[p2p-research] must read: The era of extreme neoliberalism and the end of the European social state

Tue Jun 29 16:09:03 CEST 2010

I like Polanyi and think he has much to say worthwhile.

I think where we differ on capitalism is that you see an acceleration of
past indiscretions.  I see new failures in how the system was meant to
work...not accelerations.  The system was always designed (when it was
designed) as a partnership between the state and the economy to mutual
benefit.  Of course people sometimes got ground up in the gears, but most
did well...or better than their forebears.

The idea of pure market is relatively new with the rise of the Austrian
School of Economics...and even their early folks, Menger and the like, were
fixated on stopping socialism...not eliminating the state regulator.  For
its part, the state became feckless and corrupt in most places--as we have
seen in the US with the regulation of the oil companies leading up to the BP
crisis.  This was also true in the financial collapse with FANNIE MAE et
al.

The so-called "iron triangle" of bureaucracy only works when there is a
triangle...not a line.

Anarchists like right wingers don't believe in institutions very much.
Trust is very low for the state and its capacity to steer.  I go back and
forth.  My trust is low right now, but my strongest feelings are for a state
that works because I know that will lead to much better ways of life (the US
west in 1920 versus 1880, for instance, or England in 1920 versus 1820.

Ryan

On Tue, Jun 29, 2010 at 5:58 AM, j.martin.pedersen <
m.pedersen at lancaster.ac.uk> wrote:

>
> Everything good? Try Karl Polanyi for the double movement: capital
> expansion destabilises the system (bad cop), countermovements (good cop)
> restabilise the system in order for a new movement of expansion to be
> able to destroy what was rebuilt (occurs on many levels and in many
> ways). This is one of the central features of capitalism, but one which
> has been transformed under neoliberalism, collapsed you might say in the
> concepts of participationism where capital expansion and
> countrermovements occur simultaneously and thus leave virtually no room
> for emancipatory moments in the countermovements. But the welfare state
> is not a purely good thing, it is simply the conditions for capital growth.
>
>
> On 29/06/10 04:59, Michel Bauwens wrote:
> > you may be right about the U.S.  being an example, I'm not an expert,
> >
> > though I'm convinced that there is a cultural tendency for Anglo-Saxons
> and
> > Americans in particular to think they invented everything and are an
> example
> > of everything good ... it's certainly not what I learned in my courses on
> > welfare during my uni years ... but I have mostly forgotten the details
> ...
> >
> > the wikipedia article also doesn't stress any U.S.-centric development:
> > http://en.wikipedia.org/wiki/Welfare_state
> >
> > On Tue, Jun 29, 2010 at 10:21 AM, Ryan Lanham <rlanham1963 at gmail.com>
> wrote:
> >
> >> Nice history of the British welfare state:
> >>
> >> http://www.bbc.co.uk/history/british/modern/field_01.shtml
> >>
> >> Bismarck actually introduced national healthcare as a military
> supporting
> >> scheme in Germany.  The US tried in 1919 and failed by a few votes after
> >> ferocious lobbying by doctors against a national system.
> >>
> >> The US Social Security System of the 1930s was the model for most modern
> >> systems that came into being after WW2.
> >>
> >> It was the effective bankruptcy of the UK in the 1970s that really
> launched
> >> Thatcherism.   Many of the discussions current now in the US, Spain,
> Italy,
> >> Greece, etc. were commonplace in 1965 and again in the 1980s.
>  Demographic
> >> models have been predicting the current outcome for a generation.
> >>
> >> France seems to be the place still to retire early with good benefits:
> >>
> >> http://www.cnbc.com/id/37725169
> >>
> >> Here's some OECD numbers...
> >>
> >> http://focus.ie.edu/entry.php?id=1264
> >>
> >>
> >>
> >>
> >>   On Mon, Jun 28, 2010 at 9:27 PM, Michel Bauwens <
> michelsub2004 at gmail.com
> >>> wrote:
> >>
> >>>
> >>> The era of extreme neoliberalism and the end of the European social
> state<
> http://blog.p2pfoundation.net/the-era-of-extreme-neoliberalism-and-the-end-of-the-european-social-state/2010/07/04
> >
> >>>
> >>> see
> >>>
> http://neweconomicperspectives.blogspot.com/2010/06/europes-fiscal-dystopia-new-austerity.htmlfor
> >>> the full article
> >>>
> >>>
> >>> [image: photo of Michel Bauwens]
> >>> Michel Bauwens
> >>> 4th July 2010
> >>>
> >>>  *Europe is dying. If its trajectory is not changed, the EU must
> succumb
> >>> to a financial coup d��tat rolling back the past three centuries of
> >>> Enlightenment social philosophy*. The question is whether a break-up is
> >>> now the only way to recover its social democratic ideals from the banks
> that
> >>> have taken over its central planning organs.
> >>>
> >>> *Michael Hudson* has a brilliant analysis<
> http://neweconomicperspectives.blogspot.com/2010/06/europes-fiscal-dystopia-new-austerity.html>of
> the tragedy that is unfolding in Europe, where the politicians beholden
>  >>> to the financial predatory class are �suiciding� the European social
> state
> >>> and three centuries of a particular logic of civilization.
> >>>
> >>> *Excerpt*:
> >>>
> >>> *�The idea is to create an artificial financial crisis, to come in and
> >>> �save� it by imposing on Europe and North America �Greek-style�
> cutbacks in
> >>> social security and pensions. For the United States, state and local
> >>> pensions in particular are to be cut back by �emergency� measures to
> �free�
> >>> government budgets.*
> >>>
> >>> *All this is quite an inversion of the social philosophy that most
> voters
> >>> hold. This is the political problem inherent in the neoliberal
> worldview. It
> >>> is diametrically opposed to the original liberalism of Adam Smith and
> his
> >>> successors. The idea of a free market in the 19th century was one free
> from
> >>> predatory rentier financial and property claims. Today, a �free market�
> >>> (Alan Greenspan and Ayn Rand style) is a market free for predators. The
> >>> world is being treated to a travesty of liberalism and free markets.*
> >>>
> >>> *This shows the usual ignorance of how interest really are set � a
> blind
> >>> spot which is a precondition for being approved for the post of central
> >>> banker these days. Ignored is the fact that central banks determine
> interest
> >>> rates. Under the ECB rules, national central banks can no longer do
> this.
> >>> Yet that is precisely what central banks were created to do. As a
> result,
> >>> European governments are obliged to borrow at rates determined by
> financial
> >>> markets.*
> >>>
> >>> *This financial stranglehold threatens either to break up Europe or to
> >>> plunge it into the same kind of poverty that the EU is imposing on the
> >>> Baltics. Latvia is the prime example. Despite a plunge of over 20% in
> its
> >>> GDP, its government is running a budget surplus, in the hope of
> lowering
> >>> wage rates. Public-sector wages have been driven down by over 30%, and
> the
> >>> government expresses the hope for yet further cuts � spreading to the
> >>> private sector. Spending on hospitals, ambulance care and schooling has
> been
> >>> drastically cut back.*
> >>>
> >>> *What is missing from this argument? The cost of labor can be lowered
> by
> >>> a classical restoration of progressive taxes and a tax shift back onto
> >>> property � land and rentier income. Instead, the cost of living is to
> be
> >>> raised, by shifting the tax burden further onto labor and off real
> estate
> >>> and finance. The idea is for the economic surplus to be pledged for
> debt
> >>> service.*
> >>>
> >>> *In England, Ambrose Evans-Pritchard has described a �euro mutiny�
> >>> against regressive fiscal policy. But it is more than that. Beyond
> merely
> >>> shrinking the economy, the neoliberal aim is to change the shape of the
> >>> trajectory along which Western civilization has been moving for the
> past two
> >>> centuries. It is nothing less than to roll back Social Security and
> pensions
> >>> for labor, health care, education and other public spending, to
> dismantle
> >>> the social welfare state, the Progressive Era and even classical
> liberalism.
> >>> *
> >>>
> >>> *So we are witnessing a policy long in the planning, now being
> unleashed
> >>> in a full-court press. The rentier interests, the vested interests that
> a
> >>> century of Progressive Era, New Deal and kindred reforms sought to
