Surprising though it might seem, barely two weeks have elapsed since those of us who anticipate GFC II – the sequel to the 2008 global financial crisis (GFC I) – were in a very, very small minority.
Consensus opinion, backed to the hilt by conventional economics, said that no such event was going to happen. Rather, we had entered the sunny uplands of “synchronised growth”, and debt had ceased to be anything much to worry about.
Of course, events, in Italy and elsewhere, haven’t yet proved us right, or the consensus wrong. We remain in a minority, though one that seems to be becoming larger. But events should embolden us, and on two fronts, not one.
First, recent developments strengthen the case for GFC II, not because of their seriousness alone, but because – as will be explained here – theyconform to a logical pattern that points towards a coming crisis.
Second, we’re being reminded of quite how far conventional economics is out of touch with reality. This, of course, will be proved decisively if – or when – GFC II does happen.
This, when you consider its implications, is really quite remarkable. The government, business and finance all place heavy reliance on a school of thought which decrees that the workings of the economy are entirely financial – so, if events prove this approach to have been wrong, the ramifications will be enormous.
Those of us who understand that, far from being a matter of money, the economy is an energy system, have a lot of work in front of us.
This seems like a good point at which to publish the promised brief summary of why GFC II is likely.
This Blog is based on an old discussion on the LinkedIn Philosophy Network.
http://letthemconfectsweeterlies.blogspot.com/2013/09/capitalist-dead-horse-flogs-99.html 23 September 2013 That people exchange things , trade things gift things and so forth is quite natural to say that this is a behavior ascribable to a market or that due to the nature of or existence of markets, people do these things is non-nonsensical .The concept of the Market in a Capitalist sense gets further away from human nature. Commerce exchange and trade would exist without capitalism and without our conception of Market.
The Free Market is a chimera one of many reflections we prisoners interpret on The wall of plato´s cave according to our own belief systems. The exercise of free will by individuals is a completely separate question for which any concept of markets is wholly unnecessary. That all things boil down to a Market and that Capitalism is the best way for Markets to do what they do best is the basis of a particular way of looking at the world as one group of people think it is best looked at.
the word Market is unnecessary, the sense in which the word Market is usually used has a lot of baggage. Kind of off topic but not completely this post from here.
´´Heads up on a new must watch lecture series (for the Ecuadoran gov) by Steve Keen. Starting here:
“This is Keen explaining his reasons for pursuing his dynamic systems modelling with the importance of debt & money factored in drawing on, well, his entire academic career. I think Keen is miles ahead in understanding how a real macro economy works & why the present mainstream thinking is so utterly crap & deeply corrupted by vested interests. Keen’s distinction between the ‘dynamic’ (mathematically ‘chaotic’) system that is reality versus the ‘equilibrium’ or static system it is assumed to be, is massively important in considering macro policy. Engineers & mathematicians should grasp this immediately. But Keen makes a good effort at explaining this for others, and I think he absolutely nails probably the most important aspects of money & macro, drawing on insights & critiques of Marx, Schumpeter, Keynes, Fisher, Kalecki, Goodwin, Minsky and others. Top stuff”
Steve Keen provides a valid criticism of modern mainstream economics in that its models are both static and ignore banks and their role in the money creation process. Keen following up on the work of Minsky shows that these oversimplifications lead to the boom and bust cycles which are inherent to the capitalist system. If your models do not include the components which are causing the instability then they will be of no use for forecasting and avoiding choke points in the system. Keen is largely pro Capitalism and Markets and I personally find his analysis compelling but do not think his solutions are nearly bold or radical enough. Keen is a professor of Economics he is not a politician he studies in an intellectually honest way and reveals some inconvenient truths that the main stream and less plain speaking branches of his profession steer clear of , in my opinion in a fear of losing patronage ( funding).
In a nutshell Keen and many others such as Michael Hudson single out the Federal reserve and its role on the Debt Fiat money swindle for particular criticism. My first introduction was through Tomlinson who has an excellent online book that can be downloaded here.
