tax them in a meaningful way? The financial sector “contributed” 6.5% to the UK’s GDP in 2017. We need to make an important distinction between the “superstructure” and the class interests behind it (I am sorry if this sounds as borrowed from a well-known German-born philosopher). Let’s not get carried away too far with the “ideas” and “legal frameworks” which belong to the “superstructure”, created by the ruling classes to serve their interests. Who did object when Germany violated the so-called “fiscal rules”? So “flexibility” is always possible if it is in the interest of the ruling oligarchy. Pity if you do not belong to the oligarchy. The superstructure is just a veil. On the other hand, we can tweak the “superstructure” in the UK for example by electing Boris (or even Corbyn) and leaving the EU but if the rich rentiers and capitalists remain rich and poor workers and unemployed remain poor, nothing will really change. The foundation of the EU is that private capital is the only capital and there must be no competition from the state using its own fiscal capacity to create financial capital. Because this would interfere with the process of harvesting surplus value and hoarding real wealth even if the total volume of the GDP would be higher. The green policies won’t violate this principle. The current owners of coal mines will be the future owners of solar and wind power stations. Want to get rid of the EU? Fine but the same idea of the nearly-absolute individual property rights is the foundation of the so-called “liberal democracy” in general, for example here, in Australia (or in the UK where this stuff came from, with the convicts, squatters and grog). The liberal and social-democratic politicians who are really hired clowns will always dance to the tune of the bankers and plutocrats. Western democracy is indeed a scam but let’s not get carried away too far with this observation, let’s be pragmatic. If we replace these clowns with the guys who really mean business, who want to mould the reality to their usually insane ideas (such as the “re-Christianisation of Europe”, popular in Poland) or by some military / secret service trained psychopaths, something far worse may happen. In the best case we will have an “illiberal democracy” and nothing will really change except for window dressing. But it can get far worse… Adolf H. was also a temporary fix put in place by the plutocrats to stop the revolting workers and unemployed from embracing communist ideas. Currently the only group which offers a viable alternative to the liberal democracy in the Western world are the fascists or similar dodgy types – again. Maybe not in Germany on a large scale but elsewhere – yes. Germany is too stable, too rich and people there have been inoculated to fascism because of what happened in 1945. But honestly, is a little mess in the Mitteleuropa really bad for the industrial tycoons? They will get more cheap and skilled labour. Do they really care that much about Ukraine or Greece? What is really necessary to change the paradigm is to redefine the property rights first. Not by a revolution, this has been tried and failed due to grave side-effects and the risk of hijacking. By applying conscious pressure when the time is right. And there might be a window of opportunity available in the near future – when the conflict between the West and China reaches a certain phase. The same happened in the West after the 1945, mostly because of the pressure from the USSR. “Cold wars are good and easy to win” – by us. We need to push to redefine individual property rights so that they are not taken out of the social context. It is the society and the state what guarantees someone’s property rights what means that a mutual obligation is created. Property rights are not “God-given”, natural. They are a social construct. They can be diluted and limited. Only in this context there is a room for an active fiscal policy. Because it is in the interest of the whole society. Not just in the interest of the military-industrial complex as in the Trumpian US. MMT proves that active fiscal policy may be viable. It does not show how this can be achieved because this belongs to the realm of political science and philosophy. The state of environment is not an issue for an ultra-rich individual who can always turn the air con on or jet away to Canada. Again this debate only makes sense in the context of societies and the humanity as a whole. Would this change be possible within the current UE framework? I don’t know, I rather doubt. The system would probably need to evolve a lot and be re-engineered from bottom-up. But I will repeat, re-engineered, not blown up. When the German tycoons realise that they have to reform the system – or else they will be left behind China and lose the opportunity (as individuals) to harvest the surplus value and extraordinary profits, they will grudgingly comply. These guys may not be nice but they are actually quite smart.
