The decision to break with free-market ideology and spend government money to control the yen’s value against the dollar was mainly driven by Japan’s relationship with China, not America. Japanese companies including Sony and Toyota that had demanded government action devaluing the yen were not concerned primarily with their competitiveness against America rivals. The motivation was a fear of being undercut by exporters in China, Korea, Singapore and Taiwan — all countries that aggressively manage their exchange rates.
With Chinese economic policy now serving as a model for other Asian countries, Japan was faced with a stark choice: back United States criticisms that China is artificially keeping down the value of its currency, the renminbi, or emulate China’s approach. It is a sign of the times that Japan chose to follow China at the cost of irritating America.
Japan’s action suggests that, in the aftermath of the recent financial crisis, the dominance of free-market thinking in international economic management is over. Washington must understand this, or find itself constantly outmaneuvered in dealings with the rest of the world. Instead of obsessing over China’s currency manipulation as if it were a unique exception in a world of untrammeled market forces, the United States must adapt to an environment where exchange rates and trade imbalances are managed consciously and have become a legitimate subject for debate in international forums like the Group of 20.
Market fundamentalists who feel that government interference with free markets is anathema should be reminded that, by today’s dogmatic standards, Ronald Reagan is one of the great manipulators of all time. He presided over two of the biggest currency interventions in history: the Plaza agreement, which devalued the dollar in 1985, and the Louvre accord of 1987, which brought this devaluation to an end.
The fact is that the rules of global capitalism have changed irrevocably since Lehman Brothers collapsed two years ago — and if the United States refuses to accept this, it will find its global leadership slipping away. The near collapse of the financial system was an “Emperor’s New Clothes” moment of revelation.
Read more...
Showing posts with label Capitalism. Show all posts
Showing posts with label Capitalism. Show all posts
The Green Economy: Capitalist Expansion
Today we are facing great risks — even a civilization crisis – manifest in many dimensions and exacerbated by unprecedented inequalities. Systems and institutions that sustain life and societies – such as food and energy production, climate, water and biodiversity, even economic and democratic institutions – are under attack or in a state of collapse.
In the 1980s, faced with a crisis of profitability, capitalism launched a massive offensive against workers and peoples, seeking to increase profits by expanding markets and reducing costs through trade and financial liberalization, flexibilisation of labour and privatization of the state sector. This massive ‘structural adjustment’ became known as the Washington Consensus.
Today, faced with an even more complex and deeper crisis, capitalism is launching a fresh attack that combines the old austerity measures of the Washington Consensus — as we are witnessing in Europe – with an offensive to create new sources of profit and growth through the “Green Economy” agenda. Although capitalism has always been based on the exploitation of labour and nature, this latest phase of capitalist expansion seeks to exploit and profit by putting a price value on the essential life-giving capacities of nature.
The Rio de Janeiro Earth Summit of 1992 institutionalized important bases for international cooperation on sustainable development, such as polluter pays, common but differentiated responsibilities and the precautionary principle. But Rio also institutionalized the concept of “sustainable development” based on unlimited “growth”. In 1992, the Rio Conventions acknowledged for the first time the rights of Indigenous communities and their central contributions to the preservation of biodiversity. But, in the same documents, the industrialized countries and corporations were guaranteed intellectual property rights to the seeds and genetic resources they stole throughout centuries of colonial domination.
Twenty years later, in 2012, the plunder continues. The “Green Economy” agenda is an attempt to expand the reach of finance capital and integrate into the market all that remains of nature. It aims to do this by putting a monetary “value” or a “price” on biomass, biodiversity and the functions of the ecosystems – such as storing carbon, pollinating crops, or filtering water — in order to integrate these “services” as tradable units in the financial market.
Read more...
In the 1980s, faced with a crisis of profitability, capitalism launched a massive offensive against workers and peoples, seeking to increase profits by expanding markets and reducing costs through trade and financial liberalization, flexibilisation of labour and privatization of the state sector. This massive ‘structural adjustment’ became known as the Washington Consensus.
Today, faced with an even more complex and deeper crisis, capitalism is launching a fresh attack that combines the old austerity measures of the Washington Consensus — as we are witnessing in Europe – with an offensive to create new sources of profit and growth through the “Green Economy” agenda. Although capitalism has always been based on the exploitation of labour and nature, this latest phase of capitalist expansion seeks to exploit and profit by putting a price value on the essential life-giving capacities of nature.
The Rio de Janeiro Earth Summit of 1992 institutionalized important bases for international cooperation on sustainable development, such as polluter pays, common but differentiated responsibilities and the precautionary principle. But Rio also institutionalized the concept of “sustainable development” based on unlimited “growth”. In 1992, the Rio Conventions acknowledged for the first time the rights of Indigenous communities and their central contributions to the preservation of biodiversity. But, in the same documents, the industrialized countries and corporations were guaranteed intellectual property rights to the seeds and genetic resources they stole throughout centuries of colonial domination.
Twenty years later, in 2012, the plunder continues. The “Green Economy” agenda is an attempt to expand the reach of finance capital and integrate into the market all that remains of nature. It aims to do this by putting a monetary “value” or a “price” on biomass, biodiversity and the functions of the ecosystems – such as storing carbon, pollinating crops, or filtering water — in order to integrate these “services” as tradable units in the financial market.
Read more...
Marx's criticisms of Capitalism
According to the Marxist theoretician and revolutionary Vladimir Lenin, "the principal content of Marxism" was "Marx's economic doctrine".[15] Marx believed that the capitalist bourgeois and their economists were promoting what he saw as the lie that "The interests of the capitalist and those of the worker are... one and the same"; he believed that they did this by purporting the concept that "the fastest possible growth of productive capital" was best not only for the wealthy capitalists but also for the workers because it provided them with employment.[16]
Exploitation is a matter of surplus labour — the amount of labour one performs beyond what one receives in goods. Exploitation has been a socio-economic feature of every class society, and is one of the principal features distinguishing the social classes. The power of one social class to control the means of production enables its exploitation of the other classes.
In capitalism, the labour theory of value is the operative concern; the value of a commodity equals the socially necessary labour time required to produce it. Under that condition, surplus value (the difference between the value produced and the value received by a labourer) is synonymous with the term “surplus labour”; thus, capitalist exploitation is realised as deriving surplus value from the worker.
In pre-capitalist economies, exploitation of the worker was achieved via physical coercion. In the capitalist mode of production, that result is more subtly achieved; because the worker does not own the means of production, he or she must voluntarily enter into an exploitive work relationship with a capitalist in order to earn the necessities of life. The worker's entry into such employment is voluntary in that he or she chooses which capitalist to work for. However, the worker must work or starve. Thus, exploitation is inevitable, and the "voluntary" nature of a worker participating in a capitalist society is illusory.
Alienation denotes the estrangement of people from their humanity (German: Gattungswesen, “species-essence”, “species-being”), which is a systematic result of capitalism. Under capitalism, the fruits of production belong to the employers, who expropriate the surplus created by others, and so generate alienated labourers.[17] Alienation objectively describes the worker’s situation in capitalism — his or her self-awareness of this condition is not prerequisite.
The identity of a social class derives from its relationship to the means of production; Marx describes the social classes in capitalist societies:
Proletariat: “those individuals who sell their labour power, and who, in the capitalist mode of production, do not own the means of production“.[citation needed] The capitalist mode of production establishes the conditions enabling the bourgeoisie to exploit the proletariat because the workers’ labour generates a surplus value greater than the workers’ wages.
Bourgeoisie: those who “own the means of production” and buy labour power from the proletariat, thus exploiting the proletariat; they subdivide as bourgeoisie and the petit bourgeoisie.
Petit bourgeoisie are those who employ labourers, but who also work, i.e. small business owners, peasant landlords, trade workers et al. Marxism predicts that the continual reinvention of the means of production eventually would destroy the petit bourgeoisie, degrading them from the middle class to the proletariat.
Lumpenproletariat: criminals, vagabonds, beggars, et al., who have no stake in the economy, and so sell their labour to the highest bidder.
Landlords: an historically important social class who retain some wealth and power.
Peasantry and farmers: a disorganised class incapable of effecting socio-economic change, most of whom would enter the proletariat, and some become landlords.
Class consciousness denotes the awareness — of itself and the social world — that a social class possesses, and its capacity to rationally act in their best interests; hence, class consciousness is required before they can effect a successful revolution.
Without defining ideology,[18] Marx used the term to denote the production of images of social reality; according to Engels, “ideology is a process accomplished by the so-called thinker consciously, it is true, but with a false consciousness. The real motive forces impelling him remain unknown to him; otherwise it simply would not be an ideological process. Hence he imagines false or seeming motive forces”.[19] Because the ruling class controls the society’s means of production, the superstructure of society, the ruling social ideas are determined by the best interests of said ruling class. In The German Ideology, “the ideas of the ruling class are in every epoch the ruling ideas, i.e. the class which is the ruling material force of society, is, at the same time, its ruling intellectual force”.[20]
The term political economy originally denoted the study of the conditions under which economic production was organised in the capitalist system. In Marxism, political economy studies the means of production, specifically of capital, and how that manifests as economic activity.
Read more...
Exploitation is a matter of surplus labour — the amount of labour one performs beyond what one receives in goods. Exploitation has been a socio-economic feature of every class society, and is one of the principal features distinguishing the social classes. The power of one social class to control the means of production enables its exploitation of the other classes.
In capitalism, the labour theory of value is the operative concern; the value of a commodity equals the socially necessary labour time required to produce it. Under that condition, surplus value (the difference between the value produced and the value received by a labourer) is synonymous with the term “surplus labour”; thus, capitalist exploitation is realised as deriving surplus value from the worker.
In pre-capitalist economies, exploitation of the worker was achieved via physical coercion. In the capitalist mode of production, that result is more subtly achieved; because the worker does not own the means of production, he or she must voluntarily enter into an exploitive work relationship with a capitalist in order to earn the necessities of life. The worker's entry into such employment is voluntary in that he or she chooses which capitalist to work for. However, the worker must work or starve. Thus, exploitation is inevitable, and the "voluntary" nature of a worker participating in a capitalist society is illusory.
Alienation denotes the estrangement of people from their humanity (German: Gattungswesen, “species-essence”, “species-being”), which is a systematic result of capitalism. Under capitalism, the fruits of production belong to the employers, who expropriate the surplus created by others, and so generate alienated labourers.[17] Alienation objectively describes the worker’s situation in capitalism — his or her self-awareness of this condition is not prerequisite.
The identity of a social class derives from its relationship to the means of production; Marx describes the social classes in capitalist societies:
Proletariat: “those individuals who sell their labour power, and who, in the capitalist mode of production, do not own the means of production“.[citation needed] The capitalist mode of production establishes the conditions enabling the bourgeoisie to exploit the proletariat because the workers’ labour generates a surplus value greater than the workers’ wages.
