market socialism/inclusive prosperity

October 10, 2019 5:43 AM

The Secret Code of Capital and the Origin of Wealth Inequality - "Capital is not a thing, but a social relation enforced by the law and the state. With the right legal coding, any object, claim, or idea can be turned into a wealth- or capital-generating asset. In her new book, Katharina Pistor analyzes the evolution of capital over the past 400 years."

Global capitalism is not a system that is detached from states or state law. Instead, it is rooted in select legal systems that have accommodated capital for centuries... capital and the system it has given its name was not designed by anybody in a coherent fashion, but neither can it be described as the product of natural evolution.

Capital assets have been placed on legal steroids and the task to pick and choose the assets that are slated as capital and apply the steroids to them has largely been left to the holders of capital and their lawyers. They could not have done this without state power, but they are no longer dependent on a single state...

In the realm of private law, the major policing function is left to other private parties, who are often ill informed and for whom the costs of law enforcement may outweigh the benefits. Capital holders therefore have an important first-mover advantage, and with sophisticated master coders at their side, they have taken advantage of it.

Katharina Pistor: The Code of Capital - "Pistor argues for the central role of the law in shaping the distribution of wealth and makes a compelling case that it is law that creates capital itself." (video)

The Code of Capital by Katharina Pistor - "The skeleton of her argument is this: The term 'code' is used to 'show how certain legal institutions have been combined and recombined in a highly modular fashion to code capital' using modules such as 'contracts, property, collateral, the law of trusts and corporations, as well as bankruptcy laws' which operate to grant assets with the attributes of priority, durability, convertibility, and universality. These attributes give their holders a 'comparative advantage in accumulating wealth over others.'"

Priority rights rank claims, privileging certain titles to an asset or others, such as secured over unsecured creditors.

Durability adds a temporal component to priority rights. Pistor tells us that “legal coding can extend the life span of assets and asset pools, even in the face of competing claimants, by insulating them from too many creditors.” For example, if a corporation defaults on a loan, their creditors can seize assets, but shareholder’s, or the shareholder’s personal creditors, cannot.

Universality ensures “priority and durability will affect the parties who agreed to be bound by them” and “that these attributes will be upheld against anybody.”

Lastly, convertibility “gives asset owners an explicit or implicit guarantee to convert their assets into state money when they can no longer find private takers,” and is especially important for financial assets.

So Pistor is arguing that “capital is a legal quality that helps create and protect wealth.” Therefore, choosing assets and imbuing them with the above attributes “is tantamount to controlling the levers for the distribution of wealth in society.” Capital is linked with power because this process can only be achieved by the state or else “the legal privileges capital enjoys would not be respected by others.”

@KatharinaPistor:

• Nice point - "You can see the hostility in the US about the corporate form in the statutes. I always give my students the 1811 New York incorporation statute at the beginning of corporations 101."[1]
• Great point - "The call for more stakeholder governance of firms should be paired with a call government getting back into the business of governing."
• The American Corporation is in Crisis—Let's Rethink It - "Stakeholder governance will require not just tinkering with existing structures, but a fundamental re-orientation of a corporation's goals."
• A thread with the 19 proposals - "Few have more to say about corporate governance than Leo Strine who has served on the chancery and supreme courts of Delaware for decades."
• Thread on capital as legal category and national accounts - "Basically, national accounts define 'capital' as anything which enables one to transfer 'value' (purchasing power) from one period to another period. Cash, valuables, land, patents. But: there has to be an entity who/which owns this capital. Persons, companies, government."[2,3]
• Common sense for a social market economy - "I believe there are two truly effective policies to forestall a communist or communist-like movement: 1. Strong labor unions; 2. Land reform."
• Access to essential resources cannot be subjected to the pricing mechanisms - "Yes there should be a blank check for fundamental human rights. That's how a right should be. We'll figure out how to provision the resources once we have an absolute commitment to provision the resources."
• Rentier capitalism does not come with a reset button - "The reality is that the concentration of wealth and power in the hands of a few privileged rentiers is not a deviation from capitalist competition, but a logical and regular outcome... If history teaches us anything, it is that the wealthy and powerful have almost no incentive to limit their political and economic privileges – and the systems they have put in place will only serve to entrench them further."[4,5,6]

High finance is wrecking the economy and the planet—but it won't reform itself - "The establishment is waking up to the dangers of 'rentier capitalism' but more than cosmetic change is required."

