An optimistic view of worker power

I am close to finishing the manuscript for my next book (with co-author, Italian journalist Thomas Fazi) which traces the way the Left fell prey to what we call the globalisation myth and formed the view that the state has become powerless (or severely constrained) in the face of the transnational movements of goods and services and capital flows. Social democratic politicians frequently opine that national economic policy must be acceptable to the global financial markets and, as a result, champion right-wing policies that compromise the well-being of their citizens. In Part 3 of the book, which we are now completing, we aim to present a ‘Progressive Manifesto’ to guide policy design and policy choices for progressive governments. We also hope that the ‘Manifesto’ will empower community groups by demonstrating that the TINA mantra, where these alleged goals of the amorphous global financial markets are prioritised over real goals like full employment, renewable energy and revitalised manufacturing sectors is bereft and a range of policy options, now taboo in this neo-liberal world are available. In today’s blog I discuss trade unions and strategies available for workers.

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Is there a case for a basic income guarantee – Part 1

This is Part 1 in my mini-series on my version of the debate between employment guarantees and income guarantees. An earlier post rightfully belongs in the series as Part 0 – Work is important for human well-being. This discussion will form part of the Part 3 of my next book (with co-author, Italian journalist Thomas Fazi) which traces the way the Left fell prey to what we call the globalisation myth and started to believe that the state had withered and was powerless in the face of the transnational movements of goods and services and capital flows. Accordingly, social democratic politicians frequently opine that national economic policy must be acceptable to the global financial markets and compromise the well-being of their citizens as a result. In Part 3 of the book, which we are now completing, we aim to present a ‘Progressive Manifesto’ to guide policy design and policy choices for progressive governments. We also hope that the ‘Manifesto’ will empower community groups by demonstrating that the TINA mantra, where these alleged goals of the amorphous global financial markets are prioritised over real goals like full employment, renewable energy and revitalised manufacturing sectors is bereft and a range of policy options, now taboo in this neo-liberal world, are available. Wherever one turns these days, a so-called progressive pops up with a megaphone (conceptual) shouting that a basic income guarantee is the panacea for all manner of evil – starting back some years ago with unemployment and moving more recently, as that rationale was exposed, to the need to counter the expected ravages of the second machine age. As regular readers will know I am a leading advocate for employment guarantees. I consider basic income proposals to represent a surrender to the neo-liberal forces – an acceptance of the inevitability of mass unemployment. Further, the robot argument doesn’t cut it. Anyway, in Part 1 – Work is important for human well-being – I considered the need to broaden the definition of productive work. I also emphasised the importance of an on-going availability of work for human well-being. In Part 2, we sketch the arguments that have been advanced to justify the basic income proposal and find them inconsistent, illogical and deficient.

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Work is important for human well-being

I am now in Kansas City for the next several days, so blogs might come at odd times. I am getting close to finalising the manuscript for my next book (this one with co-author, Italian journalist Thomas Fazi) which traces the way the Left fell prey to what we call the globalisation myth and started to believe that the state had withered and was powerless in the face of the transnational movements of goods and services and capital flows. Accordingly, social democratic politicians frequently opine that national economic policy must be acceptable to the global financial markets and compromise the well-being of their citizens as a result. In Part 3 of the book, which we are now completing, we aim to present a ‘Progressive Manifesto’ to guide policy design and policy choices for progressive governments. We also hope that the ‘Manifesto’ will empower community groups by demonstrating that the TINA mantra, where these alleged goals of the amorphous global financial markets are prioritised over real goals like full employment, renewable energy and revitalised manufacturing sectors is bereft and a range of policy options, now taboo in this neo-liberal world, are available. One proposal that seems to have captivated so-called progressive political forces is that of the need for a basic income guarantee. As regular readers will know I am a leading advocate for employment guarantees. I consider basic income proposals to represent a surrender to the neo-liberal forces – an acceptance of the inevitability of mass unemployment. In that sense, the proponents have been beguiled by the notion that the state can do nothing about the unemployment. It is curious that they think the state is thus powerful enough to redistribute income. I also consider basic income proposals demonstrate a lack of imagination of what work could become and a very narrow conception of the role of work in human well-being. This blog will be the first in several (probably about four) where I sketch the arguments that will be developed (but more tightly edited) in the final manuscript.