If capitalism is what it does and has done then the current problems which we face are due to Capitalism as it is practised. To say what is practised is not Capitalism is disingenuous, The Soviet Union Failed due to the Failure of Communism, most Capitalists have little problem claiming a victory over Communism, of course, the current troubles are due to what ( Communism dressed up in Capitalist clothing?)
Things To Know.
know exactly how the Fed says it works and how it actually works,
look for some real answers. On the oversimplifications in Economic modelling, leaving Banks and Money out of Economic modelling is something of an oversimplification wouldn’t you say? how can one make oneself any clearer than that?
Capitalism, as I state above, is the Ownership of the Means of Production by private interests for private benefit. It excludes in its deliberations externalities or costs to wider society. We have very little to be grateful to Capitalism for even though it is preached otherwise. Free Market or Laizzez Faire Capitalism is an anachronistic and wasteful system of distributing wealth it is a destroyer of wealth not a creator of wealth and the financialisation of the Economy is similarly destructive. Having established that neither of the two great tyrannical systems of the past 200 years are actually fit for purpose to serve the greatest benefit as custodians of the future husbandry of the common wealth for now and future generations what is needed is thought outside of the antiquated paradigm.
People like Charles Eisenstein have made a start in this direction talking of Resource-based economics, Roy Madron with his Gain Economics, Robertson’s future Money, Wilkinson and Pickets Spirit Level, Toby Russel and Econosophy with his writings on Guaranteed income and Ralph Boes and the Hertz iv laws in Germany
The term Flogging a Dead horse shouldn’t need any introduction. Whether Capitalism is a Golden Goose or a Dead horse may require some further explanation.
Capitalism is the New religion, The Free Market is the New Heaven and a belief in Capitalism is an unquestionable stance. Criticise Capitalism and you are declaring the Earth Flat, the Sun revolves around the Earth and are dangerously out of line.
”As Bakunin put it, property “is a god” and has “its metaphysics. It is the science of the bourgeois economists. Like any metaphysics it is a sort of twilight, a compromise between truth and falsehood, with the latter benefiting from it. It seeks to give falsehood the appearance of truth and leads truth to falsehood.” [The Political Philosophy of Bakunin, p. 179] http://en.wikibooks.org/wiki/Anarchist_FAQ/What_are_the_myths_of_capitalist_economics%3F
Two Discussion caught my Eye this past Week, One the Question of Minimum Wages and Mc Donalds and the Other a Film about Artists rights and the devaluing of Creative property due to digitisation.
This raises some interesting questions. How does a Capitalist economic system deal with the notion of abundance? WIth respect to the view point one takes on this initially the debate could be driven in an unhelpful direction for the majority of musicians and creative people as the perspective in legislation will be Capitalistic and focus on the interests of the winners, in the Music business as elsewhere in corparatised economy there are hardly any winners they are the top 1/10 of 1% and they advocate systems that syphon off most of the value of the work of those further down their Capitalistic food chain which they represeent as some immutable law of the Jungle as a natural consequence of natural laws which apply to a political economy as much as they do to the rate of acceleration due to gravitational attraction. 13 minutes ago · Like
Roger Glyndwr Lewis I have been having a discussion about the Minimum wage on linked in where the militant state monopoly capitalist right are having a field day doing the usual narrow thinking and saying those who demand living wages are killing the Capitalist Free Market golden goose. Well Capitalism is a dead horse that is flogging the 99% to death and is not a golden goose, the Music Industry as Golden Goose was never such a thing for the vast majority of musicians barriers to entry were easier to erect with older technology erecting false barriers to entry in a world with more than adequate resources for everyone is actually The Capitalist Dead horse dirtiest secret. 9 minutes ago · Like
Out of interest what is your view regarding income support policies I.E the minimum Wage is made up from a central fund so that no one had to survive on less than a living Wage?
