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Fojar38 posted:What incentive do authoritarian regimes have to use their unchecked power to commit to reform? Particularly when reforms would involve them giving up some power? Well, first of all I'm not predicting anything like this will happen, only that it is a possibility. And the incentive, presumably, would be to maintain social cohesion following another economic crash or downturn, much in the manner of various interwar authoritarian regimes.
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Nov 23, 2015 00:20
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Authoritarian regimes tend to maintain social cohesion through the threat of violence first and foremost, because anything less gives the impression of them being 'weak'. It's their perception of strength that grants them some level of support, absent that they collapse. Historically, they only very rarely deescalate civil conflicts. See: almost any war of decolonization.
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Nov 23, 2015 01:09
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rudatron posted:Authoritarian regimes tend to maintain social cohesion through the threat of violence first and foremost, because anything less gives the impression of them being 'weak'. It's their perception of strength that grants them some level of support, absent that they collapse. Historically, they only very rarely deescalate civil conflicts. See: almost any war of decolonization. I think that colonial regimes may not be the best example to draw on. I'm thinking more along the lines of interwar fascism -- simultaneously rewarding some constituencies while brutally suppressing and othering political opponents and ethnic minorities. If you look at how Hungary under Fidesz -- and facing pressure from the even further right party Jobik -- has implemented selective populist measures while also moving to legally neuter any opposition, then imagine those trends accelerating in the face of another economic crash, you'll get a sense of what I'm thinking. The barrier here may have less to do with the political risks and more to do with the economic constraints faced by emerging markets. It's possible that many of these economies simply don't have the economic basis or political control over their oligarchs to actually pursue wealth redistribution. It may be that only countries with states that are strong enough to impose their will on local oligarchs will have even the possibility of executing this kind of pivot in economic policy. Still I don't think we can entirely rule out the prospect of a return to statism and selective economic populism in some of these countries, paired with increased repression, if a bad economic downturn does occur. In particular I can I agile that China might try to stimulate domestic demand and pacify dissent with some limited form of economic nationalism. Perhaps someone with better knowledge of China's domestic politics can comment, since this post is mostly just idle speculation. My assumption here is that the Arab spring has put these emerging market regimes on notice that they face a real and present danger when the price of living becomes too high for too large a swath of the population. How exactly these regimes respond is hard to predict in advance but I think it would be a mistake to completely rule out some kind of limited attempts at economic redistribution.
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Nov 23, 2015 02:31
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to go back a bit:Ardennes posted:
re: point 2, The Economist is very far away from a hard-right perspective here. Of late it has found it fashionable to editorially endorse nominal GDP targeting. It is also far more receptive to "Malaysia-style" capital controls than it was in 1998-2001, where it consistently editorialized against them; this particular article itself has numerous implicit concessions to "formidable defenses". On the politics of this, I want to remind all present that bashing emerging markets is in the longer term a right-wing exercise, not a left-wing one. After all, emerging markets are those which have (supposedly) traded human rights, liberal democracy, and economic independence from the West in return for economic growth. Furthermore, they defy the narrative of global periphery dependency. We should not let a decade of center-left romance in South America distort this picture; the representative BRIC are the far larger R, I, and C, not Brazil; it's more the Gujurat model of development than the Kerala one. A brief stumble, and we will soon be assured by leftists that Latin American center-leftism has failed leftism because of its centrism. Such be politics. As for crisis - Marxism has no monopoly on crisis theory, and as Ardennes correctly observes, the model being advocated here is not a Marxist one. True, it invokes a declining rate of profit. But this decline does not independently drive the crisis. Rather, the crisis is driven by economic recovery in the United States causing slower growth in the second class of emerging markets as capital moves back home, which causes private-sector investments made on the basis of this assumed growth to fail, leading to a self-reinforcing crisis in the emerging market (via inflation->higher interest rates->debt default->currency weakness->inflation...); the declining rate of profit is held as a symptom. You could make a case for interpreting this along Keynesian or Austrian lines, but I would struggle to see a Marxist interpretation that predicts crisis on the basis that the evil foreign capitalists will eventually stop extending new loans and let your country's private sector default on the existing ones. The crisis of declining profit is supposed to be driven by capitalist overexploitation and overproduction. But instead there is a current account deficit - the country isn't exporting more than it is importing. Whence the extraction of the labour surplus?
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Nov 23, 2015 03:29
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So if the emerging market does crash are we going to see a lot more  and resentment of other continents/globalization as a whole?
