I just found out – state kleptocracy is the problem

Today’s blog is a little different to most, although don’t worry, I will get onto familiar themes soon enough. Today I am considering the latest broadside from controversial German philosopher Peter Sloterdijk, who Jurgen Habermas referred to as a fascist. Sloterdijk responded to that criticism by labelling Habermas, in turn, a fascist. That debate was about bi-genetics and Sloterdijk’s implicit support for a “master race”. It was an interesting debate in itself and goes to the fundamental discomfort that exists in Germany about their past. But today I am considering his views on freedom and governments who he labels fiscal thieves and suggests that modern democracies have conspired to allow ever increasing numbers to live of the toil of others courtesy of state intervention.

The Austrian School fanatics would love this guy. Sloterdijk’s latest article was published in the Winter 2010 edition of the City Journal and was entitled – The Grasping Hand.

As an aside, the City Journal is “a quarterly magazine of urban affairs, published by the Manhattan Institute”. So who are the Manhattan Institute? Turns out they are a free-market ideas think tank and hand out the annual F.A. Hayek’s Prize to honour his vision of economic and individual liberty. They display curious inconsistencies though in advocating for “free markets” yet also considering that financial markets need to be tightly regulated by government to avoid the latter bailing out the former during a bank crisis.

Sloterdijk starts with the contention that “(t)he modern democratic state pillages its productive citizens”. Which got me wondering if democracy means we can vote them out – which means that, despite our limited political choices these days, the control of the political process by the media doing the bidding for the top-end-of-town, and the flawed balloting systems in some countries (including the US), this would be a situation where we sanction the state pillage. Sort of self-pillage.

He begins by juxtaposing classical liberalism and anarchism – both movements which were “motivated by the mistaken hypothesis that the world was heading
toward an era of the weakening of the state” and hoped that:

… man’s plunder of man would soon come to an end. In the first case, this would result from the elimination of exploitation by
unproductive classes, that is, the nobility and the clergy. In the second case, the key was to reorganize traditional social classes into little groups that would consume what they produced.

I have no problem with this characterisation. Sloterdijk says that neither movement survived the political developments into the C20th, and that:

The modern democratic state gradually transformed into the debtor state, within the space of a century metastasizing into a colossal monster-one that breathes and spits out money. This metamorphosis has resulted, above all, from a prodigious enlargement of the tax base-most notably, with the introduction of the progressive income tax. This tax is the functional equivalent of socialist expropriation. It offers the remarkable advantage of being annually renewable-at least, in the case of those it has not bled dry the previous year.

There seem to be a lot of confusions in this characterisation.

First, if it is breathing and spitting out money that capacity would appear to be organic to the state. So then why is it a debtor state? The reality is that the likes of Sloterdijk who err towards classical liberalism in his “economic” ideas (and I use that term loosely because he knows nought about the way the monetary system operates) although his other works (as noted) on bio-genetics are ominously scary and invoke the master race notions that Plato first espoused and were taken up very patently by Sloterdijk’s countrymen and women in the 1930s and beyond.

The political ideology that we term classical liberalism is the foundation of the free market perspective in economics and sees very little role for the state. Classical liberals are well represented by the likes of Jean-Baptiste Say (of the famous Say’s Law) which argued that there could never be unemployment or production gluts because interest rates would also clear to ensure that saving equalled investment. This meant that if consumption fell away (and saving rose), firms would just gear up to satisfying investment goods production instead of consumptions goods production – the rise in saving would increase the flow of funds into the loanable funds market and drive down interest rates and stimulate investment.

This was a dominant thought in the C19th century and still persists today via the Chicago School. Almost all mainstream economists think that this is a correct view in the long-run although they try to temper their views by noting that frictions in the short-run might lead to temporary over-production and therefore unemployment.

If you give the idea a seconds thought you will want to know how machinery and physical capital designed to pump consumption goods out suddenly metamorphise into new machinery and capital capable of producing investment goods (machines etc). If you study economics via a mainstream course you will learn that capital is conceived of as malleable (putty) that can just be squeezed into different shapes and forms at will. It is looney stuff yet lecturers each day pump this stuff out in mainstream production, growth and distribution theory courses.

All of this capital theory was destroyed in the 1960s by the so-called Cambridge Controversies, which I might write a blog about one day. You won’t read about this debate in the mainstream textbooks and it is never taught any more but take it from me the mainstream neoclassical production and distribution theory (which relies on their capital theory) was rendered logically inconsistent and meaningless as a consequence of this bitter and drawn out debate. The Cambridge reference is to the two Cambridges which formed either side of the debate – the University of Cambridge in England (demonstrating the weaknesses of mainstream theory) and MIT in Cambridge, Massachusetts (defenders of the orthodoxy).

Of-course, Marx and then Keynes demonstrated beyond doubt that Say’s Law was nonsensical when applied to a monetary economy which was burdened by uncertainty. Keynes also showed that saving at the aggregate level was a residual (after consumption) and interest rate movements did not bring it into balance with investment (in a close economy without government).

Rather Keynes showed that it was income adjustments that brought aggregate demand and supply together and the capitalist economy could get stuck in a situation where output levels (supply) were below the level required to fully employ the available labour force. Further, because the firms were able to sell all they produced at this lower level of output there was no incentive to expand production. The remedy was to introduce an exogenous spending shock to break this under-full employment equilibrium and that became the modern justification for fiscal interventions.

Please read my blog – Functional finance and modern monetary theory – for more discussion on these points.

Later classical liberalists were Friedrich Hayek and Milton Friedman and so you know where Sloterdijk fits into the scene.

So in this broad context we have to wonder why the national governments issue debt at all seeing as it is one of the things that bugs Sloterdijk. As I explain in this blog – Gold standard and fixed exchange rates – myths that still prevail – the constraints imposed on national governments by this system meant that governments had to cover their spending with taxation and/or borrowing from the private sector. They simply could not stay within the convertibility system and violate those constraints.

The reason the system fell apart in 1971 (finally) was because it was unsustainable. It forced nations with external deficits to systematically deflate their domestic economies (via monetary contractions) which meant persistent unemployment and lost income earning opportunities. Further it put no adjustment pressure on surplus nations – other than their own citizens complaining about the huge foreign reserve stockpiles these nations accumulated which could have enhanced the material standards of living of their citizens.

So while this was a very wasteful system when it comes to real resource utilisation (labour and capital was persistently underused across the world) and income generation, by that very means, it became a politically untenable system.

Under the fiat monetary system from 1971, national governments became sovereign in their own currency which means that they were no longer revenue-constrained. They can spend however much they like subject to there being real goods and services available for sale. Irrespective of whether the government has been spending more than revenue (taxation and bond sales) or less, on any particular day the government has the same capacity to spend as it did yesterday. There is no such concept of the government being “out of money” or not being able to afford to fund a program. How much the national government spends is entirely of its own choosing. There are no financial restrictions on this capacity

But if the convertible currency system ended (for the most part) in 1971, why do national governments that issue their own currency still also issue debt virtually $-for-$ to match their net spending flows? The question is even more pointed when you realise that in this sort of monetary system the national government is not revenue constrained as above.

A child would then ask the obvious question – not having been tainted yet by the ideology of classical liberalism – then if governments can spend without issuing debt why do they open themselves to the political chagrin of the deficit terrorists and the outlandish posturing of the likes of Sloterdijk by borrowing?

It is an excellent question. And the child will grow up to learn that the answer is that the governments have been captured by the classical liberal ideology (which I guess we now stylise as neo-liberalism) and succumb to relentless pressure put on them by the political process, not to mention all the recipients of the corporate welfare (the hedge and future funds) who get a risk-free annuity to price their risky speculative products off.

The latter complain relentlessly in public about the vicissitudes of the debt-bloated monolithic state but complain even louder when the state actually follows their advice and runs surpluses, pays down the outstanding debt and renders the bond markets too thin for reliable trading and risk benchmarking. One word: hypocrites. We could have put an adjective in before that starting with F*****g!

Well there are several reasons why such a government continues to issue debt – some technical and others ideological.

First, in technical sense, when there are deficits bank reserves are growing and banks will try to get rid of these reserves by lending them on the overnight interbank market. The competition for funds drives the interest rate down to whatever support rate the central bank pays on overnight reserves. The problem is that the banks cannot eliminate the system-wide reserve surplus created by the deficits. If the system is left alone the central bank will lose control of its target interest rate. There are two things the government can do to retain control over its monetary policy stance. It can offer an interest-bearing asset in place of the reserves – that is, sell the banks government bonds (that is, “borrow”) or it can pay the target interest rate on overnight reserves. The second option is currently being used in the US for example.

Second, the overwhelming sentiment of the business community and the conservative nature of our political system (and its participants) leads to a largely anti-government swell of opinion which is continually reinforced by the media – the “debt-deficit hysterics”. The neo-liberal expression of this over the last three decades has overwhelmingly imposed massive political restrictions on the ability of the government to use its fiscal policy powers under a fiat monetary system to ensure we have full employment. We now accept very high unemployment and underemployment rates as a more or less permanent feature of our economic lives because of the political constraints imposed on government.

So while there was a major shift in history after the collapse of Bretton Woods, the logic that applied in the fixed exchange rate-convertibility days is still being imposed despite the economic fact that it does not apply in the fiat currency era.

The neo-liberal macroeconomic reasoning that you read about in the newspapers is really the sort of reasoning that prevailed in the days prior to fiat currency. The shift in history renders most of the textbook economics outdated and wrong, in terms of how they depict the operations of the fiat monetary system.

In Australia, for example (which is a common experience), even though after the Bretton Woods system collapsed, the Australian government was no longer revenue-constrained, it actually tightened the self-constraints on spending – to satisfy the growing neo-liberal policy influence – by changing the system of debt issuance (from a tap to auction) and insisting that all the net spending be fully covered by debt issuance in the private markets. Please read this blog – The problem of being a macro economist – for more on that.

The reason they did this was to place “further fiscal discipline” (in their own words) on government spending. They knew there was no fiscal constraint and they knew the electorate could easily be duped into the “government debt is bad and choking our kids” hysteria – the more prosaic expression of classical liberalism. These changes occurred as the neo-liberals began to dominate policy and were overseeing cut backs in government and rising unemployment.

This blog – Will we really pay higher interest rates? – provides some historical perspective on this tightening noose that the Government voluntary chokes itself (politically) with.

So all this industry surrounding public debt-issuance – the banks that get involved in the sale of the debt – the commentators who whip themselves up into a frenzy over it – the economists who swan around the world telling us about sovereign default risk – the future traders who profit from using the debt as a risk-free benchmark to price their own products – and the rest of it – is all built on an ideological obsession that government is bad and private markets are good.

Imagine if the government saw through all the smokescreens and announced they were no longer issuing debt and would just continue to credit bank accounts as necessary to support full employment? The neo-liberals would scream inflation … but would soon run out of steam with that line of attack.

Further, given how much of our wealth has been lost by private markets operating in a self-regulating environment in recent years I cannot believe we still hold onto these prejudices.

So Sloterdijk’s debtor state concept is a pure outcome of neo-liberalism – the political ideology that he espouses. As is the obsession with taxation as a “funding source” for governments.

Yes, taxation raises revenue for national governments but doesn’t fund its spending. All taxation does in an operational sense is reduce the spending capacity of the non-government sector to ensure that there is non-inflationary space for government to deliver public services.

Further there is no functional equivalence between taxation and socialist expropriation. The latter is a concept that socialist states use to justify not paying their workers the full value of the daily product they create. So it is just like the capitalist wage form except the socialists would say the surplus is being used to advance the welfare of all rather than just the rich.

As an aside, when I was a postgraduate student some Soviet economists visited Monash University and were talking about socialist expropriation. I asked them the question: was a worker who rose in the cold of the dark morning and went to the factory all day for a low wage any better off in a socialist state as one who did the same in a capitalist state. They replied that the worker in the former gets a social wage on top of his/her actual wage whereas in the latter situation the social wage is always suppressed. I didn’t live in their system so I cannot comment about the validity of this conclusion. But that is the theory. If you think about it for workers who make capital goods to be able to consume, the workers in the consumption goods sector have to create surpluses for expropriation – irrespective of who owns the means of production or organises the same.

Anyway, in a democratic system, each generation can choose its own tax burden. They can decide whether to have low or high taxes and correspondingly, less or more public goods and services. Please don’t think that the former (taxes) provide the funding for the latter. That would be a totally incorrect understanding of the way the monetary system functions.

The trade-off is in terms of available real resources that can be utilised by the non-government and government sectors without inflation. Clearly, by raising taxes, the government is gaining access to more underutilised real resources than if the private sector has greater spending capacity. Economic theory – Modern Monetary Theory (MMT) or mainstream theory – can say nothing about what option is socially desirable. These are entirely political choices yet if you read mainstream macroeconomic textbooks you will get a barrage of “small government is best” argument.

These arguments are just ideological statements dressed up with graphs or maths to deceive the students into thinking they are theoretically-based and hence have a “greater” authority.

Sloterdijk then moves into his main agenda – his desire to rid the nations of unproductive bludgers. But in a twist of classical liberal thinking it is not the nobility that are is targets but rather the most disadvantaged people in our societies.

Here is his contention:

… each year, modern states claim half the economic proceeds of their productive classes and pass them on to tax collectors, and yet these productive classes do not attempt to remedy their situation with the most obvious reaction: an antitax civil rebellion. This submissiveness is a political tour de force that would have made a king’s finance minister swoon.

This claim is without foundation. It is fairly time consuming getting up to date statistics that are consistent on these sorts of statistics for each country. The OECD compiles this sort of data and you can see the sort of proportions as at 2003 HERE. The Forbes magazine took the trouble to compile tax and government spending ratios as a per cent of GDP for the OECD in 2004 which you can view here HERE.