@ Adam K
Again, very elocuently put. Nevertheless:
“When the German tycoons realise that they have to reform the system – or else they will be left behind China and lose the opportunity (as individuals) to harvest the surplus value and extraordinary profits, they will grudgingly comply. These guys may not be nice but they are actually quite smart.”
I think right here, you concede implicitly that “a solution within the system” requires the forces of capital to comply and you seem to place your hope in them coming to their senses when their profits start to suffer. I beg to disagree.
Think only of the lost profit behind the opportunity cost of not having invested in infrastructure, R&D, education or healthcare decades ago. One can’t help but notice how in the long run the forces of capital are detrimental to themselves even in terms of the holy profit they claim to adore. The whole funky business that led to the GFC and the way we are set for a relapse should suffice as proof that there is no such thing as a self-preservation mechanism inherent to the tycoons you mention or their business.
@ Adam K
I forgot to concede your point on the rules not being the problem. You are right, it is how those rules are consistently enforced (or not enforced at all) in favor of the rich and powerful that is the problem.
I want to take this opportunity to thank you, Hermann, and Adam K for stimulating and insightful comments on what is an enormously complex issue. I find myself sympathetic to the views of both of you and your comments to Bill’s arguments educational, to me at least. Thank you again.
My own views are complicated and I have not completely sorted them out yet; having said that, I completely agree with Bill’s views of the perfidy of many of the EU elite and some of the institutions. But I also distinguish, as Adam K does, the political from other related considerations. I think Bill does, too. The reason Hermann and Adam and Bill and I can come to somewhat different conclusions while seemingly agreeing on so much to begin with is that the conclusions in such discussions do not deductively follow from where one begins. Also perhaps small differences in the beginning can lead to somewhat larger differences at the end, in part, due to the lack of deductive closure. Possibly this is a good thing in the end.
The EU will crash and burn by the rise of nationalism, rational or otherwise. Wishing for reforms on the eve/midst of a recession is rather pointless, as the people are fed up as is, let alone when the next round of austerity surges.
I can imagine how someone might see hope by the about-face of protecting german companies from China, but it is really just more fuel to the fire of confusing and ineffective policies.
This doesn’t mean it will be sun and roses for those with the will to jump ship before the crash, just that the chickens are coming home to roost.
@ Heim – do you have a link for the “brown people” argument?
My understanding was that the first and foremost reason given by leave voters for voting leave was the principle that decisions about the UK should be taken in the UK (49%). https://www.thefullbrexit.com/why-did-britain-vote-to-leave-the-e
The immigration issue was in second place (significantly behind the primary reason at (33%) and while racism exists in every corner of the world, the focus looks to be more on the level of immigration itself, not so much who the immigrants are. Unfettered access to endless supplies of labour from outside greatly advantage business in keeping downward pressure on workers wages and conditions, leaving employers holding virtually ALL of the cards in negotiation.
So the outcomes of the EU’s misleadingly-named “freedom of movement” policy are starkly different for ordinary working class Britons than they are for business and professional-level employees (like Guardian columnists).
Fascinating discussion between Adam K/Hermann/Larry.
I also find myself vacillating quite a lot and partly wanting the EU to fall apart and partly worrying about ‘something worse’ emerging.
One thing is clear: The left has consummately failed to find a usable narrative and Corby is trying to balance an ensemble of cognitive dissonance so great that the works of Stockhausen wold appear quite euphonious and non-challenging. Danger clearly lurks when situations lack a narrative and when confused minds are then fed some simplistic pap by fascistic types.
The Left could have created a narrative (Bill and Tomas’ book largely does this job). We’ve now had nearly 40 years of dumbed-down media and a type of anti-intellectualism that neo-liberalism thrives on by creating unhappy and stressed populaces who are left with little head space.
Maybe we should also note that because the Right is gaining strength in Europe that the E.U can be seen as creating the very forces that Adam K fears might be unleashed AFTER a dissolution of the E.U?
‘The whole funky business that led to the GFC and the way we are set for a relapse should suffice as proof that there is no such thing as a self-preservation mechanism inherent to the tycoons you mention or their business.’