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Nov 23, 2015 04:04
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LeoMarr posted:So if the emerging market does crash are we going to see a lot more More or less, although populist nationalism has many different variants and distrust with the status quo will be communicate different ways. That said, you could see some distinct similarities in governments in Turkey and Russia for example, even through they took different tracks to get where they did and in some ways they got there earlier than others. Helsing posted:I think that we've seen some very modest pressure toward reformism in the North America. Obamacare is a huge gift to insurance companies but it represent a neoliberal attempt to correct a market failure in the healthcare industry, and in Canada we've seen Liberal governments (and in rare cases parties with a vaguely social democratic flavouring) replacing conservative parties, in part by promising tax increases on the wealthy and deficit financed infrastructure spending, government run pension plans and limits on carbon emissions. Of course all these measures were mainstream a generation ago, and it's unlikely these measures will be enacted on a sufficient scale to respond effectively to the scale of the economic malaise that seems to be settling over the globe, but I see them as cracks in the neoliberal monolith. There has been very very modest shifts to attempt to reform in the US especially but these changes are relatively minor compared to continuous moves in the other direction and often are local in effect. For example, Medicaid was only expanded in about half the states, and improvements in the minimum wage are also scatter shot in their effect. In comparison, the erosion of worker rights and relatively pay is relatively universal. quote:As for the organized left, I think that the financial crisis and the incoherence of the Occupy Wall Street movement (at least at the national level) represent a sort of nadir for the left, a real and depressing example of how weak and irrelevant the left had become. Since then, however, I think we've seen some sporadic examples of grass roots mobilization that might yet bear fruit in he coming decades. Sanders has a surprisingly campaign but ultimately I don't think it will lead to much especially since Clinton will almost certainly tack way back to the center after he is defeated. Also many other causes are split over issues of identity and as of yet haven't made real economic issues their focus. Ultimately, these campaigns may or may not spur some changes but I can't think but they will be relatively superficial compared to the issues they hope to address. quote:As for the ruse of conservative anti-liberal regimes in emerging markets, I wonder where some if them won't be able to use their authoritarian political structures to pivot toward some kind of reformism more rapidly than liberal governments, much in the way that fascist governments were able to implement public works projects and targeted economic relief without generating the kind of conservative and corporate backlash that was triggered by the New Deal. Eh relatively minor changes looking at Orban, Putin or Erdogan. One thing is they may fight to keep the relative status quo, simply because "liberal experimentation" could very well discredit their regime and they will try to keep in power as long as possible. That said it is also in their best interests to keep aspirations for the future rather low. I still think economics is a key point of vulnerability for those regimes but like Egypt, it make take decades to work out and then end up in a cul-de-sac of chaos and/or the rise of another authoritarian regime. quote:My point here being that the situation seems quite fluid and while the lack of anticapitalist states internationally and socialist movements domestically may reduce the pressure toward reformism, that doesn't necessarily mean that some kind of rupture won't form within the coalition of forces upholding the current neoliberal orthodoxy. If nothing else, we might see the looming threat of global warming getting used as justification for a huge economic reordering of society. Global warming certainly adds a new pressure to the system, but ultimately it is not a threat altogether taken that seriously (even now) and probably won't until the political outcomes of it become too impossible to ignore. That said, scientifically at that point it would be way way too late to actually stop it and would take decades (or longer?) to repair the damage. Ardennes fucked around with this message at 11:38 on Nov 23, 2015 |
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Nov 23, 2015 05:46
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ronya posted:Rather, the crisis is driven by economic recovery in the United States causing slower growth in the second class of emerging markets as capital moves back home, which causes private-sector investments made on the basis of this assumed growth to fail, leading to a self-reinforcing crisis in the emerging market (via inflation->higher interest rates->debt default->currency weakness->inflation...); Helsing posted:I think that colonial regimes may not be the best example to draw on. I'm thinking more along the lines of interwar fascism -- simultaneously rewarding some constituencies while brutally suppressing and othering political opponents and ethnic minorities. If you look at how Hungary under Fidesz -- and facing pressure from the even further right party Jobik -- has implemented selective populist measures while also moving to legally neuter any opposition, then imagine those trends accelerating in the face of another economic crash, you'll get a sense of what I'm thinking.  [source: http://www.transparency.org/research/cpi/overview] So the idea that these kinds of countries: A: Will ever want to set up any kind of vast distributive programs, & B: Could do so in a way that wouldn't unintentionally (or intentionally) just end up funneling money back into the pockets of oligarchs Are massive assumptions that I want to challenge. The path of least resistance is to just buy more guns and use them more, continue until the problem goes away. Hopefully, it doesn't and they end up losing. But don't think for a second that oligarchs or plutocrats are 'far-sighted' leaders, because that's not true for the vast majority of history. They're much more likely to lash out from paranoia. rudatron fucked around with this message at 08:07 on Nov 23, 2015 |