The following graph shows the tax and spending burdens as a per cent of GDP for 2004 ranked right to left by size of tax burden. Not the average is tax ratio is 43 per cent of GDP and the government spending ratio is 49 per cent. This figure is biased upwards by a small number of nations, all of which enjoy high quality public infrastructure and services and high per capita incomes. If you exclude these OECD countries (Sweden, Denmark, Norway, Finland, France, Austria and Italy) the average tax ratio falls to 34 per cent and the government spending ratio falls to 42 per cent for the remainder (the vast majority) of the nations.

But the argument is based on false notions which I will come back to later.

Sloterdijk considers the bloated public sectors mean:

… we do not live in a capitalist system but under a form of semi-socialism that Europeans tactfully refer to as a “social market economy.” The grasping hand of government releases its takings mainly for the ostensible public interest, funding Sisyphean tasks in the name of “social justice. Thus, the direct and selfish exploitation of a feudal era has been transformed in the modern age into a juridically constrained and almost disinterested state kleptocracy.

Sisyphus was the cat who upset Zeus and for his sins had to roll a large rock up a steep incline which was impossible and it would always tumble down again. Sisyphean tasks are relentless and ineffective tasks.

Critics of public sector activity always eventually come back to the claim that it is leaf-raking and boondoggling – meaning it is a wasteful, unproductive endeavour.

I just love it when publicly-funded academics such as Sloterdijk – who is the Rector at the Staatliche Hochschule für Gestaltung Karlsruhe (HfG) (State College of Design) – argue that state spending is entirely wasteful and the product of “kleptocracy” and put pressure on governments to reduce the “welfare state” yet retire with comfortably generous state pensions and enjoy very satisfactory working environments along the way.

I won’t get into the wasteful – real job/unreal job – debate that is implied here. I consider this question in great detail this blog – Boondoggling and leaf-raking …. Suffice to say it is without question that the state provides services and infrastructure which enhance our welfare generally and provide private profit seekers with structure to leverage off.

As an aside, the largest unproductive sector is the financial sector. Yet they are grasping an ever increasing share of real GDP (of which they produce hardly any proportion) and when they overstep they then put their hands out for public assistance. Sloterdijk would be better targeting these distributional drains rather than implying the most disadvantaged citizens are bludging off the rest.

The state as our agent has the economies available to provide public infrastructure etc which exceed the sum of our individual capacities.

Further, how are we to understand the relationship between government and non-government outside of the emotional hyperbole presented by Sloterdijk? As noted above each generation chooses its own tax levels and the extent of receipt of government services – that is, in systems where their is a functional polity with elections.

But where do the funds that we use to pay taxes come from? The national government is the issuer of the currency. It is not “our” currency which we get stolen and in return we get government services justified as helping us. We cannot pay our taxes until the government spends. That is an essential insight into the fiat monetary system that MMT provides.

We are being hoodwinked into believing otherwise.

Further without a monetary system you are back in the dark ages with barter exchanges. Once you introduce a monetary system and have cross-border transactions then you have to have government. It might be a small government footprint – which would be a political choice – but it will be a sovereign currency issuing government nonetheless. You can have perversions of a free fiat currency system – such as the EMU – but you can trace the same sorts of monetary operations within that system – with perverse impacts on member nations being the result of the flawed construction.

One could also argue that the introduction of a tax in the first place is oppressive. It all depends on how you define oppression. It is oppressive to have red lights at intersections and fine people who disobey them. But the benefits of safety and relative certainty on the roads easily offsets this invasion of our liberties. It is all about judgements we make about the “efficiency” of living together.

It is far better to have people by and large traversing intersections safely and freely moving to their desired destinations than having continual road carnage and death.

In questions like this we could have private or public operators of the intersections. The public good nature of such infrastructure means that it is unsuitable for private profit making. So even mainstream economic theory sees a role for public provision when there are such externalities as they call them.

More generally, a sophisticated civilised society learns to embrace broader constructions of human interrelationships than those prescribed by exchange relations emanating from market places. The private free market cannot embrace these sophistications because they cannot be priced. That is another reason we desire government provision and allow the government to command real resources that are in the private sector and to use them in their socio-economic program. Taxation is the way this public capacity to utilise real resources for greater good emerges.

As an aside, I note that many commentators on my blog use terminology like “if we had an MMT government”. I really enjoy the interchanges that occur within the comments although I find it hard to find time to respond as fully as I might. But using this sort of terminology means the person does not really understand that most countries already have modern monetary systems in the sense that the operations of the system as as described by MMT. Their policy choices within that operational reality might not accord with what I would do should ever be given the fiscal and monetary policy reins but that is another question. The US, Australia, Japan, the UK and hundreds of other nations are MMT governments!

Sloterdijk then gets to his essential point:

Free-market authors have also shown how the current situation turns the traditional meaning of exploitation upside down. In an earlier day, the rich lived at the expense of the poor, directly and unequivocally; in a modern economy, unproductive citizens increasingly live at the expense of productive ones-though in an equivocal way, since they are told, and believe, that they are disadvantaged and deserve more still. Today, in fact, a good half of the population of every modern nation is made up of people with little or no income, who are exempt from taxes and live, to a large extent, off the other half of the population, which pays taxes.

Got that crew! The poor are living on the rich!

The idea is that governments have created welfare states which provide unsustainable benefits to the poor and marginalised at the expense of those who are materially successful.

So who are we talking about? The children live of the efforts of their parents. No doubt. Sloterdijk would approve of this because he favours a purely private welfare system where generosity would see the rich give to the poor.

Further, older folks who no longer work clearly command real resources that they have not themselves produced. No doubt. The sick and in-firmed, the mentally ill and the disabled all who cannot work clearly command real resources that they have not themselves produced. No doubt. Sloterdijk is appalled by the fact we choose to support these cohorts.

And … the marginalised are the least powerful in political processes whereas the materially successful are typically the cohorts with the most political leverage. So why do they vote in governments that do this?

Part of a move towards civilisation is that we can afford this “generosity” to our fellow citizens who have worked in the past or will work in the future or who will and can never work. We see a social value and purpose in people beyond a person’s immediate daily production.

But, moreover, none of these people are being funded by taxation. The government could reduce taxation considerably and still provide adequate state pensions to university academics (some of them who lead the charge against pensions to the lowest income workers) and everybody else; and still provision public schools and hospitals and provide aged care for those without independent means.

Sloterdijk clearly doesn’t understand how the monetary system operates and the way the government transacts within it. The reason they will not reduce taxes to the levels the Austrian School would like is that there would be rampant inflation because nominal demand growth would exceed the real capacity of the economy to absorb it.

So Sloterdijk would retort – okay stop public spending. Fine, many nations have low public spending ratios (see graph above) But they also have different public provision. Whether that is better or worse is a political question and the debate would reflect our respective value systems.

I actually prefer to drive to work or ride by bike along public roads and across public bridges without having to negotiate an access fee at each intersection with a private provider.

I prefer being able to go down the beach and not have to pay access fees to get into the surf. I prefer to know that the vast bulk of the children in our world receive education and a future because of public education provision that does not sort people by an access fee. And so on. I understand others have different views on these matters. But it is not a matter that any economic theory can decide.

If we go back in history and think about the way the “deserving poor” were dealt with by the private market – in poor houses which were nothing more than penal servitude then I think I prefer a publicly-provided safety net every time. To me the poor have more “freedom” under this system than they had during the period I refer to.

Finally, I often pose the question when I am giving public presentations and it is this: How are we to judge the performance of the state? My answer is: Not how rich it makes the rich but how rich it makes the poor!

I have seen no credible research that suggests that private rates of return in nations that have larger public sectors are lower than otherwise. But I have seen a lot of credible research that shows that reduced inequality in income distributions is a positive fillip to economic growth rather than the other way round. Nations that impoverish vast masses of their population waste the greatest potential they have – the capacity to work and achieve.

The major issue I have with government spending is the large chunk that goes to corporate welfare. They never complain when that happens. When the US government announced a huge increase in financial support to the banks we heard no complaints at all from this lobby.

And finally, after all this political posturing dressed up as philosophy, Sloterdijk offers his last policy advice:

At present, the main danger to the future of the system involves the growing indebtedness of states intoxicated by Keynesianism. Discreetly and ineluctably, we are heading toward a situation in which debtors will once again dispossess their creditors-as has so often happened in the history of taxation, from the era of the pharaohs to the monetary reforms of the twentieth century. What is new is the gargantuan scale of public debt. Mortgaging, insolvency, monetary reform, or inflation-no matter, the next great expropriations are under way. Today, the state’s grasping hand even reaches into the pockets of generations unborn. We have already written the title of the next chapter of our history: “The pillage of the future by the present.

Intoxicated = drunk. The subdued fiscal reactions by the vast majority of our national governments to the largest crisis in 80 years did not look like the behaviour of a drunken sailor to me. The reason the crisis has dragged on for so long and the damage will be correspondingly higher for longer is because governments didn’t expand early enough nor in sufficient scale to be more effective.

And the next generation will be better off because of this modest fiscal intervention (after years of neo-liberal neglect of public space) than they would have been without it. Already significant cohorts in the population will bear the scars of this recession because the policy response has been so marginal. But given there was a response and it has prevented a global depression then the number of people bearing scars is less and the severity of the pain lower than would be the case otherwise.

We will see in the coming years how much inflation and how high taxes go. But at any rate, these changes will have no real relationship with the fiscal policy interventions at present. Inflation may rise if energy prices increase or if aggregate demand is pushed beyond the real capacity of the economy. At present it will not be driven to this point by the scale of the fiscal interventions.

Taxes might rise if there is inflation and the government makes a political choice to hold the public/private mix in real GDP constant. But they won’t rise to fund any debt paybacks.

A sovereign government never has a problem paying its debt on maturity or servicing it in between times. It is just another act of government spending. So it doesn’t need to inflate away its debt or raise taxes.

A lawyer in Los Angeles who understands

I came across this article yesterday (April 6, 2010) – An everyday tale of how the extremely rich are different – which carried the sub-title “Frank and Jamie McCourt … accused each other of cheating”.

So that might seem a bit lurid for a blog about MMT and other more mundane issues. But there was a deep message carried within the article.

Superficially, the story is about two rich characters Frank and Jamie (his estranged wife) who own or perhaps own the “one of America’s most famous baseball teams … the Los Angeles Dodgers”. Frank definitely owns them but Jamie also thinks she owns them too. Anyway, Frank and Jamie don’t get along any more and there is a huge divorce battle going on where Jamie wants Frank to pay her $US988,845 a month “in spousal support to maintain her existing lifestyle” plus several million more for other things plus “unlimited travel expenses, 24-hour security at her homes and flowers in her office”. If that wasn’t enough there were more demands that I don’t care to mention. Part of the dispute is about who owns the baseball team.

Now Frank disputes all this and his lawyer cast them both as “a financially irresponsible couple living well beyond their means”. Then he said:

These people have lived their lives with borrowed money. They have to stop spending. This isn’t the federal government

The lawyer also noted that Jamie has two adjoining Malibu homes – one to live in and the other “to do her laundry”.

Anyway, focus on the quote – “these people have lived their lives with borrowed money. They have to stop spending. This isn’t the federal government”.

So at least one person in Los Angeles understands the difference between a household who is the user of the currency and is always financially constrained and cannot keep borrowing forever and the national government which is sovereign in the currency as the monopoly issuer and can spend as much as chooses up until the goods and services available are exhausted without any financial constraints.

Conclusion

My band is playing tonight so …

That is enough for today!

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This Post Has 67 Comments

  1. Dear Bill,

    I am glad you brought back to life the capital measurement controversy, long forgotten by many but very relevant. I will wait to read your thesis on the topic so I can comment on my views.

  2. “anarchism called for the total death of the state.”

    Anarchism also called for the total death of capitalism as well…

    “Behind these two movements was a hope typical of the European nineteenth century: that man’s plunder of man would soon come to an end.”

    Except that the anarchists included the exploitation of labour by private property (“Property is theft!”).

    Trying to ignore that anarchism is a form of socialism (libertarian socialism) IS quite disgraceful — or suggests an utter ignorance of what anarchism actually stands for. Anarchism is that form of socialism based on (to again quote Proudhon) “the denial of Government and of Property.” We are well aware what classical liberalism (to quote Proudhon again) was something to oppose:

    “Political economy, as taught by MM. Say, Rossi, Blanqui, Wolovski, Chevalier, etc., is only the economy of the property-owners, and its application to society inevitably and organically gives birth to misery.”

  3. Craziness is endemic today. Alan Greenspan blames crisis on fall of Berlin Wall, Fannie and Freddie. You see, the increased competition in the free market led to the expansion of subprime mortgages, which were securitized by people the Fed had no control over, and these securities were sold en masse to Fannie and Freddie because the government forced them to buy them. Alan: I had nothing whatsoever to do with it. Got that?

  4. 1. ” We cannot pay our taxes until the government spends”. The CB can also lend financial intermediaries and finance reserves in exchange for private assets (i.e., mortgages) and foreign currency.

    2. What is reality? Reality is our reactions to occurences that includes impressions. It is not what is ideally possible if we are restrained either by involuntary and/or voluntary constraints. A Political Economy Theory must incorporate not only what can be done but what is also feasible as conditioned by the circumstances! Operating under illusions and inertia and motivated by “windows” of complexity must be accomodated by our forecasts and reactions otherwise we will be syrprised and our theory will be wrong!