> >>> subordinate to the economy at large, are fighting back. And they are in
> >>> control, with their own representatives in power � ironically, as
> Social
> >>> Democrats and Labour party leaders, from President Obama here to
> President
> >>> Papandreou in Greece and President Jose Luis Rodriguez Zapatero in
> Spain.
> >>> *
> >>>
> >>> *Having bided their time for the past few years the global predatory
> >>> class is now making its move to �free� economies from the social
> philosophy
> >>> long thought to have been built into the economic system irreversibly:
> >>> Social Security and old-age pensions so that labor didn�t have to be
> paid
> >>> higher wages to save for its own retirement; public education and
> health
> >>> care to raise labor productivity; basic infrastructure spending to
> lower the
> >>> costs of doing business; anti-monopoly price regulation to prevent
> prices
> >>> from rising above the necessary costs of production; and central
> banking to
> >>> stabilize economies by monetizing government deficits rather than
> forcing
> >>> the economy to rely on commercial bank credit under conditions where
> >>> property and income are collateralized to pay the interest-bearing
> debts
> >>> culminating in forfeitures as the logical culmination of the Miracle of
> >>> Compound Interest. *
> >>>
> >>> *This is the Junk Economics that financial lobbyists are trying to sell
> >>> to voters: �Prosperity requires austerity.� �An independent central
> bank is
> >>> the hallmark of democracy.� �Governments are just like families: they
> have
> >>> to balance the budget.� �It is all the result of aging populations, not
> debt
> >>> overload.� These are the oxymorons to which the world will be treated
> during
> >>> the coming week in Toronto. *
> >>>
> >>> *It is the rhetoric of fiscal and financial class war. The problem is
> >>> that there is not enough economic surpluses available to pay the
> financial
> >>> sector on its bad loans while also paying pensions and social security.
> >>> Something has to give. The commission is to provide a cover story for a
> >>> revived Rubinomics, this time aimed not at the former Soviet Union but
> here
> >>> at home. Its aim is to scale back Social Security while reviving George
> >>> Bush�s aborted privatization plan to send FICA paycheck withholding
> into the
> >>> stock market � that is, into the hands of money managers to stick into
> an
> >>> array of junk financial packages designed to skim off labor�s savings.
> *
> >>>
> >>> *So Mr. Obama is hypocritical in warning Europe not to go too far too
> >>> fast to shrink its economy and squeeze out a rising army of the
> unemployed.
> >>> His idea at home is to do the same thing. The strategy is to panic
> voters
> >>> about the federal debt � panic them enough to oppose spending on the
> social
> >>> programs designed to help them. The fiscal crisis is being blamed on
> >>> demographic mathematics of an aging population � not on the
> exponentially
> >>> soaring private debt overhead, junk loans and massive financial fraud
> that
> >>> the government is bailing out.*
> >>>
> >>> *What really is causing the financial and fiscal squeeze, of course, is
> >>> the fact that that government funding is now needed to compensate the
> >>> financial sector for what promises to be year after year of losses as
> loans
> >>> go bad in economies that are all loaned up and sinking into negative
> equity.
> >>> *
> >>>
> >>> *When politicians let the financial sector run the show, their natural
> >>> preference is to turn the economy into a grab bag. And they usually
> come out
> >>> ahead. That�s what the words �foreclosure,� �forfeiture� and
> �liquidate�
> >>> mean � along with �sound money,� �business confidence� and the usual
> >>> consequences, �debt deflation� and �debt peonage.�*
> >>>
> >>> *Somebody must take a loss on the economy�s bad loans � and bankers
> want
> >>> the economy to take the loss, to �save the financial system.� From the
> >>> financial sector�s vantage point, the economy is to be managed to
> preserve
> >>> bank liquidity, rather than the financial system run to serve the
> economy.
> >>> Government social spending (on everything apart from bank bailouts and
> >>> financial subsidies) and disposable personal income are to be cut back
> to
> >>> keep the debt overhead from being written down. Corporate cash flow is
> to be
> >>> used to pay creditors, not employ more labor and make long-term capital
> >>> investment. *
> >>>
> >>> *The economy is to be sacrificed to subsidize the fantasy that debts
> can
> >>> be paid, if only banks can be �made whole� to begin lending again �
> that is,
> >>> to resume loading the economy down with even more debt, causing yet
> more
> >>> intrusive debt deflation.*
> >>>
> >>> *This is not the familiar old 19th-century class war of industrial
> >>> employers against labor, although that is part of what is happening. It
> is
> >>> above all a war of the financial sector against the �real� economy:
> industry
> >>> as well as labor.*
> >>>
> >>> *The underlying reality is indeed that pensions cannot be paid � at
> >>> least, not paid out of financial gains. For the past fifty years the
> Western
> >>> economies have indulged the fantasy of paying retirees out of purely
> >>> financial gains (M-M� as Marxists would put it), not out of an
> expanding
> >>> economy (M-C-M�, employing labor to produce more output). The myth was
> that
> >>> finance would take the form of productive loans to increase capital
> >>> formation and hiring. The reality is that finance takes the form of
> debt �
> >>> and gambling. Its gains therefore were made from the economy at large.
> They
> >>> were extractive, not productive. Wealth at the rentier top of the
> economic
> >>> pyramid shrank the base below. So something has to give. The question
> is,
> >>> what form will the �give� take? And who will do the giving � and be the
> >>> recipients?�*
> >>>
> >>> --
> >>> P2P Foundation: http://p2pfoundation.net  -
> http://blog.p2pfoundation.net
> >>>
> >>> Connect: http://p2pfoundation.ning.com; Discuss:
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> >>>
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> >>>
> >>> Think tank:
> http://www.asianforesightinstitute.org/index.php/eng/The-AFI
> >>>
> >>>
> >>>
> >>>
> >>>
> >>> _______________________________________________
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> >>
> >>
> >> --
> >> Ryan Lanham
> >> rlanham1963 at gmail.com
> >> Facebook: Ryan_Lanham
> >> P.O. Box 633
> >> Grand Cayman, KY1-1303
> >> Cayman Islands
> >> (345) 916-1712
> >>
> >>
> >>
> >>
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> >>
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> >
> >
> >
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-- 
Ryan Lanham
rlanham1963 at gmail.com
Facebook: Ryan_Lanham
P.O. Box 633
Grand Cayman, KY1-1303
Cayman Islands
(345) 916-1712
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