Indeed-BUT the state rescued them so the ‘self-preservation’ mechanism IS the state and the capitalists know this. Bill and Tomas also explore this in the chapter ‘The State never Went Away.’
I think we should acknowledge that the situation is very dangerous and ‘non-linear’ in the sense that things don’t seem to have their old trajectories which make it seem that 2+2 doesn’t equal 4.
Add to this housing and land asset bubbles + private debt and you have a real recipe for instability as there seems no clear way out-how the UK housing asset bubble genie can be re-bottled still seems unclear so you end up with stagnant and rigid wealth inequalities and millions plying a debt treadmill.
And with this going on we find neo-liberalism obtains further succour from it.
Great discussion folks-thanks!
“So the people who voted for Brexit racists(77% of pro-Brexit voters first reason for voting Brexit was “brown” people)”
This is not the data that I have seen and you are perpetuating myths that are unhelpful to constructive debate.
Whilst one must always cautious over the claims of polls, looking at the original Ashcroft poll, so beloved of the original anti-democratic remainers who rejected the Referendum result, showed that only 1/3 of Leavers had immigration as their sole motivation.
Logically for those who are concerned over immigration it does not follow that they are all racist. Other polls have shown, quite robustly without the error bar sensitivity of other conclusions, that racists were twice as likely to vote leave as to vote remain. That means that there were racists who voted to stay, just half as many who voted leave.
The implication that all (or most) who voted leave are racist and therefore should be dismissed or ignored is a highly pernicious, destructive and probably counter-productive argument and is itself based on bigotry – a performative contradiction.
I am not claiming that you are doing this, although such statements you make are doing nothing to deter others from making such erroneous conclusions.
I have learnt a lot thanks to you, friend. So I’m happy you feel repaid 🙂
“Also perhaps small differences in the beginning can lead to somewhat larger differences at the end”
Someone somewhere here in the comment section linked to the work on economics from the precursor of fractal geometry, Benoît Mandelbrot. It’s nice to see chaos theory at work in the comment section as well 😉
@ Simon Cohen
Hello, Simon! To your point:
“Indeed-BUT the state rescued them so the ‘self-preservation’ mechanism IS the state and the capitalists know this.”
They also claim it was the states fault to begin with (Fannie Mae & Freddie Mac made us shoot ourselves in the foot!). You touch on a subject we have discussed earlier. Is it devilishly cunning or stupidity/incompetence that drove them? I tend to prefer Hanlon’s razor, because I want to belive most are not evil but certainly victims of confirmation bias, a way too favorable view of themselves and their abilties, etc. Accordingly, I attribute their continously detrimental behavior to an adaptation of that old quote attributed to Twain: It’s easier for people to double down on mistakes than it is for them to admit they were wrong to begin with.
@all: Indeed, simply the best forum to my knowledge if one is interested in insightful opinions and a civilized discussion. In this case, however, I think Adam K takes the prize, for he argues from the probably less popular position in here and manages to do so respectfully, eloquently and, in many points, convincingly.
@bill: Kudos to you for keeping the trolls away without simply banning contrarian opinions.
Ditto to eveything you said, Hermann. I do take the view sometimes that confirmation bias provides, as you nicely put it, a way too favorable view of themselves and their abilities.
For the vote in the Commons yesterday, the song, The Windmills of your Mind by Michele Legrand, comes to mind (sung by either Noel Harrison or Dusty Springfield). Doubling down on stupidity seems to be the order of the day. They might as well be going round in circles mentally. And what is it that is jangling in their heads? Nothing that seems to be getting them anywhere.
I misspelled Michel Legrand’s name. He died just last month. RIP.
I tend to agree with Larry on the view that ‘confirmation bias’ might be too favourable a take on it. Take Tusks comments on Greece that Bill quoted at the time:
‘You did it! Congratulations to Greece and its people on ending the programme of financial assistance. With huge efforts and European solidarity you seized the day.’