Bourgeoisie: those who “own the means of production” and buy labour power from the proletariat, thus exploiting the proletariat; they subdivide as bourgeoisie and the petit bourgeoisie.
Petit bourgeoisie are those who employ labourers, but who also work, i.e. small business owners, peasant landlords, trade workers et al. Marxism predicts that the continual reinvention of the means of production eventually would destroy the petit bourgeoisie, degrading them from the middle class to the proletariat.
Lumpenproletariat: criminals, vagabonds, beggars, et al., who have no stake in the economy, and so sell their labour to the highest bidder.
Landlords: an historically important social class who retain some wealth and power.
Peasantry and farmers: a disorganised class incapable of effecting socio-economic change, most of whom would enter the proletariat, and some become landlords.
Class consciousness denotes the awareness — of itself and the social world — that a social class possesses, and its capacity to rationally act in their best interests; hence, class consciousness is required before they can effect a successful revolution.
Without defining ideology,[18] Marx used the term to denote the production of images of social reality; according to Engels, “ideology is a process accomplished by the so-called thinker consciously, it is true, but with a false consciousness. The real motive forces impelling him remain unknown to him; otherwise it simply would not be an ideological process. Hence he imagines false or seeming motive forces”.[19] Because the ruling class controls the society’s means of production, the superstructure of society, the ruling social ideas are determined by the best interests of said ruling class. In The German Ideology, “the ideas of the ruling class are in every epoch the ruling ideas, i.e. the class which is the ruling material force of society, is, at the same time, its ruling intellectual force”.[20]
The term political economy originally denoted the study of the conditions under which economic production was organised in the capitalist system. In Marxism, political economy studies the means of production, specifically of capital, and how that manifests as economic activity.
Read more...
Marcuse and Capitalism
Marcuse’s analysis of capitalism derives partially from one of Karl Marx’s main concepts: Objectification,[6] which under capitalism becomes Alienation. Marx believed that capitalism was exploiting humans; that the objects produced by laborers became alienated and thus ultimately dehumanized them to functional objects.
Marcuse took this belief and expanded it. He argued that capitalism and industrialization pushed laborers so hard that they began to see themselves as extensions of the objects they were producing. At the beginning of One-Dimensional Man Marcuse writes, “The people recognize themselves in their commodities; they find their soul in their automobile, hi-fi set, split-level home, kitchen equipment,”[7] meaning that under capitalism (in consumer society) humans become extensions of the commodities that they create, thus making commodities extensions of people's minds and bodies and calling into question the notion of alienation.
Read more...
Marcuse took this belief and expanded it. He argued that capitalism and industrialization pushed laborers so hard that they began to see themselves as extensions of the objects they were producing. At the beginning of One-Dimensional Man Marcuse writes, “The people recognize themselves in their commodities; they find their soul in their automobile, hi-fi set, split-level home, kitchen equipment,”[7] meaning that under capitalism (in consumer society) humans become extensions of the commodities that they create, thus making commodities extensions of people's minds and bodies and calling into question the notion of alienation.
Read more...
Frankfurt declaration
The Frankfurt Declaration is the general name that refers to the set of principles titled Aims and Tasks of Democratic Socialism issued by the Socialist International in Frankfurt, West Germany, on 3 July 1951.[1] The Declaration condemned capitalism for placing the "rights of ownership before the rights of man", for allowing economic inequality, and for its historical support of imperialism and fascism.[1]
The Frankfurt Declaration was updated at the 18th Congress of the Socialist International in Stockholm in June 1989.[2]
It declared that capitalism has coincided with "devastating crises and mass unemployment".[3] It praised the development of the welfare state as challenging capitalism and declared its opposition to Bolshevik communism.[3]
It declared that socialism was an international movement that was plural in nature that required different approaches in different circumstances.[1] However the Declaration stated that true socialism could only be achieved through democracy.[1] The economic goals of socialism according to the Declaration include: full employment; the welfare state; achievement of public ownership through a variety of means, including: nationalization, creation of cooperatives to counter capitalist private enterprise, and/or securing rights for trade unions.[1]
The Declaration stated that economic and social planning did not necessarily have to be achieved in a centralized form, but could also be achieved in decentralized forms.[1] The Declaration denounced all forms of discrimination whether economic, legal, or political must be abolished, including discrimination against women, races, regions, and other social groups.[1] The Declaration denounced all forms of colonialism and imperialism.[1]
Read more..
The Frankfurt Declaration was updated at the 18th Congress of the Socialist International in Stockholm in June 1989.[2]
It declared that capitalism has coincided with "devastating crises and mass unemployment".[3] It praised the development of the welfare state as challenging capitalism and declared its opposition to Bolshevik communism.[3]
It declared that socialism was an international movement that was plural in nature that required different approaches in different circumstances.[1] However the Declaration stated that true socialism could only be achieved through democracy.[1] The economic goals of socialism according to the Declaration include: full employment; the welfare state; achievement of public ownership through a variety of means, including: nationalization, creation of cooperatives to counter capitalist private enterprise, and/or securing rights for trade unions.[1]
The Declaration stated that economic and social planning did not necessarily have to be achieved in a centralized form, but could also be achieved in decentralized forms.[1] The Declaration denounced all forms of discrimination whether economic, legal, or political must be abolished, including discrimination against women, races, regions, and other social groups.[1] The Declaration denounced all forms of colonialism and imperialism.[1]
Read more..
Beyond the Washington Consensus
A significant body of economists and policy-makers argues that what was wrong with the Washington Consensus as originally formulated by Williamson had less to do with what was included than with what was missing.[50]
This view asserts that countries such as Brazil, Chile, Peru and Uruguay, largely governed by parties of the left in recent years, did not—whatever their rhetoric—in practice abandon most of the substantive elements of the Consensus. Countries that have achieved macroeconomic stability through fiscal and monetary discipline have been loath to abandon it: Lula, the recent Brazilian President (and leader of the Workers' Party), has been explicit that the defeat of hyperinflation[51] was among the most important positive contributions of recent years to the welfare of the country's poor.
Nor have these countries in practice reversed their more open orientation to global trade and international investment in favor of a return to the policies of autarchy pursued between the 1950s and 1980s.
These economists and policy-makers would, however, overwhelmingly agree that the Washington Consensus was incomplete, and that countries in Latin America and elsewhere need to move beyond "first generation" macroeconomic and trade reforms to a stronger focus on productivity-boosting reforms and direct programs to support the poor.[52]
This includes improving the investment climate and elimination of red tape (especially for smaller firms), strengthening institutions (in areas like justice systems), fighting poverty directly via the types of Conditional Cash Transfer programs adopted by countries like Mexico and Brazil, improving the quality of primary and secondary education, boosting countries' effectiveness at developing and absorbing technology, and addressing the special needs of historically disadvantaged groups including indigenous peoples and Afro-descendant populations across Latin America.
Read more...
This view asserts that countries such as Brazil, Chile, Peru and Uruguay, largely governed by parties of the left in recent years, did not—whatever their rhetoric—in practice abandon most of the substantive elements of the Consensus. Countries that have achieved macroeconomic stability through fiscal and monetary discipline have been loath to abandon it: Lula, the recent Brazilian President (and leader of the Workers' Party), has been explicit that the defeat of hyperinflation[51] was among the most important positive contributions of recent years to the welfare of the country's poor.
Nor have these countries in practice reversed their more open orientation to global trade and international investment in favor of a return to the policies of autarchy pursued between the 1950s and 1980s.
These economists and policy-makers would, however, overwhelmingly agree that the Washington Consensus was incomplete, and that countries in Latin America and elsewhere need to move beyond "first generation" macroeconomic and trade reforms to a stronger focus on productivity-boosting reforms and direct programs to support the poor.[52]
This includes improving the investment climate and elimination of red tape (especially for smaller firms), strengthening institutions (in areas like justice systems), fighting poverty directly via the types of Conditional Cash Transfer programs adopted by countries like Mexico and Brazil, improving the quality of primary and secondary education, boosting countries' effectiveness at developing and absorbing technology, and addressing the special needs of historically disadvantaged groups including indigenous peoples and Afro-descendant populations across Latin America.
Read more...
Neo-Keynesian Criticisms of Washington Consensus
Neo-Keynesian and post-Keynesian critics of the Consensus have argued that the underlying policies were incorrectly laid down and are too rigid to be able to succeed. For example, flexible labor laws were supposed to create new jobs, but economic evidence from Latin America is inconclusive on this point.
In addition, some argue that the package of policies does not take into account economic and cultural differences between countries. Some critics have argued that this set of policies should be implemented, if at all, during a period of rapid economic growth and not—as often is the case—during an economic crisis.
Moisés Naím, chief editor of Foreign Policy, has made the argument that there was no 'consensus' in the first place. He has argued that there are and have been major differences between economists over what is the 'correct economic policy', hence the idea of there being a consensus was also flawed.
Read more...
In addition, some argue that the package of policies does not take into account economic and cultural differences between countries. Some critics have argued that this set of policies should be implemented, if at all, during a period of rapid economic growth and not—as often is the case—during an economic crisis.
Moisés Naím, chief editor of Foreign Policy, has made the argument that there was no 'consensus' in the first place. He has argued that there are and have been major differences between economists over what is the 'correct economic policy', hence the idea of there being a consensus was also flawed.
Read more...
Criticisms of the Washington Consensus
Most criticism has been focused on trade liberalization and the elimination of subsidies, and criticism has been particularly strident in the agriculture sector. Though, in nations with substantial natural resources, criticism has tended to focus on privatization of industries exploiting these resources.
As of 2010, several Latin American countries were led by socialist or other left wing governments, some of which—including Argentina and Venezuela—have campaigned for (and to some degree adopted) policies contrary to the Washington Consensus policies. Other Latin American countries with governments of the left, including Brazil, Chile and Peru, in practice adopted the bulk of the policies included in Williamson's list, even though they criticized the market fundamentalism that these are often associated with. Also critical of the policies as actually promoted by the IMF have been some US economists, such as Joseph Stiglitz and Dani Rodrik, who have challenged what are sometimes described as the 'fundamentalist' policies of the IMF and the US Treasury for what Stiglitz calls a 'one size fits all' treatment of individual economies.