There is a race to the bottom in Globalism which is beggaring our neighbors I find that this is uncivilised Blaming the poor for their Plight is a generalisation that I would hope you can see really doesn’t work. How can it apply to all cases I suggest it actually doesn’t apply in the vast majority of cases, did you read the Article I linked too regarding the French Language professor above?
I advocate the Guaranteed income scheme which in a post industrial society is inevitable at the moment it is only in place for the Banker sand High Rollers in the financialised economy. They should be duking it out not the folks at the bottom of the heap.
The first Muslim Caliph Abu Bakr introduced a guaranteed minimum standard of income, granting each man, woman, and child ten dirhams annually; this was later increased to twenty dirhams.
American revolutionary Thomas Paine advocated a basic income guarantee to all US citizens as compensation for “loss of his or her natural inheritance, by the introduction of the system of landed property” (Agrarian Justice, 1795).
French Emperor Napoleon Bonaparte echoed Paine’s sentiments and commented that ‘man is entitled by birthright to a share of the Earth’s produce sufficient to fill the needs of his existence’ (Herold, 1955).
In 1962, economist Milton Friedman proposed a Negative Income Tax coupled with a flat tax in support of a guaranteed minimum income.
In 1963, Robert Theobald published the book Free Men and Free Markets, in which he advocated a guaranteed minimum income (the origin of the modern version of the phrase).
In 1966 the Cloward–Piven strategy advocated “overloading” the US welfare system to force its collapse in the hopes that it would be replaced by “a guaranteed annual income and thus an end to poverty”.
In his final book Where Do We Go from Here: Chaos or Community? (1967) Martin Luther King Jr. wrote
I am now convinced that the simplest approach will prove to be the most effective — the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.
—from the chapter titled “Where We Are Going”
In 1968, James Tobin, Paul Samuelson, John Kenneth Galbraith and another 1,200 economists signed a document calling for the US Congress to introduce in that year a system of income guarantees and supplements.
In 1973, Daniel Patrick Moynihan wrote The Politics of a Guaranteed Income in which he advocated the Guaranteed Minimum Income and discussed Richard Nixon’s GAI proposal.
Have a great weekend everyone.
Rog Anyway, I am happy to commit this Capitalist, Free Market Blasphemy and fully admit that I do not believe in their Gods the whole edifice is founded upon a metaphysical confidence trick. ”As Bakunin put it, property “is a god” and has “its metaphysics. It is the science of the bourgeois economists. Like any metaphysics it is a sort of twilight, a compromise between truth and falsehood, with the latter benefiting from it. It seeks to give falsehood the appearance of truth and leads truth to falsehood.” [The Political Philosophy of Bakunin, p. 179] http://en.wikibooks.org/wiki/Anarchist_FAQ/What_are_the_myths_of_capitalist_economics%3F
People need to be wary of both state and corporations, Corporations are but the Government in the sun casting its shadow over government as Dewey described. Society and societal institutions will still exist in the absence of a State and Trans national corporations. Through the monetary system the established power State and Capital pull of our strings most of us do not see what puppets we are and believe we are free. corporations would not grow to their positions of power in the absence of the monetary system we have which allows private banking corporations to create 97% of all money as debt thereby guaranteeing a Syphoning of wealth from the poorest and least powerful in society to the top. Marx’s Labour theory of value is actually rather solid and most arguments against minimum wage are thin justifications for the theft of the Labour of those powerless to
I find the initial argument put forward by Rami very unconvincing, one has to consider Political economy and any employer paying less than a living wage should not be in business they are parasites on the rest of society. on the subjective theory of value I find this an interesting Native American insight.
When all the trees have been cut down,
when all the animals have been hunted,
when all the waters are polluted,
when all the air is unsafe to breathe,
only then will you discover you cannot eat money.