    3. Public fiscal policy must face the fact that is captured by private units leading to corporate welfare, corruption and inefficiency as incentives of interest and speculative motivation dominate public duty and purpose. Only a crisis can bring a regime switch and weaken capitalist market domination and allow community solidarity and common duty to guide public policy that targets public purpose and welfare. The emphasis can be away from capital proprietary relations and towards civilization common relations.

  5. The argument I like to use on the Sloterdijks of this world runs as follows.

    1. You want the state to protect your property and personal rights, yes?
    2. And you want the state to do it as efficiently as possible, so as to impose the least burden on you, yes?
    3. Well, if the poor are starving and homeless they tend to get antsy, even revolutionary.
    4. Keeping them down by force is incredibly expensive, and not very effective in the long run.
    5. So in fact, keeping them at a certain level of comfort is the cheapest way of protecting your property rights.

    Unless they are willing to take their position all the way to genocide, this tends to get some traction. I mean, it’s nonsense (how do you measure productivity anyway when the market can only measure effective demand?) but it gets under their essentially psychopathic selfishness.

    Personally I might be interested in trying a world where they gave up their property rights and we gave up our transfer payments. But that isn’t usually what they have in mind.

  6. I’ve always been puzzled by the conundrum….if we’re all on the same team, who is the opposition? (Not that ‘single party’ politics is any more attractive.)

    Anything that restricts your choices is by definition counterproductive (especially if it forces you to act against your own interests.)
    Um, often choices aren’t what you would like them to be and worse, right and wrong are not always crystal clear (something the damn opposition seizes upon at every opportunity!)

    Austrians, Randites and Libertarians are all cut from the same cloth. How can these people preach freedom by advocating for a world where nothing and no one is free, a world were the ‘common good’ doesn’t exist? A world where you can’t venture a single step beyond your own property without paying for the privilege of access…worse, a world where each ‘operator’ is free to boost you for whatever they feel like charging you and you only have three choices…stay put, pay up or kill’ em. There is no ‘government’ to complain to.

    Short version…how long do you think it would be before there were dead bodies as far as the eye could see? This is what ‘Libertarian paradise’ looks like, a place better know as Somalia (where it is not uncommon to be charged for ‘shade’.)

    How about something ‘really different’? What if the law (rules we all agree to live by) were beyond the reach of…er, legislators?

    Instead of ‘voting’ for politicians who ignore you the moment they win election, we should vote directly on the laws. Here’s the really crazy part…our ‘leaders’ (who are no longer legislators) WOULD HAVE TO OBEY THE LAWS TOO!

    Nah, too far out…people would never go for it! Forget I even brought it up.

  7. Bill Mitchell: “As an aside, I note that many commentators on my blog use terminology like “if we had an MMT government”. I really enjoy the interchanges that occur within the comments although I find it hard to find time to respond as fully as I might. But using this sort of terminology means the person does not really understand that most countries already have modern monetary systems in the sense that the operations of the system as as described by MMT. Their policy choices within that operational reality might not accord with what I would do should ever be given the fiscal and monetary policy reins but that is another question. The US, Australia, Japan, the UK and hundreds of other nations are MMT governments!”

    Do any of these governments realize that?

  8. Ooh, I’d love to read a billy blog capital controversy post or two.pri

    Yes, of course many countries have a fiat currency system with flexible exchange rates – that is one part of a “government” – the operational structure. But someone has to pull the levers on the machine. And if the actual presidents, prime ministers, representatives, MPs, and ministers do not even think to consider the possibility that different policies might be possible under a fiat currency system with flexible exchange rates, than under an exchangeable currency system with fixed exchange rates, then you can’t really call it an “MMT government.”

    Terming the simple existence of MMT operational structure by itself as an “MMT Goverment” when the people running the government are not actually even aware of – much less making good use of – its operational features is like referring to a supercomputer that is being used as a doorstop – because its operators do not know what it is or how to actually use it – a “fine example of modern technological prowess.”

  9. Why not prove this MMT works for the poor. How would you improve the plight of South Africa’s poor.
    South Africa is a good case to work on as it has good governance and a workable public service to deliver services.
    South Africa has wonderful hard working men trying to improve the lot of their children. SA best resorce is its 50 million people. They want to work. If you where the Gov what would you do right now.
    If you have not been to SA do go. Its full of Dads trying their best. Just like the rest of us.
    If you can answer this you are keeping it real, for real people.

  10. People voting for the laws is easier said than done, even if they desired it. Some of the issues are just too complex to conceptualise and then arrive at the best outcome.

  11. Thank you for your efforts on this blog Bill.

    “The trade-off is in terms of available real resources that can be utilised by the non-government and government sectors without inflation. Clearly, by raising taxes, the government is gaining access to more underutilised real resources than if the private sector has greater spending capacity.”

    I don’t understand this. If you asked me a question on it, I would have guessed that government could gain more access to underutilised real resources via spending whereas taxes would reduce non-government access to real resources that are already in use. Is’nt it the case that outcome of real resources being utilised or not depends on people perceiving a benefit to employing them as much as being able to finance them?

  12. “People voting for the laws is easier said than done, even if they desired it. Some of the issues are just too complex to conceptualise and then arrive at the best outcome.”

    It would still be nice to try. As Gegner points out it aint working out too well the current way.

    Gegner

    Interesting points about Libertarians and their ideas about a “free” society. (Free to the OWNERS) Personally Im right tired of the libertarians/Randians.
    They have parents raise them, teachers teach them, policeman protect them, courts that keep their daily life civil and millions of other people before them have built everything they dwell in on a daily basis and then they have the nerve to say “I’m a self made man” ……..Sheeeeeeeesh!

    I think we ought to find a place (a nice place even) where we can send all the self made men to make it on their own. A sort of Survivor episode for keeps. Get those sociopaths out of our hair so we can get on with dealing with the rest of society and its ills. (Maybe the ills would go away once they left……. I’d like to test the theory anyway)

  13. Hello Professor,

    I enjoy your blog very much. You say:

    Under the fiat monetary system from 1971, national governments became sovereign in their own currency which means that they were no longer revenue-constrained. They can spend however much they like subject to there being real goods and services available for sale.

    Can you explain why France’s large Keynesian stimulus in 1981/1982 under Mitterrand failed?
    Was it because they refused to devalue the overvalued Franc in 1981? Was it bad timing given there was a global recession?

    Regards,
    Andrew

  14. Dear Bill,

    Something Sloterdij would find puzzling (paraphrasing a friend): “Without dignity peace is not possible; without peace, prosperity is never assured” which set me thinking about supply and demand. In the context not so much of what people want – but rather what we actually need – like the demand for food and water for instance, like the love that a child needs to thrive in a family home.

    Being more of a visual type, watching Britain from Above on ABC1 this week was absolutely mind blowing, as millions of people transited and communicated over the entire country, goods were shifted, finances exchanged, an extra 3GW of power supplied as people turned on their kettles after EastEnders – demand and supply for a stressful, unremitting material life, born of desires and concepts, controlled by a relative few – and real people with real needs. I wondered how much peace was in their lives, how prosperous they felt; I looked for dignity in their faces. Going home to get up, until death draws a line through it all …… I wondered what went on in their hearts? And how easily we are led. And of the people who say: ‘There’s got to be something more ….’

    The power of it all brought home to me the power of the ideology that sub-stands it, and the power of malfeasance when that ideology goes wrong. My friend also wonders if the Neanderthals are still not with us, living on in our genes and ruling the world, evident perhaps I speculate in the more primitive of our societal processes. This is such an ancient problem on planet earth. The real criminal I believe (irregardless of their academic credentials) is the one who wilfully deprives any human being of their freedom to realise their potential; or who uses that potential to harm others. People should listen to themselves, to their own needs, long before they listen to the purveyors of caste. In the East there is a temple on every street corner; in the West a financier or ‘expert’ wanting to control my life.

    Thinking a little more, these are inherent demands dignity peace and prosperity, constant from birth to death. There are outer needs; things like thirst, hunger, the desire for shelter and comfort, the desire to express and satisfy our personality. The ‘I’. The dramatic actor on the stage of life: sometimes cruel and full of ambition; sometimes kind and full of generosity Australian Story – Tara Winkler. Then there are the demands of our inner needs …

    One is that people be allowed to live their life with dignity; that no human being is any less endowed with the potential to benefit from the life gifted. We all learn as the years roll by, in our own unique way; and this is by far the true wealth of any human being. Yet we allow others to strip this gift from us. Why do we suffer all of the class nonsense, claims of superiority based on materiality or intellection, that arrogantly treats people as robots and teach of their control, whilst tolerating material deprivation, suffering and infliction as though it is others problem or somehow their fault. Undressed, this is dark cruelty! Our so called educational institutions focus short-sightedly on concrete knowledge instead of lifting their eyes to demand justice; reinforcing, even celebrating as ‘excellence and achievement’ Western caste – psychology apparently more interested in pathology and dumb behaviour than human potential. I don’t think some of these ‘illumini’ would recognise excellence if they fell over it, dazzled as they are by the illusion of their own absolutely worthless robotic radiance.

    Another is that people be allowed to live their lives in peace; the realisation heightened by dire experience and recognition that hatred and greed begets only itself. We already have this simple wisdom, but refuse to enact it. For me, this redefines the word ‘intelligence’. People have always wanted stability and security to raise their families and explore what it means, to be alive. If the upper echelons of our Western caste system valued people as much as they valued their egos and pride, achievements and toys, and were truly the elder brothers and statesmen they delight to portray, then they would have successfully stood up to the bullies in this world long ago and implemented a much fairer society, happier safer and healthier. I think it’s the intelligentsia that are dragging their heels, and need a Renaissance and shot of raw courage. Science and psychology I hope, will find the balls (thats M+F) to lead the way.

    And people need to prosper; to feel and know through their own experience that they are actually unfolding as human beings, that their existence is blossoming, growing – taking full advantage of the one chance at life they have been given. Who will value, or even come to understand the value of a human being and the potential each holds. For me, each is absolutely unique; the outcome of unimaginable years of evolution in a seemingly infinite universe. It took billions of years of planetary evolution to produce the cunning of a Wall Street predator, and we should marvel at the ingenuity of Nature; but this same potential and same powers are at work in a Tara Winkler who dedicates the life given to lifting the burden of some of Cambodia’s children, even if she can help but a few. Which is a flower of this human evolution, and which the one who needs to catch up!

    In the preface to any economic textbook should be written a dedication to ourselves, who are so much more than just an economic or societal unit.

    Sincerely,

    jrbarch

  15. Lucky Punch: How would you improve the plight of South Africa’s poor.

    I’m not an economist, let alone an expert in development, and I don’t know much about SA. But knowing what I do about MMT, I’d likely start with a job guarantee, then add public investment in education, health care, infrastructure, small business lending, and anything else of public purpose that increases productive capacity while improving welfare. The basic organizational principle to use is subsidiarity, which places emphasis on decentralization and local decision-making. Another important principle is solidarity – the spirit of, “We’re all in this together,” instead of, “It’s every man for himself.” I would see this happening from the village level instead of from the capital.

    I would not make having work a necessary condition for receiving compensation under the JG. I would start everyone immediately, sort applicants by aptitude and ability, start providing training as needed, and get everyone doing something useful in the organizational process, on the way to providing the jobs that would eventually come out of it. This process might take some time before the program was up and running and everyone was actually working. But the guaranteed income would spur private investment as well to take advantage of the consumption that would occur.

    Basically, a monetarily sovereign government can fund anything it wishes as long as it maintains a balance between nominal aggregate demand and real output capacity so that inflation doesn’t become an issue. The funding isn’t the problem. It’s marshaling and organizing the resources productively and sustainably in order to promote a developed economy in which everyone who wants to work is gainfully employed and the population has access to the goods and services it demands. The funding is just the grease that removes friction in transactions. The resources are human and real – knowledge and skill, on one hand, and “stuff,” on the other. We tend to think more in terms of stuff, but human resources are more important. So there has to be a lot of focus on developing, maintaining, and increasing human resources.

  16. Dear Lucky Punch

    When we talk about MMT working for the poor I presume you mean fiscal policy initiatives targeting increased opportunities for the disadvantaged.

    You mentioned South Africa:

    South Africa is a good case to work on as it has good governance and a workable public service to deliver services. South Africa has wonderful hard working men trying to improve the lot of their children. SA best resuorce is its 50 million people. They want to work. If you where the Gov what would you do right now.

    I am very familiar with South Africa and recently completed a large ILO contract there as a consultant to their Extended Public Works Program. This work brought me into contact with senior South African government officials etc. The first five years of the program created more than 1 million jobs while the second five year plan which my work helped to influence will create many more jobs than that. I provided analysis to help them improve the reginoal targeting (match jobs with need) and also proposed a minimum wage framework for the program some of which has been built-in to the latest design. I was able to show that the first five years of operation improved well-being considerably by reducing poverty. By providing opportunities for people where labour markets do not work well these job creation programs were very effective.

    The major problem that remains is the scale of poverty and unemployment South Africa, lack of housing and transport infrastructure (to get people from home to work), and the neo-liberal leanings of the government which thinks that running budget surpluses when you have 60 per cent (open or hidden) unemployment rates is good fiscal practice. Who told them that? The IMF! I have had many heated debates with South African officials about this question.