According to Stiglitz the treatment suggested by the IMF is too simple: one dose, and fast—stabilize, liberalize and privatize, without prioritizing or watching for side effects.[24]
The reforms did not always work out the way they were intended. While growth generally improved across much of Latin America, it was in most countries less than the reformers had originally hoped for (and the "transition crisis", as noted above deeper and more sustained than hoped for in some of the former socialist economies). Success stories in Sub-Saharan Africa during the 1990s were relatively few and far in between, and market-oriented reforms by themselves offered no formula to deal with the growing public health emergency in which the continent became embroiled. The critics, meanwhile, argue that the disappointing outcomes have vindicated their concerns about the inappropriateness of the standard reform agenda.[25]
—Professor Dani Rodrik, Harvard University
The critique laid out in The World Bank's study Economic Growth in the 1990s: Learning from a Decade of Reform (2005) [26] shows how far discussion has come from the original ideas of the Washington Consensus. Gobind Nankani, a former vice-president for Africa at the World Bank, wrote in the preface: "there is no unique universal set of rules.... [W]e need to get away from formulae and the search for elusive ‘best practices’...." (p. xiii). The World Bank's new emphasis is on the need for humility, for policy diversity, for selective and modest reforms, and for experimentation.[27]
The World Bank's report Learning from Reform shows some of the developments of the 1990s. There was a deep and prolonged collapse in output in some (though by no means all) countries making the transition from communism to market economies (many of the Central and East European countries, by contrast, made the adjustment relatively rapidly). More than a decade into the transition, some of the former communist countries, especially parts of the former Soviet Union, had still not caught up to their 1990 levels of output. Many Sub-Saharan African's economies failed to take off during the 1990s, in spite of efforts at policy reform, changes in the political and external environments, and continued heavy influx of foreign aid. Uganda, Tanzania, and Mozambique were among countries that showed some success, but they remained fragile. There were several successive and painful financial crises in Latin America, East Asia, Russia, and Turkey. The Latin American recovery in the first half of the 1990s was interrupted by crises later in the decade. There was less growth in per capita GDP in Latin America than in the period of rapid post-War expansion and opening in the world economy, 1950-80. Argentina, described by some as "the poster boy of the Latin American economic revolution",[28] came crashing down in 2002.[27][28]
Among other results of the recent global financial crisis has been a strengthening of belief in the importance of local development models as more suitable than programmatic approaches. Some elements of this school of thought were summarized in the idea of a "Beijing Consensus" which suggested that nations needed to find their own paths to development and reform.
Read more...
As of 2010, several Latin American countries were led by socialist or other left wing governments, some of which—including Argentina and Venezuela—have campaigned for (and to some degree adopted) policies contrary to the Washington Consensus policies. Other Latin American countries with governments of the left, including Brazil, Chile and Peru, in practice adopted the bulk of the policies included in Williamson's list, even though they criticized the market fundamentalism that these are often associated with. Also critical of the policies as actually promoted by the IMF have been some US economists, such as Joseph Stiglitz and Dani Rodrik, who have challenged what are sometimes described as the 'fundamentalist' policies of the IMF and the US Treasury for what Stiglitz calls a 'one size fits all' treatment of individual economies.
According to Stiglitz the treatment suggested by the IMF is too simple: one dose, and fast—stabilize, liberalize and privatize, without prioritizing or watching for side effects.[24]
The reforms did not always work out the way they were intended. While growth generally improved across much of Latin America, it was in most countries less than the reformers had originally hoped for (and the "transition crisis", as noted above deeper and more sustained than hoped for in some of the former socialist economies). Success stories in Sub-Saharan Africa during the 1990s were relatively few and far in between, and market-oriented reforms by themselves offered no formula to deal with the growing public health emergency in which the continent became embroiled. The critics, meanwhile, argue that the disappointing outcomes have vindicated their concerns about the inappropriateness of the standard reform agenda.[25]
—Professor Dani Rodrik, Harvard University
The critique laid out in The World Bank's study Economic Growth in the 1990s: Learning from a Decade of Reform (2005) [26] shows how far discussion has come from the original ideas of the Washington Consensus. Gobind Nankani, a former vice-president for Africa at the World Bank, wrote in the preface: "there is no unique universal set of rules.... [W]e need to get away from formulae and the search for elusive ‘best practices’...." (p. xiii). The World Bank's new emphasis is on the need for humility, for policy diversity, for selective and modest reforms, and for experimentation.[27]
The World Bank's report Learning from Reform shows some of the developments of the 1990s. There was a deep and prolonged collapse in output in some (though by no means all) countries making the transition from communism to market economies (many of the Central and East European countries, by contrast, made the adjustment relatively rapidly). More than a decade into the transition, some of the former communist countries, especially parts of the former Soviet Union, had still not caught up to their 1990 levels of output. Many Sub-Saharan African's economies failed to take off during the 1990s, in spite of efforts at policy reform, changes in the political and external environments, and continued heavy influx of foreign aid. Uganda, Tanzania, and Mozambique were among countries that showed some success, but they remained fragile. There were several successive and painful financial crises in Latin America, East Asia, Russia, and Turkey. The Latin American recovery in the first half of the 1990s was interrupted by crises later in the decade. There was less growth in per capita GDP in Latin America than in the period of rapid post-War expansion and opening in the world economy, 1950-80. Argentina, described by some as "the poster boy of the Latin American economic revolution",[28] came crashing down in 2002.[27][28]
Among other results of the recent global financial crisis has been a strengthening of belief in the importance of local development models as more suitable than programmatic approaches. Some elements of this school of thought were summarized in the idea of a "Beijing Consensus" which suggested that nations needed to find their own paths to development and reform.
Read more...
Washington Consensus
The term Washington Consensus was coined in 1989 by the economist John Williamson to describe a set of ten relatively specific economic policy prescriptions that he considered constituted the "standard" reform package promoted for crisis-wracked developing countries by Washington, D.C.-based institutions such as the International Monetary Fund (IMF), World Bank, and the US Treasury Department.[1] The prescriptions encompassed policies in such areas as macroeconomic stabilization, economic opening with respect to both trade and investment, and the expansion of market forces within the domestic economy.
Subsequently to Williamson's minting of the phrase, and despite his emphatic opposition, the term Washington Consensus has come to be used fairly widely in a second, broader sense, to refer to a more general orientation towards a strongly market-based approach (sometimes described, typically pejoratively, as market fundamentalism or neoliberalism). In emphasizing the magnitude of the difference between the two alternative definitions, Williamson himself has argued (below) that his ten original, narrowly-defined prescriptions have largely acquired the status of "motherhood and apple pie" (i.e., are broadly taken for granted), whereas the subsequent broader definition, representing a form of neoliberal manifesto, "never enjoyed a consensus [in Washington] or anywhere much else" and can by now reasonably be said to be dead.
Discussion of the Washington Consensus has long been contentious. Partly this reflects a lack of agreement over what is meant by the term, in face of the contrast between the broader and narrower definitions outlined above. But there are also substantive differences involved over the merits and consequences of the various policy prescriptions involved. Some of the critics discussed in this article take issue, for example, with the original Consensus's emphasis on the opening of developing countries to global markets, and/or with what they see as an excessive focus on strengthening the influence of domestic market forces, arguably at the expense of key functions of the state. For other commentators reviewed below, the point at issue is less what is included in the Consensus than what is missing, including such areas as institution-building and targeted efforts to improve opportunities for the weakest in society. Despite these areas of controversy, a great many writers and development institutions would by now accept the more general proposition that, rather than any single "one size fits all" formula, strategies need to be tailored to the specific circumstances of individual countries.
Read more...
Subsequently to Williamson's minting of the phrase, and despite his emphatic opposition, the term Washington Consensus has come to be used fairly widely in a second, broader sense, to refer to a more general orientation towards a strongly market-based approach (sometimes described, typically pejoratively, as market fundamentalism or neoliberalism). In emphasizing the magnitude of the difference between the two alternative definitions, Williamson himself has argued (below) that his ten original, narrowly-defined prescriptions have largely acquired the status of "motherhood and apple pie" (i.e., are broadly taken for granted), whereas the subsequent broader definition, representing a form of neoliberal manifesto, "never enjoyed a consensus [in Washington] or anywhere much else" and can by now reasonably be said to be dead.
Discussion of the Washington Consensus has long been contentious. Partly this reflects a lack of agreement over what is meant by the term, in face of the contrast between the broader and narrower definitions outlined above. But there are also substantive differences involved over the merits and consequences of the various policy prescriptions involved. Some of the critics discussed in this article take issue, for example, with the original Consensus's emphasis on the opening of developing countries to global markets, and/or with what they see as an excessive focus on strengthening the influence of domestic market forces, arguably at the expense of key functions of the state. For other commentators reviewed below, the point at issue is less what is included in the Consensus than what is missing, including such areas as institution-building and targeted efforts to improve opportunities for the weakest in society. Despite these areas of controversy, a great many writers and development institutions would by now accept the more general proposition that, rather than any single "one size fits all" formula, strategies need to be tailored to the specific circumstances of individual countries.
Read more...
Blockupy and the Politics of Crisis
The politics of crisis speaks among other things to the inherent crisis within the capitalist process. Nonlinear studies of capitalism, for example, take a far more honest approach to their subject matter. One can read the theology that is neoclassical economics and despair that even the first steps of scientific method are ignored. The primary failure is the belief amongst neoclassical economists that exceptions to their rules prove them.
On the contrary, a physicist for example would build a model of some process and run the process to see if the model was correct. If something strange happened, they would not conclude reality is wrong, rather they would integrate the singular event into their model, or completely revise their model to fit the new picture. Neoclassical economists on the other hand see strange occurrences as failures of reality (humans), and stick rigidly to their models. The result: capitalist crisis is seen as a failure of humans, not of the neoliberal order, and the solutions prescribed are (i) reaffirmation of the infallibility of the model; (ii) disciplining of material humanity for having sullied the ideal form of capital; and (iii) perpetuation of the myth that crisis is unusual, rather than the norm.It would be wrong, however, to counter this by arguing that capitalism must end in crisis for to do so is simply to adopt the negative position which reaffirms the exteriority of crisis to capital. This carries with it the implicit suggestion that capitalism runs fine for seven fat years, then suddenly tips into a correction.
Surely the correct synthesis is in the conception of the process as such. Capitalism, being a process, already engages in the reflexive self-determination of the negative in its becoming. Put more simply, crisis is central to capitalism – it is in constant crisis – capitalism is the crisis.
We can see this for example already in the USD2bn lost by JP Morgan – the bank took positions, then hedged these positions and finally hedged its hedges. Hedge funds, smelling the instability of the bank’s stance, piled in and willingly took bets with JP Morgan, which duly obliged, which resulted in the massive loss. It is a nice story to see this as “risk management gone wrong”, but surely the point is that great profits were drawn, or derived, from the constitution of a massively unstable risk structure – one that was actively toppled this way and that by capitalists in order to increase the pent up “crisis” in the system.
Read more...
On the contrary, a physicist for example would build a model of some process and run the process to see if the model was correct. If something strange happened, they would not conclude reality is wrong, rather they would integrate the singular event into their model, or completely revise their model to fit the new picture. Neoclassical economists on the other hand see strange occurrences as failures of reality (humans), and stick rigidly to their models. The result: capitalist crisis is seen as a failure of humans, not of the neoliberal order, and the solutions prescribed are (i) reaffirmation of the infallibility of the model; (ii) disciplining of material humanity for having sullied the ideal form of capital; and (iii) perpetuation of the myth that crisis is unusual, rather than the norm.It would be wrong, however, to counter this by arguing that capitalism must end in crisis for to do so is simply to adopt the negative position which reaffirms the exteriority of crisis to capital. This carries with it the implicit suggestion that capitalism runs fine for seven fat years, then suddenly tips into a correction.
