Tag: Economics

Democratic Socialism: An Impossible Dream? II

An Article in Two Parts, by Craig Collins 
Read Part One Here 

Part Two: Energy & Economics Shapes Politics

The first part of this article asserted that, contrary to the prevailing mythology on both sides of the Cold War, socialist revolutions never succeeded in creating genuine democratic socialism. Then, several insufficient explanations for why socialist revolutions failed to produce socialism were critiqued. Finally, a more comprehensive hypothesis was offered: Perhaps a rapidly expanding, multi-state, globalized industrial economy—powered by an energy base of fossil fuels—is incompatible with nationally restricted efforts to bring it under genuine democratic control. Part Two will explore this hypothesis in more detail and consider its implications for building genuinely egalitarian, democratic societies in a post industrial future powered by renewable energy.

In hindsight, it appears that the physical constraints and social requirements imposed by globalized industrialism foster undemocratic, hierarchical economic relations resembling either corporatist or statist political economies that resist bottom-up, democratic governance. This is the most feasible, comprehensive explanation for the failure of democratic socialism in both emerging and mature industrial societies. The other piecemeal theories discussed in part one are partially accurate, yet limited, derivatives of this pervasive, underlying restriction on genuine economic democracy.

The problem solving theoretical principle known as Occam’s razor (or the law of parsimony) considers the strongest theory to be the one that provides the simplest, most comprehensive explanation in line with the evidence.[1] The conclusion that economic democracy is incompatible with the hierarchical, vertically organized structure of industrial production meets these criteria.

By its very nature, fossil-fueled industrialism promotes extensive, highly integrated economies of scale that require top-down managerial direction. Complicated, highly mechanized, global chains of industrial production frustrate nationally confined, workplace-centered economic democracy. They require an managerial elite to oversee the planning, administration, and supervision these technologically elaborate, vertically integrated operations. Therefore, it becomes virtually impossible to govern these political economies in a decentralized, democratic manner—especially when chains of production override and transcend national borders.

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Democratic Socialism: An Impossible Dream?

An Article in Two Parts, by Craig Collins

Part One: Socialist Mythology vs. Statist Reality

The founders of “scientific socialism,” Karl Marx and Frederick Engels, assumed it was quite possible, even historically inevitable, for working people to democratically govern an industrial society. However, they never went into detail about how this would work. Even today, despite overwhelming evidence to the contrary, many orthodox Marxists persist in believing that vast, complex, globalized, industrial economies can be run by and for the workers who operate the machinery of production. In fact, doctrinaire Marxists still cling to the fantasy that worker-run industrial socialism is not only possible, it is the historically destined, superior replacement for industrial capitalism.

This Marxist conviction is dubious for two reasons. First, history has demonstrated that after many attempts, and despite their best intentions, the leaders of “socialist” revolutions have never succeeded in building an industrial society run by and for working people. Second, the primary underlying reason for this failure flows from the structural requirements of industrial society. Fossil-fueled industrial economies exert a powerful influence over their social and political structures. The extensive, intricate, hierarchical configuration of carbon-powered industrialism appears structurally unsuited and deeply resistant to bottom-up, democratic management.

Socialist Revolutions Without Socialism

As originally intended by Marx and Engels, a socialist society would be run democratically, by the vast majority of working people, on the basis of human need, not profit. In other words, socialism meant economic, social, and political democracy. They believed worker-run socialism would eventually become classless communism, as industry produced enough wealth to satisfy everyone’s basic needs and people became accustomed to contributing their abilities to a commonwealth that encouraged their talents and potentials in return.

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Catabolic Capitalism & Green Resistance

By: Craig Collins

In the first installment of this two-part article we examined the notion that any future without globalization must be an improvement.  But globalization and growth only constitute capitalism’s expansionist phase, powered by abundant fossil fuels.  As energy becomes scarce, boom turns to bust.  But profit-hungry capitalism doesn’t die; it morphs into its zombie-like, undead phase.

Growth-less capitalism turns catabolic.  The word catabolism is used in biology to refer to the condition whereby a living thing feeds on itself.  Thus, catabolic capitalism is a self-cannibalizing system whose insatiable hunger for profit can only be fed by consuming the society that sustains it.[1]  As it rampages down the road to ruin, this system gorges itself on one self-inflicted disaster after another.  Unless we bring it down, catabolic capitalism will leave its survivors rummaging through the toxic rubble left behind.

Capitalism is adept at exploiting human weaknesses, especially greed and fear.  During the period of rapid expansion, greed provides the most powerful incentive for investors, while fear comes in a distant second.  Investors are encouraged to take big risks and go into debt in the hope of scoring windfall profits.  Speculative bubbles grow rapidly as people try to make it rich on the next big deal.  But when boom turns to bust, fear takes the drivers seat.  In these troubled times, the most profitable ventures capitalize on insecurity, desperation and scarcity.