With financialised capitalism grinding remorselessly onwards, it’s hard to take the “reset” debate seriously. Nevertheless it does suggest that capitalists are nervous and looking for new ideas—as well they might, because the rise of political insurgencies, protectionism and authoritarianism all threaten globalised markets. We have been here before, as Karl Polanyi reminds us in a series of essays uncovered and first published by Prime, the research network I work through. In the inter-war period, “captains of industry undermined the authority of democratic institutions, while democratic parliaments continuously interfered with the working of the market mechanism. A sudden paralysis of both the economic and the political institutions of society was well within the range of the possible... This was the critical state of affairs out of which the fascist revolutions sprang...”

Both the FT and even the Business Roundtable fret that hyper-globalisation has gone too far. A “sudden paralysis of both the economic and the political institutions” is a phrase that resonates today in Britain, the US, Hong Kong, Brazil and beyond. Such paralysis arises out of doomed and purely defensive attempts—and in many ways Brexit is a case in point—to protect society from the operation of “free” markets without thinking through clearly and from first principles the rigged way in which many of them operate.

This economist has a plan to fix capitalism. It's time we all listened - "Mariana Mazzucato has demonstrated that the real driver of innovation isn't lone geniuses but state investment. Now she's working with the UK government, EU and UN to apply her moonshot approach to the world's biggest challenges."

After the publication of The Entrepreneurial State, Mazzucato, an effervescent woman in her late forties, became a regular on current affairs programmes, often delivering devastating critiques of commonly held economic beliefs with eloquence. During a debate about the budget deficit on Newsnight in 2017, she berated Evan Davis for obsessing about it, explaining with exasperation: “Deficits matter, but what matters is what you’re spending it on.” When asked about Google’s tax avoidance by Jon Snow on Channel 4 News, she retorted: "You know what? That's not the problem. The real problem is that people don't know about the backroom deals that the Googles and the Apples and the Glaxos and the Pfizers have with the treasuries around the world on tax policy.”

• The Case for Higher Taxes at the Very Top - "The wealthiest 400 Americans have the lowest federal income-tax rates."[7,8,9]
• Let me try to convince you, @AndrewYang - "First, most of the wealth of the rich (70%-80%) is in listed equities, bonds & mutual fund shares with clear market values."
• Can a wealth tax bridge Germany's divide between rich and poor? - "Germany's Social Democrats are calling for nationwide wealth tax. Why is the idea gaining momentum, and is it the answer to bridging the growing gap between rich and poor?"[10,11,12]

Neoliberalism: a thread - "Neoliberalism, as defined by its current adherents (rather than by its squawking enemies), views markets as the fundamental generators of prosperity, and government as the way to distribute that prosperity more equitably... I believe that government needs to do more than just redistribute the proceeds of free markets."[13,14,15]

First, I believe the government can't shoulder the entire burden of equalizing the economy. Decades of successful Republican opposition to the welfare state have proven that. Instead, we need additional, quasi-independent institutions, like unions.

Second, seeing the problems of land, and the inequalities produced by land, have made me want to see some kind of land reform that goes way beyond what most neoliberals would endorse. Land value taxes, public housing, housing co-ops, downpayment assistance, etc. etc.

Third, I believe that industrial policy is underrated, both at the national and the local level. Neoliberalism under-emphasizes science policy, for example. I want a Big Push for science-driven growth. I've come to believe in export promotion, which is anathema to many neoliberals, since it's a restriction on free trade. Can the government "pick winners"? Yes. The government *must* pick winners. Green energy and other zero-carbon technologies being chief among the things we must pick.

I also believe in national health insurance, which is just straight-up nationalization of a major industry...

• Economics After Neoliberalism - "Contemporary economics is finally breaking free from its market fetishism—one focused on power and inequality and aimed at a more inclusive society." (forum; Democracy's Promise)
• Games Economists Play - "Historians make quite clear how a constructed ideological-political machine set about rolling back the New Deal and how crucial economists such as Friedman, Stigler, and Buchanan were to the construction and operation of that machine." (Milton Friedman debates Samuel Bowles)
• The Future of Political Philosophy - "For five decades Anglophone political philosophy has been dominated by the liberal egalitarianism of John Rawls. With liberalism in crisis, have these ideas outlived their time?"

In the years since the rise of liberal egalitarianism, the state has expanded, but it has also been privatized. The nature of capitalism and of work has transformed and will continue to do so, likely in dramatic and unexpected ways. The constituency of the least well off has been reconstructed, and both its composition and its place as an agent of change rather than a recipient of goods need to be again interrogated. Politics is changing, as authoritarians, radical movements, and new oligarchs battle in a novel international landscape shaped by unaccountable financial institutions, new media platforms, new technologies, and climate change.