Surely the correct synthesis is in the conception of the process as such. Capitalism, being a process, already engages in the reflexive self-determination of the negative in its becoming. Put more simply, crisis is central to capitalism – it is in constant crisis – capitalism is the crisis.
We can see this for example already in the USD2bn lost by JP Morgan – the bank took positions, then hedged these positions and finally hedged its hedges. Hedge funds, smelling the instability of the bank’s stance, piled in and willingly took bets with JP Morgan, which duly obliged, which resulted in the massive loss. It is a nice story to see this as “risk management gone wrong”, but surely the point is that great profits were drawn, or derived, from the constitution of a massively unstable risk structure – one that was actively toppled this way and that by capitalists in order to increase the pent up “crisis” in the system.
Read more...
Franfurt School
The Frankfurt School (German: Frankfurter Schule) refers to a school of neo-Marxist interdisciplinary social theory,[1] particularly associated with the Institute for Social Research at the University of Frankfurt am Main. The school initially consisted of dissident Marxists who believed that some of Marx's followers had come to parrot a narrow selection of Marx's ideas, usually in defense of orthodox Communist parties. Meanwhile, many of these theorists experienced that traditional Marxist theory could not adequately explain the turbulent and unexpected development of capitalist societies in the twentieth century. Critical of both capitalism and Soviet socialism, their writings pointed to the possibility of an alternative path to social development.[2]
Although sometimes only loosely affiliated, Frankfurt School theorists spoke with a common paradigm in mind, thus sharing the same assumptions and being preoccupied with similar questions.[3] In order to fill in the perceived omissions of traditional Marxism, they sought to draw answers from other schools of thought, hence using the insights of antipositivist sociology, psychoanalysis, existential philosophy, and other disciplines.[1] The school's main figures sought to learn from and synthesize the works of such varied thinkers as Kant, Hegel, Marx, Freud, Weber and Lukács.[4]
Following Marx, they were concerned by the conditions which allowed for social change and the establishment of rational institutions.[5] Their emphasis on the "critical" component of theory was derived significantly from their attempt to overcome the limits of positivism, materialism and determinism by returning to Kant's critical philosophy and its successors in German idealism, principally Hegel's philosophy, with its emphasis on dialectic and contradiction as inherent properties of reality.
Since the 1960s, Frankfurt School critical theory has increasingly been guided by Jürgen Habermas' work on communicative reason,[6][7] linguistic intersubjectivity and what Habermas calls "the philosophical discourse of modernity".[8] More recently, critical theorists such as Nikolas Kompridis have voiced opposition to Habermas, claiming that he has undermined the aspirations for social change which originally gave purpose to critical theory's various projects—for example the problem of what reason should mean, the analysis and enlargement of "conditions of possibility" for social emancipation, and the critique of modern capitalism.[9]
Read more...
Although sometimes only loosely affiliated, Frankfurt School theorists spoke with a common paradigm in mind, thus sharing the same assumptions and being preoccupied with similar questions.[3] In order to fill in the perceived omissions of traditional Marxism, they sought to draw answers from other schools of thought, hence using the insights of antipositivist sociology, psychoanalysis, existential philosophy, and other disciplines.[1] The school's main figures sought to learn from and synthesize the works of such varied thinkers as Kant, Hegel, Marx, Freud, Weber and Lukács.[4]
Following Marx, they were concerned by the conditions which allowed for social change and the establishment of rational institutions.[5] Their emphasis on the "critical" component of theory was derived significantly from their attempt to overcome the limits of positivism, materialism and determinism by returning to Kant's critical philosophy and its successors in German idealism, principally Hegel's philosophy, with its emphasis on dialectic and contradiction as inherent properties of reality.
Since the 1960s, Frankfurt School critical theory has increasingly been guided by Jürgen Habermas' work on communicative reason,[6][7] linguistic intersubjectivity and what Habermas calls "the philosophical discourse of modernity".[8] More recently, critical theorists such as Nikolas Kompridis have voiced opposition to Habermas, claiming that he has undermined the aspirations for social change which originally gave purpose to critical theory's various projects—for example the problem of what reason should mean, the analysis and enlargement of "conditions of possibility" for social emancipation, and the critique of modern capitalism.[9]
Read more...
The Frankfurt School
During the 1930s, the Frankfurt school developed a critical and transdisciplinary approach to cultural and communications studies, combining political economy, textual analysis, and analysis of social and ideological effects of. They coined the term "culture industry" to signify the process of the industrialization of mass-produced culture and the commercial imperatives that drove the system.
The critical theorists analyzed all mass-mediated cultural artifacts within the context of industrial production, in which the commodities of the culture industries exhibited the same features as other products of mass production: commodification, standardization, and massification. The culture industries had the specific function, however, of providing ideological legitimation of the existing capitalist societies and of integrating individuals into its way of life.
Adorno's analyses of popular music, television, and other phenomena ranging from astrology columns to fascist speeches (1991, 1994), Lowenthal's studies of popular literature and magazines (1961), Herzog's studies of radio soap operas (1941), and the perspectives and critiques of mass culture developed in Horkheimer and Adorno's famous study of the culture industries (1972 and Adorno 1991) provide many examples of the Frankfurt school approach.
Moreover, in their theories of the culture industries and critiques of mass culture, they were among the first social theorists its importance in the reproduction of contemporary societies. In their view, mass culture and communications stand in the center of leisure activity, are important agents of socialization, mediators of political reality, and should thus be seen as major institutions of contemporary societies with a variety of economic, political, cultural and social effects.
Furthermore, the critical theorists investigated the cultural industries in a political context as a form of the integration of the working class into capitalist societies. The Frankfurt school theorists were among the first neo-Marxian groups to examine the effects of mass culture and the rise of the consumer society on the working classes which were to be the instrument of revolution in the classical Marxian scenario. They also analyzed the ways that the culture industries and consumer society were stabilizing contemporary capitalism and accordingly sought new strategies for political change, agencies of political transformation, and models for political emancipation that could serve as norms of social critique and goals for political struggle. This project required rethinking Marxian theory and produced many important contributions -- as well as some problematical positions.
The Frankfurt school focused intently on technology and culture, indicating how technology was becoming both a major force of production and formative mode of social organization and control. In a 1941 article, "Some Social Implications of Modern Technology," Herbert Marcuse argued that technology in the contemporary era constitutes an entire "mode of organizing and perpetuating (or changing) social relationships, a manifestation of prevalent thought and behavior patterns, an instrument for control and domination" (414). In the realm of culture, technology produced mass culture that habituated individuals to conform to the dominant patterns of thought and behavior, and thus provided powerful instruments of social control and domination.
Victims of European fascism, the Frankfurt school experienced first hand the ways that the Nazis used the instruments of mass culture to produce submission to fascist culture and society. While in exile in the United States, the members of the Frankfurt school came to believe that American "popular culture" was also highly ideological and worked to promote the interests of American capitalism. Controlled by giant corporations, the culture industries were organized according to the strictures of mass production, churning out mass-produced products that generated a highly commercial system of culture which in turn sold the values, life-styles, and institutions of "the American way of life."
The work of the Frankfurt School provided what Paul Lazarsfeld (1942), one of the originators of modern communications studies, called a critical approach, which he distinguished from the "administrative research." The positions of Adorno, Lowenthal, and other members of the inner circle of the Institute for Social Research were contested by Walter Benjamin, an idiosyncratic theorist loosely affiliated with the Institute. Benjamin, writing in Paris during the 1930s, discerned progressive aspects in new technologies of cultural production such as photography, film, and radio.
In "The Work of Art in the Age of Mechanical Reproduction" (1969), Benjamin noted how new mass media were supplanting older forms of culture whereby the mass reproduction of photography, film, recordings, and publications replaced the emphasis on the originality and "aura" of the work of art in an earlier era. Freed from the mystification of high culture, Benjamin believed that media culture could cultivate more critical individuals able to judge and analyze their culture, just as sports fans could dissect and evaluate athletic activities. In addition, processing the rush of images of cinema created, Benjamin believed, subjectivities better able to parry and comprehend the flux and turbulence of experience in industrialized, urbanized societies.
Himself a collaborator of the prolific German artist Bertolt Brecht, Benjamin worked with Brecht on films, created radio plays, and attempted to utilize the media as organs of social progress. In the essay "The Artist as Producer" (1999 [1934]), Benjamin argued that progressive cultural creators should "refunction" the apparatus of cultural production, turning theater and film, for instance, into a forum of political enlightenment and discussion rather than a medium of "culinary" audience pleasure. Both Brecht and Benjamin wrote radio plays and were interested in film as an instrument of progressive social change. In an essay on radio theory, Brecht anticipated the Internet in his call for reconstructing the apparatus of broadcasting from one-way transmission to a more interactive form of two-way, or multiple, communication (in Silberman 2000: 41ff.)-- a form first realized in CB radio and then electronically-mediated computer communication.
Moreover, Benjamin wished to promote a radical cultural and media politics concerned with the creation of alternative oppositional cultures. Yet he recognized that media such as film could have conservative effects. While he thought it was progressive that mass-produced works were losing their "aura," their magical force, and were opening cultural artifacts for more critical and political discussion, he recognized that film could create a new kind of ideological magic through the cult of celebrity and techniques like the close-up that fetishized certain stars or images via the technology of the cinema. Benjamin was thus one of the first radical cultural critics to look carefully at the form and technology of media culture in appraising its complex nature and effects.
Moreover, he developed a unique approach to cultural history that is one of his most enduring legacies, constituting a micrological history of Paris in the 18th century, an uncompleted project that contains a wealth of material for study and reflection (see Benjamin 2000 and the study in Buck-Morss 1989).
Max Horkheimer and T.W. Adorno answered Benjamin's optimism in a highly influential analysis of the culture industry published in their book Dialectic of Enlightenment, which first appeared in 1948 and was translated into English in 1972. They argued that the system of cultural production dominated by film, radio broadcasting, newspapers, and magazines, was controlled by advertising and commercial imperatives, and served to create subservience to the system of consumer capitalism. While later critics pronounced their approach too manipulative, reductive, and elitist, it provides an important corrective to more populist approaches to media culture that downplay the way the media industries exert power over audiences and help produce thought and behavior that conforms to the existing society.
The Frankfurt School also provide useful historical perspectives on the transition from traditional culture and modernism in the arts to a mass-produced media and consumer society. In his path-breaking book The Structural Transformation of the Public Sphere, Jurgen Habermas further historicizes Adorno and Horkheimer's analysis of the culture industry. Providing historical background to the triumph of the culture industry, Habermas notes how bourgeois society in the late 18th and 19th century was distinguished by the rise of a public sphere that stood between civil society and the state and which mediated between public and private interests. For the first time in history, individuals and groups could shape public opinion, giving direct expression to their needs and interests while influencing political practice. The bourgeois public sphere made it possible to form a realm of public opinion that opposed state power and the powerful interests that were coming to shape bourgeois society.