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The struggle to establish a coherent progressive position continues

There was an interesting article from Spanish political scientist (and economist) Vicente Navarro (August 4, 2016) – Is The Nation-State And Its Welfare State Dead? A Critique Of Varoufakis – which contested the former Greek finance mininster’s claims that the “nation state is dead” and so pan-international movements are required to restore democracy and provide a bulwark against global capitalism. I have a lot of sympathy for Navarro’s argument given that the topic is closely related to current book manuscript I am working on with Italian journalist Thomas Fazi on the reasons that the Left have vacated the progressive space and adopted neo-liberal economic positions that guarantee its steady demise as a political force. So in that context, the work of the former finance minister in trying to revive a Left narrative is admirable but, as Navarro notes, is misguided. DiEM25 is not likely to form a basic of a progressive manifesto for the future.

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Brexit signals that a new policy paradigm is required including re-nationalisation

With the new British Prime Minister now indicating that she will push ahead with Brexit and free the nation from the undemocratic imposts of the increasingly dysfunctional European Union, a view that is apparently ‘poisonous’ to some so-called progressive writers, several pro-Remain economists or economic commentators have realised that the game is up for neo-liberalism in Britain. There have been several articles recently arguing (after bitching about the loss of the Remain vote and repeating the catastrophe mantra) that a new economic paradigm is now called for in Britain, based on its new found sovereignty (after it finally exits). It could, by the way, exit through an Act of Parliament without all the Article 50 palaver if it wanted to. That is just a smokescreen. This idea of a new paradigm being required is exactly what Thomas Fazi and I are working on as part of our current book project which is nearing completion. Today, I consider briefly our view that nationalisation has to return as a key industry policy plank for any aspiring progressive political party.

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Why capital controls should be part of a progressive policy

I am in the final stages of completing the manuscript for my next book (this one with co-author, Italian journalist Thomas Fazi) which traces the way the Left fell prey to what we call the globalisation myth and started to believe that the state had withered and was powerless in the face of the transnational movements of goods and services and capital flows. Accordingly, social democratic politicians frequently opine that national economic policy must be acceptable to the global financial markets and compromise the well-being of their citizens as a result. In Part 3 of the book, which we are now working on, we aim to present a ‘Progressive Manifesto’ to guide policy design and policy choices for progressive governments. We also hope that the ‘Manifesto’ will empower community groups by demonstrating that the TINA mantra, where these alleged goals of the amorphous global financial markets are prioritised over real goals like full employment, renewable energy and revitalised manufacturing sectors is bereft and a range of policy options, now taboo in this neo-liberal world, are available. Today, I discuss capital controls.

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OECD joins the rush to fiscal expansion – for now at least

In the last month or so, we have seen the IMF publish material that is critical of what they call neo-liberalism. They now claim that the sort of policies that the IMF and the OECD have championed for several decades have damaged the well-being of people and societies. They now advocate policy positions that are diametrically opposite their past recommendations (for example, in relation to capital controls). In the most recent OECD Economic Outlook we now read that their is an “urgent need” for fiscal expansion – for large-scale expenditure on public infrastructure and education – despite this organisation advocating the opposite policies at the height of the crisis. It is too early to say whether these ‘swallows’ constitute a break-down of the neo-liberal Groupthink that has dominated these institutions over the last several decades. But for now, we should welcome the change of position, albeit from elements within these institutions. They are now advocating policies that Modern Monetary Theory (MMT) proponents have consistently proposed throughout the crisis. If only! The damage caused by the interventions of the IMF and the OECD in advancing austerity would have been avoided had these new positions been taken early on in the crisis. The other question is who within these organisations is going to pay for their previous incompetence?