    So in my work I urged them to expand the program and move it away from a supply-side (budget constrained) policy, which severely limited the jobs that could be created (to millions rather than many millions), reduced the duration of those jobs and the pay being offered – to a demand-side Job Guarantee type policy where you provide jobs as required. The second five year plan took a lot of this advice on board and there are more jobs availabe that last longer and pay better. So there is progress but still the neo-liberal leanings of Treasury constrain development signficantly there. It is not a too severe observation to say that the 1994 changes meant was that political apartheid gave way to economic apartheid, which remains.

    best wishes
    bill

  17. I love the reference to Sisyphean task as “relentless and ineffective tasks”- particularly in comparison to Albert Camus’ depiction of Sisyphus as the abusrd hero:

    Cut too wiki:

    “In the last chapter, Camus outlines the legend of Sisyphus who defied the gods and put Death in chains so that no human needed to die. When Death was eventually liberated and it came time for Sisyphus himself to die, he concocted a deceit which let him escape from the underworld. Finally captured, the gods decided on his punishment: for all eternity, he would have to push a rock up a mountain; on the top, the rock rolls down again and Sisyphus has to start over. Camus sees Sisyphus as the absurd hero who lives life to the fullest, hates death and is condemned to a meaningless task.

    Camus presents Sisyphus’s ceaseless and pointless toil as a metaphor for modern lives spent working at futile jobs in factories and offices. “The workman of today works every day in his life at the same tasks, and this fate is no less absurd. But it is tragic only at the rare moments when it becomes conscious.”

    Camus is interested in Sisyphus’ thoughts when marching down the mountain, to start anew. This is the truly tragic moment, when the hero becomes conscious of his wretched condition. He does not have hope, but “[t]here is no fate that cannot be surmounted by scorn.” Acknowledging the truth will conquer it; Sisyphus, just like the absurd man, keeps pushing. Camus claims that when Sisyphus acknowledges the futility of his task and the certainty of his fate, he is freed to realize the absurdity of his situation and to reach a state of contented acceptance. With a nod to the similarly cursed Greek hero Oedipus, Camus concludes that “all is well,” indeed, that “One must imagine Sisyphus happy.”

  18. Anarcho: “Political economy, as taught by MM. Say, Rossi, Blanqui, Wolovski, Chevalier, etc., is only the economy of the property-owners, and its application to society inevitably and organically gives birth to misery.”- Prudhon

    Under classical economics, prosperity of the few results in misery for most. Historically, classical economics arose in opposition to feudalism, that is, domination by the landed aristocracy under aegis of the crown. Classical economics is about the replacement of the rentier class (land owners) with the entrepreneurial class (capitalists). It marks the transition from a predominantly agricultural society/economy to an industrial one.

    Since the 18th century, the historical trend has been toward the dominance of capitalism, which ushered in the industrial “revolution” that supplanted agricultural society and replaced rent with profit as the dominant economic driver. In the West, this was a positive direction historically because the lot of the serfs under feudalism was a lot worse than that of workers under the capitalistic system in that there was a blood barrier that they could not cross; hence, they could never escape their plight.

    However, with the rise of globalism, first, due to discovery, then trade, and finally the development of transportation and communications technology, so-called “primitive” or under-developed cultures and peoples were brought into the world economy. Peruvian economist Hernando De Soto claims that the transition from under-development to a developed (capitalistic) economy is hampered in the Third World by the lack of business and property rights, which were never developed in those societies. This is the transition that is now taking place, with a great deal of resistance from the indigenous peoples, who are being divested of their traditional livelihood and forced into a system that they did not chose to join voluntarily. Here, we are talking about billions of people, so this is no small matter.

    While I am a libertarian of the left and deplore this situation, I am also a Hegelian with respect to the philosophy of history. I think that Hegel got the pattern of historical development essentially correct, even through I don’t agree with all the details. Marx assumed this paradigm, but claimed that Hegel had made a grave error in thinking that spirit was the driving force rather than matter. As a result, while I generally agree with Marx’s analysis in outline, he thought that the transition to anarcho-socialism was going to take place much sooner than could be expected if spirit is the driving force. This was borne out by history, when communism failed not because it was a bad idea – after all, Jesus and the early Christians had lived it – but because collective consciousness was not yet prepared for it. Marx, to a degree, and Lenin much more were influence by the anthropological work of Lewis Morgan on Native American culture. The Native Americans had the collective consciousness but not yet the technology.

    I would say that the world is now going through the period of capitalism, and it still has a way to run before the internal contradictions of its “idea” call forth the next iteration, just as the internal contradictions inherent in the notion of feudalism brought about a transition to capitalism that could not easily be foreseen beforehand, otherwise monarchy and aristocracy would have nipped it in the bud.

    Whatever the next idea to emerge will be, it will be the result of an expansion of collective consciousness to the next stage of human development. This is actually an evolutionary step, since human consciousness and the ideas it supports are structured in brain functioning. However, evolution is not a completely linear process. There are twists and turns and even dead-ends. So predicting the direction it will take in any kind of detail is difficult, especially with respect to one’s own species, which humans cannot stand outside of and examine objectively.

    Nonetheless, there are some indicators that hold out hope that the next iteration is not only unfolding but that it will be a step forward in the development of collective consciousness. A number of spiritual luminaries have predicted the onset of an age of enlightenment and the dawn of a new humanity, based on a greater realization of the integration of spirit and matter, and a conversion of heart. Since neo-liberal capitalism, modeled on positive science, is based on materialism and the pursuit of self-interest as acquisition, it will not persist as collective consciousness expands and becomes more integrated, and another form of economics will arise to supplant it.

    This need not involve a total break with the past, in that the 18th century Enlightenment produced the notion of the political ideal of liberté, égalité, et fraternité. Liberty signifies natural rights, specifically the right of every individual to freedom of thought, expression, and action, exercised within the boundary of not adversely affecting the rights of others. Equality involves the abolition of privilege and institution of justice, with the same standard applied in the same way to all. Fraternity signifies harmonizing individual rights and responsibilities in a community, e.g., through sharing instead of hoarding. These principles apply to all societies, including the family, where parents teach them to their children in relation to their siblings and friends, apply the same standard, are fair, and encourage children to “play nice.” Expansion of consciousness, according to the sages, involves seeing the world as one’s family. Short of this anarcho-socialism is impossible. With it, this is the natural state. “Love and do what you will” – Augustine of Hippo.

    In the Hegelian view, change begins under the surface and rises unseen as a current in the ocean of consciousness. What most people see is only the turbulence of the surface waves. But anyone who has been at sea knows that those waves are huge swells and the froth on the crests is just stirred up by the wind. The wise don’t just look to the surface.

  19. I have nothing to add to the debate, I just wanted to say that there is at least one more person in Los Angeles that gets it. Additionally as a lifelong Dodgers fan the fact that Jamie McCourt can have two houses in Malibu but not spend money to retain their best players is horrible. These people are terrible.

  20. Tom,

    Your idea of communism needs serious rethinking. Jesus was a communist? Communism, from the point of view of religion is a very bad idea, if by communism you mean what you seem to mean–the reality of Soviet Russia and its satellites and the reality of Maoist China. At least they are consequential: Marxist communism is materialist through and through, and is pro-industrialism through and through, and vigorously anti-religious. Life in those countries, for the vast majority was hell–above all for Christians!–and still is very difficult in China, unless you are pro-slave labor de facto. And need one be reminded of the plight of Buddhist Tibet in the tender hands of the Chinese communists? To put the biblical ambience of Christianity side by side with modern communism is simply a grotesque error. As for the French revolution, its immediate result was the Jacobin reign of terror. The world is still in thrall to the optical illusions and false idealisms of the so-called Enlightenment, with its veneer of “caring” and its essential destruction of humanity and all that makes life meaningful and worth living.

  21. Dear Nikhil

    We now have 2 who get it and rising. Soon the whole of the city of angels will be in the MMT grasp!

    As to the Dodgers and their opponents – they just seem like unfit guys to me who throw balls at each other and occassionally charge into each others (quaintly-named) dugouts to have a brawl. On all appearances, a very eccentric past-time! (-:

    best wishes
    bill

  22. Because sovereign governments are no longer revenue-constrained in their currencies, with “no financial restrictions on this capacity”, limited only “if aggregate demand is pushed beyond the real capacity of the economy”, why don’t governments simply anticipate demand and allocate capital as needed to ensure that supply is always ahead of, or at pace with, demand? It seems though that poverty and unemployment should be non-existent by now if “no financial restrictions” is in fact correct.

    I want to believe, or better yet, I want to know that only a perception change is holding back human progress. And I do believe that progress has been severely restricted by the devaluing of human capital due to exploitive and misguided ‘ideologies’ etc. There is something unsettling though about potentially limitless ‘thin air’ wealth that my mind struggles with. When I was a boy I brought up this very subject at the dinner table once, a subject many or maybe even most kids have pondered, and I was given a stern lecture about the pit-falls of Communism, and the importance of hard work, so maybe my parents closed off that part of my brain just a little. But I am trying to open that part of my mind again — yet I am confused by how much suffering and hardship exists if governments have only “the real capacity of the economy” as a limit to what could, and should be done regarding a long list of issues.

    Thanks, Ray L. Love, (Texas)

  23. Dear Ray L Love from Texas

    Welcome to my blog and thanks for the comment which raises very interesting issues.

    I agree that there is a tendency for all of us to eschew simple solutions because we have been taught that things are manifestly complicated. I confronted this point in my work in South Africa recently which was provided the Governmetn with advice on how they could improve the implementation of their large-scale public works program. I was continually being told by government officials and other consultants that the unemployment problem in their country was “manifestly complicated” (quote from one of the senior government officials). This complexity meant that little could be done quickly and that expectations had to be low of any fundamental change.

    When I inquired about the nature of this complexity I was never given a good answer that was based on any evidence or research. I was told “you don’t understand the complexity”. Okay, it is complex because it is complex. The typical conservative answer to defend the status quo which delivers benefits of a wealthy nation to a few. Same all over world (mostly).

    But what you find in South Africa is that when the public works program offers jobs in a region – there are more people wanting them than there are jobs offered. You find the skills required to create public infrastructure in a labour-intensive manner (suitable for the level of development) are quickly acquired and the work performed in a professional way with excellent outcomes. You find that the health and nutrition levels of the families which now has an income improve substantially and the children get toys and start learning better at school (actually go to school!). You find rates of crime and substance abuse are lower.

    So while these problems might be complex to some, as a development economist with experience in several countries now, the solution is fairly basic to me. Strong fiscal support and job creation go a long way to reducing poverty. Sure residual issues persist and need other support programs. But a huge dent in poverty can be made through job creation. And when the private sector won’t do it, then there is only one other sector than cat in this dichotomous world!.

    This doesn’t mean that the teachings of your parents was wrong – although I will exclude the paranoia about Communism from that assessment. But humans do have to “work hard” to create the real goods and services that enhance our material standards of living. For it is the real things rather than the financial things that ultimately deliver this welfare.

    And while there is clearly no financial limit on government spending (national) that shouldn’t be something that worries us at all. It just means that governments have to work hard on harnessing all the real resources that they can and we want them to in order to ensure we can all work hard and enjoy a free life with some material security. Just achieving that via fiscal policy (and other policies) is hard enough. But our governments divert their attention from this task by continually thinking that is the size of the budget deficit that matters – as if it is something that means something independent of the real economy.

    Of-course, they are diverted into this erroneous space because the conservatives have a vested interest in denying the opportunities to share in the real flow of resources to many of our citizens. There is more for the elites this way and they exert political power.

    So be relaxed that your assessment – “progress has been severely restricted by the devaluing of human capital due to exploitive and misguided ‘ideologies’ etc” is a very perceptive observation. The challenge that we face is what do we do about it.

    My little part in the story is to write stuff that helps people see through the financial lies and focus on what the real issues are. Then it is up to them to mobilise and try to change things a bit.

    best wishes
    bill

  24. Jim, you seem to have misunderstood what I meant. What I meant to say is that anarco-socialism requires a high level of consciousness in order to live. Marx was wrong to think that it was possible to institute a society based on this idea by changing the from of government and laws of the state, e.g., regarding property. That’s like wagging a dog’s tail to make him happy. What will likely happen is that instead you will get bitten by making him angry. History has passed its verdict on Marx’s misinterpretation of Hegel.

    What I said was: “This was borne out by history, when communism failed not because it was a bad idea – after all, Jesus and the early Christians had lived it – but because collective consciousness was not yet prepared for it.” It is well established in the New Testament that the early followers of Jesus shared all things in common. Acts 2:44-45 – “All the believers joined together and shared everything in common; they sold their possessions and goods and divided the proceeds among the fellowship according to individual need.” For an extensive list of scriptural quotations, see this link. These people were able to do this because their consciousness was expanded enough to include each other. This is actually an ancient Hebrew idea: “Love your neighbor as yourself.” Leviticus 19-18.

    The idea of anarcho-socialism is ancient. Indigenous people lived in such societies, and some of the world’s most venerable literature is founded on it, such as the Tao Te Ching attribute to Laozi and the writing of Mengzi (Mencius) in China, as well as the New Testament in the West. It is also found in the idea of benevolence central to the work of Kongzi (Confucius) and universal compassion of Mahayana Buddhism.

    Historically, tribal society based on cooperation and sharing the commons rather than competition and acquisition was eclipsed by the idea of property, which is the basis for civilization as we have come to know it. From property came the idea of government as separate from the people, individual ownership that leads to acquisitiveness, accumulation and hoarding, and law based on property rights, etc. These do not exist in nature. They are ideas. These ideas have power for as long people give them power. When people cease to give them power, they lose their power over people minds and as other ideas replace them.