Habermas notes a transition from the liberal public sphere which originated in the Enlightenment and the American and French Revolution to a media-dominated public sphere in the current stage of what he calls "welfare state capitalism and mass democracy." This historical transformation is grounded in Horkheimer and Adorno's analysis of the culture industry, in which giant corporations have taken over the public sphere and transformed it from a site of rational debate into one of manipulative consumption and passivity. In this transformation, "public opinion" shifts from rational consensus emerging from debate, discussion, and reflection to the manufactured opinion of polls or media experts. For Habermas, the interconnection between the sphere of public debate and individual participation has thus been fractured and transmuted into that of a realm of political manipulation and spectacle, in which citizen-consumers ingest and absorb passively entertainment and information. "Citizens" thus become spectators of media presentations and discourse which arbitrate public discussion and reduce its audiences to objects of news, information, and public affairs. In Habermas's words: "Inasmuch as the mass media today strip away the literary husks from the kind of bourgeois self-interpretation and utilize them as marketable forms for the public services provided in a culture of consumers, the original meaning is reversed" (1989: 171).
Habermas's critics, however, contend that he idealizes the earlier bourgeois public sphere by presenting it as a forum of rational discussion and debate when in fact many social groups and most women were excluded. Critics also contend that Habermas neglects various oppositional working class, plebeian, and women's public spheres developed alongside of the bourgeois public sphere to represent voices and interests excluded in this forum (see the studies in Calhoun 1992). Yet Habermas is right that in the period of the democratic revolutions a public sphere emerged in which for the first time in history ordinary citizens could participate in political discussion and debate, organize, and struggle against unjust authority. Habermas's account also points to the increasingly important role of the media in politics and everyday life and the ways that corporate interests have colonized this sphere, using the media and culture to promote their own interests.
The culture industry thesis described both the production of massified cultural products and homogenized subjectivities. Mass culture for the Frankfurt School produced desires, dreams, hopes, fears, and longings, as well as unending desire for consumer products. The culture industry produced cultural consumers who would consume its products and conform to the dictates and the behaviors of the existing society. And yet, as Walter Benjamin pointed out (1969), the culture industry also produces rational and critical consumers able to dissect and discriminate among cultural texts and performances, much as sports fans learn to analyze and criticize sports events.
In retrospect, one can see the Frankfurt school work as articulation of a theory of the stage of state and monopoly capitalism that became dominant during the 1930s. This was an era of large organizations, theorized earlier by Austro-Marxist Rudolf Hilferding as "organized capitalism" (1980 [1910]), in which the state and giant corporations managed the economy and in which individuals submitted to state and corporate control. This period is often described as "Fordism" to designate the system of mass production and the homogenizing regime of capital which wanted to produce mass desires, tastes, and behavior. It was thus an era of mass production and consumption characterized by uniformity and homogeneity of needs, thought, and behavior producing a mass society and what the Frankfurt school described as "the end of the individual." No longer was individual thought and action the motor of social and cultural progress; instead giant organizations and institutions overpowered individuals. The era corresponds to the staid, conformist, and conservative world of corporate capitalism that was dominant in the 1950s with its organization men and women, its mass consumption, and its mass culture.
Read more.....
The critical theorists analyzed all mass-mediated cultural artifacts within the context of industrial production, in which the commodities of the culture industries exhibited the same features as other products of mass production: commodification, standardization, and massification. The culture industries had the specific function, however, of providing ideological legitimation of the existing capitalist societies and of integrating individuals into its way of life.
Adorno's analyses of popular music, television, and other phenomena ranging from astrology columns to fascist speeches (1991, 1994), Lowenthal's studies of popular literature and magazines (1961), Herzog's studies of radio soap operas (1941), and the perspectives and critiques of mass culture developed in Horkheimer and Adorno's famous study of the culture industries (1972 and Adorno 1991) provide many examples of the Frankfurt school approach.
Moreover, in their theories of the culture industries and critiques of mass culture, they were among the first social theorists its importance in the reproduction of contemporary societies. In their view, mass culture and communications stand in the center of leisure activity, are important agents of socialization, mediators of political reality, and should thus be seen as major institutions of contemporary societies with a variety of economic, political, cultural and social effects.
Furthermore, the critical theorists investigated the cultural industries in a political context as a form of the integration of the working class into capitalist societies. The Frankfurt school theorists were among the first neo-Marxian groups to examine the effects of mass culture and the rise of the consumer society on the working classes which were to be the instrument of revolution in the classical Marxian scenario. They also analyzed the ways that the culture industries and consumer society were stabilizing contemporary capitalism and accordingly sought new strategies for political change, agencies of political transformation, and models for political emancipation that could serve as norms of social critique and goals for political struggle. This project required rethinking Marxian theory and produced many important contributions -- as well as some problematical positions.
The Frankfurt school focused intently on technology and culture, indicating how technology was becoming both a major force of production and formative mode of social organization and control. In a 1941 article, "Some Social Implications of Modern Technology," Herbert Marcuse argued that technology in the contemporary era constitutes an entire "mode of organizing and perpetuating (or changing) social relationships, a manifestation of prevalent thought and behavior patterns, an instrument for control and domination" (414). In the realm of culture, technology produced mass culture that habituated individuals to conform to the dominant patterns of thought and behavior, and thus provided powerful instruments of social control and domination.
Victims of European fascism, the Frankfurt school experienced first hand the ways that the Nazis used the instruments of mass culture to produce submission to fascist culture and society. While in exile in the United States, the members of the Frankfurt school came to believe that American "popular culture" was also highly ideological and worked to promote the interests of American capitalism. Controlled by giant corporations, the culture industries were organized according to the strictures of mass production, churning out mass-produced products that generated a highly commercial system of culture which in turn sold the values, life-styles, and institutions of "the American way of life."
The work of the Frankfurt School provided what Paul Lazarsfeld (1942), one of the originators of modern communications studies, called a critical approach, which he distinguished from the "administrative research." The positions of Adorno, Lowenthal, and other members of the inner circle of the Institute for Social Research were contested by Walter Benjamin, an idiosyncratic theorist loosely affiliated with the Institute. Benjamin, writing in Paris during the 1930s, discerned progressive aspects in new technologies of cultural production such as photography, film, and radio.
In "The Work of Art in the Age of Mechanical Reproduction" (1969), Benjamin noted how new mass media were supplanting older forms of culture whereby the mass reproduction of photography, film, recordings, and publications replaced the emphasis on the originality and "aura" of the work of art in an earlier era. Freed from the mystification of high culture, Benjamin believed that media culture could cultivate more critical individuals able to judge and analyze their culture, just as sports fans could dissect and evaluate athletic activities. In addition, processing the rush of images of cinema created, Benjamin believed, subjectivities better able to parry and comprehend the flux and turbulence of experience in industrialized, urbanized societies.
Himself a collaborator of the prolific German artist Bertolt Brecht, Benjamin worked with Brecht on films, created radio plays, and attempted to utilize the media as organs of social progress. In the essay "The Artist as Producer" (1999 [1934]), Benjamin argued that progressive cultural creators should "refunction" the apparatus of cultural production, turning theater and film, for instance, into a forum of political enlightenment and discussion rather than a medium of "culinary" audience pleasure. Both Brecht and Benjamin wrote radio plays and were interested in film as an instrument of progressive social change. In an essay on radio theory, Brecht anticipated the Internet in his call for reconstructing the apparatus of broadcasting from one-way transmission to a more interactive form of two-way, or multiple, communication (in Silberman 2000: 41ff.)-- a form first realized in CB radio and then electronically-mediated computer communication.
Moreover, Benjamin wished to promote a radical cultural and media politics concerned with the creation of alternative oppositional cultures. Yet he recognized that media such as film could have conservative effects. While he thought it was progressive that mass-produced works were losing their "aura," their magical force, and were opening cultural artifacts for more critical and political discussion, he recognized that film could create a new kind of ideological magic through the cult of celebrity and techniques like the close-up that fetishized certain stars or images via the technology of the cinema. Benjamin was thus one of the first radical cultural critics to look carefully at the form and technology of media culture in appraising its complex nature and effects.
Moreover, he developed a unique approach to cultural history that is one of his most enduring legacies, constituting a micrological history of Paris in the 18th century, an uncompleted project that contains a wealth of material for study and reflection (see Benjamin 2000 and the study in Buck-Morss 1989).
Max Horkheimer and T.W. Adorno answered Benjamin's optimism in a highly influential analysis of the culture industry published in their book Dialectic of Enlightenment, which first appeared in 1948 and was translated into English in 1972. They argued that the system of cultural production dominated by film, radio broadcasting, newspapers, and magazines, was controlled by advertising and commercial imperatives, and served to create subservience to the system of consumer capitalism. While later critics pronounced their approach too manipulative, reductive, and elitist, it provides an important corrective to more populist approaches to media culture that downplay the way the media industries exert power over audiences and help produce thought and behavior that conforms to the existing society.
The Frankfurt School also provide useful historical perspectives on the transition from traditional culture and modernism in the arts to a mass-produced media and consumer society. In his path-breaking book The Structural Transformation of the Public Sphere, Jurgen Habermas further historicizes Adorno and Horkheimer's analysis of the culture industry. Providing historical background to the triumph of the culture industry, Habermas notes how bourgeois society in the late 18th and 19th century was distinguished by the rise of a public sphere that stood between civil society and the state and which mediated between public and private interests. For the first time in history, individuals and groups could shape public opinion, giving direct expression to their needs and interests while influencing political practice. The bourgeois public sphere made it possible to form a realm of public opinion that opposed state power and the powerful interests that were coming to shape bourgeois society.
Habermas notes a transition from the liberal public sphere which originated in the Enlightenment and the American and French Revolution to a media-dominated public sphere in the current stage of what he calls "welfare state capitalism and mass democracy." This historical transformation is grounded in Horkheimer and Adorno's analysis of the culture industry, in which giant corporations have taken over the public sphere and transformed it from a site of rational debate into one of manipulative consumption and passivity. In this transformation, "public opinion" shifts from rational consensus emerging from debate, discussion, and reflection to the manufactured opinion of polls or media experts. For Habermas, the interconnection between the sphere of public debate and individual participation has thus been fractured and transmuted into that of a realm of political manipulation and spectacle, in which citizen-consumers ingest and absorb passively entertainment and information. "Citizens" thus become spectators of media presentations and discourse which arbitrate public discussion and reduce its audiences to objects of news, information, and public affairs. In Habermas's words: "Inasmuch as the mass media today strip away the literary husks from the kind of bourgeois self-interpretation and utilize them as marketable forms for the public services provided in a culture of consumers, the original meaning is reversed" (1989: 171).