This is, of course, beyond disgusting and in the realms of a mindset that has utterly monetised the human reality on the ground. That comment by Tusk reveals the depths of derangement, so deep that it would probably take years of therapy to loosen.
Sorry to hear about Michell Legrand, ‘Windmills’ was a great song using a Bach-like Baroque cycle of fifths progression to great effect.
What about these lyrics as another illustration of ‘confirmation bias’:
‘Everybody’s talkin’ at me
Can’t hear a word they’re sayin’
Only the echoes of my mind’
Simon, those lyrics also work. Thanks. And thanks for the structural info on Windmills. If I ever knew this, I certainly forgot it.
What is odd about Tusk is that he appears to hold two sets of propositions in his mind, one is as you describe, while the other is of Europe as a bastion against barbarism. One would think he would be conflicted, but I see no clear evidence of this. You may be right that these conflicting approaches are buried so deep that years of therapy might be needed to loosen them up. What a picture this conjures up.
Wolfgang Streeck in How will Capitalism End? blames Talbot Parsons at Harvard for taking economics out of sociology. The reverse applies. Sociology was taken out of economics. Can we bring them back together along with anthropology, history, geography and engineering? The Great Transformation by Karl Polanyi is the classic book in this territory. A new selection of Polanyi’s selected writings is now in the bookshops published by Polity in paperback. edited by Michele Cangiani and Claus Thomasberger
Polanyi’s 1935 essay on The Essence of Fascism is fascinating, especially when considering the time of publication. I hate to say it but this is relevant to our times.
Jerry, Talcott Parsons did not take economics out of sociology entirely as can be seen in Parsons and Smelser’s Economy and Society (the title being an oblique reference to Max Weber whom Parsons translated and thought highly of); in that text, what Parsons does is to take on board what is now the mainstream view of macroeconomics. Why he did this, I am not sure, but some have made their particular, negative, assessments of Parsons’ position in this regard known. In general, however, Parsons ignored the subject.
Thanks for mentioning the availability of the new selection of Polanyi’s essays.
AdamK’s obviously deeply-felt views, founded as they are on his own first-hand experience in Poland, merit the greatest respect (especially from armchair theoreticians like yours truly).
Having said that I disagree with his conclusion insofar as it relates to Brexit. About Europe I defer to others’ wisdom.
Britain had been a member of the EU for 43 years when the referendum took place, during which time the EU underwent such profound changes as to make it entirely unrecognisable as the same institution membership of which a substantial majority had voted in favour of in the 1975 referendum (including me). Not surprisingly, a majority voted in favour of leaving it in 2016 – the only real surprise is that the majority wasn’t larger.
A majority of the British people have said unequivocally that they do not wish Britain to continue to be a member of the EU. AdamK disapproves of that choice; so do a minority of Brits.
What should we do? Ignore the referendum? Pretend it never happened? Hardly. The one course that is not open to us is to turn 180°.
There really is no other choice than to continue along the road we set-out on on 23 June 2016, meaning that on March 29th we leave the EU. Either the pessimists or the optimists will be proved wrong – probably both in equal measure, but in complementary ways. That’s how things usually turn out.
One trap we ought all to try to avoid falling into is demonising our political adversaries. That process has been in full swing in the USA for some time now, and it’s not a pretty spectacle to behold. That should have been enough to cause us to do our utmost to avoid succumbing to the same corrosive malaise, but we seem intent on doing just that alas.
Thanks Larry. The reference is the final chapter of “How Will Capitalism End?” where Streeck discusses the public mission of sociology and observes “the contrast between the progressive decay of the politics and economy of the United States and the star-studded social science departments from Harvard to Stanford.”
It is a lose-lose situation for public policy. There’s the stuff the kids are taught in the economics departments. Bill has been on this subject lately. Craig Freedman covered this issue thoroughly in his book “Chicago Fundamentalism.” Then there was the invasion of the bureaucracy by these narrowly-trained economists. The Australian sociologist Michael Pusey described the disaster in “Economic Rationalism in Canberra.”