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Nov 23, 2015 08:03
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rudatron posted:Hidden in this logic is the assumption that growth has not slowed in the emerging economies, that instead the US has 'caught up', so naturally the capital moves back. This is not true. I was making the point that the model invoked in the Economist article is not Marxist, so whether or not the assumptions going into the model are true is irrelevant. The article predicts "interest-rate increases by the Federal Reserve" that "draws capital back to America"; the conclusion follows. The blogger predicts loosening measures. Opposite assumptions, hence different conclusions. The blog you are linking is written by a (supposedly - haven't read in detail) Marxist blogger, so of course it is plausibly Marxist. (it has to be said that Marxists have never failed to predict an imminent recession - at this point, more than a century on, the test of a Marxist model is its claims as to when capitalist crisis doesn't happen) ronya fucked around with this message at 11:41 on Nov 23, 2015 |
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Nov 23, 2015 11:16
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rudatron posted:Like the reason I'm really skeptical is that the meme you're deploying here, Authoritarian Government Cutting Through Red Tape, is actually really questionable. And I mean, you want another example here, okay, take Syria. Assad has known for a very long time that this war he is in was coming. But rather than working to make it less likely, he has invested heavily in buying armaments (especially tanks) to try and ride it out. Every authoritarian regime is well aware of the sword of damocles having over their head, and it encultures paranoia within the ruling group. Non-democratic governments ultimately have an antagonistic relationship with the people they govern, to the point where giving any opposition what they want automatically devalues the ruling regime itself. That, and these kind of regimes are also heavily corrupt: It depends on the regime though and regimes may go after minorities (or in the case of Syria, majorities) with full force but many of those types of regimes also have a hard time going against their "own" people. In the case of Syria, Assad has no problem killing Sunnis but if he did the same to the Shia population, who would be left to support him? It is also a reason often authoritarian regimes "choke" in more ethnically/religiously homogeneous countries when a crisis happens because frankly the army has a hard time shooting people they identify with. The "August coup" in Russia is an example of this. This isn't always the case, in Egypt there was extreme enough post-revolutionary political cleavage that the opposition was gunned down with applause. However, these regimes get in power in the first place because they do have likely a majority of the public on their side or at least acquiescent. Putin doesn't control Russia because people are afraid of his tanks but because he has often tone to set with the public that they accept. While these regimes are heavily corrupt and usually have little interest in addressing equality, but they do have a interest in keeping the public generally on their side. It is why the most likely corruption will go on, but drastic changes to the status quo probably won't. If anything the regime needs to offer some type of minimal stability to some portion of the population or otherwise, who is going is yet again going to back them? Obviously long-term there is going to be a major failure, but these sort of regimes can last for decades especially if they find a cause like revanchism (Azerbaijan/Russia/Hungary). Also be frank, what gives these governments often their true power is the lack of viable alternatives, especially in countries where forms of liberalism have been tried and failed and/or no other alternative emerges. People may be willing to put on with a lot if they believe the alternative may even lead to even worse living conditions, or if the idea of liberal democracy itself is highly politicized. We can argue why this is so, but it is quite clearly the case in several states. Ardennes fucked around with this message at 13:31 on Nov 23, 2015 |
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Nov 23, 2015 11:52
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Or they'll just demarcate the population along class lines, even in ethnically homogeneous states. The have-nots will continue having nothing & dying, then they'll get blamed for starving on account of being dumb/uncouth/smelly. It's not like feudalism is historically impossible, and the ownership structures in many of these countries is resembling it more and more. Like the mistake here is thinking that fascism itself solves the crisis of capitalism - it doesn't, it just moves it. Specifically, it moves the burden onto a minority group, then rewards people not in the group for playing along. Lacking such a minority group internally, one will have to be created from whole cloth - if it can't, it will fail. Like, logically, it would make sense to have a redistribution scheme. We're used to governments like the US not thinking logically, but whatever problem the US has with not acting long-term or whatever, you get more than double that in countries without any kind of accountability. Corruption that would be unacceptable in the west is standard fare in a lot of these countries. Ergo, the system as a whole will not act logically, because it is incapable of doing so. It will act short-sightedly, without subtlety or grace. Rarely will it make very expensive moves to help any group not inherently necessary for the strict functioning of the government.