    As consciousness expands, it becomes more inclusive and integrative. Old ideas based on self-interest lose their power as new ideas based on harmony arise (as consciousness unfolds in the direction of the absolute idea, according to Hegel). At this point anarcho-socialism becomes possible because government as enforcer and economics based on utility (self-interest) recedes as people develop more enlightened idea of interest, in which pursuing the good of the whole and pursuing one’s own good come to be seen as integral. This concept has been developed as Theory Z in motivational psychology and applied to management. Alexis de Tocqueville praised the 19th century America he wrote about in Democracy in America (1835) for practicing self-interest rightly understood, so this is at least a proto-idea in the US, even though it seems to have receded lately in mass consciousness. Historical development is not a linear phenomenon.

    There is no way to impose an idea whose time has not come through legislation or any political means. This is why communism failed. I have spoken with a number of people who grew up in communistic societies, and they said that they found the idea inspiring but that it was not being lived in their nations. Many actually looked down on capitalistic society after experiencing it, even here in the US, as somewhat sub-human since it was rich but treated people badly because of selfishness. They are intelligent enough to be able to distinguish between an idea and an expression of it.

    For this idea to supplant the current idea of capitalism (neo-liberalism) and the organization of society based on it, a change in consciousness would need to take place that involves an expansion of not only of the general level of intelligence but also of heart. This idea is central to all the great religions and is found in the Golden Rule, so it is hardly new. It has not yet managed to take hold in civilization, even though it was practiced in so-called primitive cultures and civilized people pay lip-service to it. But material prosperity seems to have eclipsed it as a dominant idea. Humanity is still passing through the phase of fascination with material prosperity, in the mistaken belief that material satisfaction (pleasure) is equatable with happiness. The great wisdom traditions deny this equation, holding that true happiness is not found in that which changes, that is, what comes to be and passes away, but rather in that which does not change. This lesson is still being learned and until is it, anarcho-socialism will remain an ideal that is realized only in limited communities in which what is universal subsumes that which is particular. That which is most particular is, “I,” “me,” and “mine.”

    The is a great difference between anarco-socialiism and totalitarian communism, in that the anarchy prefix signifies the withering away of the state as an enforcer rather than simply an organizer. Marx included this idea as the ideal to be reached subsequent to the dictatorship of the proletariat that would replace government by the bourgeoise after the revolution. However, that was an idea whose time had not yet come and another faction simply seized power and continued the idea of the government as enforcer. This was a historical outcome given conditions, especially the level of collective consciousness. It was not a necessary outcome, and under different circumstances that idea may yet come to pass with much better results. But it won’t happen without an expansion of consciousness globally, which is something that visionaries foresee eventually transpiring.

    This requires a development of the idea of freedom progressing from (1) freedom from constraint to (2) freedom to think, speak and act in accordance with conscience, in the direction of (3) freedom for self-development and self-actualization. Freedom for self-development and self-actualization is necessary to unfold one’s inherent potential as both a human being and an individual, which is the purpose of life.

  25. Dear Bill – if I may:
    __________________________________________
    Dear Tom Hickey,

    A few minutes of video for your enjoyment – crank up the volume!!

    http://www.drivehq.com/folder/p7017281.aspx

    1) mavoh_vo.exe (Photodex presenter video with integral player – celebrating the uniqueness of every human being)

    2) A_New_Dawn.wmv (uptempo rock with quotes from down the ages)

    In appreciation of your comments.

    Sincerely,

    jrbarch

  26. So would it be correct to think that Japan’s debt th GDP of nearly 200%, with no foreign creditors, is of no cost to the national economy, and of no concern?

    And at the risk of being a pest, from what I have read here so far, it seems that the MMT has been around, essentially, since at least the time of JM Keynes. If so, I’m still somewhat befuddled about how something as profound as almost limitless wealth creation, something that would seemingly allow billions of ‘consumers’ to be provided to the corporate gods (cynically put), would take so long to find acceptance. I am not however unaware of how deeply rooted conservatism is, I do of course live in the most backward part of a mostly backward country (I live within ear-shot of Ft. Hood). And, I spent a few months in Nicaragua during the Reagan ‘undermining’ there, so I have a good sense of how stubborn, ruthless, and devious the opposition can be. But, I also know that the opposition is losing support at a rate unprecedented in my 54 year span; so maybe the time for significant progress is drawing near?

    This is a very interesting site. Ray L. Love

  28. “My little part in the story…”

    dear bill,

    this is the first time i have both understood your comment and seriously thought you were very wrong.

    there is nothing “little” about it. many, many thanks for your BIG part.

    selise

  29. Dear Ray L Love

    You asked:

    So would it be correct to think that Japan’s debt th GDP of nearly 200%, with no foreign creditors, is of no cost to the national economy, and of no concern?

    You are totally correct.

    In terms of your second issue you should note that until 1971 national governments were constrained financially because of the exchange rate arrangements and the currrency convertibility that supported them. But after that, governments are entirely capable of exploiting their currency sovereignty without recourse to “funding”.

    And as an aside – Texas has some things going for it – some great blues guitarists come from that part of the world. But I must admit that would not be enough to keep me there!

    best wishes
    bill

  30. Dear Selise

    Thanks very much for your kind comment.

    But I am worried that you agree with me when you don’t understand what I am saying! (-:

    best wishes
    bill

  31. Dear Tom,

    We must not confuse self as a unit manifestation of a set of proprietary attributes/rights persuing interest in a competitive driven market environment with civic as a unit manifestation of a set of common attributes/rights persuing duty in a solidarity driven community environment. The self manifestation is a domain triggered by osmosis and the civic manifestation is a domain triggered by symbiosis of phenomena of occurence and they jointly materialize although in variable mix as my work shows.

  32. Dear Takis,

    Libertarians of the left wish to harmonize the free individual and responsible citizen as an integral person inhabiting a harmonious society and world. Libertarians of the right and neoliberals emphasize the former and utopian socialists, the later. The political dialectic is between those extremes. Many liberals and progressives tend to be confused about this, because their ideas are not clear, so they are often somewhat bipolar.

    These extremes meet is in enlightened self-interest, where one sees self in all.

    “I” is at once completely particular as it relates to an individual, and it is also completely universal in that every individual designates self as “I.” (hat tip to Hegel). Subsuming the particular under the universal and expressing the universal as particulars constitutes an integral process, e.g., reciprocity.

  33. Dear Tom,

    My objection is that the self whether individual or social or universal is a distinct manifestation from the civic individual or social or universal. They are both a joint manifestation of the unit occurence as a joint part series. They are in conflict with each other (contradiction) but with a dominant orientation either as private (market) or public (community) domain conditioned by the regime situation. An enlightened self-interest is still in contradiction with its civic-duty manifestation, an alienation we fight daily. Under a market dominated regime, the self-interest in competition with other interests guides our reactions until a crisis from a major “surprise” weakens this domination and a community oriented approach with solidarity among civic duties expressed by public institutions and agencies can guide our reaction and reality.

  34. Dear Takis,

    This is in accord with the dialectical notion of historical development, in which internal contradictions are the driver of progression. That is why there is no permanent or lasting solution to change, and why the evolution process is the determiner in the scheme of things. Dialectical progression is not necessarily progress. There are mistakes and surprises in addition to successes, in adaptive dynamics.

  35. Dear Tom,

    Adaptive mechanisms of mutation (friction) are only part of static completion mechanisms of adjustment reaction which also include stabilization and regulation from imperfection. There are also dynamic variation mechanisms of recovery and disclosure mechanisms of impression of feedback reaction, subject to fragility and opacity, that forecast reality and lead to occurence surprise. Your emphasis on evolutionary processes is what I am hesitant to accept as reality is more complex that induce entropies, inflections and jumps associated with extreme surprises and crises.

  36. Dear Tom,

    Thanks for the lengthy and thoughtful reply. I don’t think I misunderstood you. There is indeed all the difference in the world between communism as conceived and practiced by the modern industrial totalitarianisms and what you term the anarchic version, as practiced by small groups of people in pre-industrial conditions, or in such religious groups as the Shakers, for example or, for that matter, by any monastery or convent. In any case, it is one thing to speak of economic arrangements among such small homogeneous populations, normally traditionalist in character (by which I mean a tradition that they deem sacred, or of more than human origin and authority), living, as humans normally did, very close to the land and quite simply, and by no means characterizable as “proletarians,” and possible arrangements in relation to the immense and extremely complex urban agglomerations of modern industrial societies, which do comprise enormous numbers of “proletarians,” and which are for the most part very heterogeneous in other respects, and scarcely traditional in outlook. Jesus nowhere advocates a life lived in common, nor does he forbid it. The fact that he and his disciples did so does not institute anything legally or religiously binding in relation to the eventual large collectivities of Christians, nor has any traditional Christian authority ever recommended such a patently impractical notion, except for monasteries and convents. At any rate, my main point was that your phrase, “This was borne out by history, when communism failed not because it was a bad idea – after all, Jesus and the early Christians had lived it – but because collective consciousness was not yet prepared for it.” establishes a kind of equation between “communism” and “mass” societies, and more or less communal arrangements of relatively small pre-industrial groups, and in particular that there is one iota of anything in the Bible that could legitimately be termed “communism.” if by this term you’re going to lump together the ideologies and arrangements of Stalinist Russia, Maoist China, and the teachings of Jesus and his disciples and a millenial Christian tradition, which I find abusive in the extreme, and which overlooks absolutely essential distinctions and conditions.

  37. Dear Jim,

    If your idea of reality prevents you from grasping what I am talking about, I’m afraid there is nothing more to say other than that you are putting words in my mouth and imputing ideas that I am not propounding. I am not blaming you for misunderstanding, however. As I said, ideas are powerful and difficult to disengage from. This is the dialectical challenge that I am describing. Everyone is trapped in an idea of reality (worldview) that they take to be congruent with reality. Human consciousness is not, however, a mirror of reality. It shapes apprehension of reality through ideas, broadly speaking, and these ideas are the manifestation of particular types of brain functioning. Evolution involves sorting out what types of functioning are more adaptive to current challenges.

    Respectfully,
    tom

  38. Dear Takis,

    All human behavior takes place within the framework of nature, which is evolutionary from the biological viewpoint. Each of us is a fish in that ocean, and each of us is also part of a school of fish, so to speak. We have no choice this matter. We are programmed biologically to survive and reproduce ourselves. Natural selection determines which choices were the “right” one under the circumstances. You are describing the circumstances in which all of us find ourselves “thrown,” as Heidegger put it rather trenchantly. We are forced to make those choices. Abstaining from choice is also one of the choices, but sticking one’s head in the sand is seldom a successful strategy, apologies to the ostriches.

    These are the evolutionary challenges that we are forced to meet in the face of uncertainty using the tools at hand, one of the most powerful of which is human intelligence. This is the way that evolutionary biologists look at the world and our place in it. We don’t know where we are going, but we are forced on inexorably by the pressure of time and circumstance. Each of us is pursuing survival individually and through our offspring, strongly influenced by kinship. What most of us are unaware of us is that from the standpoint of evolution this is about the survival of the species in an often hostile environment. At the moment there are plenty of reasons to be concerned.

    Evolutionary biologist David Sloan Wilson is in the process of writing a series of posts on evolution and economics at his blog, Evolution for Everyone. It is very informative from the perspective of an evolutionary biologist in this regard. Here is one thing he says in Economics and Evolution as Different Paradigms X: The Ultimate-Proximate Distinction and Why it Matters that I found pertinent.

    Everything that evolves requires two explanations. First, why does a given trait exist compared to many other traits that could exist (ultimate causation)? Second, what are the physical mechanisms that cause the trait to be expressed (proximate causation)?
    ***
    The ultimate-proximate distinction is so foundational in evolutionary theory that it would be odd indeed if it did not prove to be equally foundational in our efforts to understand and manage human life.

    He illustrates this with citations from Elinor Ostrom, Nobel in Economic Sciences (2009).

  39. Tom,

    I’m one of the Loves from Lovington, New Mexico. I grew up in So. California though. I have lived also in Nevada, Idaho, Oregon, Florida, Hawaii, and now of course — Texas. But I just live here, and this State has very little to do with who I am, and so “Takis” is neither apt or appreciated. Not to suggest that I am deeply offended, but “Takis”… does seem a little smug.

  40. “But I am worried that you agree with me when you don’t understand what I am saying! (-:”

    dear bill,

    no worries. when i don’t understand, of course i can neither agree nor disagree! and besides, not understanding makes me much too preoccupied with trying to understand to even ask myself the question. my only worry is that i may misunderstand… so, lots more reading and thinking is on my “to do” list. just wanted to say thank you and your comment above gave me a good excuse.

    best,
    selise

  41. Dear Tom,

    I object to the views of Wilson and evolutionary biology as an incomplete but respectable description of life processes. It is not a dialectical methodology in the tradition of Plato, Hegel, Marx, etc. It has many important insights such as ultimate/proximate causation but automatic (cause/effect) reaction is not the only experience of reality. It excludes volition(will/discretion) and jump processes in a crisis of surprise.

  43. Dear Takis,

    Of course, evolutionary biology is neither the dialectical methodology of Plato, nor that of Hegel and Marx. I am not asserting that. Scientific method is essentially hypothetico-deductive. There is some similarity among their conclusions with respect to history, however, in that both dialecticians and evolutionists view progression as experimental and ongoing, unfolding the next stage of potential of an organism. On the other hand, Plato, Hegel, and Marx are teleological and deontological, while modern science is not. That is to say, Plato, Hegel, and Marx thought that history is progressing to higher state of humanity, and, moreover, that it ought to. Their philosophies are based on such a presumption.