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British Left reject fiscal strategy – speculation mounts, March 1976

This blog continues the discussion of the British currency crisis in 1976. Today we discuss the rejection of the 1976 Public Expenditure White Paper by the British Parliamentary Left who wanted an expansion of the fiscal deficit given that unemployment was well in excess of 1 million people in early 1976. Soon after Harold Wilson resigned as Prime Minister and James Callaghan, took over. He was by then ‘anti-union’ and was, increasingly, making statements about trade union power that played into the hands of the conservative push for an increased share of national income. After the rejection of the fiscal strategy, the sterling sell-off intensified. It was no coincidence.

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Spanish El Pacto – A Syriza Reprise!

I am now back in Australia after a very interesting 2-week visit to Spain. There were several ‘private’ events in that time, and I gave 7 public lectures over 5 days, with travel and meetings in between. It was a hectic week once the public events began, criss-crossing the rather large (by European standards) nation. I learned a lot about grass roots political movements (how they easily splinter as personalities get in the way) and about the state of European politics. I learned little about European economic policy – it is as ridiculous and damaging as ever, yet the ideologues, in the ‘pay’ of the financial and corporate elites, keep claiming everything is on track for recovery. Not! I heard about the ‘ghost’ airport, the unused Formula 1 race track, and saw the massive Arts and Sciences Complex in Valencia, all of which epitomise the excesses in the early years of the Eurozone and the unbridled capacity of Spanish politicians for corruption (the Wiki page doesn’t tell you that several corrupt pollies are already in prison over this project with more to come – see HERE and HERE and ). In the last week, a major development occurred with the signing of the so-called ‘El Pacto’ – Cambiar España: 50 pasos para gobernar juntos – which is an historic agreement between the leaders of Podemos and the United Left (IU) coalition and constitutes the manifesto to ‘Change Spain in 50 steps’ if they win government at the upcoming national election on June 29, 2016. If they don’t win government it will probably squeeze the Socialist party (PSOE) into extinction (which would be good). But ‘El Pacto’ is a dangerous document for the progressive side of politics. This blog explains why. Short summary: Syriza reprise!

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The Left confuses globalisation with neo-liberalism and gets lost

Financial Times journalist Wolfgang Münchau’s article (April 24, 2016) – The revenge of globalisation’s losers – rehearses a common theme, and one which those on the Left have become intoxicated with (not implicating the journalist among them). The problem is that the basic tenet is incorrect and by failing to separate the process of globalisation (integrated multinational supply chains and global capital flows) from what we might call economic neo-liberalism, the Left leave themselves exposed and too ready to accept notions that the capacity of the state has become compromised and economic policy is constrained by global capital. This is a further part in my current series that will form the thrust of my next book (coming out later this year). I have broken sequence a bit with today’s blog given I have been tracing the lead up to the British decision to call in the IMF in 1976. More instalments in that sequence will come next week as I do some more thinking and research – I am trawling through hundreds of documents at present (which is fun but time consuming). But today picks up on Wolfgang Münchau’s article from the weekend and fits nicely into the overall theme of the series. It also keeps me from talking about deflation in Australia (yes, announced today by the Australian Bureau of Statistics) as the Federal government keeps raving on about cutting its fiscal deficit (statement next Tuesday). I will write about those dreaded topics in due course.

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The British Labour Party path to Monetarism