• Economics Is the Materiality of Moral Choice - "Like Hayek, Polanyi is attuned to the materiality of moral choice, only he believes the question of costs and constraints is best mediated through moral and political arguments in the public square."
• We are Plan C: For a Practice of Politicised Commoning - "Attempts to create new forms of social relations and practices in direct opposition to the prevailing capitalist, colonial and patriarchal relations require rehearsals of other possible ways of living in common, and I emphasise the word 'possible'. How could this be otherwise?"
• Reinventing How to Govern Capitalism - "The basic argument is summarized here: Waves of Technical Change and Economic Governance."

While neoliberal capitalism has been extremely good at generating new wealth, it has been lousy at distributing those gains in a broad and equitable manner. A central challenge of contemporary economic governance is to design new institutions of asset ownership that give ordinary people access to wealth creation at its source. Such new institutions will both accelerate productivity growth and ensure that the fruits of this growth are distributed as widely as possible. Building on an account of how the American government has historically developed policies to ensure the broad distribution of wealth, this talk proposes a new “mutualist” approach to wealth sharing that we believe can govern an emerging era of capitalism whose technological underpinnings are themselves undergoing radical transformation.

• Marx's Capital after 150 Years - "Diverse perspectives and critical insights into the principal contradictions of contemporary capitalism, pointing to alternative economic and social models."

A visit with Ludwig Erhard, father of Germany's economic miracle - "In Fürth, a sleepy Bavarian town, the seeds were first planted for German's post-World-War-II 'economic miracle.'"

Erhard created the social market economy. It was based on free market principals, but with the important addition of employee participation in key decisions like wages, benefits and working conditions through their presence on boards, and a strong social safety net.

A New Deal For This New Century: Making Our Economy Work For All - "Toward fair and sustainable capitalism: A comprehensive proposal to help American workers, restore fair gainsharing between employees and shareholders, and increase American competitiveness by reorienting our corporate governance system toward sustainable long-term growth and encouraging investments in America's future."[16,17,18]

To promote fair and sustainable capitalism and help business and labor work together to build an American economy that works for all, this paper presents a comprehensive proposal to reform the American corporate governance system by aligning the incentives of those who control large U.S. corporations with the interests of working Americans who must put their hard-earned savings in mutual funds in their 401(k) and 529 plans. The proposal would achieve this through a series of measured, coherent changes to current laws and regulations, including: requiring not just operating companies, but institutional investors, to give appropriate consideration to and make fair disclosure of their policies regarding EESG issues, emphasizing “Employees” and not just Environmental, Social, and Governance” factors; giving workers more leverage by requiring all societally-important companies to have board level committees charged with ensuring fair treatment of employees, authorizing companies to use European-style works’ councils to increase employee voice, and reforming labor laws to make it easier for workers to join a union and bargain for fair wages and working conditions; reforming the corporate election system so that voting occurs on a more rational, periodic, and thoughtful basis supportive of sustainable business practices and long-term investment; improving the tax system to encourage sustainable, long-term investment and discourage speculation, with the resulting proceeds being used to revitalize and green America’s infrastructure, tackle climate change, invest in American workers’ skills, transition workers from carbon-intensive industries to jobs in the clean energy sector; and taking other measures, such as reform of corporate political spending and forced arbitration, to level the playing field for workers, consumers, and ordinary investors.

Deaths of Despair and the Future of Capitalism - "The flaws in capitalism that are fatal for America's working class."[19,20,21]

Case and Deaton tie the crisis to the weakening position of labor, the growing power of corporations, and, above all, to a rapacious health-care sector that redistributes working-class wages into the pockets of the wealthy. Capitalism, which over two centuries lifted countless people out of poverty, is now destroying the lives of blue-collar America.

The Welfare State Should Be More Than Just A Safety Net - "We should ditch the 'safety net' metaphor for the welfare state. and instead think of it (in its ideal state) as a floor or foundation; a permanent support structure that everyone builds their lives on top of."

From Baghdad to Kyiv to Haiti, people everywhere are rising up. The U.S. is a big part of the problem. - "Mass protests engulf a stunning number of nations on every continent. The common link? Corruption. America has enabled this."[22,23,24]

"Avoiding Plutocracy Would Require a Political Change": Branko Milanovic on the Future of Capitalism - "In an interview with ProMarket, CUNY Graduate Center economist Branko Milanovic discussed the differences and similarities between US-style and China-style capitalism and explained why, without major reforms, liberal capitalism could lead to plutocracy."[25,26,27]

There is also an important similarity that might lead to a convergence of the two systems. In the “end of history” or “why nations fail” literature, the convergence is basically seen unilaterally: the terminus of history is liberal rule-based capitalism. But I think a very different convergence can be imagined, and I discuss it briefly at the end of the book.