In the era of fossil fuel abundance, catabolic capitalists worked the dim back alleys of the growth economy.  But, as the productive sector atrophies and the financial sector seizes up, this parasitic sector emerges from the shadows and proliferates rapidly.  It thrives off anxiety and hoarding; corruption and crime; conflict and collapse.  Catabolic capitalism profits by confiscating and selling off the stranded assets of the bankrupt productive and public sectors; dodging or dismantling legalities and regulations while pocketing taxpayer subsidies; hoarding scarce resources and peddling arms to those fighting over them; and preying upon the utter desperation of people who can no longer find gainful employment elsewhere.

This looming catabolic future will transform the Green New Deals proposed by eco-optimists like Al Gore, Lester Brown and Jeremy Rifkin into ecotopian pipe dreams…unless we exorcise capitalism’s profit possession from the economy.[2]  Instead of investing society’s remaining resources into a sustainable recovery and renewal, catabolic capitalism will eat away at society like a cancerous tumor.  A malignant alliance of parasitic profiteers, resource cartels and weapons merchants will infect the body politic and poison any effort to prevent them from ransacking the economy and the Earth.  If society succumbs to their all-consuming thirst for profit, life will become a dismal affair for everyone but them.

However, at the risk of sounding over-optimistic, the approaching period of catabolic collapse presents some strategic opportunities to those who would like to rid the world of this system as soon as possible.  The end of growth seriously erodes the legitimacy of capitalism by undermining its capacity to meet the needs of everyday life. 

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Catabolic Capitalism: The Dark at the End of the Tunnel

By: Craig Collins

“Out of the frying pan, into the fire” is an apt description of our current place in history. No matter what you think of globalization, I believe we’ll soon discover that capitalism without it is much, much worse.

No one needs to convince establishment economists, politicians and pundits that the absence of globalization and growth spells trouble. They’ve pushed globalization as the Viagra of economic growth for years. But globalization has never been popular with everyone. Capitalism’s critics recognize that it generates tremendous wealth and power for a tiny fraction of the Earth’s seven billion people, makes room for some in the middle class, but keeps most of humanity destitute and desperate, while trashing the planet and jeopardizing human survival for generations to come.

On the Left, a loose alliance of ecology and labor activists, small farmers, indigenous peoples and human rights advocates has disrupted international economic summits for many years. They say malignant capitalism demolishes habitats and poisons ecosystems, wreaks havoc with the climate, destroys indigenous cultures, pushes farmers off their land and into slums and erodes wages by pitting desperate workers around the globe against one another. At annual World Social Forums, these social movements voice their opposition to globalization and growth and unite around the belief that “Another World Is Possible!” They work toward the day when neoliberal globalization is replaced by a more democratic, equitable, Earth-friendly society.

Since globalization is so damaging, most activists assume that any future without it is bound to be an improvement. But now, it appears that this assumption may be wrong. In fact, for all of its depredations, future generations may someday look back on capitalism’s growth phase as the halcyon days of industrial civilization, a naïve time before anyone realized that the worst was yet to come.

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Capsule Introduction to Capitalism and Socialism

by Victor Wallis

A short introduction to key terms in political theory by the author of Red-Green Revolution: The Politics and Technology of Ecosocialism

A capitalist society is one in which the major decisions about what is produced (and how, and how much, and for whom) are made by the capital-owning class and/or its representatives. Capital differs from earlier forms of wealth in that it is liquid, i.e., it can be bought and sold on the market. Capitalist wealth includes machinery (what Marx called “means of production,” or capital in the narrow sense), but it also includes land and financial instruments (money, stocks & bonds, etc.).

Most of this wealth is concentrated in large corporations or financial institutions, whose goal is to maximize their own profits. To do this, they must sell as much as possible and pay out as little as possible. Sales are maximized by responding not simply to needs but rather to market-demand (i.e., needs or wants backed by purchasing power). Market-demand is in turn shaped partly by public policy (e.g., if there’s no mass transit, more people will have to buy cars) and partly by a whole culture of advertising and public relations. At the same time, costs are minimized by paying workers as little as possible (including moving production to low-wage areas) and by skimping on such matters as waste-disposal and workplace safety & health.

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Two Proposals to Foster Autonomy, Renew Democracy and Exit Post-Truth Politics

By: Marco Senatore

In a world where money is the only universal means of exchange, how different would society be if racists had economic incentives to embrace human rights, and the average citizen found it profitable to foster democracy? In this article I will attempt to answer this question.

Last year the neoliberal narrative suffered a major blow in the United Kingdom, with the vote for Brexit, and in the United States, with the election of Donald Trump as President. By neoliberalism here I mean that political and cultural model that subordinates every public decision to economic rationality, and adapts the state and the whole society to the needs of the market. More specifically, I include in neoliberalism the Ordo-liberal School that influenced the architecture of the Economic and Monetary Union, the Chicago School, the so-called Washington Consensus and, somewhat, the Third Way developed during the 1990s. Beyond its economic principles, neoliberalism has also been important in supporting human rights and rule of law, as they facilitate the functioning of the markets.