The Bank of England’s failure in the early 1970s to control the money supply under the Competition and Credit Control (CCC) policy should have discouraged the Monetarist support base. However, while the monetary targets were abandoned, the Monetarist infestation was firmly alive among economists in the British Treasury and the Bank of England and the junior ministers in Edward Heath’s government. The City was also a hotbed of Monetarist support, with the likes of Gordon Pepper, an economist in the private sector who edited the Greenwell Monetary Bulletin prominent. Pepper, was very vocal and very influential within government circles. The ‘Greenwell Monetary Bulletin’ became a vehicle for the monetarist views to penetrate the highest levels of government. The British Labour Party was struggling with its factions. On the one hand, the Left was becoming more powerful within the Party and deeply rejected the attempts to diminish union operations. They formulated a new and far reaching industrial policy, which was light years away from the approach adopted by Harold Wilson’s government in the 1960s. But there was also a significant rump of Labour Monetarists, mostly concentrated in the Parliamentary party who were closer to the Tories on macroeconomic policy than their colleagues on the Left. Major tensions developed and would, ultimately lead to the famous 1976 surrender to Monetarism by James Callaghan at the National Conference. We trace this evolution in this blog so that we can understand the next instalment, which analyses the 1976 IMF loan arrangement that the British government entered into. This arrangement is a significant turning point in the way that social democratic governments have been captured by the neo-liberal myths.

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Rising urban inequality and segregation and the role of the state

Last week, 61.1 per cent of Dutch voters who turned out (the turnout was above the legal threshold to make the vote legal) voted against the referendum proposal to ratify a ‘preferential trade’ agreement between the European Union and Ukraine. It means that the Dutch government cannot, from a political perspective, ratify the EU initiative. It is the second time in its history that the Dutch have rejected a referendum about the EU – the last time was in 2005 when the EU Constitutional Treaty was soundly rejected. Then, the EU elites just ignored the democratic intent and bundled the initiative up into the Treaty of Lisbon and went about business as usual. Democracy is only useful to the EU elites if it ratifies their own self-interest. The same will happen this time. Merkel and Hollande have already said (in as many words) that they will disregard the Dutch outcome. The interpretations of last week’s voting outcome are now coming ‘fast and furious’ and the denialists are out in force – ‘oh, it doesn’t mean what it appears’ etc, and so the EU will just go about business as usual, as it always does, and that ‘culture’ is one of the reasons the whole European Project (now dominated by the common currency) is now proving to be an abject failure. It is a dysfunctional dystopia! Then citizens are watching the unfolding story from The Panama Papers, which only serve to confirm how top-level corruption, hypocrisy etc is rife and there is one (no) rule for them and another, harsher, binding rule for the rest of us. And, recent research findings suggest that our social settlements, where we live, bring up families, develop our aspirations and behaviours, are riven with rising inequality and increased segregation. Juxtapose that with the facts coming out about the urban backgrounds of young Belgians who achieve their aspirations by blowing themselves up and taking as many of us with them. The souls typically come from highly segregated urban enclaves in our cities with joblessness and poverty a daily burden. All of the above has been created by a neo-liberalism that works for the elites and aims to extract as much real income out of the system for the few as possible with as little democratic oversight as possible.

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The Heath government was not Monetarist – that was left to the Labour Party

This blog provides another excerpt in the unfolding story about Britain and the IMF and the Monetarist sell-out by the British Labour Party once it was reelected in February 1974. As I noted in this blog – The British Monetarist infestation – I am currently working to pin down the historical turning points, which allowed neo-liberalism to take a dominant position in the policy debate. In doing so, I want to demonstrate why the ‘Social Democrat’ or ‘Left’ political parties, who still have pretentions to representing the progressive position (but have, in fact, become ‘austerity-lite’ merchants), were wrong to surrender to the neo-liberal macroeconomic Groupthink. This is a further instalment of my next book on globalisation and the capacities of the nation-state. Today, we trace the tensions within the Tory Party during the period 1970 to 1974, when the old school “One National Conservatism” represented by Edward Heath came into conflict with the growing Tory Monetarists, who would eventually be the bulwark of Margaret Thatcher’s pernicious regime later in the 1970s.