With the current movement toward plutocracy in liberal capitalism, you have rich people who are able to influence the policies of national governments. Essentially, economic power gets conflated with political power. In the case of political capitalism like China’s, it is political power that is often transmuted into economic power. The outcome in both cases may be the same: the concentration of both political and economic power in the hands of an elite.

Document Number Nine - "China is about to become something new: an AI-powered techno-totalitarian state. The project aims to form not only a new kind of state but a new kind of human being, one who has fully internalised the demands of the state and the completeness of its surveillance and control. That internalisation is the goal: agencies of the state will never need to intervene to correct the citizen's behaviour, because the citizen has done it for them in advance."

Preventing Digital Feudalism - "By exploiting technologies that were originally developed by the public sector, digital platform companies have acquired a market position that allows them to extract massive rents from consumers and workers alike. Reforming the digital economy so that it serves collective ends is thus the defining economic challenge of our time."[28,29,30]

Three Big Things: The Most Important Forces Shaping the World - "The three big ones that stick out are demographics, inequality, and access to information."[31,32,33]

Neither law nor machines eliminate the role of human judgment which exists at every step of the governance structure - "Thus, we need more diverse decision-making structures with a wider array of perspectives and voices that enables us to focus on what is a core mission — to educate and create knowledge that makes a better world."

posted by kliuless (19 comments total)

Jesus wept, kliuless. How the hell do you find the time to get across so much of this stuff?

As ever, thank you!
posted by flabdablet at 6:52 AM on October 10, 2019 [16 favorites]

Omg you did it again. Special thanks for the nod to Ludwig Erhard and the social market economy. Always have a hard time explaining this concept to Americans - this will help.
posted by The Toad at 7:14 AM on October 10, 2019

Slow clap.
posted by j_curiouser at 7:58 AM on October 10, 2019

Wow. Amazing post!
posted by xingcat at 7:59 AM on October 10, 2019

This is incredible.

I am especially interested in learning more about Mariana Mazzucato and the New Deal for a New Century paper - and I'd sure like to know more about James Medlock, the "floor or foundation, not safety net" guy, whose little Twitter thing was great but I can't seem to find anything else about him.

Thank you so much for this, kliuless. You are one of Metafilter's greatest treasures.
posted by kristi at 8:11 AM on October 10, 2019 [3 favorites]

"The three big ones that stick out are demographics, inequality, and access to information."

...and climate change. It's kind of weird that that's entirely missing from the essay, when it seems likely to be one of the greatest disruptors of the 21st century.
posted by Foosnark at 9:05 AM on October 10, 2019 [5 favorites]

Capital is a wonderfully slippery concept.
posted by Heywood Mogroot III at 9:14 AM on October 10, 2019

Wooo, socialize the finance sector! You know it’s a good idea cause the people in power are terrified of it (waves at the Meidner plan in Sweden ) and have gone on record in saying they’re rather raise wages then share power because raising wages doesn’t change the social relationship between labor and capital it’s just more of the same.
posted by The Whelk at 9:47 AM on October 10, 2019 [11 favorites]

You're right Foosnark, that oversight kind of makes the article less than optimal in what its trying to convey.
posted by Mrs Potato at 10:39 AM on October 10, 2019

I have a friend on Dreamwidth asking progressives/socialists how they define socialism, and my first point was precisely this: Capitalism is a set of rules dictating ownership rights. It isn't a "Natural Law" despite Locke and Bastiat, etc... I

What I love is how this is somehow seen as a radical conception, and yet it's a fundamentally Marxist approach.

It just seems radical because we've been indoctrinated to believe that Capital is a natural state of affairs. This is also due to conflation of "Free Trade" with the sum of Capital.

Listening to the youtube link above, which I hope is good - so far it's good but it's just starting.
posted by symbioid at 12:28 PM on October 10, 2019 [2 favorites]

Also! If you’d like a more mass market version of these arguments , this was going to be an FPP but it fits here

, “Financialisation, Blakeley convincingly argues, is the unique way in which capital responded to the crisis of the 1970’s...” Grace Blakeley ‘s book STOLEN details how capital emerged triumphant post-war by gaming them and consolidating power. “As the finance sector became ever more powerful, and the alternatives to capitalism faded further from view, it became extremely difficult to believe that there could be another way to organise the economy. Today, the greatest challenge for the left is to remind people that history isn’t over, that capitalism hasn’t won, and that we still have the power to change the world.” It’s time the people ran Wall Street.
posted by The Whelk at 12:56 PM on October 10, 2019 [2 favorites]

What if instead of asking people to "run Wall Street" we burn it down and destroy it and replace the edifice of a direct workers controlled democratic institutions from the bottom up.