Habermas's critics, however, contend that he idealizes the earlier bourgeois public sphere by presenting it as a forum of rational discussion and debate when in fact many social groups and most women were excluded. Critics also contend that Habermas neglects various oppositional working class, plebeian, and women's public spheres developed alongside of the bourgeois public sphere to represent voices and interests excluded in this forum (see the studies in Calhoun 1992). Yet Habermas is right that in the period of the democratic revolutions a public sphere emerged in which for the first time in history ordinary citizens could participate in political discussion and debate, organize, and struggle against unjust authority. Habermas's account also points to the increasingly important role of the media in politics and everyday life and the ways that corporate interests have colonized this sphere, using the media and culture to promote their own interests.
The culture industry thesis described both the production of massified cultural products and homogenized subjectivities. Mass culture for the Frankfurt School produced desires, dreams, hopes, fears, and longings, as well as unending desire for consumer products. The culture industry produced cultural consumers who would consume its products and conform to the dictates and the behaviors of the existing society. And yet, as Walter Benjamin pointed out (1969), the culture industry also produces rational and critical consumers able to dissect and discriminate among cultural texts and performances, much as sports fans learn to analyze and criticize sports events.
In retrospect, one can see the Frankfurt school work as articulation of a theory of the stage of state and monopoly capitalism that became dominant during the 1930s. This was an era of large organizations, theorized earlier by Austro-Marxist Rudolf Hilferding as "organized capitalism" (1980 [1910]), in which the state and giant corporations managed the economy and in which individuals submitted to state and corporate control. This period is often described as "Fordism" to designate the system of mass production and the homogenizing regime of capital which wanted to produce mass desires, tastes, and behavior. It was thus an era of mass production and consumption characterized by uniformity and homogeneity of needs, thought, and behavior producing a mass society and what the Frankfurt school described as "the end of the individual." No longer was individual thought and action the motor of social and cultural progress; instead giant organizations and institutions overpowered individuals. The era corresponds to the staid, conformist, and conservative world of corporate capitalism that was dominant in the 1950s with its organization men and women, its mass consumption, and its mass culture.
Read more.....
Essential viewing! China's Capitalism
On March 28th, Dean Guthrie delivered a talk entitled “China’s Capitalism: A Model for the U.S.?” at The Clarke Forum for Contemporary Issues at Dickson College located in Carlisle, PA. The Clarke Forum was created in 1994 to connect Dickinson students, faculty and members of the broader community with scholars, practicing professionals, artists, and activists through the sponsorship of lectures, seminars, conferences, and performances. By encouraging engagement with these visitors in ways that allow for dialogue and critical reflection, the Clarke Forum helps prepare students to become knowledgeable, productive, and intellectually active citizens and leaders.
Who will step up for capitalism?
"I'm so scared of this anti-Wall Street effort. I'm frightened to death," political consultant Frank Luntz told a gathering of the Republican Governors Association in Florida last month. "They're having an impact on what the American people think of capitalism."
Luntz's suggested first rule for Republicans when defending capitalism? Don't talk about capitalism. "I'm trying to get that word removed and we're replacing it with either 'economic freedom' or 'free market.' The public still prefers capitalism to socialism, but they think capitalism is immoral."
Americans think capitalism is immoral? If Luntz does have the data to back this up, and he probably does, then conservatives should be fighting to change Americans' minds, not cede the argument.
And if "capitalism" is such a terrible word for conservatives to utter, then why do liberals avoid it like the plague? Consider two recent attacks on American capitalism, neither of which ever actually used the word "capitalism." First, two weeks ago, former Service Employees International Union President Andy Stern gushed about China's "superior economic model" in the pages of the Wall Street Journal. The man who once bragged he spent more than $60 million putting Obama in the White House explained, "The conservative-preferred, free-market fundamentalist, shareholder-only model -- so successful in the 20th century -- is being thrown onto the trash heap of history in the 21st century."
Then last week, President Obama echoed Stern's call for an end to American capitalism in a speech delivered in Osawatomie, Kan., Obama acknowledged that while free-market principles appeal "to our rugged individualism and our healthy skepticism of too much government," history had allegedly shown that "it doesn't work. It has never worked."
Capitalism has never worked? Really? Obama spent much of his Osawatomie speech bemoaning the fact that a byproduct of the capitalist system is inequality. He's right. Capitalism does include inequality. But so does every other system of organizing human behaviour. Capitalism just does it in a way that also makes everyone richer.
As Nobel laureate Milton Friedman said in 1979:
"The great achievements of civilization have not come from government bureaus. Einstein didn't construct his theory under order from a bureaucrat. Henry Ford didn't revolutionize the automobile industry that way.
"In the only cases in which the masses have escaped from the kind of grinding poverty you're talking about, the only cases in recorded history are where they have had capitalism ...
"The record of history is absolutely crystal clear: There is no alternative way, so far discovered, of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by a free enterprise system."
Read more...
Luntz's suggested first rule for Republicans when defending capitalism? Don't talk about capitalism. "I'm trying to get that word removed and we're replacing it with either 'economic freedom' or 'free market.' The public still prefers capitalism to socialism, but they think capitalism is immoral."
Americans think capitalism is immoral? If Luntz does have the data to back this up, and he probably does, then conservatives should be fighting to change Americans' minds, not cede the argument.
And if "capitalism" is such a terrible word for conservatives to utter, then why do liberals avoid it like the plague? Consider two recent attacks on American capitalism, neither of which ever actually used the word "capitalism." First, two weeks ago, former Service Employees International Union President Andy Stern gushed about China's "superior economic model" in the pages of the Wall Street Journal. The man who once bragged he spent more than $60 million putting Obama in the White House explained, "The conservative-preferred, free-market fundamentalist, shareholder-only model -- so successful in the 20th century -- is being thrown onto the trash heap of history in the 21st century."
Then last week, President Obama echoed Stern's call for an end to American capitalism in a speech delivered in Osawatomie, Kan., Obama acknowledged that while free-market principles appeal "to our rugged individualism and our healthy skepticism of too much government," history had allegedly shown that "it doesn't work. It has never worked."
Capitalism has never worked? Really? Obama spent much of his Osawatomie speech bemoaning the fact that a byproduct of the capitalist system is inequality. He's right. Capitalism does include inequality. But so does every other system of organizing human behaviour. Capitalism just does it in a way that also makes everyone richer.
As Nobel laureate Milton Friedman said in 1979:
"The great achievements of civilization have not come from government bureaus. Einstein didn't construct his theory under order from a bureaucrat. Henry Ford didn't revolutionize the automobile industry that way.
"In the only cases in which the masses have escaped from the kind of grinding poverty you're talking about, the only cases in recorded history are where they have had capitalism ...
"The record of history is absolutely crystal clear: There is no alternative way, so far discovered, of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by a free enterprise system."
Read more...
Can Capitalism Help Save Our Planet?
We need to harness the power and ingenuity of business to tackle global warming.
Half a century ago, the world was threatened with nuclear annihilation. The threat dissipated, ultimately, when capitalism as an economic system triumphed over communism.
Today, we face another threat: a planet, which, in the face of unrelenting population pressure and economic growth, is suffering from a deteriorating environment.
Our region has always depended on nature's bounty, including its fruitful seas and forests, to support a good quality of life. Thus, the Northwest is particularly sensitive to the shifting environment. A warming planet, according to the University of Washington's Climate Impacts Group, will likely mean more spring flooding, less water in summer to support farmers and new development, and more forest fires. In the long term, we can expect more pests and disease to harm our forests and our health.
For years, we have depended on regulations and our love of nature to protect the environment. But it is increasingly clear that to change behavior on a global scale, we must rely on the same market system of supply and demand that ultimately defeated communism.
If Microsoft helps computers save energy or Paccar develops a more environmentally friendly truck, those companies sell more products. They also reduce the carbon footprint of computers and trucks around the globe.
We know that there is a strong economic return from being environmentally responsible. Buildings built to conserve energy receive a premium on the real estate market; environmentally responsible companies save money and attract better talent. "Executing a strategy for sustainability is critical for business's survival in today's rapidly changing world: one in which there are more hurricanes, fewer wetlands, more limits on resources, and less credit to go around," says Adam Werbach in Strategy for Sustainability: A Business Manifesto, published this summer by Harvard Business Press.
Werbach recommends "Nature's Rules of Sustainability": adapt and specialize to the changing environment; plan and execute systemically, not compartmentally; rightsize regularly, rather than downsizing occasionally; foster longevity, not immediate gratification; waste nothing, recycle everything and borrow little.
In the Northwest, we have an opportunity to lead the country in developing this new business model. If we can build the values of sustainability into every product and service we provide, our companies will be best positioned to respond when new regulations are enacted to reduce carbon emissions.
But change is never easy. To be a sustainable business often requires new investments with an eye to long-term returns. The goal of our Green Washington competition is to encourage progress toward sustainability by recognizing the companies, governments and institutions that are leading in this effort.
Read more...
Half a century ago, the world was threatened with nuclear annihilation. The threat dissipated, ultimately, when capitalism as an economic system triumphed over communism.
Today, we face another threat: a planet, which, in the face of unrelenting population pressure and economic growth, is suffering from a deteriorating environment.
Our region has always depended on nature's bounty, including its fruitful seas and forests, to support a good quality of life. Thus, the Northwest is particularly sensitive to the shifting environment. A warming planet, according to the University of Washington's Climate Impacts Group, will likely mean more spring flooding, less water in summer to support farmers and new development, and more forest fires. In the long term, we can expect more pests and disease to harm our forests and our health.
For years, we have depended on regulations and our love of nature to protect the environment. But it is increasingly clear that to change behavior on a global scale, we must rely on the same market system of supply and demand that ultimately defeated communism.
If Microsoft helps computers save energy or Paccar develops a more environmentally friendly truck, those companies sell more products. They also reduce the carbon footprint of computers and trucks around the globe.
We know that there is a strong economic return from being environmentally responsible. Buildings built to conserve energy receive a premium on the real estate market; environmentally responsible companies save money and attract better talent. "Executing a strategy for sustainability is critical for business's survival in today's rapidly changing world: one in which there are more hurricanes, fewer wetlands, more limits on resources, and less credit to go around," says Adam Werbach in Strategy for Sustainability: A Business Manifesto, published this summer by Harvard Business Press.
Werbach recommends "Nature's Rules of Sustainability": adapt and specialize to the changing environment; plan and execute systemically, not compartmentally; rightsize regularly, rather than downsizing occasionally; foster longevity, not immediate gratification; waste nothing, recycle everything and borrow little.
In the Northwest, we have an opportunity to lead the country in developing this new business model. If we can build the values of sustainability into every product and service we provide, our companies will be best positioned to respond when new regulations are enacted to reduce carbon emissions.