The Polanyi essays are recommended. He has something to say and he knows how to say it. The Hungarian has such a wonderful command of written English.
Concerning Europe, among others to whose wisdom I defer is Wolfgang Streeck.
From “The return of the repressed” (in New Left Review 104, March-April 2017), here’s yet another telling quote (translated by Rodney Livingstone):-
“The cosmopolitan identitarianism of the leaders of the neoliberal age, originating as it did in part from left-wing universalism, calls forth by way of reaction a national identitarianism, while anti-national re-education from above produces an anti-elitist nationalism from below. Whoever puts a society under economic or moral pressure to the point of dissolution reaps resistance from its traditionalists. Today this is because all those who see themselves as exposed to the uncertainties of international markets, control of which has been promised but never delivered, will prefer a bird in their hand to two in the bush: they will choose the reality of national democracy, imperfect as it may be, over the fantasy of a democratic global society”.
Pace AdamK I concur (especially with the last sentence). Streek’s injunction “whoever puts a society under economic or moral pressure to the point of dissolution reaps resistance from its traditionalists” strikes me as an exact prefiguring of Macron and the gilets jaunes.
Jerry, I, too, have read Craig Freedman’s Chicago Fundamentalism. I enjoyed it. Certainly doesn’t make Stigler pere very appealing. I have read Stigler’s son’s statistical histories, which is a worthwhile endeavor. Doesn’t seen to have the same personality as his father, but I may be wrong. Agree about Polanyi. Have you been able to have a look at The Econocracy by the students at Manchester? They hated their curriculum. The response of the department was appalling. Told them effectively that if they didn’t like what they were being taught that they could transfer to the business department.
That’s an excellent insight Robert H. Adam K stopped me in my tracks and I suspect he has given the amazing Bill Mitchell cause to think. I agree with you on Brexit. The criticism of Therese May is unreasonable. It is not her baby and it is not the end of the world. I’m with the yellow vests. Wynne Godley spotted the technical problem at the time of the Maastricht signing and such diverse minds as George Soros and Yanis Varoufakis still search for a technical solution. I always thought the project was overly ambitious.
Larry, I knew some economics students were unhappy with the curriculum but had not heard of the specific Manchester example. It does not surprise me. My Dad taught at Manchester on sabbatical and loved it. My parents acquired a love of Lowry’s paintings.
Frank Stilwell’s Department of Political Economy at Sydney University had put up heroic resistance to Chicago economics. My old school chum John Dawkins has a lot to answer for. We should not confuse education and training. Get the education first then worry about the training. Even Keynesian dentists should know how to read and write.
Will a European superstate ever come to pass? Will it be progressive? Those are two questions, not one.
It may help to compare the current EU/Eurozone situation with that of the Confederation of the United States circa 1785. Washington, Mason, Madison, and others realized that the Confederation was a failure, but they wished to preserve the union, as it were. One thing led to another, eventuating in the ratification of a new US Constitution in 1788, and a new unified sovereign government was born.
The EU is not unlike the original US Confederation. It is failing for lack of a sovereign center, and MMT contributes to showing how such failure is inevitable.
The EU is at more or less the same crossroads that confronted the US Confederation. They must preserve the union by creating a single unified sovereign government where members of the union (the “states”) agree to function as subsidiary agents of that sovereign government; or else they must cut the bullsh*t and allow those members to operate as independent sovereign states, period. No fuzzy in-between arrangement seems to be workable if history is any guide. Insisting on a common currency requires preserving the union. So much the worse for a common currency? Etc. Where are the EU’s Washingtons, Masons, and Madisons to bring this point home?
Anyway, it must be said that a European superstate is not impossible if its member states were prepared to accept what that actually entails. It is not as likely as forming a superstate out of a confederation of thirteen independent American colonies in 1787, but it is not impossible.
As for whether or not such a superstate would be progressive, …?