If we do have a "run Wall Street" approach then I'd posit the best way forward on something like that might be something more akin to Parecon.

If anyone is interested in the concepts of primitive accumulation (which the marxist commenter in that video discusses - and I alluded to with my prev comment) and that she starts out discussing, there's some good reading here in The Invention of Capitalism (pdf).
posted by symbioid at 1:42 PM on October 10, 2019 [1 favorite]

Yep Participatory and circular economics, worker ownership, the Cleveland/Preston model, Alternate Models Of Ownership, workplace democracy, all ideas outlined in the essays and more.

A bottom up economic model is not only achievable but more efficient and can add in the human and environmental costs it incurs. Plus, it can liberate our powerful economic and productive forces from being planned for a small handful of people into one that more closely resembles a true democracy and provides for everyone.

Which fundamentally changes the social relation between workers and owners, which is why it’s so terrifying to anyone in charge with half a brain, which is why they fight tooth and nail to stop it from happening in any kind of reform, however minor.
posted by The Whelk at 2:22 PM on October 10, 2019 [3 favorites]

Everyone's a Keynsian in a crisis...
posted by rum-soaked space hobo at 11:46 PM on October 10, 2019

Well, I guess forget about my weekend plans as I work through all of this. What a fantastic post!
posted by skookumsaurus rex at 8:36 AM on October 11, 2019

This reminds me of a bit from David Graeber's Debt: The first 5000 years, paraphrased because I don't have the physical book with me:

PARAPHRASE
Legally, property rights, going back to ancient Roman law, are described as "a relationship between a person and an object, where the person has unlimited control and rights of use over that object." But how can a person have a relationship with an object? That seems odd. .... When we examine it, the idea of property rights is more precisely a relationship between one person - an owner - and the entire rest of society, agreeing that the rest of society will treat some object as the owner's property.

There are other philosophical theories that describe and justify property rights - like Locke's labor theory - idk what else, i just read shit, i don't actually know shit

point is, the "right to property" feels natural to a lot of people, as natural as the "right to life", but the proliferation of theories trying to justify it ... sort of implies that it's less natural than it seems. And capital, of course, seems much like the idea of property, gone wild.
posted by Rainbo Vagrant at 5:23 PM on October 11, 2019 [3 favorites]

How the hell do you find the time to get across so much of this stuff?

mostly just reading through @KatharinaPistor's feed -- and less sleep :P

• From financial crisis to inequality — how economists got it wrong - "Three new books dissect how capitalism is changing and our failure to spot the danger signs."[1,2,3]
• OpenLibra - "An open platform for financial inclusion. Not run by Facebook."
• Does Public Banking Work? - "The trick is to keep public banking from getting politicized."
• Indeed: What requires explanation is the existence (and one might add the survival) of liberal democracies - "No mention of the role of morality, ethics and - dare I say it - religion in the creation and maintenance of liberal democracies."
• My bet - "The legal code will enclose the digital code."
• Discussions boiled down to this - "Is law private or a public good?"

also btw...

• On the colonization of what seemed once a free internet by clueless yet hermetic 'platforms' - "If Big Tech becomes synonymous with the internet, we could lose free choice, democracy, and even the ability to imagine a different world. We won't notice we live in someone else's stack any more than a farmed fish can taste tank water."
• Confronted with our digital age, Polanyi would say much the same - "A laissez-faire policy is not neutrality. Rather, it's an intentional decision to allow liars & fabulists to gain vital competitive advantages over those bound by some fealty to fact."
• This is the one I'm afraid of! - "I contributed to the project of empowering everyone with Linux/FOSS and P2P for years — decades — as it faded from a dream to a joke. That could happen to Bitcoin/crypto, too, and it's our job to realise the potential this time."
• Remedying the monopoly and monopsony power of firms - "As always, monopoly power calls into question whether a firm should be private at all. If a firm's choices are going to be so impactful of people other than firm shareholders, maybe there needs to be different means of arriving at them than officers' or a private board's discretion."
• Just because there are efficiencies associated with scale doesn't mean an increase in concentration is good - "It's always good remember that an economic policy that leads to a Pareto 'efficient' outcome with high inequality is only 'efficient' in the sense that it's equivalent to the outcome a 'benevolent' central planner that cared almost only about rich people's welfare would choose."
• We make a major export industry of protecting the corrupt - "We are now the world’s leader in providing international tax shelters, often using state-registered dummy corporations. We demand the Swiss do what we say, but refuse to do the same. No other country is so hypocritical on tax issues."