In the current juncture, highlighting the risks of populism and of post-truth is an important and useful exercise. It is obvious that the manipulation of facts, racism and other forms of discrimination make populists much more dangerous for democracy than most politicians who have ruled the world in the recent decades.

However, in order to change some of the paradigms that are shaping the political debate in America and – to a less extent, after Macron’s election – Europe, it would be essential to deal also with the flaws of that neoliberal order, whose contradictions have helped the rise of populists. After recalling some elements that are shared by populism and neoliberalism, I would like to propose two forms of social interaction, aimed at overcoming these elements.

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Rethinking the Goals of Finance: Lessons from the Amherst Arbitrage

By: John Brodie Gay & Jeremy Kingston Cynamon

I. BACKGROUND

Financial devices, like all technologies, develop – sometimes intentionally, sometimes by historical accident – to benefit particular interests and reinforce certain values at the expense of others. Therefore, the form in which we encounter these various technologies today is not a necessary characteristic of those technologies, but the result of their respective histories. If those histories had unfolded differently, then those technologies might benefit sharply different values and interests. Given this contingency, we can plausibly pursue different ways of repurposing financial devices (as well as technology more generally) and thereby altering the interests and the values they protect. With a bit of imagination, we can realize alternative potentials in these devices.

The sort of argument just previewed has been largely ignored by the left. In general, progressives tend to treat the financial sector as a scapegoat for the ills of society.  In our view this is a mistake.  There is nothing inherently problematic about finance. Insofar as our contemporary financial practices are troubling, they are troubling because of their execution, not because finance is itself problematic. To the contrary, finance – if directed purposely – can be a great asset to the political programs of any stripe.

Our goal in this short essay is merely to demonstrate the aforementioned contingency and transformative potentials in our financial devices. We argue by way of example, using a peculiar story about the use of credit default swaps after the 2008 mortgage crisis to illustrate our larger themes.

II. FINANCIAL DERIVATIVES

We begin with a rather strange fact: our financial system allows individuals and firms to place side bets on any homeowner’s ability to pay his/her mortgage. Known as financial derivatives, the total amount gambled in these bets can greatly exceed the outstanding amount on the underlying mortgage. Bizarre as it may seem, this is the financier’s utopia: a “complete market” that allows participants to bet on any chance event. Natural catastrophe, the result of an election, even a terrorist attack could be the source of profits for the shrewd gambler.

In theory, these financial derivatives can be tools for prudently distributing risk across parties. In practice, however, the use of financial derivatives often results in dangerous concentrations of risk. As it happens, a significant proliferation of these sorts of financial derivatives coincided with the real estate bubble and the subsequent 2008 mortgage crisis.[1] Though much has been written about that crisis, the story presented in the following section will likely be unfamiliar to most readers – even to those who keep up with this sort of thing. This is probably not a coincidence. The story illustrates the potential inherent in our financial technologies and devices to disrupt the common practices of finance and harness its power for varying purposes.

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Liberal Values in Market Society

By: Jeremy Kingston

Much of political philosophy concerns itself with devising a priori systems (derived purely from theory) for organizing society. However, in doing so it tends to overlook many extant structures – particularly those of the economic sphere. In this piece I examine what it is that these a priori systems overlook, as well as the ways that the existing structures alter the institutions haphazardly placed on top of them. I devote the bulk of my attention to the frequent attempts made to overlay liberal values into our market society.

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Iceland as a Model for Popular Mobilization in a Post-2008 World

By: Hayden Eric Godfrey

Fellow Icelanders,

The task of the authorities over the coming days is clear: to make sure that chaos does not ensue if the Icelandic banks become to some extent non-operational. For this the authorities have many options and they will be used. Both in politics and elsewhere it will be important to sheathe our swords. It is very important that we display both calm and consideration during the difficult days ahead, that we do not lose courage and support each other as well as we can. Thus with Icelandic optimism, fortitude and solidarity as weapons, we will ride out the storm.  

God bless Iceland [1] Prime Minister Geir Haarde, 6 October 2008

The connection between political corruption and popular mobilization against a small cadre of rulers is a tale as old as the concept of government itself. From the French Revolution of 1789, in which mobs of starving peasants took to the streets in a revolt against the ancient political order that took the blame for their destitution, to the age of extremist politics that emerged out of the Great Depression of the 1920s and 30s in Europe, this relationship rears its head in frequently dramatic fashions that reorient the power dynamics within society. In recent times, however, this revolutionary spirit has been absent in the majority Western societies, in which oligarchic domination of the political systems has created paradigmatic complacency in regard to a corrupted, broken status quo within their political economies.

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