But change is never easy. To be a sustainable business often requires new investments with an eye to long-term returns. The goal of our Green Washington competition is to encourage progress toward sustainability by recognizing the companies, governments and institutions that are leading in this effort.
Read more...
Capitalism - does Obama understand it?
The economic recovery, or the lack thereof, is the central topic for the election. Liberals like my colleague E.J. Dionne posit that this is “a distinction between the capitalist we typically honor who comes up with a good product and hires people to make and market it; and another kind who takes over a company, pulls out all the cash he can, and then abandons it to die?” But this is a straw man worthy of President Obama.
As I and many, many others have written, the Newt Gingrich-David Axelrod cartoon bears no resemblance to the particulars of Bain or the private equity markets more generally. It is simplistic and ultimately misleading to suggest that someone comes up with a good product and hires people without any need for investors and ready access to capital.
E.J. argues:
This leads naturally to the question of how creative the destruction wrought by our current brand of capitalism actually is. Since the dawn of the leveraged buyout era three decades ago, many friends of capitalism have questioned whether loading companies with debt as part of these deals is good for companies and for the economy as a whole.
Does this approach cause unnecessary suffering among the employees of the companies in question and the communities that often lose plants and jobs as a result? Sucking pension and health funds dry to aggrandize investors seems less like a creative act than a betrayal of workers who made bargains with their employers in good faith.
But this “brand” of capitalism is capitalism, and in its undiluted state does create hardship, but nothing in comparison to the amount of suffering inherent in other, less successful economic models. Two points should be kept in mind. First, we don’t have undiluted capitalism precisely because, while capitalism is the greatest wealth-creator the world has ever known (I think Obama even said this), we don’t as a compassionate society want undue suffering in the short term. Hence, we have unemployment insurance and an array of social safety-net programs.
Second, capitalism is unmatched in its ability to lift and keep people out of poverty. (On this topic I would heartily recommend “Wealth and Justice: The Morality of Democratic Capitalism” by Peter Wehner and Arthur Brooks, as well as Brooks’s new book, “The Road to Freedom: How to Win the Fight for Free Enterprise.”)
Read more....
As I and many, many others have written, the Newt Gingrich-David Axelrod cartoon bears no resemblance to the particulars of Bain or the private equity markets more generally. It is simplistic and ultimately misleading to suggest that someone comes up with a good product and hires people without any need for investors and ready access to capital.
E.J. argues:
This leads naturally to the question of how creative the destruction wrought by our current brand of capitalism actually is. Since the dawn of the leveraged buyout era three decades ago, many friends of capitalism have questioned whether loading companies with debt as part of these deals is good for companies and for the economy as a whole.
Does this approach cause unnecessary suffering among the employees of the companies in question and the communities that often lose plants and jobs as a result? Sucking pension and health funds dry to aggrandize investors seems less like a creative act than a betrayal of workers who made bargains with their employers in good faith.
But this “brand” of capitalism is capitalism, and in its undiluted state does create hardship, but nothing in comparison to the amount of suffering inherent in other, less successful economic models. Two points should be kept in mind. First, we don’t have undiluted capitalism precisely because, while capitalism is the greatest wealth-creator the world has ever known (I think Obama even said this), we don’t as a compassionate society want undue suffering in the short term. Hence, we have unemployment insurance and an array of social safety-net programs.
Second, capitalism is unmatched in its ability to lift and keep people out of poverty. (On this topic I would heartily recommend “Wealth and Justice: The Morality of Democratic Capitalism” by Peter Wehner and Arthur Brooks, as well as Brooks’s new book, “The Road to Freedom: How to Win the Fight for Free Enterprise.”)
Read more....
Corporate Social Marketing and Capitalism - a contradiction in terms?
Do you roll your eyes when you see "all-natural" items on grocery store shelves?
Do you question burrito chain Chipotle's commitment to the sustainable farming movement, even if you love Willie Nelson warbling a Coldplay tune (not to mention an overstuffed burrito with steak and black beans, two kinds of salsa, sour cream, cheese and lettuce)?
Does the responsible parent in you applaud McDonald's for offering apple slices along with French fries in its Happy Meals, while the cynic in you thinks the fast-food giant is only doing it to duck a "Super Size Me" helping of negative publicity?
Me too.
So it was with great interest that I settled in last month to moderate a panel discussion on corporate social marketing at Ogilvy's D.C. headquarters on 19th Street NW. One of the pleasures of this job — it really is one of the best, despite what you read — is having the chance to quiz experts on subjects I know little about. And, as a veteran business journalist, I'm trained to be highly skeptical of these kinds of marketing buzzwords.
So my big-picture question was a simple if provocative one: Does corporate social marketing run counter to capitalism itself?
Are the twin goals of business success and social good actually a contradiction in terms?
Read more...
Do you question burrito chain Chipotle's commitment to the sustainable farming movement, even if you love Willie Nelson warbling a Coldplay tune (not to mention an overstuffed burrito with steak and black beans, two kinds of salsa, sour cream, cheese and lettuce)?
Does the responsible parent in you applaud McDonald's for offering apple slices along with French fries in its Happy Meals, while the cynic in you thinks the fast-food giant is only doing it to duck a "Super Size Me" helping of negative publicity?
Me too.
So it was with great interest that I settled in last month to moderate a panel discussion on corporate social marketing at Ogilvy's D.C. headquarters on 19th Street NW. One of the pleasures of this job — it really is one of the best, despite what you read — is having the chance to quiz experts on subjects I know little about. And, as a veteran business journalist, I'm trained to be highly skeptical of these kinds of marketing buzzwords.
So my big-picture question was a simple if provocative one: Does corporate social marketing run counter to capitalism itself?
Are the twin goals of business success and social good actually a contradiction in terms?
Read more...
Which kind of capitalism?
This is not a distraction. This is what this campaign is going to be about,” President Obama said Monday at the NATO summit. The “this” in question is Mitt Romney’s tenure at Bain Capital and what it says about Mr. Romney’s economic vision for the country.
Team Romney should have seen this coming. If Newt Gingrich and Rick Perry were willing to rip Mr. Romney for being too capitalistic in the Republican primary, it doesn’t take a lot of imagination to expect that Mr. Obama and Vice President Joseph R. Biden would happily do the same in the general election.
And Mr. Obama has a point. If you are going to campaign on the idea that you were a private-sector job creator, it’s certainly fair game for your opponents to investigate the claim. Now, I think the Obama campaign’s specific charges and accusations regarding Bain Capital are spurious and unfair - as did, say, Newark Mayor Corey Booker, before he was forced to recant his heresy.
There are real political dangers for Mr. Obama in making himself the attack-dog-in-chief. Not only is it contrary to his admittedly tattered post-partisan brand, but voters may reasonably conclude that the president is focusing on Mr. Romney’s record to change the subject from his own.
Still, he’s not entirely wrong. Nor is Washington Post columnist E.J. Dionne, who hopes the Bain brouhaha will spark a deeper debate about what kind of capitalism we want. Borrowing a term from Germany’s Christian Democrats - one widely accepted across much of Europe - Mr. Dionne says we need to build a “social market,” as opposed to what he calls an “anti-social market.”
“Social” is one of those loaded terms that sounds pleasant enough, but presupposes a very large role for the state in our lives. For instance, “Julia,” the fictional Everywoman the Obama campaign is touting as the typical beneficiary of progressive government, lives in a social market. And, therefore, the government heavily influences not just her wages and health care, but also her career, recreational activities and even her childbearing decisions. “Under President Obama: Julia decides to have a child,” one slide explains with a dry creepiness.
It’s telling, but not remotely surprising that Mr. Dionne looks to Europe, home of the cradle-to-grave welfare state, as the inspiration for the kind of capitalism he wants here. European capitalism has things to recommend it, particularly if you have a job - especially a government job - and can live your life before the bill for the social market comes due, as it has in, say, Greece.
One microcosm of the social market at work has been Wisconsin’s public sector, where the generous perks and benefits of government work have crippled the state’s ability to govern. That’s why Madison, the spiritual home of the progressive movement, has looked a bit like a modern Greek city-state ever since Gov. Scott Walker took it upon himself to reform the system. The champions of the social market have not only thrown the kitchen sink at him in an effort to protect their ideals and their perks, they’ve brought in sinks from across the country to rain down upon him. And yet, it looks as if he will triumph next month in the recall effort.
Not entirely by Mr. Obama’s design, for the last few years, America’s labor market has looked pretty European. We don’t have the mobs of unemployed and unemployable youths loitering in the vain hope that some state worker will die or retire so they can take his place. But we’re not that far off, either. Workers don’t want to leave their jobs because they have no faith they’ll find another. Few firms want to create new positions because they don’t know if the market will sustain them.
Under normal circumstances, the U.S. economy creates tens of millions of jobs every year and destroys tens of millions, with net new jobs. In a typical year, up to 50 million Americans change jobs, often happily. They get hired away, promoted, etc.
This process partly explains why America’s capitalism has been so much more dynamic than Europe’s. In the social market, once you have a job, you cling to it because you may never get another. European governments make it much easier to cling to that job by punishing businesses that fire people. The unhappy byproduct of such “compassion” is that businesses are also far more reluctant to hire people because each new hire is a potential long-term liability.
Yes, Mr. Romney created jobs while he was creating value and wealth at Bain; he also destroyed jobs. Both are necessary in a dynamic market that improves the prospects for most Americans through economic growth. Some suffer from the process. But I would argue more people suffer under the social market. Which system is better is, indeed, a worthy - and overdue - debate.
Read more...
Team Romney should have seen this coming. If Newt Gingrich and Rick Perry were willing to rip Mr. Romney for being too capitalistic in the Republican primary, it doesn’t take a lot of imagination to expect that Mr. Obama and Vice President Joseph R. Biden would happily do the same in the general election.
And Mr. Obama has a point. If you are going to campaign on the idea that you were a private-sector job creator, it’s certainly fair game for your opponents to investigate the claim. Now, I think the Obama campaign’s specific charges and accusations regarding Bain Capital are spurious and unfair - as did, say, Newark Mayor Corey Booker, before he was forced to recant his heresy.
There are real political dangers for Mr. Obama in making himself the attack-dog-in-chief. Not only is it contrary to his admittedly tattered post-partisan brand, but voters may reasonably conclude that the president is focusing on Mr. Romney’s record to change the subject from his own.
Still, he’s not entirely wrong. Nor is Washington Post columnist E.J. Dionne, who hopes the Bain brouhaha will spark a deeper debate about what kind of capitalism we want. Borrowing a term from Germany’s Christian Democrats - one widely accepted across much of Europe - Mr. Dionne says we need to build a “social market,” as opposed to what he calls an “anti-social market.”
“Social” is one of those loaded terms that sounds pleasant enough, but presupposes a very large role for the state in our lives. For instance, “Julia,” the fictional Everywoman the Obama campaign is touting as the typical beneficiary of progressive government, lives in a social market. And, therefore, the government heavily influences not just her wages and health care, but also her career, recreational activities and even her childbearing decisions. “Under President Obama: Julia decides to have a child,” one slide explains with a dry creepiness.