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Nov 23, 2015 15:25
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You know, if you want to observe a panoply of strongman regimes responding to sovereign debt crises in diverse ways, the 1997 Asian financial crisis wasn't that long ago.
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Nov 23, 2015 17:07
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ronya posted:You could make a case for interpreting this along Keynesian or Austrian lines, but I would struggle to see a Marxist interpretation that predicts crisis on the basis that the evil foreign capitalists will eventually stop extending new loans and let your country's private sector default on the existing ones. The crisis of declining profit is supposed to be driven by capitalist overexploitation and overproduction. But instead there is a current account deficit - the country isn't exporting more than it is importing. Whence the extraction of the labour surplus? This is actually what Marxists call imperialism, where labour surplus is being extracted as "super-profits". Lenin wrote the book about it and it's what Wallerstein's world-system analysis is based on. The usual basic contradictions of capitalism make imperialism unustainable in the long term, but it is one of the ways by which crisis is delayed and new profits are found in the shorter term.
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Nov 23, 2015 17:21
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Helsing posted:Can you explain why you think this? Looking back I was reading between the lines more than intended but it's safe to say this topic has broader meaning to you than just another downturn in a subset of the global economy. And for example: Helsing posted:and it's unlikely these measures will be enacted on a sufficient scale to respond effectively to the scale of the economic malaise that seems to be settling over the globe, but I see them as cracks in the neoliberal monolith. I think that frame of reference is as important and interesting as the specific topic.
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Nov 24, 2015 01:31
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Bob le Moche posted:This is actually what Marxists call imperialism, where labour surplus is being extracted as "super-profits". Lenin wrote the book about it and it's what Wallerstein's world-system analysis is based on. The usual basic contradictions of capitalism make imperialism unustainable in the long term, but it is one of the ways by which crisis is delayed and new profits are found in the shorter term. But Marxists call everything imperialism. Shouldn't the extraction of super-profits via loans show up as capital outflow, rather than inflow? The center loans the periphery massive amounts, is defaulted upon, and gets none of it back. Whence extraction? Wallerstein invokes the primary production of resources, but resource prices are not the dynamic postulated in the OP article.
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Nov 24, 2015 15:10
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ronya posted:But Marxists call everything imperialism. Yes, imperialism means exporting capital from the center to less developed countries. Ownership of capital is not transferred though, despite being put to work somewhere else geographically it is still the asset of the initial holder (in the form of debt for example). Like any other investment it is made because it provides a return (capitalists don't invest in a business just because they want to help the workers do their job). The money invested in the third world "grows" (accumulates interest), and that profit is just like any profit, somewhere down the line, extracted from local labour. (In the same way that rent paid to a landlord comes from the labour of the tenant) The defaulting on those debts is the crisis situation, when things break down, it's not really "supposed" to happen from the point of view of the imperialist investors, or at least not desirable. It will happen in the long term, inevitably, but until then developing countries are a good investment. When debts are defaulted on, the loan-givers usually also make sure that they seize as much asset value as possible in collateral to minimize losses. When the borrower is a government , imperialist interests will go to great lenghts to make sure the debt i not defaulted upon (for example if an elected government threatens to cancel the nation's debts, a puppet regime can be installed that will ensure interest payments continue to be extracted from the country's working population. Austerity and privatization are also a way of liquidating a government's "assets" to compensate loaners.). A lot of people might throw the term "imperialism" around without really understanding the marxist analysis, but it is actually a useful term that refers to something well-defined. Imperialism is such an ubiquitous driver of contemporary world economy and politics though, that most of the time people throw it around carelessly they are probably not that wrong anyway...