    I don’t think that evolutionary biology excludes any possible experience in its investigation. If economics can identify something, they it becomes of interest to the biologist and cognitive scientist, whose job involves explanation of all phenomena that comes under the purview of these disciplines. Wilson is somewhat controversial, for example, for including the phenomenon of religion as an evolutionary factor, since he thinks that evolution is inclusive of all experience, and experiences that persist must have an evolutionary value for the species. Certainly, neither evolutionary biology nor cognitive science excludes volition/will/discretion, although some scientists take a reductionist viewpoint and view mental events purely in terms of biological functioning. Wilson is known for being rather liberal in this regard in comparison with extreme reductionists like Dawson, who attack religion as anti-evolutionary, for instance.

    Evolutionary biology is constantly dealing with jump experiences involving surprise. Surprise sure did get those dinosaurs, and many biologists are warning that climate change is going to get us if humanity doesn’t wake up before a cataclysmic event pushes us over the tipping point. Those organisms that are most adaptive in an environment of uncertainty are more likely to survive. Evolution supports flexibility rather than rigidity, as long as flexibility does not produce weakness. Other things being equal, the organism with the fastest reaction time wins.

    But the issue that Wilson brings up that I find interesting is whether economics is consilient with the life sciences – evolutionary biology, cognitive science, anthropology, sociology, political science, etc. – or relatively independent of them. Wilson views mainstream economists as modeling their discipline on the physical sciences rather than the life sciences, for example, in their preoccupation with mathematical modeling based on assumptions that often do not accord with observation.

  44. Dear Tom,

    1.Dialectical methodology as a way of understanding reality is not progessive but seeks the contradictions that bring change, obviously to states that are free of the previous contradicitions.
    2. The principle of volition is not incorporated in evolutionary thinking which is basically a horizontal adjustment of segment allocation (with some reservation for the punctuation model) and vibration and is rather based on vertical automation (cause/effect) whether is called natural selection via environmental change or ultimate/proximate causation.
    3. Surprise is not strictly some random walk or even jump effect but the non-monotonic and reversible reaction to occurence which if it is discovered alters the life process of occurence as a leap forward or even backward. This has nothing to do with some accident that affects in a jump fashion the rate of occurence/reaction of particular species.
    4. I agree with Wilson regarding economics and mathematical models since mathematics is only another language with an imprecise and contradictory logic as Wittgenstein showed in “Tractatus Logicophilophicus”.

  45. Re: “Plato… thought that history is progressing to higher state of humanity”
    Plato’s thought is rather a prolongation of the Pythagoreans. Like all Indo-European traditions, they held to the idea of the 4 ages of the human cycle, beginning with the golden age and ending with the iron age. It is a devolution, not an evolution, rather as with the Plaot’s view of the stages of government which end in tyranny.

    “Their philosophies are based on such a presumption.”

    Plato’s thought is most certainly not based on that presumption. His thought is based squarely on a doctrine that sees the To Agathon at the summit of the ontological pyramid, and which sees the cosmos as the refracted projection of the divine “Ideas,” which would expressly rule out evolution. Evolution is what the entire modern outlook is based on, but not Platonism, which envisages causality–cosmogenesis– in a “vertical” sense while evolution projects it “horizontally” into the past.

  46. Re: “Everyone is trapped in an idea of reality (worldview) that they take to be congruent with reality.”

    Presumably you are an exception, since you seem to be able to take note of the situation, and thus in some sense escape it. Your idea amounts to a relativism that digs a grave for the intelligence.

  47. Causality or automation principle is vertical and not horizontal and volition(will/discretion) is horizontal. How does evolution allocates or deals with vibration?

  48. Henry, the allegory of the cave in The Republic is an example of the progression of knowledge from illusion to wisdom on the part of individuals. Plato’s view is essentially on all fours that of the Vedic tradition, which holds a cyclical view of time and a progressive view of individual knowledge that culminates in absolute knowledge. This is reflected in Buddha’s wheel and escape from the wheel.

    Please let me be clear that I certainly make no claim to have realized absolute knowledge. Like everyone else that has not realized absolute knowledge, I am trapped in my own idea, which is admittedly limited and incomplete. Hegel’s philosophy, which asserted the absolute idea as metaphysical principle, is not realization of that idea, nor is any theological, philosophical or religious idea as an understanding of ordinary mind.

    Is knowledge therefore necessarily relative? Perhaps not. Some have claimed to have realized absolute knowledge, for example:

    There cannot be anything hidden from the One who is everywhere present, for He is everywhere. And it naturally follows that when there cannot be anything hidden from this One He must also be All-Knowing, knowing everything.

    The infinite-Knowing is ‘seeing’ everything at one and the same time, and seeing it NOW. It is that Knowledge which does not begin and does not end; which is indivisible and continuous, and to which nothing can be added and from which nothing can be subtracted.
    It is that Knowledge which makes God at this moment know that which He knew when it occurred countless aeons ago, and makes Him know that which will occur countless aeons hence; that Knowledge which makes everything known to God simultaneously and NOW. It is the Knowledge of the Perfect Masters and the Avatar.

    In terms simpler to you it means that which you as individuals know at this moment I knew aeons ago, and what you individuals in ages to come will be knowing at a particular moment, I know now.

    Meher Baba, The Everything and the Nothing, 33, Myrtle Beach, SC: Sheriar Foundation, 2003, p. 58

  49. 1.Dialectical methodology as a way of understanding reality is not progessive but seeks the contradictions that bring change, obviously to states that are free of the previous contradictions.

    There are two types of dialectical reasoning that are somewhat different. The first is the Socratic, which is the essence of the give and take of oppositional debate of issues. The outcome is a progression toward greater knowledge.

    The second is the Hegelian, which is the logical and phenomenological investigation of the development of the idea, which Hegel set forth respectively in the Logic and the Phenomenology of Mind also translated as Phenomenology of Spirit (Geist). There is controversy over what Hegel’s method was. My view is this: For Hegel, the idea is a metaphysical principle that mediates between knowledge and reality. Science in Hegel’s sense is the progression of grasping the idea, so that knowledge incorporates more and more of reality.

    For example, the body is an idea. It is instantiated by many individual bodies. At first, the idea of the body was limited largely to the outer appearance, and not much was known about the inner workings. Biology developed knowledge of the body, in terms of structure and function. Anatomy provided a rather gross idea of the body. Later came an understanding of the working of the organs and how they related to each other and the organism. The human genome is a very refined development of the idea that extends to the molecular level. Event this is not a complete idea of the body, since knowledge is not complete (comprehensive).

    Knowledge of the idea is always progressing as one stage yields to another when it proves insufficient. Each of these steps in the progression of knowledge about the idea was called forth by the insufficiency of previous knowledge to account for observed facts. The methodology of modern science is quite compatible with Hegel’s concept of dialectical reasoning. For example, in The Structure of Scientific Revolutions, Thomas Kuhn developed the notion of contradictions arising in the pursuit of normal science under one paradigm that result in a scientific revolution that involves paradigm change. The development of the idea involves overturning the idea, not necessarily by discovering it to be wrong but by showing it to be incomplete.

    Hegel’s view of history involves the idea filling itself in as it progresses to completeness in the correspondence of knowledge and reality in the absolute idea. This is definitely a progression of knowledge. Marx reversed this to make matter and history paramount, dismissing the importance of mind and metaphysics as essentially irrelevant to life. He viewed the dialectical progression as being from deficient expressions of social organization toward an ideal society that honored the equality of persons, not as a metaphysical idea but as a socio-economic reality.

    2. The principle of volition is not incorporated in evolutionary thinking which is basically a horizontal adjustment of segment allocation (with some reservation for the punctuation model) and vibration and is rather based on vertical automation (cause/effect) whether is called natural selection via environmental change or ultimate/proximate causation.

    “The evolutionary origins of volition by Wayne Christensen” In D. Ross, D. Spurrett, H. Kincaid, D. Ross & L. Stephens (Eds.), Distributed Cognition and the Will: Individual Volition and Social Context, pp. 255-287. MIT Press, 2007.

    3. Surprise is not strictly some random walk or even jump effect but the non-monotonic and reversible reaction to occurence which if it is discovered alters the life process of occurence as a leap forward or even backward. This has nothing to do with some accident that affects in a jump fashion the rate of occurence/reaction of particular species.

    I would simplify this and say rather that surprise results from lack of knowledge, either the known unknown or the unknown unknown. It’s what makes life an adventure. 🙂

  50. Correction: in my April 11, 2010 at 1:59, I should have written (Richard) Dawkins, not Dawson. Apologies to Prof. Dawkins, and sorry for any confusion.

  51. Dear Tom,

    Reality is our reaction based on our ‘knowledge” which is incomplete (as you say) by definition. Thus knowledge is not a progression that incorporates reality but reality of what we do is the outcome of knowledge.

    Regarding the discovery process of surprise is not a strictly an evolutionary progression which you insist of stressing. Understanding the mysteries of the “body” occurence creates a different reality depending on whay we thing we know (ideas) which changes as we get surprised from the gap or contradictions between we realize and what is as the two are non-monotonic, they are not inverse of each other. I am trying to avoid bringing Plato, Hegel, Kuhn, etc., in the conversation because I am not analyzing their work but I am only explaining my position.

    Regarding the lack of knowledge or uncertainty as the source of the surprise as my work shows there are more factors that bound the forecast which is displayed as reality.

    The problem with theoretical knowledge derived from surprise or evidence, is that we think it is but not exactly what it is. Any occurence cannot see itself directly but only in a “mirror”. What is “ideal” is not real because if it was it would not exist and cancel out as the reaction will cover the action. Its the journey that exists not the origin and the destination points because at the origin or the destination the journey does not exist. This is the Pythagorean theorem! If the journey Ulysses makes is to exist, he leaves and never returns, to make the poet (Kavafi) right!

  52. Dear Takis,

    What I am saying is that the idea for most humans contains the idea of progression because it is evolutionary. It is “religious,” if one wishes to call it that. Must humans project an idea of reality that includes progression otherwise life would be absurd for them, going nowhere, “waiting for “Godot,” “a tale full of sound and fury signifying nothing.” For the same reason, humans project the idea as having structure, meaning, value, and purpose. None of these things exist as such in nature, which is simply occurrence – what happens.

    Moreover, humans do not know directly (immediately) but only mediately. Human beings project their idea as individuals but they do it through culture and society. People who were abandoned at an early age and grew up in the forest are found to be essentially animals. Without an idea of “reality” and language to express it in thought and speech, reality is bare occurrence received as sense data and processed rather minimally by comparison. This is the role of the idea, which is chiefly the product of the human cortex, yet is influenced by many other aspects of brain functioning that extend back through the course of evolution.

    I am not insisting that there “is” anything. As far as I am concerned, we don’t know what there “is” other than through ideas, which are the tools through which we think we know what is. Looking back through the course of history, we see that most previous ideas have been supplanted as “primitive”, and we regard that as progression. In fact, most people think that their own idea is the most advanced yet developed, and some even think that it is eternal Truth.

    What I am insisting on is that ideas are important because they are the way we structure what we take to be “reality” for consciousness (intelligence), in consciousness, and by consciousness (νοῦς). Through the idea, the subjective pole of consciousness comes in contact with itself through its object as the objective pole to yield knowledge. We are led to conclude that this process is not comprehensive through surprise. We are surprised when our idea of reality is contradicted by occurrence (reality). Owing to such contradictions, we adjust the idea. This we regard as progress, in the belief that we are getting closer to “reality.” That is an assumption because we can only know phenomena (appearance), and the data too complex to gather, much less process. We don’t even live in a simultaneous universe, despite appearances.

    Marx saw Darwin as important in establishing the historical basis for evolution and ending the teleological explanation at the basis of the theology being used politically. Marx realized that economics is basic to formulation of an idea of reality capable of directing life in more evolutionary way by empowering the instruments of production; hence, his view that economic ideas are directly relevant to evolutionary adaptation (link). I have argued that “the invisible hand” is essentially a theological concept deriving from 18th century Deism, an idea under which humanity is still laboring. “There is no invisible hand.” (Joseph Stiglitz). As far as the theology of neoliberalism is concerned, he may as well as have said, “There is no god.” Without this, neoliberalism crumbles as an idea revealed to be an idol with clay feet.

    Regarding the lack of knowledge or uncertainty as the source of the surprise as my work shows there are more factors that bound the forecast which is displayed as reality.

    The problem with theoretical knowledge derived from surprise or evidence, is that we think it is but not exactly what it is. Any occurence cannot see itself directly but only in a “mirror”. What is “ideal” is not real because if it was it would not exist and cancel out as the reaction will cover the action. Its the journey that exists not the origin and the destination points because at the origin or the destination the journey does not exist. This is the Pythagorean theorem! If the journey Ulysses makes is to exist, he leaves and never returns, to make the poet (Kavafi) right!

    I would agree.

    ITHACA

    When you set out on your journey to Ithaca, pray that the road is long, full of adventure, full of knowledge. The Lestrygonians and the Cyclops, the angry Poseidon – do not fear them: You will never find such as these on your path, if your thoughts remain lofty, if a fine emotion touches your spirit and your body. The Lestrygonians and the Cyclops, the fierce Poseidon you will never encounter, if you do not carry them within your soul, if your soul does not set them up before you.

    Pray that the road is long. That the summer mornings are many, when, with such pleasure, with such joy you will enter ports seen for the first time; stop at Phoenician markets, and purchase fine merchandise, mother-of-pearl and coral, amber and ebony, and sensual perfumes of all kinds, as many sensual perfumes as you can; visit many Egyptian cities, to learn and learn from scholars.

    Always keep Ithaca in your mind. To arrive there is your ultimate goal. But do not hurry the voyage at all. It is better to let it last for many years; and to anchor at the island when you are old, rich with all you have gained on the way, not expecting that Ithaca will offer you riches.