I'd sure like to know more about James Medlock, the "floor or foundation, not safety net" guy...

it's a link to a post on matt bruenig's people's policy project (e.g. The Family Fun Pack Makes Parenting Easy for Everyone - "Capitalism is hostile to families. The welfare state can fix that." ;)

oh and...
Why the upper-middle class would benefit from socialism - "Suburban professionals are more likely to be Democrats, but they shouldn't stop there." (even the pretty-affluent might support a generous and competent welfare state: "the corporatist American welfare state is hideously inefficient. We spend 30 points of GDP and yet are missing absolutely basic stuff")

...and climate change.

Taking a look at Jeremy Rifkin's 'The Green New Deal' - "What industry's move away from investment in fossil fuels means for policymakers and curbing climate change at large."

We're on the cusp of a collapse of the fossil fuel civilization. This is hard for people to imagine — we've lived 200 years off fossil fuels across all of civilization. Our construction materials, our fertilizers, pesticides, pharmaceutical products, food additives, power, transport, heat, light, packaging — it's everything.

But what's happened here and this is really enormous — this year the cost of solar and wind, the levelized cost of scaled solar and wind has now plummeted below the cost of nuclear, below the cost of oil, below the cost of coal and now below the cost of natural gas. So what's happening is we're sitting on the biggest bubble in history — stranded assets in the fossil fuel industry — because now the cost of solar and wind are cheaper, it means all of the gas-fired power plants and the pipelines and the refineries and all the way to the gas stations are stranded assets. They will not amortize out.

This is the biggest bubble in history. Citigroup, a big bank, says this could be some $100 trillion in stranded assets across the fossil fuel civilization. The Economist magazine's Intelligence Unit said it's at least $40 trillion. Our projections are that over the next 10 years this Third Industrial Revolution infrastructure made up of solar and wind electricity and electric transportation vehicles is going to mean that the fossil fuel civilization will probably collapse somewhere around 2028...

So what you're describing here is essentially a free-market mechanism. Do we even need protests for climate change and do we need government intervention or is the market going to sort it out by itself?

No. What I made clear in "The Green New Deal" is that the market is a powerful force and is saying we're seeing the collapse of fossil fuels because solar and wind are now cheaper and batteries are cheaper and these are coming in and they're going to be cheaper electric vehicles. But that's not enough. You have to have a new infrastructure in place to manage power and move day to day life...

Businesses don't do infrastructure. It's up to local governments and it's up to regional governments and national governments. They have to lay out the infrastructure to make possible the new business opportunities and the new jobs.

Eleven trillion dollars have now been taken out of the fossil fuel industry, especially by pension funds. And these pension funds say 'my God' if this is collapsing we don't want millions of workers not to get their retirement funds. The problem is they have all the money and they want to now invest in a Third Industrial Revolution Green New Deal. But it's up to localities and cities and states to come up with infrastructures that can be scaled as the money is there but they don't want to invest in little pilot projects like a hydrogen bus or a little bike path.

They want to invest in a whole transformation of a city or region. So all the money is there through public pension funds and other investments, they've all gotten out of fossil fuels but now the cities have to step up. The regions have to step up. Countries have to step up. Governments have to help lay out this infrastructure — involve their communities in this transformation and that's where the millions of new jobs will come from. The new business opportunities.

The Economy Keeps Growing, but Americans Are Using Less Steel, Paper, Fertilizer, and Energy - "Good news! We're getting more while using less." (This is how you get economic growth while decreasing resource use.)

Finally, let's look at total energy consumption combined with greenhouse gas emissions, which are the most harmful side effect of generating energy from fossil fuels.

I was surprised to learn that total American energy use in 2017 was down almost 2 percent from its 2008 peak, especially since our economy grew by more than 15 percent between those two years. I had walked around with the unexamined assumption that growing economies must consume more energy year after year. This turns out not to be the case anymore—a profound change. Energy use went up in lockstep with economic growth in America for more than a century and a half, from 1800 to 1970. Then the increase in energy use slowed down, and then it turned negative—even as the economy kept growing. Over the last decade, we've gotten more economic output from less energy.

Greenhouse gas emissions have gone down even more quickly than has total energy use. This is largely because we have in recent years been using less coal to generate electricity and more natural gas, which produces 50–60 percent less carbon per kilowatt-hour.

The conclusion from this set of graphs is clear: A great reversal of our Industrial Age habits is taking place. The American economy is now experiencing broad and often deep absolute dematerialization.