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Nov 24, 2015 18:40
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I really appreciate Ronya's posts because they shift this back to the more immediate topic of the thread, which is the economic dynamics of the crisis, that having been said I want to make some quick responses to the people who spent time answering my earlier arguments.Ardennes posted:More or less, although populist nationalism has many different variants and distrust with the status quo will be communicate different ways. That said, you could see some distinct similarities in governments in Turkey and Russia for example, even through they took different tracks to get where they did and in some ways they got there earlier than others. If anything the position of labour and related progressive movements is objectively weaker than it has been in decadaes, and arguably the most noteworthy political development of the Obama years has been a hardening and strengthening of the right wing of the Republican party. The examples I'm pointing to are just examples of mobilization occuring at the grassroots level. Whether that can be translated into a more broadly based challenge to the status quo is an open question right now but I don't think such movements can be dismissed out of hand. And even within the Republican party, I think its notable that while the media focuses primarily on Trump's statements on race and immigration, his position on the economy and trade is outside the Republican mainstream and amounts to a sort of pseudo-populist appeal to a white middle and working class that is growing increasingly anxious about the direction of globalization. So even if left wing pressure fails to produce any changes in policy regime, it may be that right wingers will take up that mantle. quote:Sanders has a surprisingly campaign but ultimately I don't think it will lead to much especially since Clinton will almost certainly tack way back to the center after he is defeated. Also many other causes are split over issues of identity and as of yet haven't made real economic issues their focus. Ultimately, these campaigns may or may not spur some changes but I can't think but they will be relatively superficial compared to the issues they hope to address. The question with Sanders is whether he leaves behind any kind of coherent organization after he inevitably losses the nomination battle. quote:Eh relatively minor changes looking at Orban, Putin or Erdogan. One thing is they may fight to keep the relative status quo, simply because "liberal experimentation" could very well discredit their regime and they will try to keep in power as long as possible. That said it is also in their best interests to keep aspirations for the future rather low. I still think economics is a key point of vulnerability for those regimes but like Egypt, it make take decades to work out and then end up in a cul-de-sac of chaos and/or the rise of another authoritarian regime. I'm projecting forward beyond some hypothetical emerging markets crash and, quite possibly, another economic crisis in the west (assuming that guys like Nouriel Roubini are correct about the scale of the asset bubble that's supposedly been inflated here thanks to quantitative easing and a lack of genuinely profitable investments). I agree with you that in the short term there's little prospect of these regimes seriously altering course: they have no real incentive to do so after all and many reasons not to. I'm just wondering what happens if it's revealed over the course of the next few years that most of the global recovery since 2008 was largely chimerical. We already saw a number of Middle Eastern regimes collapse during the Arab Spring because they couldn't address the internal contradictions that were unbalancing their economies. quote:Global warming certainly adds a new pressure to the system, but ultimately it is not a threat altogether taken that seriously (even now) and probably won't until the political outcomes of it become too impossible to ignore. That said, scientifically at that point it would be way way too late to actually stop it and would take decades (or longer?) to repair the damage. I'm not so much imagining a genuine effort to fix the problems of global warming. Rather I'm suggesting that the fight against climate change could play a role similar to what happened during the Second World War: under the rubric of national security state governments (along with corporations who are either convinced or coerced to join in) the threat of global warming becomes an excuse to restructure the economy and perhaps to try and restore profitability within the private sector by giving out substantial government contracts.
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Nov 25, 2015 00:28
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rudatron posted:Hidden in this logic is the assumption that growth has not slowed in the emerging economies, that instead the US has 'caught up', so naturally the capital moves back. This is not true. Well first of all I never said anything aobut "vast distributive programs", I think the adjectives I used were "select" and "limited"> More broadly: I'm absolutely not suggesting that authoritarian regimes are more efficient or that they can efficiently cut through "red tape". What I am arguing is that because authoritarian regimes can suppress internal dissent more easily than liberal democratic regimes they are better positioned to placate (or in extreme situations coerce) their local oligachs and that this in turn gives them political options that would face furious opposition under democratic regimes. Though he was writing in a different context I think Michal Kalecki's article "Political Aspects of Full Employment" offers a helpful and succinct summary of this dynamic. I included an extended excerpt below: quote:There are, however, even more direct indications that a first-class political issue is at stake here. In the great depression in the 1930s, big business consistently opposed experiments for increasing employment by government spending in all countries, except Nazi Germany. This was to be clearly seen in the USA (opposition to the New Deal), in France (the Blum experiment), and in Germany before Hitler. The attitude is not easy to explain. Clearly, higher output and employment benefit not only workers but entrepreneurs as well, because the latter's profits rise. And the policy of full employment outlined above does not encroach upon profits because it does not involve any additional taxation. The entrepreneurs in the slump are longing for a boom; why do they not gladly accept the synthetic boom which the government is able to offer them? It is this difficult and fascinating question with which we intend to deal in this article. Kalecki is specifically describing opposition to deficit spending and/or measures to supplement market income with government transfers, but I think his broader point about the political dynamics of the situation are applicable here. The need for fiscal orthodoxy if the state is willing to deploy repressive police tactics directly against its own population. Also these assumptions don't require that Oligarchs be far sighted or bold leaders. If anything it's more likely that these programs would being as a paniced and improvised set of reactions to a worsening situation. Quite likely they'll steal policy planks from smaller and more overtly fascist parties, much in the way that Fidesz has stolen some of the anti-immigrant and economically nationalist policies of Jobik in Hungary despite commanding a Super Majority in the legislature.