~ Cree Prophecy ~ ‘Marx describes capitalism as having an institutional framework in which a small minority (the capitalists) oligopolize the means of production. The workers cannot survive except by working for capitalists, and the state preserves this inequality of power. In normal role of force is structural, part of the usual workings of the system. The reserve army of unemployed workers continually threatens employed workers, pushing them to work hard to produce for the capitalists.” http://en.wikipedia.org/wiki/Labor_theory_of_value
How do we as individuals value things ? there is an immediate dualist problem distinguishing between satisfying needs and insatiable wants? it goes on to be even more complicated than that, If one does not consider the market than anything other than another flawed and manipulated construct how then do we establish a fair use value.
I have considered this question at length with respect to housing prices. It is a particularly interesting question in that area of fundamental human need and human rights ( to that of Shelter) and its commodification as a speculative playground for the wealthy. ( Mea Culpa, former property developer, gamekeeper turned poacher)
Your essay is mercifully short, perhaps an indication of how little analysis the anti minimum wage stance actually has.
Applying your analysis to one example of Mc Donalds and applying some fairly cursory arithmetic based on reducing the ceos pay and upping the pay rates leading to a large increase in what needs to be charged for the product does not actually stand up to scrutiny and constitute a serious analysis.
Further There are a whole host of other practices that large corporations indulge in regarding not making fair payments to their suppliers which need examining but you analysis seems firmly set in the main stream Democrat/ republican puppet show which is always unconvincing at best.
In 2006, the International Labour Organization (ILO) argued that the minimum wage could not be directly linked to unemployment in countries that have suffered job losses. In April 2010, the Organisation for Economic Co-operation and Development (OECD) released a report arguing that countries could alleviate teen unemployment by “lowering the cost of employing low-skilled youth” through a sub-minimum training wage. A study of U.S. states showed that businesses’ annual and average payrolls grow faster and employment grew at a faster rate in states with a minimum wage. The study showed a correlation, but did not claim to prove causation.
Although strongly opposed by both the business community and the Conservative Party when introduced in 1999, the minimum wage introduced in the UK is no longer controversial and the Conservatives reversed their opposition in 2000. A review of its effects found no discernible impact on employment levels. However, prices in the minimum wage sector were found to have risen significantly faster than prices in non-minimum wage sectors, most notably in the four years following the implementation of the minimum wage.
Since the introduction of a national minimum wage in the UK in 1999, its effects on employment were subject to extensive research and observation by the Low Pay Commission. The Low Pay Commission found that, rather than make employees redundant, employers have reduced their rate of hiring, reduced staff hours, increased prices, and have found ways to cause current workers to be more productive (especially service companies). Neither trade unions nor employer organizations contest the minimum wage, although the latter had especially done so heavily until 1999.
There are a whole host of US government policies that are damaging to the interests of what Americans call the ´middle class´of America, Google, the hollowing out of America for the myriad examples. Opposition and propaganda falsely citing minimum wage as a factor in decline of American employment is dishonest intellectually or just plain intellectual laziness ( and probably both.).
The race to the bottom so beloved of the Trans Global corporations and Banks is found in these specious minimum wage opposition arguments. Wider policy issues regarding the end of growth, the leisure society as machines replace human labour and future policies such as guaranteed income whereby no one is excluded from the common wealth are all up for examination clinging onto a Dickensian view that the poor should be grateful for the crumbs condescending from the top table is to me repugnant. The main stream political puppet show is fully complicit in our corrupt and fundamentally unworkable monetary system, should this be fixed along with other government welfare policies for the large corporations and banks we would find the real economy would remove the garrote of financialisation and debt and allow the economy to function properly again to the wider benefit of society. Ghandi said and I agree with him that poverty is the worse form of violence. saying there is an absence of coercion in desperation is flase Ricky. There is not a lack of coercion the coercion is latent, covert and pernicious to the self justfying and amoral nature of capitalism and the profit motive absent any appreciation of externalities.