    Ithaca has given you the beautiful voyage. Without her you would have never set out on the road. She has nothing more to give you. And if you find her poor, Ithaca has not deceived you. Wise as you have become, with so much experience, you must already have understood what Ithacas mean.
    -Kavafi

  53. Dear Tom,

    I think we are getting somewhere! I thank for your exchange that helps my process of discovery that makes me a live occurence,

    A point of clarification for my position. Reality is not a monotonic expression or reversion of occurence. They are not copies of each other. What we obseve is a reality that is based on our reaction to occurence itself and the reaction includes the observation. We are not only progressing or regressing an “idea” of occurence, as occurence is not its reaction that we see as real. To put it differently the “idea” or presentation of impression of the message we process from surprise, is only one component of reaction which is bounded by the entropy of illusion. The rest of factors of reaction are feedback terms of occurence to itself as phenomena processed by recovery to the impact of surprise and unit of occurence responses as behavior attempting to adjust. These terms are bounded by imperfection, friction (that brings mutation and adaptation) and complexity that induces entropies of reduction and inertia. The result is reality that is different from occurence and of course occurence is surprised. This surprise impacts as a catalyst upon occurence that brings variation of occurence leading to a new reaction and reality. Life occurences emerge after many trials because they have the capacity to discover surprise by learning and instruction to induce recurrence of life occurence itself and its reaction as reality. Occurence is forced to ‘invent” (inflection) life because it needs to discover the ideas you talk about or unlock the mysteries of surprise. Without the adventure of discovery, the inclusion of mind to nature, life has no meaning to exist!

  54. Dear Takis,

    I would just add this to what you say here. Aquinas observed that knowledge is in accordance with the mode of the knower. Maharishi Mahesh Yogi, commenting on Rig Veda, put it similarly: Knowledge is structured in consciousness, knowledge is different in different states of consciousness, and reality appears differently in different states of consciousness. What this means is that in modes of consciousness that are relative instead of absolute, reality appears relative to that type of consciousness and its limitations.

    Our knowledge of reality, which is represented through the “idea,” which Wittgenstein called a worldview ]Weltbildung] in Philosophical Investigations, is a construct arising from many factors that can be traced through language and cognition to biology, hence, to evolution. Homo sapiens sapientis is an evolutionary experiment that is ongoing. Humanity is part of nature and is part of nature’s way of coming to know itself and also shape itself through the evolutionary development of consciousness.

    Consciousness is not simply a mirror of reality, as naive realism supposes. Scientific research has borne this out in terms of the operation of the senses, nervous system, and brain. What each of us calls “reality” is a mental construct – “idea” – based on many factors. The degree to which an idea is congruent with experience reveals the degree to which it is an adequate one. Human being are continually adjusting their ideas based on surprise, for example.

    History reveals that surprise is not necessarily enough to bring about a change in entrenched ideas, however. Counter-explanations are devised, especially by those who are heavily invested in the particular idea. As Kuhn observed, even in science a paradigm shift does not occur until the anomalies become too great to address ad hoc. Moreover, a paradigm shift requires a new way of seeing, and as Karl Popper observed in The Logic of Scientific Discovery, no logical method has yet been devised to produce an intuitive leap. As Richard Feynman said of Einstein’s discovery of relativity, “I don’t see how he thought of it.” Such discoveries themselves are surprises, because there is no way to anticipate them.

    While there is a forward thrust in the process of development, there is also a drag on it. Radicals rush out ahead toward future promise, while reactionaries nostalgically hold fast to the past. Conservatives caution against the adoption of untested innovation too quickly for safety’s sake, while liberal caution against moving too slowly to take advantage of promising opportunity in fear of losing it. Social change involves a dialectic among these competing forces.

    What ramifications does this have for economics today? Todays we see conservatives clinging to 18th century classical ideas, Smith’s “invisible hand” metaphor that is central to his work only in the sense that it occurs only once in The Wealth of Nations in the middle of the book and amplifying it into the central dogma of neoliberalism, e.g., REH (Lucas) and EMH (Fama). Barro updated Ricardo in his notion of Ricardian Equivalence, and Laffer did the same for Say by turning Say’s Law into supply side economics, to which the Treasury View and Real Business Cycle Theory can be traced. The prevailing idea in economics – neoliberalism – is built from building blocks like these. This idea is also defined by what it excludes – Marx, Keynes, etc., and anything else that threatens investment in the status quo, where capital is considered to be the dominant factor of production, which other factors must therefore serve as subsidiary.

    The idea of neoliberalism defines the prevailing worldview and dominant universe of discourse in mainstream economics. This idea is accepted as “reality,” and anyone who questions it is marginalized as “fringe,” Even the surprise created by the present crisis has not been enough to shake the current paradigm, let alone falsify it, other than at the margins of power and influence.

    In the Hegelian sense, the idea of neoliberalism typifies the prevailing socio-economic and political Zeitgeist. It is an idea to which the world has given power through agreement. That idea must run its course and for a new idea to replace it, the time must come. Come it will, for change is of the nature of things, but what, when, and how are unpredictable.

    Everyone with skin in the game is a participant in this process of change wittingly or unwittingly, either has a drag on change for as a force for change. Moreover, everyone on the planet is also a player in the game to some degree, because it is public agreement that determines the acceptance and power of ideas. Even ideas that are demonstrably wrong can still have power through agreement. Through such agreement – consciously intentional or not – humanity chooses its present state and future course.

    Bill began this post by considering the economic implications of a philosophical view. My point is that all views are subsidiary to a single idea, that of a worldview. Every worldview is bounded by norms that include, exclude, and prioritize. The notion that economics is simply gathering and processing data in terms of models that represent “reality” is naive in the extreme. Economic thinking does not exist independently of the rest of life.

    Neoliberalism strives to scale up microeconomics into macroeconomics, and in doing so find government to be an inconvenience. Therefore, better to just eliminate it from economic thinking by isolating it from economic activity as much as possible. Is this an evolutionary accident, or a bourgeois plot? Examine the investment aka follow the money. Where is the line dividing excusable ignorance, willful ignorance, and disingenuousness?

    Truth seekers are guided by their pursuit of truth, and moralists by their insistence on what is right. Those who see life as an evolutionary experiment wait to see what nature deems fit. Are these mutually exclusive? No. As participants in the game of life, we make our choices and commit ourselves to them. When Ulysses sets sail or the knight enters the forest in the myth, he is going on a noble adventure, not off on a boondoggle. Life is a process of self-discovery. And that involves the elements of risk and surprise. There are no guarantees. It’s what we can make of it individually and together as we pursue the horizon.

  55. Dear Tom,

    I thought we were coming to a consensus but we are drifting apart. As a point of observation I must repeat that my purpose in this debate is not to engage in a history of thought exercise but to present my own opinions based on my framework of analysis in order to be consistent which means they are incomplete (impossibility Theorem).

    Again, you seem to be fixed on knowledge and evolution as the main sources of reality to put it simply. You also seem to focus on the concept of a”world view” as the foundation of implications which contradicts the catalyst of surprise and indicates that we are part of a plan, a Hegelian problem. Based on this worldview is hard to think of different realities which means that there are no debates taking place as if we all agree on reality which obviously is not correct.

    As tools of discussion I must point out the distinction between nature and mind, The nature of occurence is construction of entity for a unit as an incomplete series of its parts and its adjustment during reaction which is praxis of object. A life form of occurence has a mind which is estimation of identity for the unit and its adjustment which is decision of subject. It takes a mind of a unit of occurence to have knowledge via cognition, as it identifies itself through life trials and errors and not only a nature of this unit whose construction structure via design occurs jointly. Reality is not strictly the reaction of a mental process of an idea but also a natural process through the reaction of praxis, as well as the feedback of surprise impact via recovery and impression of information.

    As for the issue of being congruent with experience this seems to me as a circular statement because experience is reality except that is not the same with the occurence that prompted it, and is not the same for everyone. You do not statically adjust to surprise but surprise impacts upon your occurence, as a catalyst seeking a dynamic reaction and its reality.

    Regarding the paradigm shift this comes from discovery of the mysteries of surprise, this is something first discussed in my opinion by Aristotle via learning disposition and instuction. Invention from the discovery mechanism is an inflection of logic which is limited by reasoning criteria of continuous adjustment that cannot lead to discovery of surprise. It takes a regime switch to do so, meaning a transformation of occurence into something else. For example, physical reality is different as the occurence paradigm upon it reacts is not the same. Its a different universe that we “observe” not because we are surprised ex post but its occurence is different thing (after discovery) as well (Uncertainty Principle). So the point of Popper is not in contradiction with my position but rather it validates my dialectical and dynamic view of discovery. It is the surprise impact that, after a number of trials of occurence, can bring discovery as an invention as long as the mind is there (life form) and capable (human intelligence) to attempt it.

    I am glad you agree on reversion(progression/regression) towards a mean in a horizontal allocation mode but there is also a synthesis(thesis/antithesis) towards a stasis in a vertical generation mode, in order to complete this aspect of the dialectical process. Again I discuss this in my framework if you look it up.

    As far as the surprise in the present economic reality, as I have commented before in this blog, it requires outliers of crisis for a regime switch to occur as it happened in the 30s with the New Deal program and the Keynesian paradigm. Furthermore, the rise in Monetarism during the 70s was the result of an accumulation of crises including the abandonment of the Gold Standard and the severe stagflation cases that was followed by high inflation.

  56. Dear Takis,

    As you say, “As a point of observation I must repeat that my purpose in this debate is not to engage in a history of thought exercise but to present my own opinions based on my framework of analysis in order to be consistent which means they are incomplete (impossibility Theorem).” That is an idea that is in competition with other ideas in the theater of evolution that nature operates according to principles that are only dimly visible to us at present.

    We may agree on certain things and disagree with others, or we may persuade each other to modify our ideas. That’s what debate is about and it is part of the evolutionary process. That’s where Socratic dialectic fits in. We are acquiescing to that by participating in it.

  58. Dear Tom,

    I assume you understand that my framework is not reality but an incomplete tool that I use to understand reality. Regarding Wilson, I am familiar with his work and his blog. I do have a hard time undestanding how evolutionary theory is consistent with the dialectical method. I must agree that some evolutionary theorists attempt to incorporate volition and dialectics in their analysis tbut this does not mean that the evolutionary framework is consistent with them. Furthermore, notice that my framework icorporates adaptation as one of several processes of adjustment but not the only one.

    To simplify my position, a unit occurence is described by a construction of entity and an identification process of identity (knowledge) which is incomplete because of imperfection and friction. Reality is the reaction to this occurence and consists of a response (behavior) of what we decide and what we do which can be excessive due to complexity. Furthermore, this reaction includes recovery and impression phenomena that impact upon the occurence induced by coincidences subject to inertia and illusion. The outcome is a reaction that differs from the occurence and this gap is surprise that if it is realized it becomes an impact that brings a reaction of recovery and impression. The process begins all over again. So, reality is not knowledge of occurence but the reaction to it. Notice that realization of surprise does not mean discovery of surprise which requires a mind for the occurence that only life forms have. The mind if present, operates with identification and adjusts with decision, excessive or not.

  59. Dear Takis,

    I do have a hard time undestanding how evolutionary theory is consistent with the dialectical method. I must agree that some evolutionary theorists attempt to incorporate volition and dialectics in their analysis tbut this does not mean that the evolutionary framework is consistent with them.

    Competition for individual and kinship group survival entails progress of a species through natural selection. The evolutionary process at sub-human levels involves competition among individuals and kinship groups that drives natural selection. At the human level, where ideas come into play, the competition also involves natural selection among ideas in terms of their fitness for species survival and progress.

    I am not saying that there was any direct connection between Hegel and Darwin. Hegel died a quarter of a century before the publication of The Origin of Species in 1859. He was familiar with Lamarck though and rejected his theory.

    I see a similarity between the experimental process that nature uses in natural selection and the experimental process of dialectic, for example, when contrasted with categorical reasoning. It’s progress through elimination of unfitness in the direction of greater fitness instead of arrival at a final destination, e.g., truth.

    This pretty well characterized scientific method, as well, which is essentially pragmatic, operating through falsification and Ockham’s razor. Scientific hypotheses survive experiments, for example. Experiments don’t confirm hypotheses. In changing environments, everything is tentative. The idea is always in the process of becoming more complete. That’s dialectical in contrast to categorical.

  60. Dear Tom,

    The evolutionary process and the dialectical process are not the same. The first involves a “debate” of relations, ideas, etc., to reveal the fittest via competition of alternatives to survive which is then selected as the winner. The second is a “debate” of the above that reveals the opposites via contradiction that leads into a synthesis such as occurence its reaction and their relation that needs surprise to complete them and impact this relation into a new “debate”

  61. Dear Takis,

    I am not asserting that the natural evolutionary process and the dialectical process are the same. I am saying, with Sloan Wilson, that it would be surprising if we did not find similar principles at work across the spectrum of evolution, of which humanity is a part. The process of natural evolution is based in genetics, whereas dialectical reasoning is based on ideas. However, cognitive science is now demonstrating the biological basis for intelligence, too, showing how ideas are connected with brain functioning.

    Intelligence is one of the principal ways that complex organisms exhibit fitness in adapting to changing circumstance, and human beings do this through ideas. Some ideas are more fit than others, and humanity as devised ways to identify those ideas, including dialectical reasoning and scientific methodology. As a result societies that based themselves on such methods were able to prevail in competition vis-a-vis other societies, e.g., those based on mythology or rigid ideology. It is, of course individual human beings that compete, but in the purview of history, the individuals are lost, other than for “the great men,” and what remains is the ideas involved. But those ideas are connected with biological functioning through the basis of intelligence in the nervous system.