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Nov 25, 2015 00:42
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Bob le Moche posted:Yes, imperialism means exporting capital from the center to less developed countries. Ownership of capital is not transferred though, despite being put to work somewhere else geographically it is still the asset of the initial holder (in the form of debt for example). Like any other investment it is made because it provides a return (capitalists don't invest in a business just because they want to help the workers do their job). The money invested in the third world "grows" (accumulates interest), and that profit is just like any profit, somewhere down the line, extracted from local labour. (In the same way that rent paid to a landlord comes from the labour of the tenant) The implication of your analysis is that debt default or debt inflation is a unilateral triumph over the capitalist, whereas successfully borrowing and repaying loans is a submission to superexploitation. The obvious question is why debt default is in any way bad for the third-world country. Or why the Economist magazine, not normally known for its adherence to Marxism, is praising 'formidable defences' or advocating expediting bankruptcy reform in this context. Half a century after Allende got coup'd for nationalizing copper, we live in a time where the IMF, the banks, and the US Treasury Department simultaneously bitch that SCOTUS is letting recalcitrant American bondholders hold out from Argentina's negotiated debt forgiveness. It's a brave new world. The +/- signs on the supposed extraction flows all point the wrong way. Let me suggest that imperialist extraction is a real force but does not principally currently function in a classically neo-Marxist Prebischian fashion.
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Nov 25, 2015 07:25
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ronya posted:The implication of your analysis is that debt default or debt inflation is a unilateral triumph over the capitalist, whereas successfully borrowing and repaying loans is a submission to superexploitation. The obvious question is why debt default is in any way bad for the third-world country. Or why the Economist magazine, not normally known for its adherence to Marxism, is praising 'formidable defences' or advocating expediting bankruptcy reform in this context. i will admit that i'm less into the high theory of this than certain others, but the simple fact of capital ownership tending towards "wealthy" countries seems to help make the case of imperialism being an ongoing process, at least in vulgar terms what this implies in terms of debt crises, i do not know, but it seems odd to state that the flow is reversed in a system where the "first world" or whichever term one prefers still holds a disproportionate amount of the ownership of capital. i tend to agree that investment and tend to create an increasingly cosmopolitan international bourgeoisie and that the tendency of national imperialism is abating, but that's in the first or second order derivative, not in the number itself
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Nov 25, 2015 16:45
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I also don't know anything about theory, but isn't the great damage of default that it cuts off your access to the international financial system? You could draw analogy with a collective of workers seizing the means of production from a capitalist in the modern USA. It's 'good' in itself, but then the police come knocking.
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Nov 25, 2015 16:57
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Let me make an open invitation for anyone who wants to critique / add to / tear into the following.asdf32 posted:Looking back I was reading between the lines more than intended but it's safe to say this topic has broader meaning to you than just another downturn in a subset of the global economy. My own perspective here is that the (possible) crisis in emerging markets is reflective of a structural imbalance in the global economy. There are different ways that you can describe the contours of this imbalance depending on your preferred theoretical lens, which is why I think it's nice we're getting some debate in this thread. Broadly speaking though, the way I would characterize the current situation (and pardon me for being somewhat vague and inelegant here, but I'm in a rush right now and just wanted to make sure I typed off a reply to you before leaving) is that the available investment capital sloshing around the global economy is far greater than the available safe investments for that capital. Global growth is relatively low right now, and much of the growth that we've seen in the last couple decades has either been in the form of a time limited surge as countries like China are finally integrated into the global economy, or it's a product of bubble-like economic behaviour in which the constant infusion of new capital into a given industry or market obscures the extent to which market fundamentals are actually still quite poor. The quintessential example of that in recent times could be the American housing market, where home prices were arguably being inflated more by investors desiring a safe haven for their money than by any kind of fundamental increase in the value of America's housing stock. Anyway, that's an admittedly crude sketch of the situation but that should provide a basic illustration of where I'm coming from. Note that this isn't to suggest hat the productive capacity of the world economy has not increased vastly, or even that the so called "mass of profits" hasn't increased. The trouble lies in the fact that increased productive capacity doesn't translate into a higher rate of profit: if anything it's the opposite. So while the "mass of profits" may increase the overall rate of profit drops. I'll note immediately that how one properly measures "profit" in the economy can be a controversial subject in some economic circles, and is worth talking about at greater length. As for my comment about "cracks in the neoliberal monolith", I hasten to add that this is not the same as claiming that capitalism as a system is on the verge of destruction. I would propose a (very rough) model of history that goes something like this: within the history of capitalism we can make various subdivisions, with different periods of capitalist expansion following different dynamics. The capitalism of the late 19th century, for instance, involved a lot of gunboat diplomacy and outright colonization or conquest of global regions that had not yet been integrated into the European dominated world economy. By the mid 20th century you very clearly still have a mostly capitalist world economy, but many of the particulars have changed dramatically