Is the rest of the world dematerializing? It's a hard question to answer definitively because there's no equivalent of the detailed and comprehensive USGS data for countries other than America. There is evidence, though, that other advanced industrialized nations are also now getting more from less. Goodall, of course, found that the United Kingdom is now past "peak stuff." And Eurostat data show that countries including Germany, France, and Italy have generally seen flat or declining total consumption of metals, chemicals, and fertilizer in recent years.

Developing countries, especially fast-growing ones such as India and China, are probably not yet dematerializing. But I predict that they will start getting more from less of at least some resources in the not-too-distant future.

The problem for capitalism is that the future may no longer bail out the present - "There is now rising panic in policy circles over the short-term future of banks and the long-term future of the free market itself."

But the savings glut and the investment strike are not the only problem, nor even the main one. For me, the shadow of secular stagnation is only a symptom of a bigger problem, which is the exhaustion of capitalism’s ability to adapt and self-renew through technological change.

It's not that technological progress has stopped: on the contrary it has speeded up. The silicon chip in your mobile phone now contains five times more processing power than the server farm that generated the movie Toy Story in the 1990s.

The problem is: information technology is different. As I argued in PostCapitalism (2015), information technology collapses production costs, allows automation at a speed that new job creation cannot keep up with, creates free utility via the network effects, and - in conditions of a competitive market - democratises knowledge.

Right now, we have a dysfunctional info-capitalism, in which all these spontaneous tendencies are supressed: by monopoly pricing, by under-employment and precarious low-skilled labour, through rent-seeking business models like Uber and WeWork, and through the creation of vast and systematic asymmetries of access to information.

If I and the other post-capitalist theorists are right, there is no future income or measurable economic growth from which to pay down the debts, or manage down the central bank balance sheets. The ultimate structural reform needed is a managed transition beyond capitalism itself.

It is slowly dawning on the clearest thinkers in the official system that the entire era of financial globalisation has been based on borrowing from and speculating against a future income stream that may not exist. While in the short term, aggressive and radical social-democratic programmes will need to be adopted across the developed world, the strategic task is to design an economy that replaces one based on markets, scarcity, debt, speculation and (of course) carbon.

Mainstream economists are getting radical - "As global growth continues to fall, the world’s top economists and financial authorities are signaling an openness to experimenting with previously fringe economic ideas that just a few years ago would have been considered extreme or even laughable."

ECB president Mario Draghi recently suggested the eurozone consider modern monetary theory, or MMT — which argues that governments with their own currency should ignore deficits and keep spending until inflation becomes a problem, with federal legislators in control of setting interest rates.

A collection of former central bank presidents are calling for "helicopter money" — a program in which central banks would deposit money directly into every citizen's checking account.

Top strategists at BlackRock, the world's largest asset manager, are urging more central banks to start buying stocks...

Federal Reserve economist Claudia Sahm has proposed automatic government payments directly to individuals when the 3-month average unemployment rate rises 0.50 percentage points above the low from the previous year...

Catherine Mann, a former chief economist at the OECD and current global chief economist at Citi Research, has proposed a program that would use central bank funds to deposit shopping vouchers directly into consumers' accounts...

Julia Coronado, a former Federal Reserve economist and current president of MacroPolicy Perspectives, said she's working on a paper that will advocate combining helicopter money with a central bank digital currency. "We’re not on the edge," she said during an interview at NABE. "We’re chief economists at major global banks, for God’s sake. We’re hardly fringe players."

The End Of Capitalism Is Already Starting–If You Know Where To Look - "One of America's foremost Marxist economists has never felt so optimistic in his 50-year career."

Wolff says, it’s instructive to look to the transition to capitalism, and understand that it’s the smaller waves and shifts in the way things are done that signal true change.

Before capitalism emerged in Europe, there was feudalism, a radically different system in which nothing–neither land nor labor–was for sale, and serfs orbited their feudal lord like ribbons tethered to a maypole. Feudalism’s inhumanity was different from capitalism’s: Instead of being unable to work and earn money to pay for rent and necessities, serfs were dependent on the lords for their livelihoods and their schedules and for a piece on land upon which to labor. Their stability was contingent on the lord’s generosity or lack thereof.

Sometimes, serfs would get squeezed, Wolff says–maybe a serf who was permitted to work his own land three days a week was cut down to two, and had to work on the lord’s the rest of the time, struggling to feed his family. Those serfs would run away. They’d jet off into the forests around the manors, where they’d encounter other runaway serfs (this is the origin of Robin Hood). That group of runaways, who’d cut ties with the feudal system, would establish their own villages, called communes. Without the lord controlling how the former serfs used their land and their resources, those free workers set up a system of production and trade in the communes that would eventually evolve into modern capitalism.