It’s telling, but not remotely surprising that Mr. Dionne looks to Europe, home of the cradle-to-grave welfare state, as the inspiration for the kind of capitalism he wants here. European capitalism has things to recommend it, particularly if you have a job - especially a government job - and can live your life before the bill for the social market comes due, as it has in, say, Greece.
One microcosm of the social market at work has been Wisconsin’s public sector, where the generous perks and benefits of government work have crippled the state’s ability to govern. That’s why Madison, the spiritual home of the progressive movement, has looked a bit like a modern Greek city-state ever since Gov. Scott Walker took it upon himself to reform the system. The champions of the social market have not only thrown the kitchen sink at him in an effort to protect their ideals and their perks, they’ve brought in sinks from across the country to rain down upon him. And yet, it looks as if he will triumph next month in the recall effort.
Not entirely by Mr. Obama’s design, for the last few years, America’s labor market has looked pretty European. We don’t have the mobs of unemployed and unemployable youths loitering in the vain hope that some state worker will die or retire so they can take his place. But we’re not that far off, either. Workers don’t want to leave their jobs because they have no faith they’ll find another. Few firms want to create new positions because they don’t know if the market will sustain them.
Under normal circumstances, the U.S. economy creates tens of millions of jobs every year and destroys tens of millions, with net new jobs. In a typical year, up to 50 million Americans change jobs, often happily. They get hired away, promoted, etc.
This process partly explains why America’s capitalism has been so much more dynamic than Europe’s. In the social market, once you have a job, you cling to it because you may never get another. European governments make it much easier to cling to that job by punishing businesses that fire people. The unhappy byproduct of such “compassion” is that businesses are also far more reluctant to hire people because each new hire is a potential long-term liability.
Yes, Mr. Romney created jobs while he was creating value and wealth at Bain; he also destroyed jobs. Both are necessary in a dynamic market that improves the prospects for most Americans through economic growth. Some suffer from the process. But I would argue more people suffer under the social market. Which system is better is, indeed, a worthy - and overdue - debate.
Read more...
Booker T Washington and Black Capitalism
UNEMPLOYMENT AND poverty are the plight of millions of Black workers in today's America. Yet paradoxically, Black political power has grown in the decades since the height of the civil rights and Black Power movement. This is because political power without economic power is empty.
But what kind of economic power? Many Black political leaders argue for a version of "Black capitalism"--that increased economic power within the confines of the capitalist system is the way to improve the lot of the mass of Black workers.
While starting with a correct premise--that political power is not enough--the conclusion that more Black business is the answer is mistaken. Nor are these ideas new. In fact, they have historical roots in the "self-help" philosophy of Booker T. Washington.
Washington was an emancipated slave who became the most prominent spokesperson for Blacks at the end of the 19th century. In 1880, Washington founded the Tuskegee Institute in Alabama, a technical school to train Blacks for skilled work.
Tuskegee stressed training to instill not only skills, but the "proper attitudes" and values--like hard work, sobriety, subservience to employers--in its students. Perhaps this was why Washington wrote that Tuskegee "has no warmer and more enthusiastic friends anywhere than it has among the white citizens ... throughout the state of Alabama and throughout the entire South."
Later, Washington created the Negro Business League, with the intent of creating a Black capitalist class. At a Business League conference in 1910, Washington called league members to be missionaries "in teaching the masses to get property, to be more thrifty, more; economical, and resolved to establish an industrial enterprise wherever a possibility presents itself."
Read more...
But what kind of economic power? Many Black political leaders argue for a version of "Black capitalism"--that increased economic power within the confines of the capitalist system is the way to improve the lot of the mass of Black workers.
While starting with a correct premise--that political power is not enough--the conclusion that more Black business is the answer is mistaken. Nor are these ideas new. In fact, they have historical roots in the "self-help" philosophy of Booker T. Washington.
Washington was an emancipated slave who became the most prominent spokesperson for Blacks at the end of the 19th century. In 1880, Washington founded the Tuskegee Institute in Alabama, a technical school to train Blacks for skilled work.
Tuskegee stressed training to instill not only skills, but the "proper attitudes" and values--like hard work, sobriety, subservience to employers--in its students. Perhaps this was why Washington wrote that Tuskegee "has no warmer and more enthusiastic friends anywhere than it has among the white citizens ... throughout the state of Alabama and throughout the entire South."
Later, Washington created the Negro Business League, with the intent of creating a Black capitalist class. At a Business League conference in 1910, Washington called league members to be missionaries "in teaching the masses to get property, to be more thrifty, more; economical, and resolved to establish an industrial enterprise wherever a possibility presents itself."
Read more...
America's Dysfunctional Capitalism
On Wednesday, some understandably disgruntled investors filed suit in federal court against Facebook and several of the big banks that promoted its stock sale. The lawsuit alleges that the social media giant and the banks “selectively disclosed” to “certain preferred investors” the fact that Facebook’s financial prospects weren’t as bright as the public had been led to understand.
Facebook’s phenomenal rise: In seven years, the social networking site has grown from a project hatched in a college dorm to the largest social networking site in the world, well on its way to hitting its goal of having 1 billion users.
In the days leading up to the company’s initial public offering last week, the Wall Street Journal has reported, the underwriting banks told major institutional investors that Facebook’s share price would be set way too high — the pricing was “ridiculous,” according to one phone call on which the Journal reported. Facebook’s ad revenue, the big-time investors were told, wasn’t keeping pace with its growth on platforms such as mobile phones, which appear to be less ad-friendly than computers. No one conveyed this information to individual investors, however, many of whom rushed to buy the stock last Friday. By Thursday, Facebook shares had fallen 13 percent from their initial price.
Such “selective disclosure” may be grotesquely unfair, but it’s perfectly legal. The law requires corporations and brokers to inform the public of any information that could affect the value of their stocks — except in the case of IPOs, when securities firms are forbidden from reporting such information to the public until 40 days after the initial offering.
This isn’t a widely known law; the Journal called it “one of Wall Street’s best kept secrets.” It seems to be secret even from some U.S. senators with direct jurisdiction over securities statutes. Republican Bob Corker (Tenn.) told The Hill that he’s been focused more on the $2 billion trading-loss scandal at JPMorgan Chase than on Facebook “because we have regulation that it’s going to affect.” Charles Grassley (R-Iowa) told the same paper that this was a matter for the Securities and Exchange Commission, not Congress. It is indeed a matter for the SEC, but it should be on Congress’s plate as well.
The Facebook affair provides one more bit of confirmation — not that any should be needed — that our economic system, when left to its own devices and when regulated by rules that powerful interests have shaped, tilts grotesquely toward the rich and their institutions. The JPMorgan Chase debacle has highlighted the fact that chief executive Jamie Dimon sits on the board of the Federal Reserve Bank of New York, his company’s primary regulator. Vermont’s Bernie Sanders, the Senate’s sole socialist, and California’s Barbara Boxer (D) introduced a bill this week that forbids such arrangements — a long-overdue reform, as the Fed’s regional banks have always been controlled more by private bankers than public regulators.
Meanwhile, the one thing made clear by the recent debate over the merits of private-equity firms is that those firms’ net effect on job creation and destruction is essentially negligible. Their one undisputed effect — and admitted raison d’etre — is to enrich their investors and, more particularly, the people who work there. The firms’ defenders hail them for creating wealth, though the wealth they create goes chiefly to the wealthy and is often generated by slashing the wages of workers at the companies they take over.
The dysfunction of American capitalism has become the backdrop before which this year’s elections are playing out. Polls show that the American people believe that the nation’s economy has fundamentally changed for the worse, but the two parties are divided over the culprit. Republicans blame government for distorting what would otherwise be a thriving market system; Democrats argue that government must do more to prod those markets to distribute wealth more equitably, thereby increasing the aggregate demand that markets need to thrive.
Read more...
Facebook’s phenomenal rise: In seven years, the social networking site has grown from a project hatched in a college dorm to the largest social networking site in the world, well on its way to hitting its goal of having 1 billion users.
In the days leading up to the company’s initial public offering last week, the Wall Street Journal has reported, the underwriting banks told major institutional investors that Facebook’s share price would be set way too high — the pricing was “ridiculous,” according to one phone call on which the Journal reported. Facebook’s ad revenue, the big-time investors were told, wasn’t keeping pace with its growth on platforms such as mobile phones, which appear to be less ad-friendly than computers. No one conveyed this information to individual investors, however, many of whom rushed to buy the stock last Friday. By Thursday, Facebook shares had fallen 13 percent from their initial price.
Such “selective disclosure” may be grotesquely unfair, but it’s perfectly legal. The law requires corporations and brokers to inform the public of any information that could affect the value of their stocks — except in the case of IPOs, when securities firms are forbidden from reporting such information to the public until 40 days after the initial offering.
This isn’t a widely known law; the Journal called it “one of Wall Street’s best kept secrets.” It seems to be secret even from some U.S. senators with direct jurisdiction over securities statutes. Republican Bob Corker (Tenn.) told The Hill that he’s been focused more on the $2 billion trading-loss scandal at JPMorgan Chase than on Facebook “because we have regulation that it’s going to affect.” Charles Grassley (R-Iowa) told the same paper that this was a matter for the Securities and Exchange Commission, not Congress. It is indeed a matter for the SEC, but it should be on Congress’s plate as well.
The Facebook affair provides one more bit of confirmation — not that any should be needed — that our economic system, when left to its own devices and when regulated by rules that powerful interests have shaped, tilts grotesquely toward the rich and their institutions. The JPMorgan Chase debacle has highlighted the fact that chief executive Jamie Dimon sits on the board of the Federal Reserve Bank of New York, his company’s primary regulator. Vermont’s Bernie Sanders, the Senate’s sole socialist, and California’s Barbara Boxer (D) introduced a bill this week that forbids such arrangements — a long-overdue reform, as the Fed’s regional banks have always been controlled more by private bankers than public regulators.
Meanwhile, the one thing made clear by the recent debate over the merits of private-equity firms is that those firms’ net effect on job creation and destruction is essentially negligible. Their one undisputed effect — and admitted raison d’etre — is to enrich their investors and, more particularly, the people who work there. The firms’ defenders hail them for creating wealth, though the wealth they create goes chiefly to the wealthy and is often generated by slashing the wages of workers at the companies they take over.
The dysfunction of American capitalism has become the backdrop before which this year’s elections are playing out. Polls show that the American people believe that the nation’s economy has fundamentally changed for the worse, but the two parties are divided over the culprit. Republicans blame government for distorting what would otherwise be a thriving market system; Democrats argue that government must do more to prod those markets to distribute wealth more equitably, thereby increasing the aggregate demand that markets need to thrive.
Read more...
Subscribe to:
Posts (Atom)