and the centre of economic power has shifted away from Europe and toward North America. The economic regime that we're living under right now is often referred to (somewhat imprecisely) as "neoliberalism". There are some intelligent critiques of the term that you could make, but it's useful as a shorthand for the orthodox economic thinking that has mostly guided our policy makers since the 1980s, and which is politically associated with figures like Lee Kwan Yew or Deng Xiapoing in Asia and Margaret Thatcher and Ronald Regan in the West (the fact it applies to so many different and distinct figures should already give an indication to why it's a necessarly vague term, but still a useful one when deployed correctly). My contention would be that it's relatively rare that these policy regimes last longer than 40 or 50 years. The global economy changes, and the problems facing policy makers change as well. The particular set of difficulties that cropped up in the 1970s are not necessarily the problems facing the world today. So it's not surprising that pressure is mounting for changes in the neoliberal policy regime. I may very well be wrong about the imminent changeover of neoliberalism. Neoliberalism is deeply entrenched in the global trade order and forms the "common sense" for most of the global elite, and it is supported by powerful vested interests. But when I suggest that we may see some pressure to shift toward a new policy regime I can at least cite a long list of historical examples of similarly major changes and upheavals in the past. The capitalism of 1850 is not the capitalism of 1900, the capitalism of 1950 is not the capitalism of 2000. Some fundamental patterns and laws stay the same, but many crucial details do not.
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Nov 25, 2015 17:11
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V. Illych L. posted:i will admit that i'm less into the high theory of this than certain others, but the simple fact of capital ownership tending towards "wealthy" countries seems to help make the case of imperialism being an ongoing process, at least in vulgar terms from a marxist intuition, supposing a just trade system (however defined), in the absence of deliberate global redistribution, what basis is there to expect economic convergence to begin with? One would readily expect that countries with large amounts of capital will most easily produce even more capital. Labour generates the most surplus in the wealthy world. the core intuitions behind economic convergence as a default result are marginalist intuitions - price arbitrage, diminishing returns, factor mobility. In other frameworks, convergence is a possible result but it would not be a general one given the resounding popularity of controlled trade as consensus politics in the 1960s, in both the developing (nonaligned socialism of various ideological subtypes) and developed (bretton woods) world alike, compared to the embrace of generally uncontrolled, floating trade in both the major developing and developed economies alike, I am surprised that you think that there is no first-order change. At risk of leaving neomarxist territory, the Rodrikian political trilemma holds and we can see which two arms that governments have preferred to pick. The EU and its Euro as an elite project is a thing that has actually happened, which is rather bizarre, if you think about it.
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Nov 25, 2015 17:50
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Helsing posted:My contention would be that it's relatively rare that these policy regimes last longer than 40 or 50 years. The global economy changes, and the problems facing policy makers change as well. The particular set of difficulties that cropped up in the 1970s are not necessarily the problems facing the world today. So it's not surprising that pressure is mounting for changes in the neoliberal policy regime. your historical narrative is conspicuously missing the rise and fall of Bretton Woods, I think. Also missing are the recent actors that have tended to define the contemporary policy universe: stagflation, the abrupt death of k% monetarism, the Great Moderation, the triumph of inflation targeting since we're talking about emerging markets, the main challenge to neoliberalism in its 1990s incarnation is probably Malaysia and its influential revival of capital controls/suspicion of hot money flows. it is this suspicion which resonates throughout the entire OP article (which is quite funny if you reflect upon how the Economist reacted back in 1997). The 1997 AFC is repeatedly invoked because it is exactly that crisis that demonstrated the relevance of the private-sector debt problem - unlike earlier Latin American crises, the problem was not unsustainable sovereign debt but private-sector debt it's worth appreciating that this is a context where "the consensus" thinks it knows how to get a handle on things (capital controls, expedited bankruptcy, stress-testing so that people actually know how to kill a bank when a bank needs killing, rather than having it all merely in theory), and is sitting about fretting over whether it has enacted all the policy recipes ronya fucked around with this message at 18:11 on Nov 25, 2015 |
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Nov 25, 2015 18:07
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Helsing posted:Let me make an open invitation for anyone who wants to critique / add to / tear into the following. The point made earlier though in many ways capitalism was forced to change do to ongoing set of political circumstances, however if anything the overwhelming nature of neoliberalism may in fact lead to a very different cycle. One thing is that those in power aren't in any way under direct pressure to change, if anything, politics today more or less business is as usual (with an increasing authoritarian element). However, this can only go on so long. This shift won't lead to the rise of Marxist revolutions (and thus a direct political opposition), but the slow but sure growth of chaos. The Middle East or Africa seem to be the best regions to illustrate this. Basically, the gears will grind and grind until the teeth fall off because there is no way theoretical way to do anything else but it will be difficult to figure out. The world is being slowly boiled in more ways than one. If anything you can say when capitalism detached itself from politics, it also detached itself from the regulating mechanism that allowed peaceful changes to occur. In addition, nuclear weapons add another subtle twist. Without the possibility of world war, there is no longer a shock to the system that also would allow it to evolve. While in a sense the world is more peaceful but our politics aren't evolving to meet contemporary challenges if not future ones.