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The Monetarism Trap snares the second Wilson Labour Government

This blog provides another excerpt in the unfolding story about Britain and the IMF. As I noted in this blog – The British Monetarist infestation – I am currently working to pin down the historical turning points, which allowed neo-liberalism to take a dominant position in the policy debate. In doing so, I want to demonstrate why the ‘Social Democrat’ or ‘Left’ political parties, who still have pretensions to representing the progressive position (but have, in fact, become ‘austerity-lite’ merchants), were wrong to surrender to the neo-liberal macroeconomic Groupthink. This is a further instalment of my next book on globalisation and the capacities of the nation-state, which I am working on with Italian journalist Thomas Fazi. We expect to finalise the manuscript in May 2016. In the last instalment, I traced back and demonstrated that Britain was engulfed in Monetarist thinking long before Margaret Thatcher took over. She really just put the ‘(rancid) cream on the top of the (inedible) cake’. I showed that the British Labour Party were infested with the Monetarist virus in the late 1960s and James Callaghan’s famous 1976 Black Speech to tge Labour Party Conference was just a formal recognition of that disease. It really just consolidated what had been happening over the prior decade. This historical journey also helps us understand that it was not the OPEC oil crisis in the early 1970s that provided the open door for governments to reject Keynesian policy. In Britain, the Treasury and Bank of England had fallen prey to Monetarist ideas following the elevation of Milton Friedman onto the world stage. These subsequent events just helped keep the insurgency moving until total dominance in the contest of ideas was won. Today, we start with the Bank of England’s so-called Competition and Credit Control (CCC), which was introduced in September 1971. This formalised the growing emphasis among the banking sector and economists that the central bank had to ‘control’ the money supply. It failed – but empirical failure doesn’t matter when people are becoming swamped with propaganda that says otherwise.

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The impossibility theorem that beguiles the Left

Some years ago (June 27, 2007), Harvard economist Dani Rodrik outlined what he called his “impossibility theorem”, which said that “democracy, national sovereignty and global economic integration are mutually incompatible: we can combine any two of the three, but never have all three simultaneously and in full”. In his brief article – The inescapable trilemma of the world economy – he made the case that “deep economic integration required we eliminate all transaction costs … in … cross-border dealings” and that “Nation-states are a fundamental source of such transaction costs”. Ergo, if you want ‘deep’ integration then the Nation-state has to surrender. His “trilemma” guides his view of how the “international economic system” should be reformed. He think that if “want more globalization, we must either give up some democracy or some national sovereignty”. This view has been adopted by political parties as if the conceptual framework is in some way binding. The trilemma has been skillfully sold as a narrative by right-wing think tanks and others who serve the interests of capital. The so-called progressive politicians have fallen into the trap and have shifted their political parties closer and closer to their right-wing opponents, such that now it is hard to distinguish between the major parties in most nations. The reality is that while the impossibility theorem beguiles the Left – its applicability as a binding constraint on government is limited. It is as vapid as the statements made by these career politicians on both sides of politics that they serve the people.

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The Modigliani controversy – the break with Keynesian thinking

I have been continuing the research for my next book (hopefully to be finished by May 2016) on the way in which the neo-liberals convinced policy makers including those in progressive social democratic political parties that the globalisation of finance and capital flows meant that the currency-issuing state was no longer capable of maintaining full employment through appropriate use of fiscal policies. The tenet we are entertaining is that the state never went away, it was just co-opted by capital to serve its interests. This will be a two-part blog and centres on a critical period in economic history in the mid-1970s, which marked the break with the full employment system which had moderated the excesses of capitalism. This was the period when the neo-liberal period dawned, and which steadily, opened the way for these excesses to reemerge, in all their indecent indulgence and destruction. It is also the period in which a series of economic myths crystallised into the mainstream narrative we know today, which opposes government deficits and allows unemployment to remain elevated at excessive levels. It is really important to understand what went on then because we are living with the legacy of the falsehoods introduced during this period.