“The image of the transition from feudalism to capitalism was the French Revolution, and that was part of it,” Wolff says, “but it wasn’t the whole story. The actual transition was much slower, and not cataclysmic, and found in these serfs that ran away and set up something new.”

In the U.S., businesses converting to cooperative workplace models are the functional equivalent of those runaway serfs. Around 10 cities across the U.S. have, in recent years, launched initiatives specifically to support the development of worker co-ops, which have been especially beneficial in creating job and wage stability in low-income neighborhoods. Because workers are beholden to themselves and each other, rather than a CEO and a board of directors, the model parts ways with the capitalist structure and advances something that more closely resembles a true democratic system.

“This is the beginning of the end of capitalism,” Wolff says. “Whether these experiments–which is what we have to call them at this point–will congeal into a massive social transformation, I don’t know. But I do know that massive social transformations have never happened without this stage. This stage may not do it, but change won’t happen without it,” he adds. These subtle shifts away from capitalism are not just apparent in the development of more co-ops, Wolff says. Over the past year, he’s been called in to meet with CEOs at large financial firms, who seemed to Wolff to be steeling themselves for a dethroning. As CEOs continue to disproportionately outearn their employees, the call for a dismantling of the system has become loud enough that they seem to have no choice but to pay attention. While it’s a flimsy gesture, some have distributed their bonuses to their employees.

“The move toward co-ops and the change in consciousness I’ve witnessed in workplaces and among my students are the two mechanisms of transformation that are now underway globally, and I’d like to say–it’s more a wish than anything else–that it’s too late to stop them,” Wolff says. “And the sheer beauty of this is that nothing fuels this movement more than capitalism’s own troubles, and the displeasure, disaffection, and anxiety it produces.”

Of course, the thought currents and little blooms of democratic workplaces are not enough to engineer a new economic system. These developments are all happening outside of the political system; in the White House and in Congress, the presence of big capitalist businesses continues as strong as ever. But the fact that local governments like New York City and Austin have launched incubator programs for worker-owned cooperatives indicates that they’re not incompatible with the current political system.

The thing that could transition them to a movement is solid, unified political thought underpinning each new development, each step away from capitalism. It’s not enough for all of these workplaces to democratize in isolation, or for conversations about the failures of capitalism to happen in a vacuum. If an alternative to capitalism is ever going to scale up, it will need to do so nationally, and with political support at the federal level. In the meantime, the democratic ethos of worker co-ops–which is, especially now, what’s driving their appeal–can be translated into many other parts of the prevailing economic system.

Could it look something like inviting Medicare and Medicaid recipients into the legislating body that decides the future of healthcare in this country? Could it look something like involving women in the legal processes that determines what resources they can access to care for their own bodies? Something like a cooperativized Housing and Urban Development department that brings those people it aims to serve into the process of determining how best to do so?

Or what about developing a justice system that relies not on removing people from the formal economy via mass incarceration, but that emphasizes cooperative employment and job training at both points of re-entry and pre-incarceration? Kimberly Westcott, associate counsel in the New York-based Community Service Society, a 172-year-old anti-poverty organization, has begun a program through Democracy at Work to teach cooperative work within prisons. If the cooperatives that could form inside prisons could function just like those on the other side, are the walls necessary?

posted by kliuless at 4:56 AM on October 13, 2019 [2 favorites]

@gabriel_zucman:

Starting from the current tax system, everyone can design their own tax plan

Wealth tax, individual income tax, corporate tax... Pick the rates, adjust enforcement, and taxjusticenow.org shows:

1. How much revenue would be generated
2. How tax progressivity would change

How much revenue would a wealth tax generate? And a VAT?

Which groups of the population would gain or lose from replacing private health insurance by an income tax?

taxjusticenow.org provides factual answers to these questions.

You can also simulate the tax plans of the main presidential candidates:

Based on their currently released plans, this is how Warren, Biden, and Sanders would change tax progressivity

Their proposals are still being refined. We'll update the model as new proposals come in.

New Rules, New Politics - "A new economics is being born—one that is being argued everywhere from academic journals to the 2020 campaign trail and is moving with surprising alacrity to mainstream consciousness."[1]
posted by kliuless at 6:19 AM on October 15, 2019

Monopoly Men - "Businesses, towns, communities, and individuals cannot thrive in an economy where access to the market is contingent on the whims and control of a few private actors."

Here's the thing: "societies create corporations; societies can take them away. Societies decide that stockholders get to vote; societies can also decide that other people get to vote."
posted by kliuless at 6:14 AM on October 18, 2019