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Nov 25, 2015 18:16
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ronya posted:your historical narrative is conspicuously missing the rise and fall of Bretton Woods, I think. I might add to this list the oil shock and the economic impact of simlutaneously trying to pursue the Vietnam War and the Great Society programs while cutting taxes. But in my defense I was trying to avoid even more sprawl in that post so all this stuff got shoved under the umbrella of "difficulties that cropped up in the 1970s". Maybe it would be interesting to start a thread dedicated to the collapse of the postwar capitalist boom since it feels like such a sprawling topic in its own right. quote:since we're talking about emerging markets, the main challenge to neoliberalism in its 1990s incarnation is probably Malaysia and its influential revival of capital controls/suspicion of hot money flows. it is this suspicion which resonates throughout the entire OP article (which is quite funny if you reflect upon how the Economist reacted back in 1997). The 1997 AFC is repeatedly invoked because it is exactly that crisis that demonstrated the relevance of the private-sector debt problem - unlike earlier Latin American crises, the problem was not unsustainable sovereign debt but private-sector debt There are a lot of interesting points to digest here, especially regarding Malaysia. I usually think of China as the poster child for violating neoliberal orthodoxy by using strict capital controls and state lead initiatives to maintain government control of the economy, but the problem with China is that, like America, it's so enormous that it almost demands its own separate analysis. It's hard to point to China and claim that it's a representative example of the challenges and opportunities facing any other country. Also I think it's interesting that - as you point out - the consensus opinion seems to be that we have the necessary economic theories to address the crisis but simply lack the political will to implement them. I wonder, however, what another decade of low global growth might lead to. We already have prominent New Keynesians arguing that the real problem here isn't financial crisis per se but rather "secular stagnation". I wonder whether we're going to see a rising appetite for more aggressive fiscal policy to address economic stagnation, especially given that we've already seen central banks stretching monetary policy to it's utmost limits. Then again maybe the challenge going forward is going to be getting the population of the first world to accept an ever lower standard of living without sparking an anti-globalization revolt in the First World. Ardennes posted:The point made earlier though in many ways capitalism was forced to change do to ongoing set of political circumstances, however if anything the overwhelming nature of neoliberalism may in fact lead to a very different cycle. One thing is that those in power aren't in any way under direct pressure to change, if anything, politics today more or less business is as usual (with an increasing authoritarian element). However, this can only go on so long. This shift won't lead to the rise of Marxist revolutions (and thus a direct political opposition), but the slow but sure growth of chaos. The Middle East or Africa seem to be the best regions to illustrate this. I see what you're saying and I obviously don't dismiss it entirely but I think it's dangerous, when analyzing the broad sweep of world history, to fall back on overly reductive formulations. Sure the historical pattern has been for a strong left (either domestically through a labour movement or internationally through the USSR) placing external pressure upon the system to reform itself, and clearly a strong left doesn't exist right now, but I think it's dangerous to assume that the future will inevitably mimic the past. It may be that in the absence of a left wing challenge we'll see something new: perhaps the risk of right wing extremism in Europe and North America, or radical Islam in the Middle East, will play the role that socialism played in the 20th century. Or maybe the globalized system will break down and countries will fall back on neo-mercantilist policies that will open up a larger space for state lead growth. History is so replete with surprises and unexpected detours that I think we need to be somewhat open minded regarding this question. Quite likely we won't anticipate the shape of the 21st century global or domestic order until it's already mostly formed. Certainly the men and women of the 1930s weren't in a good position to imagine what the booming world of the 1960s would look like, even though many of the technologies and political tendencies of the 1960s already existed in embryonic form.
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Nov 27, 2015 19:11
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