    BTW, Hegel used “thesis, antithesis, synthesis” on once, in reference to Kant. His concept of dialectic was somewhat different. There are many forms of dialectic, and to characterize dialectic as thesis, antithesis, synthesis is overly narrow.

  62. Dear Tom,

    There is no limit that restricts the dialectical method to be applied for the analysis of biological processes. The point is that the natural selection method used in the evolutionary framework is different than the dialectical method (summarized by thesis/antithesis/synthesis) used in a Platonic/Hegelian/Marxist framework and similarly in my framework which also uses adaptation as a process induced by friction but not limited to that. It is not correct to use these general methods as limited only to biological,cognitive, material and/or social processes. They are only methods, tools of analysis.

  63. Tom,

    I think your reply to Jim was very unsatisfactory. Besides, your argument could easily apply to your possible misunderstanding. In both your replies–to Jim and to Henry–you seem to slide over the depth of their replies. In any case, I thoroughly agree with Jim on the abusive juxtaposition of communism that you undertake, and find your explanation of why you do so equally to be, frankly philosophical nonsense.

    Let’s also look at two salient facts: collectivism in fact (notably Russia and China) hardly has an idealistic background. It is a nothing less than a brutal program of preliminary destruction in view of a what could be termed a diabolical outcome. What is in question is hardly the common good, but the violent imposition of atheism on the one hand (a thoroughly secular, materialist philosophy–and this really is a crucial point), and on the other, will to power (as Mao said, “power comes from the barrel of a gun). “By their fruits you shall know them”: Lenin, Stalin, Mao, and the rest of the sorry galaxy of communistic “leaders” are to a man psychopathic individuals capable of mass murder without any qualms. So communism or collectivism is not about what they say it is about–namely communist or collectivist “ideals”–it is about instituting a small group–the Party–at the helm, and reducing humanity to an ant heap. The reductionist philosophy makes it possible to employ any means at all to further this end, which is touted as an ideal, but which in reality is simply the putting in power the worst of men and the reduction of humanity to “the masses.” None of this has anything whatsoever to do with what any of the world religions teach. As the Koran says, “Had We willed, we

    The same basic trends continue, of course, in the thrust towards globalization. The core of the matter, which is the destruction of the human being and the transfer of power to fundamentally criminal and totalitarian elements. In all domains, we see the dissolution of norms and principles and the establishing of a situation of confusion, chaos, destabilization. This destruction is perfectly intentional, and prepares the way for the “new world order.” If it pleases you, see it as a wonderful Hegelian and evolutionary synthesis, as a racheting up of “consciousness.” I see it as a coming horror.

  64. Dear Franklin,

    I do not comment on conspiracy theories.

    Respectfully,
    tom

  65. Tom,

    Very interesting series of rejoinders. Tom, I think you do not comment when it gets uncomfortable for you. In particular, historical facts–not “conspiracy theories”–seem to make you uncomfortable. Perhaps the atrocities of the Russians and Chinese are conspiracy theories to you; they were very real to those who suffered them. One has to have a little courage and face facts. Here is another fact: how many people risked their lives to escape from West Berlin into East Berline? How many people risked their lives to try to escape from East Berlin to West Berlin? And the same holds true for the Chinese and the Tibetans, etc., etc. Stick to MMT, Tom. You’re comfortable there, and you’re good at it.

  66. Jon, I’m referring to “New World Order” conspiracy theory in the last para . I don’t do that stuff. I don’t disagree that there are matters involved in many conspiracy theories that have a basis meriting investigation in light of evidence, and they are discussed in other venues in that light. There are other venues that deal with conspiracy theories as such. They are of no interest to me.

    As far as the charge that my position either condones or overlooks the atrocities of either institutional religion or totalitarian ideologies in the past, I reject that categorically. That is not what I am asserting or implying in any way. Admittedly, some forms of institutional religion have led to inquisition and oppression and certain socio-economic theories have led to totalitarian statism. This simply provides evidence that ideas can be hijacked, as market capitalism and representative democracy have been hijacked by special interests at the expense of billions of lives globally. Market-based economics and liberal democracy are still good ideas nonetheless. The deficiency needs to be addressed instead of condemning the idea in its entirety.

    Good ideas are not always well executed and can even be perverted into their opposite, as ideas of Jesus, Marx and many others have been historically. Intelligent people condemn these perversions without confusing them with the original intention of the ideas, which was the greater good.

    Finally, in the case of Jesus and Marx, Marx simply proposed that the wealthy lose their property in the interest of distributional justice. Jesus asserted that they risked eternal damnation for their moral transgression against justice. Jesus was far more severe here. And anyone who has read Hebrew scripture realizes that a lot went down then that would be considered reprehensible under today’s standards.

  67. Re: Good ideas are not always well executed and can even be perverted into their opposite, as ideas of Jesus, Marx and many others have been historically.

    Yes, so what? Your point is both banal and evident. Christianity has also produced a galaxy of saints, sacred art, and so on, in common with the other world religions. Ideas have consequences. Marxism and dialectical materialism have consequences. It is well known that “corruptio optimia pessima.” That does not support your relativism.

    One point you consistently sidestep with sophistries is that you falsely equate the ideas of communism and those of the Gospel.

    Regarding the “new world order,” it is not necessarily ‘conspiracy.’ It also an avowed program which is far from kept secret. And itis a simple fact that the labels are put on by the organizations themselves. For example, the First, Second, and Third Internationals. See the Wikipedia article, on Proletarian Internationalism:

    “Proletarian internationalism, sometimes referred to as international socialism, is a marxist social class concept based on the view that capitalism is now a global system, and therefore the working class must act as a global class if it is to defeat it. Workers should struggle in solidarity with their fellow workers in other countries on the basis of a common class interest.

    Proletarian internationalism is closely linked to Marxist goals of world revolution, to be achieved through successive or simultaneous communist revolutions in all nations. Marxist theory is that world revolution would lead to world communism, and later still, stateless communism.[1][2]

    Marxists regard proletarian internationalism as the antonym of bourgeois nationalism but the term has been subjected to different interpretations by various currents of marxist thought.”

    New World Order:

    “We are grateful to the Washington Post, The New York Times, Time Magazine and other great publications whose directors have attended our meetings and respected their promises of discretion for almost forty years. It would have been impossible for us to develop our plan for the world if we had been subjected to the lights of publicity during those years. But, the world is now more sophisticated and prepared to march towards a world government. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national auto-determination practiced in past centuries.”
    David Rockefeller Baden-Baden, Germany 1991

    “Rarely have Americans lived through so much change, in so many ways, in so short a time. Quietly, but with gathering force, the ground has shifted beneath our feet as we have moved into an Information Age, a global economy, a truly new world.”
    President William Clinton State of the Union Address 1998

    “We must all be profoundly grateful for the magnificent achievements of our forbearers in this century. Yet perhaps in the daily press of events, in the clash of controversy, we don’t see our own time for what it truly is – a new dawn for America.”
    President William Clinton State of the Union Address 1999

    “…all of us here at the policy-making level have had experience with directives…from the White House…. The substance of them is that we shall use our grant-making power so as to alter our life in the United States that we can be comfortably merged with the Soviet Union.”
    H. Rowan Gaither, Jr., President – Ford Foundation
    (as told to Norman Dodd, Congressional Reese Commission 1954)

    “What we’re talking about is creating new forms of life on the basis of new values.”
    Mikhail Gorbachev From Red to Green Audubon magazine 1994

    “I am a Communist, a convinced Communist! For some that may be a fantasy. But to me it is my main goal.”
    Mikhail Gorbachev New York Times 1989

    “The Soviet strategy of ‘perestroika’ must be exposed because it is deceptive, aggressive and dangerous. Gorbachev and ‘glastnost’ have failed to reveal that ‘perestroika’ is a world-wide political assault against the Western democracies…. It must be revealed that ‘perestroika’ is … not just Soviet domestic renewal but a strategy for ‘restructuring’ the whole world…. Gorbachev’s renunciation of ideological orthodoxy is not sincere or lasting, but a tactical manoeuvre in the cause of the strategy. The Soviets are not striving for genuine, lasting accommodation with the Western democracies but for the final world victory of Communism…”
    Anatoliy Golitsyn The Perestroika Deception 1990 hammer+sickle”In this sense, the theory of the Communists may be summed up in the single sentence: Abolition of private property.”
    Karl Marx and Frederich Engels The Communist Manifesto 1888 edition

    “1. Abolition of property in land and application of all rents of land to public purposes.”
    “3. Abolition of all right of inheritance.”
    “7. Extension of factories and instruments of production owned by the State; the bringing into cultivation of waste-lands, and the improvement of the soil generally in accordance with a common plan.”
    Karl Marx and Frederich Engels The Communist Manifesto 1888 edition

    “The Party seeks power entirely for its own sake. We are not interested in the good of others; we are interested solely in power. Not wealth or luxury or long life or happiness; only power, pure power….Power is not a means; it is an end. One does not establish a dictatorship in order to safeguard a revolution; one makes the revolution in order to establish the dictatorship….
    If you want a picture of the future, imagine a boot stamping on a human face – forever.”
    O’Brien to Winston
    George Orwell 1984 1949

    “For two centuries we’ve done the hard work of freedom. And tonight we lead the world in facing down a threat to decency and humanity. What is at stake is more than one small country, it is a big idea – a new world order, where diverse nations are drawn together in common cause to achieve the universal aspirations of mankind: peace and security, freedom, and the rule of law. Such is a world worthy of our struggle, and worthy of our children’s future.”
    President George Bush State of the Union Address 1991

    “If we do not follow the dictates of our inner moral compass and stand up for human life, then his lawlessness will threaten the peace and democracy of the emerging new world order we now see, this long dreamed-of vision we’ve all worked toward for so long.”

    President George Bush (January 1991)

    “But it became clear as time went on that in Mr. Bush’s mind the New World Order was founded on a convergence of goals and interests between the U.S. and the Soviet Union, so strong and permanent that they would work as a team through the U.N. Security Council.”

    Excerpt from A. M. Rosenthal, in The New York Times (January 1991)

    “We will succeed in the Gulf. And when we do, the world community will have sent an enduring warning to any dictator or despot, present or future, who contemplates outlaw aggression. The world can therefore seize this opportunity to fufill the long-held promise of a new world order – where brutality will go unrewarded, and aggression will meet collective resistance.”
    President George Bush State of the Union Address 1991 hammer+sickle”We must establish a new world order based on justice, on equity, and on peace.”
    Fidel Castro United Nations 1979

    “We are moving toward a new world order, the world of communism. We shall never turn off that road.”
    Mikhail Gorbachev 1987

    “To achieve world government, it is necessary to remove from the minds of men their individualism, loyalty to family traditions, national patriotism, and religious dogmas.” – Brock Adams, Director UN Health Organization
    “We are not going to achieve a New World Order without paying for it in blood as well as in words and money.” – Arthur Schlesinger Jr., ‘The CFR Journal Foreign Affairs’, August 1975.

    “A world government can intervene militarily in the internal affairs of any nation when it disapproves of their activities.” – Kofi Annan, U.N. Secretary General

    “Today, America would be outraged if U.N. troops entered Los Angeles to restore order [referring to the 1991 LA Riot]. Tomorrow they will be grateful! This is especially true if they were told that there were an outside threat from beyond [i.e., an “extraterrestrial” invasion], whether real or *promulgated* [emphasis mine], that threatened our very existence. It is then that all peoples of the world will plead to deliver them from this evil. The one thing every man fears is the unknown. When presented with this *scenario*, individual rights will be willingly relinquished for the guarantee of their well-being granted to them by the World Government.”
    Henry Kissinger–1991

    “In the next century, nations as we know it will be obsolete; all states will recognize a single, global authority. National sovereignty wasn’t such a great idea after all.”

    Strobe Talbot, President Clinton’s Deputy Secretary of State, as quoted in Time, July 20th, l992.

    “We shall have world government whether or not you like it, by conquest or consent.”

    Statement by Council on Foreign Relations (CFR) member James Warburg to The Senate Foreign Relations Committee on February 17th, l950

    “The Trilateral Commission is intended to be the vehicle for multinational consolidation of the commercial and banking interests by seizing control of the political government of the United States. The Trilateral Commission represents a skillful, coordinated effort to seize control and consolidate the four centers of power political, monetary, intellectual and ecclesiastical. What the Trilateral Commission intends is to create a worldwide economic power superior to the political governments of the nationstates involved. As managers and creators of the system ,they will rule the future.”

    U.S. Senator Barry Goldwater in his l964 book: With No Apologies.

    “The powers of financial capitalism had another far reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements, arrived at in frequent private meetings and conferences. The apex of the system was the Bank for International Settlements in Basle, Switzerland, a private bank owned and controlled by the worlds’ central banks which were themselves private corporations. The growth of financial capitalism made possible a centralization of world economic control and use of this power for the direct benefit of financiers and the indirect injury of all other economic groups.”

    Tragedy and Hope: A History of The World in Our Time (Macmillan Company, 1966,) Professor Carroll Quigley of Georgetown University.

    Not since the inauguration of president John F Kennedy half a century ago has a new administration come into office with such a reservoir of expectations. It is unprecedented that all the principal actors on the world stage are avowing their desire to undertake the transformations imposed on them by the world crisis in collaboration with the United States.

    The extraordinary impact of the President-elect on the imagination of humanity is an important element in shaping a new world order. But it defines an opportunity, not a policy. The ultimate challenge is to shape the common concern of most countries and all major ones regarding the economic crisis, together with a common fear of jihadist terrorism, into a strategy reinforced by the realisation that the new issues like proliferation, energy and climate change permit no national or regional solution.

    Henry Kissinger–2009

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