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The co-option of government by transnational organisations

Today, some more analysis of the debate about globalisation and the capacities of the nation-state. We consider the debates in the early 1970s about the power of transnational corporations and the claims that they undermined the capacity of the nation-state to further the interests of the population. On the one hand, the free-market liberals claimed that the emergence of the transnational corporation was a move towards increased global efficiency and the nation-state, which served narrower interests, would be swept aside, along with its regulative structures, by this trend. Global welfare (and solutions to international poverty) would be maximised by the demolition of national borders by transnational capitalism. This view considered the nation-state to be ‘dispensable’ – that it only served narrow interests and the global organisation of production no longer required national governments to operate in this way. The Marxist position was, understandably, at odds with this view. It considered the nation-state to be indispensable to the growing needs of international capital. This was in the sense that governments could provide essential stability to reduce the risk of transnational operations. My position is more in line with the latter view although it clearly recognises the relevance (and power) of the national governments in which they choose to operate. Further, these transnational corporations are typically very large firms within the nations they operate. it is hard to differentiate the political clout that being large exerted from the influence of being global. Certainly, the early literature was not clear on that issue.

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Globalisation and currency arrangements

In today’s blog, I continue the discussion that I started last Thursday, and, specifically, focus on the critique that commentators have made about the loss of state control of their economies as a result of globalisation. The thesis advanced by many analysts is that globalisation has reduced the capacity of the nation-state and forced governments to adopt free market policies at the microeconomic level and austerity at the macroeconomic level, for fear that capital flight will destroy their economies. It is a neatly packaged thesis that the political Left has imbibed, and, in doing so, has undermined the progressive basis of these institutions and left voters with little choice between right-wing parties and the social democratic parties who formally represented the interests of workers and acted as mediators in the class conflict between labour and capital. The major distinguishing feature these days between these two types of parties, who were previously poles apart in approach and mandate sought, is that the so-called progressive side of politics now claims it will implement austerity in a fairer way. These austerity-lite parties, buying into the myth that globalisation has undermined the capacity of the state to pursue full employment policies with equitable income distribution, do not challenge the basis of austerity, but just quibble over who should pay for it. The aim of this research which will appear in my next book (with co-author Thomas Fazi) is to outline a manifesto by which progressive activists and political movements can claim back the space the current generation of sham progressives have ceded to the neo-liberals.

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Democracy in Europe requires Eurozone breakup

On December 21, 2015, there was an article on the Social Europe portal – A New Plan for Greece And Europe: A Defining Moment For European Social Democracy – which I found interesting, though very incomplete, given its title. In fact, the ‘New Plan’ is really a series of fairly general statements, which at times, are somewhat inconsistent if you extend them into the necessary detail that they imply. For example, one of their key observations is that within the European Union there is a “wide and growing gap between national control over budgets that people have voted for and the post-national governance imposed on them”. Which would suggest that the solution requires that there is an aligning of the fiscal responsibility and control at the level of the currency-issuing unit. However, there is no hint of that in their ‘Plan’. They talk about an “Enhanced respect for the fiscal sovereignty of Greece” but fail to articulate how that can occur within the common currency when the Greek government has no currency-issuing capacity. Of course, if we want to increase the fiscal sovereignty of any Eurozone nation, then the only sustainable way of doing that is for that nation to re-establish its own currency and exit the monetary union. However, this would appear contrary to their “pan-European” sentiments, which dominate their overall vision. In short, once again the bogey person of the pan-European appears to be taken as a given and then specific matters that might appear inconsistent with that old ‘social democratic’ obsession in Europe are glossed over.

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CEO pay still out of control and diverging again from workers’ earnings

Two things caught my attention among other things last week. The Australian Tax Office (ATO) released the – 2013-14 Report of Entity Tax Information – which tells us about the total income and tax payable was for 2013-14 tax year for 1539 Australian and foreign companies operating in Australia with incomes above $A100 million. The rather startling revelation is that 579 of the largest Australian companies including Qantas did not pay any tax at all in that financial year. The second (unrelated but pertinent) report was released last week by the British Chartered Institute of Personnel and Development (CIPD) – The power and pitfalls of executive reward: a behavioural perspective – which found that the increasing gap between British CEO earnings and their employees is unrelated to company performance and reflects “self-serving tendencies”. They also found in an accompanying report that the increasing gap undermined trust between management and workers and eroded employee motivation – another own-goal type stunt for these management geniuses.

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